Episode #191: “My wife doesn't respect me because she earns 5x more”

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[00:00:00] Ramit: On today’s episode, meet Dillon and Carrie.

[00:00:04] Dillon: I like how I feel about money. I personally wish that you could feel more relaxed about money.

[00:00:12] Carrie: I tend to blow things out of proportion or leap to a bigger problem.

[00:00:21] Ramit: Dillon is 30, Carrie is 29, and they are struggling with their disparity in income.

[00:00:27] Dillon: I feel like if I made more money, Carrie’s stress and pressure would go away.

[00:00:31] Ramit: Carrie works in tech. She earns a very high income, but she’s constantly worried about money.

[00:00:38] Carrie: I wouldn’t know what being relaxed or confident about money even looks like. The worrying just really comes naturally to me. I find comfort in looking down the road a little bit and seeing potential problems.

[00:00:54] Ramit: Dillon is a PhD student. He earns a $40,000 annual stipend and he’s frustrated by Carrie’s belittling comments.

[00:01:04] Carrie: I have said that I’m the breadwinner and he’s my housewife.

[00:01:08] Ramit: And her inability to see their combined income in a positive light.

[00:01:13] Dillon: I think we’d just be happier if we did feel like we made over 200k.

[00:01:18] Ramit: Carrie’s view of finances is so negative that it’s causing her to drag her feet on taking a bucket list vacation that they’ve been planning for years.

[00:01:28] Dillon: When we talk about doing something that is relatively affordable, given how much money we have, like going to Japan, it’s like yes and then no and then yes and then no because she’s constantly worrying about the future.

[00:01:44] Ramit: Can Carrie improve her money psychology so they can live a happier, richer life together?

[00:01:49] Carrie: I’ve always felt that way about money. I have to actively work to not feel that way.

[00:01:56] Ramit: Let’s meet Dillon and Carrie.

[00:01:58] I want to say thank you to Amazon Music for selecting Money for Couples as a New Year, New You featured show. And here’s a reminder that you can listen to Money for Couples episodes every week on Amazon Music or ask Alexa, “Alexa, play Money for Couples with Ramit Sethi on Amazon Music.”

[00:02:19] Okay, I have Dillon and Carrie’s conscious spending plan in front of me. I’m getting ready for our conversation. Let’s take a look at what I noticed.

[00:02:26] Dillon and Carrie, conscious spending plan. All right, let’s take a look. This is a young couple, I think 29 and 30 years old. $415,000 in assets, probably a house. Investments, $341,000 at that age? Very impressive. Saving, 23,000, a little low relative to the others, but okay. Debt’s 353 for a total net worth of 426.

[00:02:54] Very impressive already. Let’s take a look at the income. Gross monthly income– whoa. Okay, so one partner earns a lot more than the other one, like more than five times more. We have one person earning 3,000 bucks a month. The other earns $16,000 a month. Maybe one of them is in school. Could be. That would be my guess.

[00:03:19] Although at 29– maybe grad school total. Household income, $236,000. That’s a lot of money. Okay, let’s take a look. So total household income, $236,000. Overall, great income. I’m thinking about why savings is kind of low. It doesn’t really particularly bother me, but I would probably have that number higher.

[00:03:47] Fine. Fixed cost are at 33%. Okay. That’s one of the lowest numbers I’ve ever seen here. They have mortgage. I mean that, what do I care? All this is very affordable. If you’re at 33%, you can do whatever you want. You got room to spare. By having a really low fixed cost, in part because they have a really high income, that allows them to have a lot of money to be able to put in different places.

[00:04:16] So I’m curious to see where they put it. Investments. Well, there you go. 28% of net. That’s good. That’s great. When you have a really high income and/or low fixed costs, you want your investment rate to go way up. That’s because the price of bread doesn’t change whether you make $50,000 or $500,000.

[00:04:38] Therefore, there’s somewhat of a natural cap on your fixed costs. Netflix costs the same for everybody, therefore, the higher your income goes it becomes almost super linear, meaning your fixed costs become proportionally lower and therefore you have extra money. So it’s your choice, but you should almost certainly be putting more money in your investments because you can afford to do that.

[00:05:01] You should probably also be spending more on guilt-free spending, but you should definitely be investing more aggressively, which they are. All right. Yeah, they’re putting a lot of money away. Wow. Good job. Savings are– whoa– also at 28%. So basically they’re just putting away a ton of money. Great. They could do this for a few years and then they’ll be set.

[00:05:23] They could ease off what they call coast and then let that money just compound and grow, and they could actually start to spend more, which brings me to a concern I have. Are they actually spending on guilt free money? Let’s take a look. Yeah, that’s what I thought. Okay. So by spending so aggressively in savings and investments, meaning putting that money away, I wanted to see if they have a healthy amount of spend, and it’s pretty low. It’s pretty low. I was wondering like, why are we here? What am I going to talk to them about? And my guess is that they have an inability to spend. 11% is low for having a $236,000 income. You know, I talk about 20 to 35%.

[00:06:08] They could easily afford any of that. They’ve chosen. To over index on saving and investing, which I totally respect, but 11% is unusually low. Okay, let’s take a look. They have travel, gifts and donations, eating out in bars. I almost wonder if I even believe this. If anything, I suspect they’re actually spending less on these things.

[00:06:31] That’s just a gut feel because people who have their numbers in this way super heavily, aggressively invest in saving. They tend to not be able to bring themselves to spend, and that means even if they tried to ease off of their saving and investing five or 10 years from now, they probably wouldn’t be able to spend. So that’s my guess what we’re gonna talk about, but never know until I meet them.

[Interview]

[00:06:54] Dillon: Carrie has a lot of fear around money. We had been talking about a trip to Japan and we were in the car together, and I mentioned the trip to Carrie and she was like, “I don’t know. I don’t think we have enough money to do it. ” My wife makes a lot more than me and puts a burden on me at home. She feels like I’m not contributing as much. It makes me feel bad about myself.

[00:07:21] And we have a lot of money, but when we talk about doing something that is relatively affordable, given how much money we have, like going to Japan, it’s like yes and then no and then yes and then no because she’s constantly worrying about the future. I can say here’s what the numbers seem like they’ll look like when we’re 60, but it doesn’t really help with that feeling. And in the end I was like, “Let me just apply it to Ramit.”

[00:07:50] Ramit: So who was the one who brought up the idea of taking a trip there?

[00:07:54] Carrie: We’ve had this goal for probably four years now with the goal of having kids in mind, a last really big hurrah of we’re going to do something really indulgent and an extravagant trip that we don’t think we could do otherwise with a kid. Knock that off the bucket list before we really settle in.

[00:08:18] Ramit: Okay, sounds good. So what about the money part of it?

[00:08:21] Carrie: We save for a travel fund every month, but we celebrated our one-year wedding anniversary this summer, so we spent a decent portion of that, but mostly we had a really large expense this year of renovating our kitchen and had to take from our travel fund to be able to finish paying that. So left us in a position that we don’t have as much as we would’ve otherwise in the travel fund.

[00:08:44] Ramit: Can you afford the trip to Japan, or no?

[00:08:47] Carrie: Right now we don’t have the money to do it. May is when we’re shooting to go. I think we can by May.

[00:08:56] Ramit: Okay. You’re waiting a few months to go to Japan. What’s a big deal?

[00:09:00] Carrie: I think more balancing that cost with how we would use the money otherwise.

[00:09:08] Ramit: How much does this trip, by the way?

[00:09:10] Carrie: We’ve talked about budgeting 10 to $15,000 for this trip.

[00:09:14] Ramit: 15k. You’re going to save up for a few months for it. Sounds good to me. What’s the argument?

[00:09:19] Carrie: House expenses.

[00:09:20] Ramit: Should we spend 15k on something to renovate the house with, or should we take this trip to Japan? Is that the conversation?

[00:09:28] Carrie: Mm-hmm.

[00:09:29] Ramit: All right. So how do you go about making a decision like that?

[00:09:31] Carrie: I’m more of the worrier. How do we justify the trip to Japan when we need to make sure that our house is clean and safe and livable and healthy for us to be in? And those are expensive things to ensure.

[00:09:48] Ramit: And then, Dillon, what about you?

[00:09:50] Dillon: From my perspective, it’s like we both have a conversation where we both say we have enough money to go to Japan. And then I’ll bring it up a couple of months later, like, “Oh, what month should we go to Japan?” But she’ll say like, “Well, what about all the lead paint we have in our windows? Before we have a kid, we’re going to need to get our windows renovated.”

[00:10:10] It never occurred to me we need new windows to have a kid. But I want the house to be so that Carrie feels like this is a safe, good place to raise a kid. It feels like we could spend a minimal amount of money to make the house ready to have a kid. It doesn’t feel like this huge thing that will keep us from having fun now.

[00:10:28] Ramit: I’m struck by the way we’re talking about money right now. I’m a little surprised. The way that you’re talking about money, it’s like the two of you make 50k a year combined. We’re talking about a trip to Japan for 15k. So does it strike you as a little odd the way we’re all talking about money right now?

[00:10:44] Dillon: To me it’s constant worrying. She’s like, “I could lose my job, so we need essentially this gigantic emergency fund.” And a big part of that is like, I’m in the PhD. Carrie’s the primary earner, and so she feels it’s all on her. To me it feels like way more stress and anxiety about the future about relatively small things. I think we’d just be happier if we did feel like we made over 200k.

