Episode 243. “She inherited $171K…but it’s already gone.”

Ramit Sethi of I Will Teach You To Be Rich talks to Mike and Noel, a young couple who are both 34. They married just 6 months ago, but financial fights have become a daily occurrence, even after receiving a $170K windfall. Mike blames Noel for overspending, but admits they both struggle with money, while Noel views the windfall as “guilt-free” spending. With $244K in debt, zero savings, and 82% of their income going to fixed costs, Ramit helps them uncover the root of their money woes. Will they finally get on the same page, create a financial system that works, and learn to trust each other with money?

 

In this episode we uncover:

• How Mike’s money anxiety leads him to check his bank account 20 times a day
• The shocking truth about their $170K windfall
• Why Mike’s anxiety worsens when he makes more money
• The one money rule Mike and Noel both broke
• How Mike’s upbringing shaped his money habits
• Why Noel feels like she’s “drowning” and has no control over their finances
• The spending categories that reveal their money psychology
• Why Mike’s “money is mine” mentality is holding them back
• Noel’s struggle to “hand over her paycheck”
• The credit card debt that keeps piling up
• Ramit’s radical approach to cutting fixed costs
• The “Glade Plug-in” budget that explains everything
• Noel’s difficult decision about tithing and faith
• Why benchmarking against past mistakes is a recipe for disaster
• The truth about their approach to money

 

Chapters:

(00:00:00) “We just kinda like get whatever we want whenever we want it”

(00:07:02) “I was stressing more than ever before”

(00:14:04) The one money rule they both broke

(00:24:29) “You treat me like a child”

(00:32:39) Ramit identifies their “money leaks”

(00:39:34) “I don’t want to hand over my paycheck”

(00:47:30) “My goals are not being met”

(00:55:38) The “Glade Plug-in” budget

(01:00:03) “I do wanna have a Glade budget”

(01:06:50) How Mike’s upbringing shaped his money habits

(01:15:10) Ramit shares his radical advice

(01:21:10) Preview for part two

 

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Transcript 

Download the full transcript PDF 

[00:00:00] Noel: We just kinda like get whatever we want whenever we want it.

[00:00:03] Mike: I think it’s been twice where I’ve had over $20,000 for the credit card debt.

[00:00:08] Noel: I’m literally spending 150 to $200 a month on GLAD plugins for our house.

[00:00:13] Mike: Is this gonna be the first time I violate my own rules? Deep down, while I want security and I just haven’t been able to find it, I’ve very much treated the money that I’ve made as mine.

[00:00:22] Truly, like I’ve never considered it our money.

[00:00:25] Noel: That’s when I just kind of realized we were like, oh, we are super screwed.

[00:00:28] Ramit: You’ve mentioned a windfall.

[00:00:30] Noel: It was $170,000.

[00:00:33] Ramit: How much of the money is left?

[00:00:34] Noel: None of it.

[00:00:35] Ramit: You have no savings. You don’t have enough to even get one day without an income. My dreams are expensive.

[00:00:43] What happens when you inherit $171,000 and blow through it in less than a year? Today I’m speaking with Mike and Noelle, both 34 years old. They’re married. They earn six figures as a single income household, and yet even after inheriting 171 K, they have a negative net worth. Their spending has caused a lot of tension in their marriage.

[00:01:05] Just listen to this line from Mike’s application. My wife would appreciate if I stopped blaming her for our money problems. Fights are started almost every day, and if we keep spending like this, we will have no future. That’s a tough line to read. I’m gonna look at Mike and Noel’s conscious spending plan right now, which breaks down their net worth income and where they spend.

[00:01:28] If you want my help with your own conscious spending plan, you can join my money coaching program at iwt.com/money Coaching. Here’s where they stand. Total assets, 29,800 investments, 28,200 savings, zero debt, 244,000. That gives them a net worth of negative 200,000. But what’s really worrying to me is their fixed costs, which are 82% of their take home pay.

[00:01:57] They’ve got debt, they’ve got high fixed costs. It’s not sustainable, and if they don’t change their relationship with money now, they will be stuck in this financial quicksand forever. Not surprisingly, they both think a second income will fix everything, but they already have a high income, so I suspect that more money will not solve their problems.

[00:02:18] My question today is can they break out of this cycle of overspending and debt? We’re about to find out. Mike, in your application, you wrote something that caught my eye. You said, I overly obsess about money and blame my wife when we live paycheck to paycheck. Take me back to the exact day that you wrote this.

[00:02:41] Where were you and what was happening?

[00:02:43] Mike: That sentence came from me literally obsessing about money when I wake up until I go to bed, whether it’s checking my bank account 20 times a day, whether it’s checking my bank card account 20 times a day, my 401k, none of them are high, by the way, just to make myself feel better.

[00:03:00] And know that there’s something in the bank. And it’s, it’s been a, a, it’s been years for me. It’s, it’s been years. And Noelle has gotten the blunt end of it a lot of the time because we’re a one income household. You know, I’m, I’m supporting her in graduate school, which I totally signed up for and want to do and love doing it.

[00:03:22] It just came to a point where I was just so sick of the, the feeling that I felt. ’cause I make a decent income and I know I sh we shouldn’t be living, making a paycheck. And why do you blame your wife? Well, I, I blame her. That’s a great, but, oh, it’s, I blaming because I think she overspends from time to time.

[00:03:42] Mm-hmm. But then I always take it back because I, I do try to see where I’m wrong in the situation. And it turns out when I look at it, we both spend too much. But I just react to her in the moment and then I have to go back and say, I’m so sorry, Noelle, I. You’re not the, you’re not the problem. I’m the problem.

[00:04:00] And I just, I can only imagine how six sheet gets of that.

[00:04:04] Ramit: Just so I understand a little bit more, Mike, when you mentioned logging into your Vanguard account and other accounts, how often are you logging into these accounts?

[00:04:11] Mike: Literally 20 times a day. Turnout, well, Vanguard probably once or twice a day, but the bank account several times.

[00:04:18] Will you walk me through

[00:04:19] Ramit: that experience for just a second? So multiple times a day?

[00:04:22] Mike: Yeah.

[00:04:22] Ramit: Are you logging in on your phone?

[00:04:24] Mike: Yes.

[00:04:24] Ramit: Okay. And right before you click that icon, what are you feeling? Anxiety. Mm-hmm. How does it show up? Is there a voice in your head? What does it say?

[00:04:35] Mike: Maybe it’s a feeling. It’s more of a feeling comfort.

[00:04:38] Mm-hmm. I get a lot of comfort just clicking into it. It’s almost like an addiction

[00:04:42] Ramit: and you click into it and it opens up. Are you hoping to see a certain number or are you treating it like, um, you know, like a baby treats a bottle or a blankie or something like that? Like you’re looking for that sense of relief?

[00:04:56] A baby treats a bottle, yeah. Okay. And then what do you do? I log out. That’s it. It’s like a five second thing. Yes. Okay. You know, I think a lot of people listening, they might go like, this sounds crazy, but I think a lot of us listening probably do the same thing with social media.

[00:05:13] Mike: Yeah.

[00:05:13] Ramit: And do you think that this is a healthy behavior?

[00:05:18] Mike: No. No. It’s one of the big reasons I wrote that I reached out.

[00:05:24] Ramit: Okay. I appreciate that. And, and have you ever gotten help, uh, you know, logging in 20 times a day seems like maybe there’s something deeper there. What do you think?

[00:05:32] Mike: Not for this, no. But yeah, I definitely something deeper, absolutely. But not particularly like this.

[00:05:38] No. Okay. Would you be open to like

[00:05:41] Ramit: seeing a therapist or somebody else about it?

[00:05:44] Mike: Very much.

[00:05:44] Ramit: Yeah. Cool. Great. Alright. I appreciate that. Noel, any surprises in what Mike just shared?

[00:05:50] Noel: No, not too much. I mean, I’ve, I see him, this is something that’s like consistently come up. So seeing him get a large amount of anxiety.

[00:05:59] We had a windfall happen about a year ago where we got 170,000 from a family member. And Mike has never been more nervous and we’ve never had as many fights. He was really stressed out about where the money was gonna go. We need this giant savings account. And like, I was maybe too, I, I saw it as a gift and you know, I, looking back, I regret the way I treated the money, but like I kind of saw it as like, oh, this is a gift.

[00:06:29] So like more than normal of this should be guilt-free spending. And so I, yeah, but lemme make

[00:06:35] Ramit: sure I understand you, Mike. In your opinion, Noel, you’re saying Mike seems anxious about not having enough money, but when there was. A surplus of money. He became even more nervous.

[00:06:46] Noel: Yeah. He gets worse when he has more money.

[00:06:48] Like the months where he has, when he makes the most, ’cause he is in sales, so he has a variable income, but the months when he makes the most money, it, it, the anxiety gets almost worse. So,

[00:06:59] Ramit: yeah. Mike, you were covering your face just now. What was that about?

[00:07:02] Mike: Sorry. I, she’s absolutely right. I’ve had, I’ve just had times where, you know, I’ve been in sales a couple years and I had the biggest paycheck ever.

[00:07:11] And I was talking to my, a good friend of mine who got me into sales and he, and I was telling him how miserable Mm. With when I made that, yeah, I, one time I’d made the most amount of money in this paycheck and it was just bizarre. I just don’t get it when she’s talking about the windfall. I was stressing more than ever before.

[00:07:28] On his beautiful gift that we got. Okay. Noel,

[00:07:31] Ramit: what’s it like to live with somebody who, as he describes it, obsesses over money?

[00:07:36] Noel: Um, I think it used to be worse. I think he’s kind of suppressed it in a way, like tried to keep it away from me recently in the past, and by recently, I mean like the past year, but like I think earlier on.

[00:07:49] It made me feel like a child, I guess is that’s what I would, I, I felt small. Why? Because it would be, because I have to ask permission for everything. Like if I wanna get my nails done, I have to ask permission. If I wanna go to the gas station and buy something, I have to ask permission. Like if I wanna, you know, maybe change the thermostat more, then I should, like, I have to ask permission, but he’ll do things like, because, but he makes the money, so it’s like, I have no room.

[00:08:15] So I feel like a, like a second class citizen.

[00:08:18] Ramit: Mm-hmm.