[00:11:15] Ramit: How would you characterize the way that each of you feels about money?

[00:11:19] Carrie: I’d say uncertain. It doesn’t feel guaranteed.

[00:11:22] Ramit: Okay. Uncertain. What else?

[00:11:24] Carrie: I feel very privileged about our financial situation. I know that I should feel confident.

[00:11:29] Ramit: Don’t tell me what you should feel. Tell me what you do feel.

[00:11:31] Carrie: Worried.

[00:11:33] Ramit: Okay.

[00:11:34] Carrie: Stressed, pressured.

[00:11:36] Ramit: Okay. That’s pretty interesting. So you feel uncertain, privileged, and worried. Okay. Same question for you, Dillon.

[00:11:47] Dillon: I feel generally relaxed towards money. I don’t like thinking about money, but I feel confident that I know how to think about money.

[00:11:57] Ramit: Oh, that’s quite interesting. Who manages the day-to-day money in the household? Is it one or both of you?

[00:12:05] Carrie: I’m definitely the check the Monarch app, see what’s what every day. I manage it more, setting up like our bill payment, credit card payments, making sure that there’s enough money where it needs to be to handle those expenses.

[00:12:25] Ramit: It’s not surprising, right? You see so far what’s going on. So Dillon’s like, I feel super relaxed. I’m not really involved in the day-to-day. Carrie goes, I am worried. I’m logging into my account every single day. What do you notice so far?

[00:12:42] Carrie: Yeah, I feel like it’s on me to make sure the system is still staying afloat from an operational standpoint, but then also from a cash flow standpoint.

[00:12:51] Dillon: I personally wish that you could feel more relaxed about money. I do appreciate the work that you do day-to-day to make sure everything is paid.

[00:13:02] Carrie: I like that we’ve got a balance of you’re more relaxed and that helps with my less relaxed, but I do wish that I too was more relaxed and I think also more grateful instead of worried and confident instead of worried. But the worrying just really comes naturally to me. The relaxing does not come naturally to me. So it feels like a comfortable place to be. That’s more of my safe space. I wouldn’t know what being relaxed or confident about money even looks like.

[00:13:40] Ramit: Can you imagine for me for a second, Carrie?

[00:13:42] Carrie: Well, probably it would feel happier. One of the things that I think I put on our conscious spending plan was wanting to do workout classes. And so while we were doing it, I started Googling Pilates classes in our town to see how much is that. And it was $48 for a 45-minute class. I’m like, “Well, that’s ridiculous.”

[00:14:08] But at the same time, I know that could be possible and could be comfortable from a financial standpoint if I chose that. And so I feel like being confident and relaxed about money to me looks like going to a 50-dollar Pilates class and feeling happy about it.

[00:14:33] Ramit: What would need to change for you in order for you to feel happy and relaxed to go to a 50-dollar Pilates class?

[00:14:42] Carrie: Honestly, when I think about it, my head goes right back to lead paint. I think about where that money would be spent otherwise.

[00:14:51] Ramit: Meaning if I spent $50 on myself, I’m not spending $50 that could be spent for lead paint, which is really for our unborn baby, which makes me what?

[00:15:05] Carrie: A bad future mom.

[00:15:07] Ramit: Yeah. Wow. This is the ultimate in-mom guilt. Someone who’s not even a mom feels guilty for future version of mom. She’s a guilty pre-mom, everybody. Give her a round of applause. So what do you think about that? It’s funny, right? But there’s something a bit dark about that.

[00:15:24] Carrie: Probably the reverse is also true that not choosing to invest in myself and my own happiness would also make me a bad future mom. To be a good mom in the future, I should focus on incorporating that into my life more now and have those habits built so that I can be a better parent in the future.

[00:15:47] Ramit: Sounds great. But spending 200, 300, 400 bucks a month on Pilates, you could be investing that. You could be renovating that. How do you justify that?

[00:16:04] Carrie: You tell me, man. I don’t know. I can’t rationalize that because I know it’s better to invest at the age of 29 than it is at the age of 35. And the more I do now, the better it is later.

[00:16:20] Ramit: You’re absolutely right. It is better to invest at 29 than 35. The difference can be somewhat large over 30 years. But when you get into the top 5%, top 2%, it can start to become unhealthy. Keep investing, just keep maxing it out. More is better. What is an example where doing a little more is good, but you do way more and it turns bad?

[00:16:50] Dillon: Exercise. It’s great for you. Exercise, even every day, probably good for you. But what about eight hours a day of exercise?

[00:16:57] Carrie: That’s excessive. That’s really going to deplete you.

[00:16:59] Ramit: Okay. Any connection to money?

[00:17:02] Carrie: Okay. Yes, it is depleting. It is draining.

[00:17:06] Ramit: And it’s not just depleting on you, right? Let’s look at Dillon. Dillon, this need to save almost everything, what effect does it have on you?

[00:17:14] Dillon: It’s tricky for me because I basically took this really low earning job of a PhD or locking in for six years to do this thing. So it’s like without Carrie, I’d be living on ramen. But at the same time, we know what makes us happy together is to do things like going to Japan. That’s really what strengthens our relationship and makes us feel really close to each other now.

[00:17:40] And I feel like Carrie puts so much pressure on herself to say, it’s all on me. What if we didn’t achieve these big goals? Having a kid because I did this selfish thing. And it’s like that for so many things. It’s exhausting. It drags me down, and it makes me feel guilty for doing the PhD. I know it’s not true, but I feel like if I made more money, Carrie’s stress and pressure would go away

[Narration]

[00:18:07] Ramit: I just want to cut in here because it’s great that Dillon thinks he can solve this problem by earning more money. He sees his wife stressing out about carrying the bulk of the financial burden for their lifestyle, and he believes that if he simply earns more, her stress and anxiety will go away.

[00:18:25] But I can tell you right now that probably wouldn’t make Carrie feel much better even if Dillon earned the bulk of their combined income. Why? Because Carrie is a classic worrier. She said so herself. And for the worrier, money conversations are always negative. They worry about running out of money.

[00:18:44] They lie awake at night, playing out worst-case scenarios, compulsively logging into their accounts every day, and eventually they’ll even worry about why they are worrying so much. They believe often that just this one thing will stop making me worry. But if you say, “Really?” They realize, “Oh, no, I’m still going to keep worrying.”

[00:19:06] Now imagine being married to a worrier. You’re seeing this playing out in real life with Dillon and Carrie. Every time money comes up, even when the topic is fun, like planning a dream vacation to Japan, the conversation naturally starts to center around fear. In this case, it’s fear around being a bad future mom because there’s lead paint on the windows. And no amount of Dillon reassuring her will assuage her fears. Candidly, it can become exhausting.

[00:19:34] I’ve noticed this pattern, and I developed specific advice for worriers and even for partners of worriers in my new book, Money for Couples. So if you want to learn more, go to iwt.com/moneyforcouples. We’ll get back to their money psychology after a quick break to support our sponsors.

[00:19:54] Now back to the show.

[Interview]

[00:19:56] Ramit: Let’s talk about this PhD program. So how did you decide to join this PhD program?

[00:20:02] Dillon: I had worked for four years in two jobs and I just wanted more from my career. I felt like even though I’m a high earning consultant, I’m basically using stuff I learned in seventh grade and I just wanted to do something more.

[00:20:15] Ramit: What was that conversation like between the two of you?

[00:20:17] Dillon: With PhD, Carrie was like, what about kids? What about buying a house? And I was like, “Even when I’m making this little stipend, our joint income will be high enough, plenty high enough to start a family and do those things.” And I remember that being the thing that convinced her, okay, this will work financially. I want him to achieve his dreams. So go for it.

[00:20:39] Ramit: Okay. And Carrie, did you feel you understood the ramifications of a PhD program?

[00:20:44] Carrie: I definitely did not, and this whole conversation, figuring out, reworking our finances in this shift was bad, was really bad. Because at every point in our relationship up until that point, we had always split everything 50-50. When we started dating, we had really similar income, everything just 50-50, but it was only up until the PhD that at that point we started to think about or talk about what would be a more equitable split of our finances. And that was not something I’d ever had to think about. I’ve never split something not 50-50 with anybody.

[00:21:33] Ramit: What did that feel like to have this proportionality conversation?

[00:21:38] Carrie: It didn’t feel fair to me. I got in a very big fight over it. We blew up and each just went separately on walks to go cool off and think about it. And I called my friends to ask what they do in their relationships when they’ve got a big discrepancy in income.

[00:22:06] Ramit: What did your friends tell you?

[00:22:08] Carrie: That they don’t split things 50-50.

[00:22:10] Ramit: Whoa. That’s surprising, right?

[00:22:13] Carrie: It just was different for me. It wasn’t something that I had encountered before, and I definitely was raised to be more stingy about money.

[00:22:24] Ramit: Who raised you that way?

[00:22:25] Carrie: My dad, I would say. He makes a lot of money but he’s very cheap.

[00:22:29] Ramit: Growing up, did you like that, or was it a source of embarrassment for you?

[00:22:34] Carrie: More so a source of stress, honestly. Kind of a yucky example, but child support. My parents divorced when I was two, and my dad’s income really kept going up from there. And there’s consistent times throughout my life that my parents were going back and forth, battling over my mom wanting more child support and my dad fighting that.