[00:08:18] Noel: Because like he could go and spend $200 on a Pokemon card on eBay, you know, he will do something like that. Right. And then I didn’t get asked permission. Right. But it’s because there’s this quiet understanding that he makes the money and I don’t, and so now it’s kind of, I feel like I started fighting back by saying, well, I work.

[00:08:41] Just as hard as you, if not harder sometimes, because law, law school’s hard.

[00:08:45] Ramit: So you’ll say, I work just as hard as you, and then what happens?

[00:08:50] Noel: I work just as hard as him. I see myself as an investment sometimes, you know, I wanna like stick up for myself a little bit. Like I’m not, I don’t wanna live in a 1950s relationship where one person has all of the power and the other person is just deals with it, you know?

[00:09:08] So, and I think early in our relationship we were just figuring that out, like what that looks like. And, um, he took it as like, well, I’m just gonna stop telling her no. Um, but I didn’t really know our financial situation. So like, I am spending more willy-nilly and I would ask him for bigger things and he would usually just let me buy whatever I wanted to buy.

[00:09:33] And you know, like we had a $60,000 wedding, which we are not $60,000 wedding people, to be honest. Um,

[00:09:41] Ramit: let’s, one, one step at a time. I wanna understand.

[00:09:44] Noel: Sure. Sorry,

[00:09:45] Ramit: Mike. You wrote in your application we agree to spend less and then inevitably we both spend more than we mean to and end up living on credit cards until I get paid.

[00:10:00] Can you walk me through typical payday to payday? What happens

[00:10:05] Mike: typical payday to payday? So biweekly is when it is my payday. Uh, what we usually do is, or what I’ve been doing is just getting a, a decent amount of income and then telling her I got paid and then I usually have enough to pay off at least enough of the credit cards not to accrue interest for that, you know, paying off a statement balance or something.

[00:10:32] Uh, so I get a, a rush of feeling good about that. But then. We both end, end up spending too much because she, she doesn’t know. I’ve never been transparent at all about our finances. She just thought I had it taken care of. Why? Because I never invited her in. I never told her I needed help with it.

[00:10:51] Noel: Can I speak to that real quick?

[00:10:52] Mike: Sure.

[00:10:53] Noel: Like last night, well, we were real when I was like realizing how bad we were financially, and I was like, I wanted to sign up to do, to drive Uber like one night a week. ’cause I was like, that could bring in a little bit of extra income. And he got so upset. Mm-hmm. And I think he was like, he was saying it was because of it’s dangerous, but like what it came down to was he, and at the end of the night he admitted like, he feels like he failed me, that I have to go drive with Bur.

[00:11:23] Right. But I don’t have to. It’s just like, I think it would free us up a bit.

[00:11:27] Ramit: Noel do. Do you see where that’s coming from?

[00:11:30] Noel: Yeah.

[00:11:31] Ramit: Where,

[00:11:32] Noel: um, I don’t know, like some, maybe some old ideas about. I think it has to do with like maleness and being a provider, but,

[00:11:41] Mike: okay. Mike, what do you say about that? I think she’s right.

[00:11:44] Yeah. I, I felt like I, I felt like I failed her. The fact that she thinks she has to go Uber. Right.

[00:11:50] Ramit: I totally agree. This is, um, this is a pretty interesting example and I love how open everybody’s being. I wish everybody were this open. What were your financial lives like before Noel went

[00:12:06] Mike: to law school? A lot better.

[00:12:09] I’ll say this. I, uh, so I switched from an office job, a desk job, to sales job, and it completely changed our lives financially. So rather than getting into a bunch of debt, I was able to pay off all of our. I was just able to pay off a lot of debt, so I felt like we were getting a footing.

[00:12:27] Ramit: And Noelle, what about from your perspective?

[00:12:28] What was it like before law school? I assume you were working.

[00:12:32] Noel: I’m gonna compare law school with undergrad. ’cause I literally did all of that just in one file swoop in our, like during our relationship, I did it all to, so I’ve been in school, like our whole relationship.

[00:12:43] Ramit: Got it.

[00:12:43] Noel: Um, but prior to that, I was a waitress at a diner, like making minimal income, living very much pay paycheck to paycheck.

[00:12:54] I think I avoided a lot of responsibility when it came to like money. Historically. I’ve never like paid a, I’ve never paid a bill other mm-hmm. Than like

[00:13:04] Ramit: mm-hmm. Huh. What does that mean? Yeah. I’ve

[00:13:05] Noel: never like, I’ve never like paid a pH a phone bill. Everyone else would have. Like, I lived in someone’s, I lived in a room in someone’s house, so I would just give them money.

[00:13:14] Okay. Or I lived my grandma, I’m on her plan, so I just give her money. Like I’d never actually had my own bills ever. Okay. So like I never really had that kind of responsibility. Um, and so I think stepping into that relationship, I just gave him my income and he paid the bills. And that’s like how we functioned, like immediately.

[00:13:37] Ramit: Hold on.

[00:13:38] Noel: Sorry. Is that crazy?

[00:13:41] Ramit: It’s not me, it’s not my role to say what’s crazy or not, but my antenna go up sometimes and I have to follow them. You remember the first time it happened.

[00:13:49] Noel: I don’t, I feel like it was just natural because you made more money than me. You, you were the grownup. It felt like you had the nicer car.

[00:13:58] I had the junker. You had the 4 0 1 KI had a job at a diner. Like, I So finish the

[00:14:04] Ramit: sentence. So what, what’s the conclusion? How does that connect to handing over your paycheck?

[00:14:09] Noel: Uh, it maybe felt like he was more equipped. I don’t know. I just, I think maybe I put myself in a position to be a second class citizen, like right away.

[00:14:18] Ramit: Hmm.

[00:14:19] Noel: I think I developed self-esteem over the course of our relationship and have kind of adjusted how I view myself. And some of that stuff has, uh, has just changed, um, over time. What do you mean by that

[00:14:30] Ramit: you’ve changed the way you view yourself?

[00:14:32] Noel: So, I’ll share something. I wasn’t sure if I was gonna share this, but, um, so I’m about 10 years sober.

[00:14:38] I’m like approaching that date and so it took me time to kind of get to a place where I was like, like I had to be pushed into getting a job, right? Like, my sponsor was like, go get a job. I had to be pushed into getting a job. I had to be pushed into getting a car and a driver’s license. I had to be pushed into getting out of my grandma’s house and getting into someone else’s house.

[00:15:00] And so I was very, always very reluctant to like, think that I was capable of doing anything on my own. Mm-hmm. Um, and I think in a relationship I was able to gain a lot of self-esteem, but also just having time and sobriety and through our relationship and through just sobriety, like I just kind of started to learn like what I deserved and what I’m capable of and that a lot of the stuff that went wrong before isn’t because I’m not capable.

[00:15:30] It’s because I was in a situation meaning alcoholism. That was really just like making me incapable of doing certain things.

[00:15:39] Ramit: Wow. That’s very powerful. And congratulations on your sobriety. That’s incredible. I’m just processing that lesson myself. There’s a lot, there’s a lot there. I can see how that can affect every part of your life.

[00:15:55] Relational, financial, career, everything. It actually really provides a, a whole new lens for me to look at this through. Thank you. I want you to notice the layers here. On one hand, Mike controls all of the finances, almost obsessively checking his bank account balance 20 times a day. But he admits he’s not particularly skilled at managing money.

[00:16:17] On the other hand, Noelle has avoided any responsibility around managing money. She’s never paid a bill herself. She literally handed over her paycheck because she didn’t think she could manage it. And understanding her history with addiction is illuminating. Noelle doesn’t trust herself, and as Mike mentioned earlier, he doesn’t really trust her with money either.

[00:16:37] When you don’t trust yourself or your partner with money, you’ve now set the stage for a vicious cycle. One person often takes on the role of a micromanager. The other willingly gives up control, almost feeling carefree. But this raises lots of problems if the couple ever separates. The non-money person has no functional financial skills.

[00:16:57] But what’s worse is this dynamic isn’t even working and trying harder or just earning more money will not fix anything. It will just make them more frustrated with each other. We’re gonna get into what happened with the inheritance right after this. You’ve mentioned a windfall Noel. Can you explain what this windfall was?

[00:17:20] Noel: So, my dad passed away about a year and a half ago, I believe it was a year and a half ago. So he had been caught up in a, uh, a lawsuit ’cause he was actually inheriting the money himself from his older brother. But there was a huge dispute. It lasted. Years and years and years. And then my dad died before, right before the payout came, so I actually got his share.

[00:17:47] So that’s how we came into it. And it was $170,000. And then about a year later, we got another 13,000 just like right around tax season when we needed it too.

[00:18:00] Ramit: So. Wow. How did you feel when you received the money?

[00:18:03] Noel: I think there was a mix of emotions, right? Because it is like my dad died, right? For me to have the money.

[00:18:10] And I didn’t have a great relationship with him. He was an alcoholic and addict and was really not in my life. And so I had a lot of guilt, like weird feelings where I’d like be mad at him, but also feel guilty that I wasn’t supporting or playing enough of a role with in his life. And so I was afraid maybe a part of me was afraid, like, would he even want me to have this money?

[00:18:31] Wow. So I think I treated it like a gift. Like I really tried to just treat it. I didn’t treat it like I should have, like income. I treated it like. Like, okay, well we don’t really deserve this anyways, so let’s just spend this on, you know, different things. We spent, we like, we obviously paid off our debt, but then I spent $30,000 at Crate Barrel to furnish our house.

[00:18:53] Like I really went for vacation style. I wanted to come home after work and feel like my home was my vacation. I spent 10,000 at, uh, on clothes and another 10,000 on Mexico. Mike spent, he got 20,000 as well for his own stuff. I don’t know if Mike, you wanna sure about that, but that’s like your thing. And then we put like a good amount of savings, but that got depleted as soon as we wanted to do IVF.

[00:19:21] So like, the money went away fast. Like we were in this just was, we literally got the money a year and three months ago.

[00:19:28] Ramit: How much of the money is left?

[00:19:30] Noel: None of it.

[00:19:31] Ramit: Mike, where were you in this, where

[00:19:33] Mike: were you in in the, uh, spending of this? You know, I did a. I, I spent a lot of mine too. What’d you spend it on?