[00:23:04] Ramit: Are you realizing something right now as we’re talking about this?

[00:23:07] Carrie: Mm-hmm.

[00:23:08] Ramit: What?

[00:23:09] Carrie: It’s similar in that he was in a position to contribute more to make my life easier as a kid. But I’m sure he thought about that more of how it impacted him and wanting more for himself maybe. With his income going up, it only would make sense for him to pay a higher child support. With my income being higher, it makes sense for me to pay more.

[00:23:41] Ramit: Wow. That seems like a pretty big breakthrough just now. Is your dad still alive?

[00:23:47] Carrie: Mm-hmm.

[00:23:48] Ramit: Okay. Are you still in touch with him?

[00:23:49] Carrie: Mm-hmm.

[00:23:50] Ramit: Okay. What’s his financial situation now?

[00:23:53] Carrie: Pretty baller.

[00:23:54] Ramit: I don’t know how much they were disagreeing about, 2,000, 5,000. Who knows? Some amount. What percentage of his net worth do you think that is now?

[00:24:06] Carrie: It’s got to be pretty insignificant. He’s a Midwest baller. In the same year that we got married, which my dad and stepmom paid for, they also built a new garage at their lake house and bought a brand new pontoon boat.

[00:24:23] Ramit: First of all, you didn’t need to tell me they lived in the Midwest. Once you told me they have a lake house, okay, done. This is as Midwest as it gets.

[00:24:32] Dillon: That’s the definition of Midwest ballers, the lake house. 

[00:24:35] Ramit: So it’s quite interesting, the idea that we can often play so small and fight over these things that seem existential to us and yet if we zoom out, that argument over child support actually had close to no material effect on that person’s finances but probably would’ve helped you and your mom in a tremendous way back then.

[00:25:02] So I think the connection here is quite clear that we can spend all this time together arguing about X, Y, or Z– a trip to Japan is a great example, but if we fast forward 10, 20, 30 years, will that 15,000-dollar trip in your situation with your joint household income make a material difference at age 60?

[00:25:27] Carrie: It won’t.

[00:25:28] Ramit: Dillon, you agree?

[00:25:30] Dillon: Oh yeah.

[00:25:31] Ramit: Dillon’s like, “I’ve been trying to say that.”

[00:25:33] Dillon: Yeah.

[00:25:34] Ramit: But okay. That’s cool. This is a source of agreement. I haven’t yet heard about this trip to Japan.

[00:25:40] Carrie: That’s the thing. I know that it won’t, but that doesn’t keep me from worrying about it.

[00:25:47] Ramit: Oh, wow. I know the math, but I can’t change the way I feel. Is that what you’re saying?

[00:25:54] Carrie: Yeah.

[00:25:54] Ramit: Okay. Now we’re on solid ground. The way I feel is real, but it may not correlate to reality. And that’s okay. Our feelings are real. I’d never tell you to stop feeling a certain way. But maybe they don’t quite sync up with your actual financial situation. Okay, we’re getting somewhere now. Carrie, you’re highly paid in the tech industry. Dillon, you are a PhD student, not earning a particularly lot of money right now. How much of this tension, the way that both of you interact with your household income, a result of your career choices?

[00:26:29] Carrie: A significant portion is also just my peer anxiety, but I know that I also put the blame on our career choices.

[00:26:39] Dillon: Carrie never really internalized that it could be fair to split money unevenly. And she’ll bring up that I’m not contributing towards these goals that we have as a couple. I’m not contributing towards our next house. I’m not contributing towards being able with a kid, and it does feel like there’s a hidden layer of blame on my career that at least I have created in my head as existing.

[00:27:05] Ramit: Carrie, any truth to what Dillon is suggesting?

[00:27:09] Carrie: Yeah.

[00:27:10] Ramit: Tell me.

[00:27:11] Carrie: You asked about what did that conversation look like for Dillon deciding to do the PhD. I feel like that conversation wasn’t really a joint discussion on how are we going to rearrange things. How are we going to make this work? What’s this going to look like to make us both feel good about this decision? It was a proclamation of like, this is what I’m going to do, and this is what my income is going to be, and I can’t split things 50-50 anymore, so you got to meet me where I’m at.

[00:27:42] Ramit: And at the time it sounds like you begrudgingly agreed, but over time you have realized that didn’t feel good to me, and I don’t feel good right now. Am I capturing that correctly?

[00:27:55] Carrie: Yeah. I told Dillon that I wanted to feel more appreciated for carrying that load. I am cool with splitting things 80-20, and I do think that that puts proportionate burden on each of us. But I don’t feel like I had any input. I know I could have been more supportive at the time, but I don’t feel like there was gratitude for carrying the team, I guess.

[00:28:24] Dillon: To me, it didn’t feel like I just proclaimed it. I did push it. I didn’t lay off it because I was like, “If you don’t contribute more, I can’t live the life that we want to live together.” But it’s also interesting to hear you talk about the gratitude portion because I think that’s fair. Matter of fact about it, I was like, “This is what’s best for both of us.” It’s clear as day to me. I do hear that that gratitude piece was missing of this is what’s best for both of us, but your career is what makes that possible.

[00:28:57] Ramit: What do you say, Carrie, hearing that? What does it sound like to you?

[00:29:00] Carrie: Thank you for acknowledging that because I do feel like at the time the conversation really lacked an emotional lens. You could live on a PhD stipend and eat ramen and live in a smaller place and not go out for cocktails, but that’s not the life I want to live. That’s not what I signed up for. Hard pivot. I’m not doing that. I make a lot. I’m not going to live like I make 40k.

[00:29:26] So I’m not going to adjust my lifestyle to that of a PhD student. I came around, after talking to my friends and knowing that that’s a normal thing to do. And thinking about how our fights about money and splitting our finances was impacting our relationship, I did think about my dad and my mom at that time and actively chose I didn’t want to be like that and I didn’t want to feel cruel or controlling with money and came back to that conversation being onboard.

[00:30:01] Ramit: I really like hearing this conversation between the two of you. Of course, let’s know our numbers, but let’s actually talk about what we each need from this conversation. Whoa. That takes money to a whole new level. So I love both of you being candid about, you’re saying, Dillon, yeah, I probably was a little overly logical. I don’t think that I was doing a proclamation, but I probably could have spoken up a little bit more and appreciated you. Love that. Carrie, love that you’re saying, “I simply wanted to be acknowledged.” To me, that’s a beautiful conversation between the two of you.

[00:30:38] Dillon: Looking back at that conversation, I almost just cornered her. And it wasn’t because I was doing it on purpose. I was like, “This is better for both of us.” And I totally missed what she really needed. I really appreciate your goals that you have for us as a couple, us as a family, and the work that you put in and the money that you make to make that happen. And I really love your focus on that, and I love that about you.

[00:31:07] Carrie: Thanks.

[00:31:09] Ramit: The thing that was striking about that was that big smile on your face the whole time, Carrie. See, you cannot say enough nice things about your partner. And that was a perfect example. Great job. Great job to both of you. And not just for what you just did, but honestly for the conversations that you had in the past, even though they may have been a bit clunky, they still opened up the ability to have these conversations.

[00:31:34] So I have to commend you both. Okay. So you split the expenses proportionally, 80-20. All right. And that was at the beginning of your PhD program. How long have you been a PhD student, Dillon?

[00:31:51] Dillon: I’m starting my third year.

[00:31:53] Ramit: All right. Have you talked about what you expect to earn when you graduate?

[00:31:57] Dillon: Yeah, it comes up somewhat often.

[00:32:00] Ramit: How much ballpark?

[00:32:02] Dillon: It could be a wide range. I would say it’s probably minimum 150, maximum 500.

[00:32:08] Ramit: Okay, fine. So it’s a lot of money. And then combined with Carrie’s income, that’s a huge amount of money. All right. Do you both agree that your household income, if you were Carrie, to continue at the pace you’re at, that the two of you would have quite a large household income?

[00:32:26] Carrie: Definitely agree with that. I think the key part is, at the pace you’re at, my worrying tendency is, can I keep up this pace? Because it is stressful and it feels high pressure.

[00:32:43] Ramit: Because y’all are talking about having a baby next year or at some point in the near-term future and you’ve got this Japan thing you’ve discussed. You have some like lead paint or whatever. It sounds to me like we should just look at your numbers.

[Narration]

[00:32:58] Ramit: If you enjoy these videos, you want to be the first to know when a new one drops, make sure you hit that Subscribe button now. It really helps my team and me grow. Up next, we’ll open up their conscious spending plan when we get back from this quick break.

[00:33:12] Let’s get back to the conversation.

[Interview]

[00:33:13] Ramit: All right. Here we go. Carrie, read off the word in bold and then the full number next to it, please.

[00:33:21] Carrie: Assets, 415,000. Investments, 341,000. Savings, 23,000. Debt, 353,000.

[00:33:35] Ramit: Total net worth?

[00:33:35] Carrie: 426,000.

[00:33:38] Ramit: What do you all think about those numbers?

[00:33:39] Dillon: It feels really good to me.

[00:33:41] Ramit: Carrie?

[00:33:41] Carrie: That feels like monopoly money because it’s intangible and it’s far away. Our assets are what we think the value of our house is and our investments are whatever the market says right now.