[00:19:40] I guess we’re all, you know, we’ve been all honest here. I, I got a, a hair transplant. A what? I spent a hair transplant. Oh, okay. All right. Yeah. Yeah. We can’t all have hair like you. Um, and, uh, did that, and then I, you know, I spent 10 thou, I spent 10,000 on just some clothes, and I have this love for, or, you know, nostalgic Pokemon Arts.

[00:20:08] Spent a lot of money in those.

[00:20:09] Ramit: Okay.

[00:20:10] Mike: Uh, and I justified, oh, this is an investment. No. So like, I, I, I had a huge part in this as well.

[00:20:16] Noel: Like, honestly, so much of that should have just been invested. Like a, like more than 50% should have just been invested.

[00:20:23] Ramit: That’s pretty powerful. I agree. If, if you had taken a hundred thousand dollars in your thirties and invested that money that would turn into a, and just let it sit there, never touch it again, it would’ve turned into a tremendous amount of money.

[00:20:36] What I want is for both your monthly spending and any unexpected income to have clear rules. What am I gonna do? Like my wife and I have a set of rules. If we make unexpected income, this percent goes here. Something like 50 or 70% goes to investments, guilt-free spending, et cetera, et cetera, et cetera. I want everybody to have that because then you can just run your playbook and you don’t have to make these arbitrary decisions.

[00:21:03] When you make arbitrary decisions in the heat of the moment. You sure you might get some very nice furniture or a nice trip to Mexico, but you’re not following your rich life plan. Do you have a shared vision of what your rich life is? Like a specific shared vision?

[00:21:20] Noel: I think we have a tendency to like this, to like go and want the same things.

[00:21:25] Ramit: If you had no debt, what would you be doing?

[00:21:29] Noel: I would be able to. I think to a reasonable degree, spend some money on my appearance. We would have a large savings. I, I would like to, I would like to own a house, but not one in the us. I would like to buy a house in Costa Rica and, you know, rent it out and one day go and retire in Costa Rica and like, maybe do like a little bit of remote legal work and part-time and, and just enjoy our lives and set our kids up for success where they could do whatever they wanted and go to school, whatever school they wanted to go to.

[00:22:05] And,

[00:22:05] Mike: okay. Mike, what about you raising kids, having fun, raising kids? I mean, I love the idea of the Costa Rican house in my rich life would be security, which is such a low autumn as I’m saying it, but that’s, it’s hard for me to. Think of much more than that. Mm. Because I’ve just never felt like I’ve had it.

[00:22:24] Ramit: I love it when couples share their rich life with me. For Noel and Mike, it’s Costa Rica Freedom and Security, but I can guarantee that when we get to their CSP, I will not see anything that points to that stuff in their spending. They haven’t mentioned saving for a house. All they’ve mentioned so far is $30,000 worth of Crate and Barrel furniture, cosmetic surgery clothes, and Pokemon cards.

[00:22:46] And I’m not judging any of those purchases. But they are not aligned with what they claim is their rich life. In addition, when you inherit money from someone, especially someone you had a difficult relationship with, it can stir up a lot of conflicting emotions. It’s very common to see people treat an inheritance in peculiar ways.

[00:23:07] Some people struggle to spend it. Others see it as a gift to be spent quickly, sometimes as a way to distance themselves from the emotions tied to the money and the grief. But what you choose to spend your money on leaves clues. And I can tell you right now that their rich life vision is completely out of alignment with the way that they spend money.

[00:23:28] The good news is we can change that. But first I need to understand a little bit more about how they got here. How often do you fight about money?

[00:23:36] Noel: Well, when he didn’t include me, it was actually a lot less than since we’ve gone on this, since we’ve gone on this podcast. Mm-hmm. Um, he has, you’ve in, you’ve included me in it and I ran all the numbers and I kind of took over.

[00:23:52] We got Monarch money and I just kind of started budgeting things down and realized like what we can actually, what our actual income is if you average out the variable and what we’ve been spending. And I like realized we were, he had every reason to be worried and we were in a very bad position. And I kind of panicked and like, I, I yelled at him like two days ago for buying a $20 pack of chicken when I said small pack of chicken.

[00:24:22] And he got the big pack of chicken and,

[00:24:24] Ramit: oh, wait, wait, wait. Can like, I’m, can we recreate this conver I love a good chicken fight.

[00:24:29] Noel: Yeah.

[00:24:30] Ramit: Alright, so take me back. Where were you when this happened?

[00:24:33] Noel: So I’m at home, I’m hungry. I’ve been trying to not buy any groceries at all. So I’ve been just like living off of whatever’s in the house.

[00:24:43] I tell Mike, go, I need you to go pick up some chicken. Um, a couple of other things, and I say specifically in there, small chicken, and he brings home a, a large chicken. It’s $20 I see on the price label that it says like 17 something. And I am immediately angry.

[00:25:03] Ramit: What do you say?

[00:25:04] Noel: I yell, this is not a small chicken.

[00:25:07] I said, small chicken. Did you not read my text message? Like I immediately start accusing him trying to back off because I know that I’m being aggressive, but I like, I, I like, cannot help myself.

[00:25:20] Ramit: How do you do that? Like, what

[00:25:21] Mike: exactly did you say?

[00:25:23] Noel: I’ll apologize and then I’ll bring it up again.

[00:25:25] Mike: And then I’m like, well.

[00:25:27] I’m gonna eat the chicken. Like it’s not a big deal. I’m gonna eat the chicken. I’m gonna put it in the freezer and I’m gonna, and we’re just gonna eat it. Okay. And that’s, that’s plan. But the one thing he doesn’t

[00:25:35] Noel: remember is that we actually already had chicken in the fridge. I want chicken size. We already had chicken breasts, so like we have an overload of chicken.

[00:25:42] But actually did

[00:25:43] Mike: remember,

[00:25:44] Noel: yeah, I just like

[00:25:45] Mike: chicken

[00:25:45] Noel: and I’m just angry. It’s so stupid. I know it’s stupid, right? Like, I know it’s stupid.

[00:25:50] Ramit: Why do you think that this fight came up? You know, you saying it’s stupid, but it happened. Why, why do you think that the fight actually happened?

[00:25:58] Noel: Well, I keep getting irritated ’cause I feel like he’s not, he doesn’t pay attention to like the details or he is not conscientious about little things.

[00:26:05] And I think that’s part of what put us into this position sometimes. Like, I think you just weren’t conscientious of, of just the list, but also like. Didn’t think like, okay, like we are seriously budgeting. We’ve already spent more than our budget for the month on growth groceries. So every bit of money we’re spending right now is borrowed.

[00:26:24] Ramit: Can I ask a couple questions? Sure. Noel. Did Mike know that you had already exceeded your grocery spend for the month?

[00:26:32] Noel: Well, I ke did. Did you know? I actually don’t. I assume you knew. Yeah. ’cause it’s on Monarch. Yeah.

[00:26:38] Mike: Yeah. It, it’s, it was, it’s difficult. We still need to eat and I know. ’cause we just combed through our finances two weeks ago.

[00:26:48] That’s when we created this budget and we were already $3,000 of our budget two weeks ago. So is the co conclusion, like we’re already over it, so like might as well just Totally, absolutely. And I know I’m gonna eat the chicken, but also I could be more conscientious. There’s no doubt about it.

[00:27:03] Noel: I was being crazy.

[00:27:03] I just wanna put that out there as not normal to like freak out over $10 of chicken. But I grew up in a situation where like $10 made the difference. Like I rem I like have a vivid memory as a child of sitting at the, at our like little kitchen table and my mom doing the budgeting and saying we had an extra $20 and that we could go to the movie theater that month and thinking, oh my God, that’s so exciting.

[00:27:29] Like, and here we are just throwing away $20. You know what I mean? So

[00:27:34] Ramit: one of my favorite parts of my job is hearing people recreate tense conversations they have about money. I love being able to sit here and listen in and this fight about chicken. Incredibly revealing. Remember, until Mike applied for the podcast and they actually had to do a conscious spending plan, Noelle had no idea what their financial situation was.

[00:27:56] They had never had a substantive conversation around money. You’ve got to understand that most couples have never had a truly deep conversation about money even after being married for 25 years. That is why I wrote my book Money for Couples, because when you dive into these money conversations years into a marriage, it can be like opening up a Pandora’s box of unspoken expectations and past decisions and differing money philosophies.

[00:28:27] Noelle vividly remembers that $10 meant something special to her as a kid, the ability to go see a movie with her mom. So it’s no surprise that they’re having a heated discussion about chicken because they’ve never really talked about what money means to each of them. Without that foundation, there’s very little curiosity, very little empathy in these discussions.

[00:28:48] It just goes straight to being defensive. Each partner in their own corner of the boxing ring, listen, as I show them a new approach, Noelle, I don’t love hearing people describe their own behavior as crazy, especially women. It’s not good. It’s like got a long history of not so great origins. In addition, you called yourself crazy, and then you referred back to your mom having $20.

[00:29:19] I’m not sure that’s a healthy relationship with money. As an example, here’s what I think a healthy relationship might look like when it comes to this decision. Both partners would be involved in the key numbers. Both partners would understand the four key numbers. Fixed cost, savings, investment, guilt-free spending.

[00:29:38] Each partner would own a certain number or numbers like groceries. One person is the grocery person and is their job to own that number and to make sure you don’t exceed it. Sometimes life gets in the way and the partner brings back some larger whatever chicken order. The question is like, is this going to destroy our financial future?

[00:30:02] And a healthy relationship with it is really about being able to ascertain the difference between a $3 problem and a $300,000 problem. Similarly, I would say that the person who’s going grocery shopping should probably press for specifics. Hey, this is what I’m planning to do. Are you cool with it? And this is the number I understand we can spend.

[00:30:24] Are you cool with that? Okay, cool. Otherwise we can’t police everybody’s, every decision in a, it just becomes laborious. Yeah. How does that strike you? It

[00:30:32] Mike: strikes me as healthy. Okay. Noelle.

[00:30:36] Noel: I think it sounds healthy. I think I need to work on control issues. ’cause my instinct is I don’t wanna let go of it, but,

[00:30:42] Ramit: Hmm.