[00:33:57] Ramit: Wow. No wonder you can’t feel good about money. The money you have, which is considerable, is not real, at least for today. It’s meant for tomorrow. Who even knows if it’s real because it’s just what the market says? 426k. Life sucks. Let’s just talk about the income. Dillon, just read me off your combined annual income.

[00:34:16] Dillon: Our combined annual income is $237,000.

[00:34:21] Ramit: $237,000, or roughly, let’s just say 20k a month gross. What do y’all think about that?

[00:34:28] Carrie: I don’t ever think about what that is on a monthly basis. At the end of the day in my bank account is like, I don’t know, $6,500 a month. So to me, I make $6,500 a month.

[00:34:43] Ramit: Got you. And when you say in my bank account, which bank account specifically?

[00:34:49] Carrie: Our joint checking account.

[00:34:51] Ramit: It always comes back to checking. The way people feel about their money, for many people, is almost entirely determined by what is in their checking account. Literally, what’s in my checking account tells me how to feel, tells me if I fall asleep crying at night, tells me if I think we can go on vacation. That’s it. Can you see the problem with that?

[00:35:11] Carrie: It’s not the whole picture.

[00:35:13] Ramit: Exactly. It’s one layer. It’s like having a Thanksgiving dinner and you’re only saying if it’s good or not based on the mashed potatoes. That doesn’t tell you anything. You got to look at the whole picture. And the whole picture is more complex than a number that’s in your checking and comes and goes.

[00:35:30] For me, I look at this, I look at the net worth section. All of that is real. All of it. In fact, I even see what your $341,000 in investments turns into by the time you retire. So to me, that’s real. You just need a little time. Then I look at your income, that’s real, but you know what’s the most real of all is the next number. Let’s take a look. What is this fixed cost number here?

[00:35:57] Dillon: Our combined annual fixed costs come to 33%.

[00:36:02] Ramit: First off, amazing job managing your costs. 33%, one of the lowest fixed cost numbers that I’ve seen. You’re spending 800 bucks a month on groceries. Okay, fine. Clothes are at 200 bucks a month. Fine. Home maintenance is at 300 bucks a month. Dog, 75. How much time and energy do you spend worrying about your fixed costs?

[00:36:25] Dillon: I think that answer depends on which of us you ask. For me, not very much.

[00:36:30] Carrie: I don’t think the fixed costs too much. I maybe check on the grocery spend a little bit, but even that in our conscious spending plan, I’m like, let’s go a little wild. Let’s bump that up $100, get some fancy groceries. But no, there’s not anything that I think that we could make any less expensive. So I’m content with that.

[00:36:53] Dillon: I don’t know if that answer reflects my experience about how much you worry about our fixed costs. You’re always worrying about, oh, what if the car breaks down. I feel like you mentioned that every other time we drive.

[00:37:07] Carrie: I think we should be prepared for the day when our 2006 Kia Sorento at the 137,000 miles on it craps out.

[00:37:17] Ramit: What just happened right there? Do you guys catch that?

[00:37:20] Dillon: I accused Carrie of worrying too much, and then she was like, “No, I should worry about this.”

[00:37:24] Ramit: Pretty much, with one additional step. So Carrie was very casual about the fixed cost. Oh, I don’t really worry about it. In fact, I think I want to spend more on groceries. And then Dillon goes, hold on a second. That’s not my experience. You worry about the car every other time we go in it. And then, Carrie, what was your response?

[00:37:43] Carrie: That my worrying is justified.

[00:37:46] Ramit: Yeah. So which is it? Do you worry about your fixed costs or not?

[00:37:52] Carrie: I’m very comfortable with where they are right now, but there’s areas of risk.

[00:37:57] Ramit: Which one?

[00:37:58] Carrie: The car. Just the car.

[00:37:59] Ramit: Where’s the risk?

[00:38:00] Carrie: Having liquid funds to get a new car.

[00:38:04] Ramit: Okay. How much does this say you have in savings?

[00:38:06] Carrie: 23,000.

[00:38:08] Ramit: Relative to your investments, that’s not a lot. Your fixed cost being $5,000 a month, you have roughly four months of an emergency fund. So I agree. If you are concerned about your car breaking down, you may not have enough. However, as I keep scrolling down, I start to see more information. Let’s take a look. Investments, 28% of net. That’s a very high number. I love that. That’s a great number for a young high-income couple. Look at a smile on Carrie’s face. She’s like, “I did it.”

[00:38:42] Carrie: Yes. I love that validation. I live for that.

[00:38:45] Ramit: All right. I am impressed. This is great. This is my approach when I was young. I could live in a very affordable place. I didn’t need to go to super fancy places. And I was like, let me just take all this money and invest it, grow that compound interest. And it was great. I had many years where I really invested aggressively.

[00:39:08] All right. So you’re both living that, the two of you investing $51,000 a year. Then I keep going down. I see your savings are at 11%. You save about 1,200 bucks a month for vacations, 250 bucks a month for emergency fund, and then miscellaneous savings, a very precise $306 per month. Home improvement is $2,500 a month. What’s that?

[00:39:35] Carrie: That’s an average of all of the money that we’ve spent on our house in the time that we’ve owned it for renovations, which just stopped.

[00:39:47] Ramit: What are you going to do with the extra money?

[00:39:49] Dillon: That is the question. And honestly, the whole discrepancy between our current spending plan and our conscious spending plan is, hey, we have 2,500 extra dollars a month. Let’s just use that on all those things that bring us joy.

[00:40:02] Ramit: Okay, I like that. I support it. Travel is 500 bucks a month. Gifts, eating out bars at 1,000 bucks a month, and then shopping 400 bucks a month. Fine. 27%. What do I care? It’s 20 to 35%. You’re right down the middle. Everything looks good.

[Narration]

[00:40:19] Ramit: For the last 30 minutes we’ve been dancing around this question of whether they can afford a trip to Japan. Are you seeing these numbers? With a little bit of planning, they can absolutely go to Japan. The numbers are not holding them back, but even if I tell them that right now, it won’t make a difference.

[00:40:37] I met a lot of people as I built my business that want external validation. They want me to say, good job. Bravo. You did it. But that wouldn’t work for Carrie, even though she says she lives for validation. Carrie is so trapped in worry and fear that my validation won’t make any difference at all. Maybe temporarily like eating a candy bar, but it won’t change anything substantive.

[00:41:02] The challenge here and the real solution is to get Carrie to shift her perspective from being problem-oriented, to being solution-oriented. All of us can identify problems. In fact, some people fixate on that. They actually thrive on identifying all the things that can go wrong. But a simple shift to focusing on acknowledging problems, but also talking about what can go right, what are our solutions, that can make a huge difference.

[00:41:32] And she’s got to be actively involved in the solution if she’s going to be able to shift that mindset. That’s why I’m not just giving them the answer. If I did, they would be right back to square one as soon as this call ended. Listen now as I challenge them to think about adjusting some of their key numbers to make this possible.

[Interview]

[00:41:50] Ramit: You can snap your fingers and afford this. There’s literally multiple ways you could do it. Go ahead. Each of you name one and just go back and forth.

[00:41:59] Dillon: We could take the home improvement spending of $2,500 a month and save that for six months.

[00:42:07] Ramit: Okay. That’s one way. I agree. What’s next?

[00:42:10] Carrie: Sell some stocks.

[00:42:11] Ramit: Okay, great.

[00:42:14] Dillon: Take some money that we invest each month, contribute that to our vacation.

[00:42:18] Ramit: Yes. What’s next?

[00:42:20] Carrie: We could eat out less.

[00:42:22] Ramit: Yes, that’s $13,000 a year. Okay.

[00:42:26] Carrie: Shopping.

[00:42:27] Dillon: We can’t fully stop shopping.

[00:42:28] Ramit: Nobody said you have to fully stop. You could cut it down by 20% here. You could cut 20% off there. So the point is, what was your conclusion from us going through the CSP and finding 10 different ways you could pay for a trip to Japan?

[00:42:40] Carrie: There’s areas that we can cut down to be able to afford the trip more easily. But those just seem harder than changing investment allocations or selling stocks.

[00:42:53] Ramit: Well, you could do that too. You could change your investment allocation or your investment contribution by 2% and you’re good.

[00:43:00] Carrie: That’s where it’s hard to prioritize though. How do I choose Japan over fully doing my 401K?

[00:43:06] Ramit: You tell me. How do I choose it?

[00:43:08] Carrie: By looking at the numbers and knowing that lowering it is still going to be okay.

[00:43:15] Ramit: Yeah, you could do that. You have done that, I’m sure.

[00:43:19] Carrie: No, I’ve only looked at ways to increase.

[00:43:21] Ramit: And as a result, what is your general philosophy with money?

[00:43:28] Carrie: Keep those fixed costs low and invest as much as I can. My mom was never really financially literate, and that definitely came back to bite her in different times that now I know she’s not in a good place for retirement. And as a kid, there were a few times that she borrowed money from me to be able to pay some bills. I definitely think that’s where the savings comes from. That’s a really stressful position to be in as a child. And I definitely think I learned from that. You got to save because you don’t know what could come.

[00:44:07] Ramit: So the conclusion from seeing your mom is, that looks really stressful. I don’t ever want to be in that position, so I’m going to save a lot of money.

[00:44:16] Carrie: Yeah.