[00:30:43] Maybe both of you, um, uh, interestingly have different types of control issues. I would like to take a look at your numbers. I think it’s gonna help me understand what’s going on. What was it like doing the conscious spending plan together?

[00:30:55] Mike: It was eye-opening for me. I’m gonna be honest. It was very relieving for me to add her in to get some help.

[00:31:01] Even all of our financial conversations the last two weeks has been stressful and just not fun. But even with, uh, uh, with all that, it’s like I just feel like I got some relief.

[00:31:14] Noel: I think it was just shocking initially. So like, initially looking over the numbers, realizing like, uh. How much money he’s making, how much money we’re spending, and how much we’d gotten ourselves into debt and like, I just had no idea.

[00:31:30] I think, I think that was where I was really shocked the conscious spending plan that like you had us do, like right. Prior to that, like we had kind of looked through some of our finances at that point, like, and just realized, like, that’s when I just kind of realized, we were like, oh, we are super, we’re super screwed.

[00:31:47] So,

[00:31:49] Ramit: so was it depressing or was it connective? How would you describe it? Noelle.

[00:31:53] Noel: It was scary, I think is the best word for me. Um, I think it was scary ’cause I’m realizing like, okay, we have this credit card debt specifically, and, and that was really mounting and I wasn’t expecting that to be so high. And then to look at the interest rate on it and then, you know, to really take a look at like, our student loans, even like recently, and to see like, oh wow, these student loans, especially like our graduate loans, like have such a high, some of them have such a high interest rate that I’m just like, great.

[00:32:23] Like, uh, it just felt very overwhelming. I’m like literally to the point where I feel like all my dreams gone and I have to start, like, as soon as I get a job, 70% of my income needs to go to debt. Like, that’s how I feel.

[00:32:39] Ramit: Okay. Let’s take a look, Mike. I’d like to ask you to read the word in bold and then the number in full next to it for this entire

[00:32:49] Mike: box.

[00:32:50] Go ahead. Assets, 15,534. Investments 28,202. Savings, zero debt 244,774. Total net worth negative 200 1038. What do you think about those numbers? The net worth was embarrassing. I was, I’m embarrassed. Very much so. Tell me more. Why embarrassed? Well, I didn’t think it was that bad. Living day to day was paying off everything and the money I make, I didn’t think it was that bad.

[00:33:26] But then when you essentially make us look at this, this number specifically net worth, and it’s like, no, this, I always thought there was a gray area with student loans and there’s not. It’s like we owe that money, we’re in debt. This isn’t. This is real.

[00:33:43] Ramit: So negative 200, $1,000 of net worth. Let’s take a look at the income.

[00:33:47] Noelle, can you read off your combined gross monthly income, please?

[00:33:52] Noel: Our gross monthly income is $13,000.

[00:33:55] Ramit: Okay? 13 KA month, which means your household income is $156,000. And I wanna note that this is a one income earner family for right now, because Mike is working. Noel is in law school. Presumably when you graduate, get a job, your income Noel will go up substantially from zero.

[00:34:15] Cool. Let’s continue. So your net is 10 KA month. Alright? Yeah. And now we’re gonna look at the four key numbers of the conscious spending plan. First off, we have your fixed costs. Mike, what’s this number here?

[00:34:29] Mike: 82%.

[00:34:30] Ramit: 82%. It’s pretty high. Like to see it between 50 to 60. We’ll come back to that Investments. Zero.

[00:34:38] I know you have a little 401k contribution. Yes. Well, it’s more than a little $780 a month. Alright, so that’s pretty good. We have savings of zero and you have $0 in savings, and then guilt free spending at 18% or $1,844. Is that number accurate? Yeah. Okay. Mike says, yes, Noel,

[00:34:59] Noel: that’s, I mean, that’s the number of our ideal situation, right?

[00:35:04] Like, so in reality, this month alone, we’ve already spent over $3,000. So, huh. In that category, what’d you

[00:35:11] Ramit: spend extra beyond 1844

[00:35:13] Noel: Doggy daycare? Um, going out, uh, to water world, uh, going out to eat. I bought shoes that were over a hundred dollars.

[00:35:25] Mike: Keep going. Turns out I, I’m on the road almost, uh, I drive about 50 to 60,000 miles a year.

[00:35:33] My job, mm-hmm. Uh, turns out I was spinning over. $350, just the gas station, energy drinks and lottery tickets. And when I looked at the numbers, I was like, this can’t be right. But it was, unfortunately it was. Okay. Um, can I ask a little bit about the

[00:35:49] Ramit: debt? So $244,000 of debt. Can you break that debt down for me?

[00:35:56] Mike: Yeah, I think I could. I think, uh, right now we had about 180,000 in student loans. Uh, we have 2220 $3,000 of credit card debt. We owe my mom 19,000. I, we took a loan from her. I think you’re short about 20 k

[00:36:15] Ramit: on this debt. Do you think that your student loans are 20 K higher?

[00:36:19] Noel: It’s gotta be student loans.

[00:36:21] Ramit: So 200 k of student loans.

[00:36:22] Noel: I mean, you’ve got 60.

[00:36:25] Ramit: Yep.