[00:44:17] Ramit: And how much money do you need to save to feel safe?

[00:44:20] Carrie: That’s where it’s just as much as you can. I think something like 5 million in retirement, but I’ve also definitely done those retirement calculators and been like, hmm, now I can only feel comfortable if it’s seven.

[00:44:35] Ramit: You know those dog races where they put the hot dog in front of the dog and they chase it? The funny thing is, it’s like you are chasing something that you yourself put the hot dog in front of you. You’re just holding it out in front of yourself and then running after it. And if you get too close, what do you do?

[00:44:54] Carrie: Push it further away.

[00:44:56] Ramit: Exactly? Oh, 5 million? That’s not enough. 7 million. Ooh, I feel so good because I have not achieved it yet. And therefore, I take comfort in not catching the hot dog. It’s an underdog identity. And an underdog identity can be really constructive. It can be positive. It makes you work harder. You achieve more. You put the time in. I love that.

[00:45:23] But being an underdog always is also not that fun. Underdogs don’t get to take a nice trip. Underdogs always say to themselves, we can’t afford Japan. Maybe if X and Y and Z, then we do it. The two are actually just identical. Japan is just a microcosm of $7 million 30 years from now. They’re exactly the same.

[Narration]

[00:45:47] Ramit: I just want to jump in here because this might be frustrating to listen to. I know it’s frustrating for me. On paper, they have a healthy income. Their fixed costs are low. They’re investing aggressively. Why are we here? Why are we talking about this? And I’ll tell you why. Because many of us believe that if we just had a little bit more money, we would be fine.

[00:46:07] We’d have no financial problems. And many of the couples that I speak to on this podcast are in that situation where they have earned more low fixed costs, etc., but they still worry. That’s one of the primary points of the podcast is that changing your financial situation alone will not necessarily change the way you feel about it.

[00:46:28] Now, let’s talk about what I’m going to do about it. Yes, they are creating unnecessary problems. The question is why. And if you’re wondering why I’m not freaking out, yelling at them for doing this, there’s a reason. It won’t work. A lot of the commenters online want me to sit here and go, “This is stupid. You should change it immediately. It’s so obvious.”

[00:46:48] Well, it’s not obvious for the couple who’s here. Worrying is really the only way that Carrie knows how to relate to money. And when we see the full picture, we can understand that it started when she was a kid. She watched her own mom worry about money when her parents divorce. It’s deeply rooted in her, and changing that mindset, and certainly behavior, takes time.

[00:47:07] The thing is she obviously gets something out of worrying or else she wouldn’t do it. Maybe it’s a sense of control. Maybe it’s something else. The other thing we have to acknowledge here is that her partner is suffering, and I don’t think she realizes the true impact that this is having on her marriage.

[00:47:23] If I can get her to identify what drives her need to worry and also help her acknowledge the massive strain that it’s putting on Dillon and their marriage, we can start to make changes. We’ll dive back in after this short break.

[00:47:37] Welcome back. Let’s keep going.

[Interview]

[00:47:39] Ramit: So here’s the thing. I don’t like to worry about money. Why would I worry about money? Carrie, what do you think?

[00:47:45] Carrie: I feel like it’s just so easy to come up with situations where there’s not going to be enough. I think I tend to blow things out of proportion or leap to a bigger problem.

[00:47:58] Ramit: You find comfort in worrying about what could go wrong?

[00:48:01] Carrie: That’s how I’m wired. I find comfort in looking down the road a little bit and seeing potential problems. It’s not pleasant. It’s not fun. It feels like preparedness.

[00:48:13] Ramit: What are the costs of thinking about all the things that can go wrong constantly?

[00:48:16] Carrie: A lot of gray hairs. I think it definitely bums Dillon out too. I can see that it disappoints him or frustrates him, because it really derails conversation. So whatever word it is that we’re trying to get done together and decide on together just gets sidetracked.

[00:48:38] Ramit: By?

[00:48:39] Carrie: My anxiety.

[00:48:40] Ramit: Is this anxiety present in other parts of life for you?

[00:48:43] Carrie: Mm-hmm, mm-hmm.

[00:48:45] Ramit: Have you addressed it with a counselor, therapist, etc.?

[00:48:48] Carrie: We are working on it.

[00:48:50] Ramit: That’s awesome. That’s the best answer I could hope for. All right. I guess I’m confused because your CSP looks pretty good. There’s some things you can change here and there, but you’re investing $50,000 a year. You’re all going to be wealthy. You know that, right? Dillon’s nodding his head yes. Carrie?

[00:49:07] Carrie: Probably.

[00:49:09] Ramit: Ah, [Bleep]. We have to do this right now.

[00:49:12] Carrie: I get compounding interest. I look at the little graph. I know you’d give it 40 years and–

[00:49:20] Dillon: Gets too well, that’s why she doesn’t go to Pilates. If I go to Pilates, that’s $100 a month. I can invest that now. Now is the good time to invest it so that I can, I don’t know, have seven times that when I retire.

[00:49:34] Ramit: Do you see the logical conclusion of the frugality bros? Don’t go to Pilates. Don’t get a cheeseburger from McDonald’s. Don’t, don’t, don’t. And then you end up sitting in your room like this and going, I love compound interest. What’s the point of that?

[00:49:52] Carrie: There’s room for improvement.

[00:49:54] Ramit: Honestly, the thing that actually makes me the most sad is that you are playing so small, so small. $15,000 vacation to Japan? That’s it? For you, you could knock this out. In literally seven days from now, you could be there.

[00:50:12] Carrie: No, it doesn’t feel that way.

[00:50:15] Ramit: Well, your feelings may not actually line up with reality. What do you think about that?

[00:50:20] Carrie: I think that’s probably accurate. I know that there’s money there. My head just keeps going to insulation replacement.

[00:50:28] Ramit: Maybe you want insulation. Maybe you need insulation, but I don’t think that’s stopping you from Japan. It’s been four years. Do you want to go to Japan?

[00:50:38] Carrie: Yeah.

[00:50:39] Ramit: And what kind of person goes to Japan when they own a house and they bring in 80% of the household income?

[00:50:48] Carrie: It’s pretty bougie. I think I’m just going to need to look away.

[00:50:52] Ramit: That’s not a healthy relationship with money. Healthy relationship says, I’m going to understand the numbers. I’m going to talk to my partner. We’re going to talk about what’s our  Rich Life vision. What are our money dials? What’s important? What’s not? And we’re going to both do this openly. How do you think my wife and I talk about our travels?

[00:51:10] Carrie: I’m sure easily because [Inaudible] substantially higher net worth.

[00:51:14] Ramit: Fine. But again, I’m talking to somebody, both of you who have a considerable net worth. So proportionally, maybe it’s a little different, but let’s assume that it’s ballpark the same.

[00:51:28] Dillon: You chose, we like travel. We want to prioritize travel. We will put more into travel. We’ll put less into other things, but we know it will all work out. We’ll be able to retire, achieve our life goals, and we get to have fun now and have this really valuable experience that brings us closer together.

[00:51:49] Ramit: When do we talk about the trip we’re going to take?

[00:51:51] Carrie: Probably a few months in advance.

[00:51:54] Ramit: We map it out for the whole year. Where do we want to go, when? We’re not sure about where we want to go for this time, but let’s put a block and we’ll going back and forth with ideas. We’re talking about it. We’re sending pictures. We’re going, “Oh, we should go to this place. Oh, I added that to the Japan bookmarks.” What are we doing when we’re doing that?

[00:52:14] Carrie: You’re working together to build that vision of what it is that you want to do and building that excitement.

[00:52:20] Ramit: Yes. And because we’ve already handled the parts about what’s our investment rate, what’s our savings rate, is the money automatically being put in this account or that, that’s all handled. So we don’t need to talk about the money anymore, basically at all. It’s all about the vision, and this is the most fun part.

[00:52:39] In fact, we get to have our vacation three times. One is in the months leading up to it, where we’re sending each other these things and book– oh, should we do that? Oh, I didn’t get the reservation there. That’s number one. Number two in it, when we’re there. We’re walking around. We’re having a blast. So cool. And then number three, when we post pictures about it again. 1, 2, 3 times, we get to live this. And what do you think that that does for our relationship?

[00:53:06] Carrie: I’m sure that brings you closer.

[00:53:08] Ramit: Yeah. So what do you make of that as it relates to your ability to take a trip to Japan?

[00:53:15] Carrie: My mentality around it doesn’t bring us closer. It makes it more stressful and challenging instead of being something that we’re jointly excited for.

[00:53:26] Ramit: Yeah, that’s right. It’s actually become this huge wedge between the two of you for the last four years. You’re in a privileged situation with so much money. What a tragedy to live a smaller life than you have to?

[00:53:38] We’re not talking about buying a Rolls Royce. We’re talking about a trip you’ve been talking about for four years. And if you don’t want to spend 15, spend 10. Fine. The price is not the point. The point is, what is your  Rich Life vision and how can you start to live it today and then live an even richer vision tomorrow?

[00:53:54] Dillon: We decided, let’s do Japan. That’s a big part of our  Rich Life. And we know that we can make it happen financially. That’s what I feel like we both want. For me, I’m not going to be like, oh, this is the hotel I want to stay at. What do you think about this, Carrie? If we can’t even commit to actually doing the trip, I’m not the kind of person that likes to plan something that might not happen.

[00:54:18] Ramit: I don’t think Japan is the real issue here. If you want to go to Japan, you can go to Japan. You can go to Japan tomorrow. It’s not a financial decision whatsoever. It’s, do the two of you want to do it, and do you prioritize it? Right now you don’t. Or at least one of you does.

[Narration]

[00:54:34] Ramit: Okay. Now I’m really frustrated because we’ve been talking in circles about this trip to Japan. They can afford the trip. There’s no question about that. You know it. I know it. And most importantly, they know it. What do you notice when you listen to them talking about planning this trip? I notice that it is entirely centered around logistics. Can we afford it? Can we not? Where’s the money coming from to pay for it? What about investment? Should it come from spending less on shopping?

[00:55:01] It’s clear that there is no joy in these conversations. There’s no shared vision for planning this dream trip. And this logistics driven conversation is just a symptom of a much deeper issue that Dillon actually included in his application. I want to bring them back to the original reason they are here. Listen, as I remind him why he wanted to talk to me. You may be shocked to hear what he wrote.

[Interview]

[00:55:28] Ramit: I guess what I’m hearing today is a little bit at odds with what I received in the application. In the application, Dillon, you wrote, “My wife does not respect me. She makes four to five times more than me and believes I should do all the dishes. Calls herself the breadwinner and me the housewife.” Is that accurate?

[00:55:47] Dillon: Yeah, that’s accurate.

[00:55:49] Ramit: What do you make of that, Carrie? It’s pretty striking.

[00:55:52] Carrie: When we’ve had tense conversations around money or housework, yeah, I have said that I’m the breadwinner and he’s my housewife.

[00:56:07] Ramit: And what does that mean, housewife? What’s the implication?

[00:56:10] Carrie: Dillon does most of the cooking and cleaning.

[00:56:12] Ramit: When you call him a housewife, what are you really saying?

[00:56:15] Carrie: It’s a put down. I guess I feel attacked in some way. It’s defensive.

[00:56:21] Dillon: Whenever she’s feeling like we don’t have enough money, which as you gathered is often, I’m the blame for that. If I were to just take my lucrative skillset and make money for us right now, then we could live comfortably, achieve all of our goals.

[00:56:39] Ramit: Carrie, is that pretty accurate?

[00:56:40] Carrie: Yeah. It doesn’t sound good. It’s unkind. It’s not supportive. It’s also just untrue. We can reach the goals that we have with just where we are today.

[00:56:53] Ramit: I think it is unkind. I’m troubled to hear it. I’m alarmed. Calling someone a housewife, especially a woman calling a man a housewife, which in and of itself is perplexing because maybe one day you might become a housewife, the implication being there’s something wrong with it is weird to me.

[00:57:14] I think it’s offensive to a lot of people, certainly to the person you’re calling that, and then you’re right. It’s untrue. It’s untrue that you just need him to earn more money and then you can all do the things you want to do. You make more than enough money to do anything you two want to do right now.

[00:57:34] May not feel that way, but I’m looking at the same numbers as you. You have so much extra money, but you don’t see it because you view the world through a set of lenses of scarcity. In fact, the lenses are so thick, it’s almost like you have a ghost in front of you. I talk about the ghost in my book. Some people have a ghost around needing to pay off debt. I have to do anything to pay my debt off. And they make often very irrational, painful decisions.

[00:58:02] In your case, it’s pure scarcity and it’s almost like a black hole. There’s no end to it because you don’t know how much is enough. You just want more and you’re actually punishing your partner because he is getting a PhD in computer science. He literally just needs some time and he’s going to be earning a lot of money anyway. And even if he didn’t, your household income is really high.

[00:58:23] Carrie: I got to lay off, not put pressure on Dillon. Where he is and what he’s doing is exactly what he should be doing right now. And then it’s not to our detriment. No matter what, we’re good right now. We’re good, Dillon. I support you. I support your PhD. I want you to enjoy it and make the most of the experience and get as much of it from it as you can and not feel that pressure from me.

[00:58:53] Dillon: That pressure is hard because I’ll be waking up at 3:00 AM thinking about my research, what am I doing? What am I getting from this? Why am I doing this? And in the meantime, also it’s like a detriment to our household income. And it’s a time when what I need is support. A PhD is very hard, and it requires total comfort with your position to be able to achieve that insight and creativity.

[00:59:24] It requires periods of long time, of consecutive work where you might miss a meal or skip a chore or something. And I always want to not be a burden. And so I try to make sure everything’s taken care of and try to do as much as I can to support you and not be a burden because I already feel like a burden through doing this.

[00:59:55] So if I could just accept we’re in a good position financially together and I can put that to side and then get more out of the PhD.

[01:00:07] Ramit: Dillon, what do you need right now?

[01:00:08] Dillon: I need you to understand that I’m pushing myself in a really hard way and simultaneously I feel like burden. I feel like I’m firing on all cylinders, this pressure, which partially is from you, partially is from myself, just keeping me from reaching my potential, which is super important to me, more important than making more money.

[01:00:34] It feels like I have to validate it to you that this thing will make money, that it’s an investment, but it’s not really how I feel about it. I want to apply my brain to these hard, unsolved problems and make a difference. And then I know I’m not going to be like a starving artist doing it, but that’s secondary.

[01:00:56] If Ramit’s talking about all the different important things to people, what can you spend on, what do you really want to prioritize? For me, it’s like doing a job that really fulfills me over some business job where I would make more money and be doing seventh grade math.

[01:01:14] Carrie: I think that’s also where part of my money psychology is to the detriment of that.

[01:01:19] Ramit: Right now you are on an escalator that only takes you to one place, earning more money. You’ll do it. You’ll win at that. You’ll be validated in the way that you will see a higher income, and you and Dillon will become increasingly disjointed because that’s not what he’s trying to do. And as a couple, that creates a massive wedge. Just to put it a different way, what if we were having this conversation and the genders were flipped?

[01:01:46] Carrie: It sounds pretty [Bleep] up. If it were reversed, no, I would not feel good about that.

[01:01:52] Ramit: You would be in a very bad place. What do you think your friends would say if you texted them and told them that? Those conversations would not be good. So I think it’s really important for us to acknowledge gender in here. I think it’s important for us to acknowledge the way that the two of you are relating to money. It’s not healthy. That’s why I’m glad you’re in couples therapy.

[01:02:15] Dillon: All this stuff is really ingrained, and I know she doesn’t want to feel anxious about money or everything else all the time, but she doesn’t know how to get out, kind of. And I can’t really be the one to change her perspective. And she’s right. If she loses her job and her car breaks down and the stock market crashes, her company goes bankrupt, we would probably be completely screwed. But you can’t live in fear of that stuff happening

[01:02:44] Ramit: Dillon, it’s interesting you say you can’t live that way, but actually Carrie’s been living that way for a long time. Right, Carrie? And actually, you found a way to regard it as being planful, as being thoughtful, as being forward looking. How many years have you felt this way about money, that things can go wrong and I need to always be prepared?

[01:03:04] Carrie: I’ve always felt that way about money. I have to actively work to not feel that way.

[01:03:11] Ramit: And who would you be if you were not worried about money?

[01:03:15] Carrie: I’d be unprepared. I’d be reactive instead of proactive.

[01:03:19] Ramit: I am not worried about money, so describe who I am.

[01:03:24] Carrie: You’re proactive and prepared and you’ve made a plan and you know that things are going where they need to go for you to be able to follow that plan.

[01:03:35] Ramit: How can I do that if I’m not worried about money?

[01:03:38] Carrie: Much lower levels of anxiety. Level of comfort.

[01:03:42] Ramit: I think you find comfort in worrying. I think it gives you purpose. I think it gives you meaning. I think it connects where you grew up with the tumultuous upbringing and the parental models that you had. I also think that you probably get a positive sensation out of self-deprivation.

[01:04:01] Carrie: I think that’s probably true.

[01:04:02] Ramit: I like to save. I like to invest. I have very aggressive goals and numbers and stuff like that, but I have also developed a love of leisure, of travel, of– like today we just went for a walk and grabbed a coffee together in the middle of the day, 20 minutes. We loved it. That, to us, gives us an irrational sense of joy just to be able to do that. I don’t think you’ve developed a joy.

[01:04:33] I don’t think you’ve allowed yourself to. The thing is, you have a partner, and he’s over here telling you, this isn’t working for me. He says, “My wife does not respect me.” That’s what he wrote. And you’re all pretty young, no kids yet. Imagine you do have kids.

[01:04:51] Imagine you get older. Imagine this dynamic calcifies. You’re going to have millions of dollars and actually not have the foundation of a healthy relationship at all. What’s the point? I’d rather make half the money and have a healthier relationship with my partner. Are you both agreeing with me?

[01:05:07] Carrie: Yeah.

[01:05:08] Dillon: I agree.

[01:05:09] Ramit: Okay. So then how are you going to do it?

[01:05:11] Dillon: I don’t feel like this will fix everything, but showing you gratitude, appreciation, and if you are in that situation where you could never feel good about what you have or what you achieved, I’m super proud of you. I can be there to help you feel good about that stuff. And in terms of life planning, kids planning, I feel like we’ve been trying and trying to make our relationship dynamic healthier to where I feel comfortable having kids.

[01:05:41] Ramit: Dillon, have you told her exactly what you would need in order to feel ready to have kids?

[01:05:47] Dillon: I want to feel like we are a couple that can have fun together, but also take care of business and we’re not drowning in our chores. We have a really functional good life without kids. So that way, when we add kids, we’re not starting from dysfunction.

[01:06:00] Carrie: I totally agree on all the fronts. And I don’t think I’ve reflected enough on how my mentality around work and money influences all the time outside of that of having more energy and mental bandwidth for quality time and doing things that bring us more joy and pursuing that instead of pursuing the next promotion.

[01:06:29] Ramit: Yeah, I agree. I think that’s smart. Where are the KPIs for your relationship? We’re the OKRs. I bet you have them at work. I bet you have multiple meetings lined up. Where are the equivalent meetings for your relationship? Where’s the biweekly or monthly money meeting that you have? Where’s the two-date coffee meetings that you’re going to have on Tuesday and Thursday with each other before work just because you can? That stuff matters. It doesn’t even cost much money. But it’s like, oh my God, I’m prioritizing work. How am I going to prioritize us?

[01:07:04] Dillon: We try to have a weekly meeting.

[01:07:06] Ramit: What do you talk about in this meeting?

[01:07:08] Dillon: Touching base about your feelings, just checking in. And it’s also logistical checking base, like what do we need to get done this week? What are your goals? What are my goals? How can we make sure we achieve them?

[01:07:19] Ramit: Oh, I love this. Clearly, you’ve gone to therapy. That’s a great agenda. I love that. Okay, cool. So you have the meeting and happens sometimes. Fine. What else? Fun stuff?

[01:07:29] Carrie: We try to do treat day in the morning.

[01:07:32] Ramit: What’s that?

[01:07:32] Carrie: Within a 20-minute walk of our house, we have a coffee shop and a bagel shop. And once a week, usually back half of the week, you got to make it through to Friday, go and get a treat.

[01:07:46] Ramit: Okay, I love that. What else?

[01:07:49] Dillon: Sometimes we hike or we walk to the farmer’s market together.

[01:07:52] Ramit: I love everything you’re saying. There’s no checkbox. You don’t have to impress me at how much you’re doing together. I think it’s great. I love the energy that I’m hearing from the two of you. Okay. So do you all have a vision for your money?

[01:08:03] Dillon: We both feel like we want everything.

[01:08:06] Ramit: I don’t need to hear the rest. That’s a no. Carrie, do you have a vision for your money besides save more and invest more?

[01:08:13] Carrie: No.

[01:08:14] Ramit: Okay, great. That’s all I need to hear, is a yes or no question. So you all understand that there are several issues at play here. Obviously, Carrie, your anxiety is, in my opinion, the number one thing that you have to focus on. He can’t solve that for you. That is a you issue, and it’s actually the number one. If you can’t learn how to properly manage that with the help of a therapist, then this issue will simply persist in 500 different permutations.

[01:08:44] That’s it. And from the boundary I’ve heard, maybe y’all won’t have kids because of that. What a waste. What a tragedy to let this ghost get in the way of what could otherwise be a really, really successful relationship. So that’s number one. If I were you, I would be prioritizing that heavily. That would be my number one priority, number one, even ahead of work.

[01:09:04] Next, we have the fact that, you two don’t really have a vision of how you want your money to spend. And as a result, Carrie’s anxiety has basically become the defacto vision, which is let’s just invest and save a [Bleep] of money. That’s why you’re arguing over taking a random trip for four years.

[01:09:22] If you had a vision, you wouldn’t even have to talk about it. It would be decided already. It would automatically be saved for, and you would know the exact month and year you’re going to take the trip. Boom. So you want to do a vision right now? What’s your  Rich Life vision?

[01:09:35] Dillon: I want to do a nice meal together, a $250 meal, just say every month.

[01:09:42] Carrie: Definitely the housekeepers are not going away. Now that started, there’s no going back.

[01:09:46] Ramit: Great. How often do they come?

[01:09:48] Carrie: Every other week.

[01:09:49] Ramit: Great. All right. So you want to have housekeepers every other week. Fantastic. Dillon?

[01:09:54] Dillon: I want to take a big trip once a year. Doesn’t have to be that expensive, but a trip that’s just us.

[01:09:59] Carrie: I want to go to Pilates classes once a week.

[01:10:02] Dillon: I want to be able to put my head down and work four times a week. Not having to cook and clean every single day.

[01:10:13] Carrie: I want to pay to get our dog groomed.

[01:10:15] Ramit: Does anybody think any of these are impossible?

[01:10:19] Carrie: Oh, no.

[01:10:22] Ramit: I feel like you could do all these right now. So let’s do it. All right. Tell me how you want to make this happen. I’m putting your CSP up on screen. Tell me. How do you want to do it?

[01:10:31] Dillon: To me, the obvious thing is lowering our investments.

[01:10:35] Ramit: Carrie, are you cool with lowering your investments?

[01:10:37] Carrie: Investments make it feel like I’ve got some target to hit. I know the maximum that I can save for 401K in a year, and so I do that, and then that feels like an achievement.

[01:10:49] Ramit: In a way it’s very helpful to know that what does it take to succeed? Tell me and then I’m going to succeed. But when you get into the top 5%, top 2%, it can start to become unhealthy. Keep investing. Just keep maxing it out. More is better. What kind of problems do you think that that causes in the relationship?

[01:11:11] Carrie: It puts artificial constraints on us. It’s just my own standards that are putting us in that box.

[01:11:22] Ramit: Yes. Arbitrarily, you chose to invest 28% of net and now you feel stuck, but it’s totally your own creation. The thing is, when you’re really designing your  Rich Life, and especially when you’re designing it with two people, there is an element of knowing the numbers and executing correctly, but there’s also this beautiful element of creativity.

[01:11:44] What do we want our  Rich Life to be? Do we want to invest 27%, or would it be better for us to invest 20% and take that extra 7% and allocate it over here? It’s an art as well as a science. So I’m going to show you how to do both right now. This is exactly how I think about my own investments.

[01:12:02] So I go over to a compound interest calculator. I’m going to plug your numbers in. You currently have $341,000 invested. You’re investing $51,000 a year. Years to grow, how many years should we say before retirement?

[01:12:15] Dillon: 30, 35.

[01:12:16] Ramit: All right. Let’s say 30, and then I’ll show you what happens at 35. It’s quite remarkable. So how much do you think you’re going to have right now? Carrie, you know the number.

[01:12:23] Carrie: I think it is 5 million.

[01:12:24] Ramit: What does that number say right there? Carrie, read it out loud.

[01:12:26] Carrie: Hey, we’ve hit my golden standard of 7.7 million.

[01:12:32] Ramit: What does this tell you right here just looking at these numbers?

[01:12:35] Carrie: There’s room to decrease. It’s a bit excessive.

[01:12:38] Ramit: Yes. And also all this agony and worry over a number that you don’t even know. You’re off by almost $3 million. And sitting over here talking about, oh, let me deprive myself of Pilates and let’s not take this trip to Japan. It makes no sense.

[01:12:58] Carrie: I just keep on underestimating and undercutting and rationalizing down instead of seeing what the real picture is of our finances.

[01:13:11] Ramit: That’s correct. And it’s honestly depressing. It’s depressing for your partner because there’s no clarity on what it takes to win. It’s just one thing after another. And the goalposts keep moving. And it’s just depressing for you because you constantly are playing small, always.

[01:13:32] You’re on track to have 7 million bucks and you’re operating as if you make $50,000 a year. It’s not serving you. You would never act this way at work. You couldn’t do your job if you weren’t confident and knew where you stand in the power structure. But your feelings about money are totally at odds with the actual numbers. You’re in a privileged situation with so much money. What a tragedy to live a smaller life than you have to.

[Narration]

[01:14:00] Dillon and Carrie are young, 29 and 30 years old, living what should be the most fun, carefree years of their lives, but for some reason, they have chosen to suffer. With their income, they can easily accomplish their dreams. In fact, we just saw them realize they’re going to have more than they ever thought, but instead, they are living a life of deprivation and stress and they are not connected over money.

[01:14:27] This is a perfect example of what can happen if you don’t do the second part of living a  Rich Life. The first, know your numbers. You got to understand the language of finance. But the second, you’ve got to master your money psychology or you might very well end up with more money than you ever thought, but you still don’t enjoy. Do you think that they will suddenly wave a magic wand at retirement with their $7.7 million and stop depriving themselves? No, they won’t. Let’s see if I can help them understand that.

[Interview]

[01:15:00] Ramit: Watch this. $11.2 million. What the hell are you going to do with $11.2 million?

[01:15:07] Dillon: We’ll be able to live so much more lavishly than we do right now.

[01:15:10] Ramit: You guys will not know how to spend $11 million. You will not have the psychological or technical ability to spend it because you don’t have any practice. Carrie is shaking her head like oh-oh.

[01:15:22] Carrie: That’s too much. That’s more than we need.

[01:15:26] Ramit: Oh.

[01:15:27] Carrie: I don’t even want that. It’s enough.

[01:15:29] Ramit: Okay. All right. All right. I like it. All right. Let’s play it then. So we got options. Let’s also not forget that I didn’t even assume any income growth. Let’s just play that out for a second. Hey, Dillon, how much should we say that we’re going to add from your future job into investments per year?

[01:15:46] Dillon: Maybe I make 200k and I want to invest like 10 or 15% of that.

[01:15:52] Ramit: Let’s make it 20k. 20k a year. All right. Easy math. Instead of 11.2 million, 14.1 million. Carrie, you look like you’re in pain. Is there some–

[01:16:02] Carrie: I don’t want that.

[01:16:04] Ramit: So what do you want to do about it?

[01:16:09] Carrie: I guess I need to invest less.

[01:16:10] Dillon: I guess you need to go to Pilates.

[01:16:12] Ramit: I actually don’t believe you, and I don’t really think you deep down believe that you don’t want that much, because for you, more always equals winning. What’s really going on here when you react that way?

[01:16:24] Carrie: That seems like greedy and selfish. That could be used much better elsewhere.

[01:16:30] Ramit: Where?

[01:16:30] Carrie: Very many places. There are a lot of people that would benefit from having that money more than us.

[01:16:36] Ramit: So like perhaps the barista who you tip $10 to because you make so much money, or perhaps the Pilates teacher who you go to and give a Christmas bonus to, a very generous one. Perhaps your husband who you say, “You take your time, work on your PhD. I want you to feel completely supported.

[01:16:58] “I know that right now you are heads down on this, and I know that at some point maybe we’re going to have kids and maybe I’ll need to be heads down and I’ll need you to pick up some of the slack. But right now I know that you’re in the thick of it, and I’d love to help.” Isn’t that a point of a partnership, and especially when you have money to make it so easy?

[01:17:19] Carrie: Yeah.

[01:17:19] Ramit: Here’s how I would now make decisions about spending. First off, you all realize that you’re going to have a lot of money. In many ways, too much money. So let’s figure it out. Right now, if we look at 30 years of investments, we are down to $7.7 million.

[01:17:37] Fantastic. That’s great. But probably more than you need, and we’re not even factoring in Dillon’s additional income, which will boost this thing a lot. So I just start to play with the numbers. I go, “Hey, instead of 51,000, what if we did 41,000?” Oh my gosh, we’ll have $6.7 million. That still seems like what?

[01:17:59] Carrie: More than enough.

[01:18:00] Dillon: More than we need.

[01:18:01] Ramit: More than enough. [Bleep] it. Let’s take it down to 31. Oh my gosh, $31,000 a year, we’re going to have $5.7 million. Again, not including Dillon’s contributions. Do you see how ridiculous it is that we are spending hours and hours talking about a 15,000-dollar trip to Japan? It makes no sense. Carrie?

[01:18:26] Carrie: Okay.

[01:18:27] Ramit: All right. That’s what I wanted to hear. I just freed up $20,000 a year. What do you want to do? First of all, you’re already spending 1,100 bucks a month on eating out.

[01:18:40] Dillon: So we want to up that. I think we want to 1,600, the one 250-dollar meal plus a couple extra meals out.

[01:18:47] Ramit: This is where you actually start to make tradeoffs. Your savings goals. You said a vacation. That needs to go up.

[01:18:55] Carrie: Probably needs to be 1,500, right?

[01:18:59] Dillon: We’re talking about going to Japan in May. It needs to go up even more.

[01:19:03] Ramit: Good. I like how you’re thinking. Great. 1,800 bucks a month for vacations. To me, that tells me that you really prioritize traveling. By contrast, you do not prioritize an emergency fund, which you told me. You have your reasons. Okay, fine.

[01:19:17] Carrie: Dog grooming. That’s $150 every eight weeks.

[01:19:24] Ramit: We got the eating out already. We got the trip. Pilates. How much is Pilates? Per week would be 400 a month, right?

[01:19:32] Carrie: That’s if I’m doing double time, twice a week.

[01:19:35] Ramit: Do you want to?

[01:19:35] Carrie: But I guess it’s better.

[01:19:36] Dillon: Just do it.

[01:19:36] Carrie: Yeah, I do. I do.

[01:19:39] Ramit: It’s called abundance. Okay, great. You’re up to 37%. Amazing. Wow. That’s crippling. And then that’s it. What a [Bleep] joke.

[01:19:47] Dillon: He’s like, this is the easiest CSP I’ve ever–

[01:19:50] Ramit: Do you see why the numbers themselves are a mere triviality? It’s a joke. That’s why I said I could knock this out in three minutes. You have so much money. You’re still investing $31,000 a year. You’re saving $28,000 a year. Your guilt-free spending is $55,000 a year. What are you taking away from this example right here?

[01:20:15] Carrie: It’s not the numbers or the money that’s holding us back. It’s me applying that pressure that we need to save more or else, and turns out we don’t.

[01:20:25] Ramit: I agree.

[01:20:26] Dillon: I think the most helpful thing was seeing that we will have enough and seeing we’ll have more than enough and that therefore we have more than enough now. And just having that mindset of, we have, we can, and not the mindset of what if everything goes wrong.

[01:20:46] Ramit: Pretty cool to see how once you actually get aligned on what am I afraid of? What are you afraid of? What do we want specifically? How much travel? How much is it going to cost? Is it international? How much are we going to Pilates? Very specific things. And then, and only then do you get to the numbers.

[01:21:09] The numbers are the last part. It’s the values. It’s how you talk about money. It’s the back and forth. And the back and forth is about having fun. It’s not about winning. You’re not here to obliterate your partner. You’re here to connect. It’s to build them up, not to break them down.

[01:21:29] You can do every single thing you want. It’s so easy. And I think seeing this, my hope is that you both realize, oh my gosh, we could be doing way more. And why are we spending our time playing so small? Why, Carrie, is my anxiety causing me to say these kinds of things to my partner? I have to fix that.

[Narration]

[01:21:47] Thank you to Dillon and Carrie for sharing their story. It’s not easy to put your personal information out there for the world to see, and it takes a lot of courage to come and ask for help. I know this conversation was frustrating at times. It was frustrating for them. It was certainly frustrating for me. And hearing one partner put another partner down simply because they earn less is not acceptable. And I hope that Carrie takes that message to heart as she and Dillon continue to work on their relationship with money and with each other.

[01:22:18] Breaking out of a scarcity mindset is really hard. You heard it in this conversation. You’ve heard it in others. The stories that we tell ourselves often come from childhood, and they can feel like they define us. In Carrie’s case, financial insecurity as a kid still shows up for her as an adult. And I’m glad I was able to help her make that connection.

[01:22:40] Now, will she continue making progress? Will she use some new tools to manage her anxiety? That’s entirely up to her. The fact that Dillon and Carrie see a therapist regularly should help on that process, and I’m rooting for them. Now let’s check out their follow-up videos. Up first, Dillon’s follow-up.

[01:23:00] Dillon: My biggest takeaway was that I should focus on both mine and Carrie’s feelings and our needs as a couple. I have always felt gratitude for Carrie working really hard, prioritizing our finances because she cares about our goals as a couple and as we start to form a family.

[01:23:23] But I guess I’ve always just let that go unsaid. Hearing that is really important to her, and so that is something that I plan to add to my life, is just that spoken, shared gratitude for Carrie. The numbers are kind of secondary to that.

[01:23:38] So we basically are going to reduce how much we spend on home improvement by about $1,000 a month. And we’ll also reduce how much Carrie invests by about $1,600 a month. And we’ll use that money for fun stuff. We added up every single fun thing we could think of, and it still came out to less than that 2,600-dollar figure.

[01:24:03] I’ve always been a person who likes having money in investments, and I think the biggest surprise is that having more in liquid will help us spend money. And that’s our challenge, is just how can we spend money? It’s just in a savings account that we’ve designated to be spent on this category that helps us spend money.

[01:24:25] Ramit: And now Carrie’s follow-up.

[01:24:27] Carrie: It feels very cheesy to say, but I honestly feel like the conversation was life changing for me. The main thing in the way of myself and my  Rich Life is just me. I have this artificial feeling of scarcity and that we don’t have enough and that we need to save more, but that that’s really not reflective of our financial situation.

[01:24:50] And the best thing I can do is get out of my own way by choosing to spend money on the things that make my life easier or happier. And for us, that’s looked like putting less money into our investments, and that just gets added into our additional income that we can spend on things that we like.

[01:25:12] So we’ve added over $500 to our monthly budget for fitness. So I can go to all the fancy Pilates classes that I want. And over $400 on just massages, manicures, and pedicures. And all of these different kinds of self-care have made, honestly, a noticeable difference in my anxiety levels, so much so that even my therapist noticed, and it’s really had a positive impact on Dillon and my relationship and how we feel about how we’re balancing the workload at the house and how we’re supporting each other. So I honestly do feel like it has been life changing and really, really impactful for our relationship.

[01:26:04] Ramit: Lots of things I love in these follow-ups. First, really specific numbers and changes. I love that. That’s what I always hope for. But even deeper than that, a lot of realizations about the way that they’ve interacted with money, especially Carrie. I really appreciate couples who come on the show and take to heart what we discuss and then send me follow-ups.

[01:26:25] My team just got another update from them a few days ago. Here’s what Dillon wrote.

[01:26:29] We just booked tickets to Japan. Yes, they were on Scott’s Cheap Flights, but we would’ve booked them even if not. Okay. I will take that as progress, even if the flights were booked for a discount. Carrie and Dillon, I’m wishing you the best.