[00:36:26] Noel: You’ve got 63. And then I’ve got the rest. I just pulled out 52,000 just for this year.

[00:36:32] Ramit: This is a lot of numbers. I just wanna know how much you owe. It should be right. 200 K in student loans, 23 K, credit card debt. And 19 K, mom. Now my question is, um, do you have a plan for this debt?

[00:36:47] Noel: Yes, now we do.

[00:36:49] Ramit: Tell me.

[00:36:49] Noel: I wish we could pay it off faster, but right now we’ve been paying his mom $500 a month. Um, and that’s just standard every month we’re paying, we’re giving her that. We have an automatic transfer set up, and then now we’ve set up an automatic transfer for credit cards. We’re paying $1,661 every month.

[00:37:10] Ramit: Okay.

[00:37:10] Noel: Towards the credit cards.

[00:37:12] Ramit: When is the, um, mom debt going to be paid off?

[00:37:15] Mike: We do the math. It was like 30 months, I think. Three years? Yeah. Okay, cool. Ideally soon, ideally sooner. And what about, um, credit card debt?

[00:37:24] Noel: Credit card debt is like, I think 15 months is what I, I think I, I calculated

[00:37:29] Ramit: good. Great.

[00:37:31] And student loans. Oh, look at the reaction, um, idea pulled home. I gotta describe this. They both just like visibly deflated at the same time. Like they blew air out of their mouths, you know, like a cartoon. And, and what is the, is it the idea, like, it’s so big, like we can’t even begin to fathom it? Is that the way you feel about it?

[00:37:53] Noel: I mean, we can’t, we’ve talked about it like, I know how we’re going to do it. It just, it sucks.

[00:37:59] Ramit: Okay.

[00:37:59] Noel: Um, it’s, when I get a job, I’m expected to make probably between, I mean, take home maybe 80 is what I’m imagining. Then put 70% of that. Towards student loans. Literally every paycheck, just 70% of it is going straight to student loans.

[00:38:18] Specifically, we’re gonna target the eight and 9% numbers. Mm-hmm. Um, and then save the lower numbers, the two 3% and just kind of make minimum payments on those while we, if you do

[00:38:29] Ramit: that, how long will it take you to pay off?

[00:38:31] Noel: I think I’m looking at like two and a half years. I think that’s right. I think I’m looking at for like two and a half years.

[00:38:37] ’cause I’m not, okay. From my understanding, it’s not smart to pay them all off when it will grow faster in investments than it will depreciate in. So the sm the, the, the interest rates that are like two, 3%, like those ones are min getting minimum payments. The rest, where’s the depressing

[00:38:50] Ramit: part of all this?

[00:38:51] This sounds like a great plan to me. Where’s the depressing part?

[00:38:56] Noel: I, well, the depressing parts comes in, like, my dreams are expensive. I, I have expensive tastes and I wish I, I wish we could have a different, you know, we’re, we’ve got IVF going. I, I like, this is, so what I’m specifically thinking about is I really want my kids to go to a really nice private school.

[00:39:15] I’ve literally already picked out the private school nearby here. It’s called Dawson. It runs like $38,000 a year per kid. That is my dream, like, for my kids to be able to go to a school like that, that is just gonna set them up for success for the rest of their lives. But I would literally be working for them to do that.

[00:39:34] And I, and I’m literally to the point where I’m like, well, I wanted to have three kids now. Maybe I should just have one kid. And

[00:39:40] Ramit: Okay, can we, can we, let’s take a step by step.

[00:39:43] Noel: Okay.

[00:39:43] Ramit: 200 K of student loans, paying that off in approximately two years, maybe a little longer, but approximately. Do you think that that is.

[00:39:54] Above, like faster than average? Average, or slower than average. Faster, very fast. Faster. Very fast. I agree. Extremely fast.

[00:40:04] Noel: I don’t wanna sit with it. I don’t wanna sit with it.

[00:40:07] Ramit: Okay. We can talk about strategies, but I just wanna point out that you’re making a choice to pay them off extremely aggressively.

[00:40:16] Mike: Mike, where are you in this? I’ve honestly just been grateful for Noelle’s help on everything, and I think it’s a great plan. Okay. I feel like for the first time I actually have some hope of getting out all this stuff. It’s just so funny. I had invite my spouse into, and I’m just surprised that I never did it before.

[00:40:30] Mike, do you know how

[00:40:30] Ramit: many men come on this show? And we’ll talk for like two, three hours and then I finally realize something. I’ll go, you ever ask your wife about money? And they’ll be like, no. And then I’ll be like, you ever ask your wife anything? And they will literally say No. I think you are showing us an example where that doesn’t work of envisioning yourself as the provider protector, especially when you need help, but by opening up that communication conduit and just by inviting them and saying, look, I need help.

[00:41:11] We gotta do this together. Two people as a team. There’s no way one person can pay off $200,000 of debt. It’s not gonna happen, especially if one person doesn’t know and they’re spending what you did and what both of you have started to do is to start to talk about money openly. Now, sure, there are some things we need to iron out and we can work on that, but the fact that you’re doing it together is way better than one person being in the dark and the other not really leading them in the right way.

[00:41:40] You see that?

[00:41:41] Mike: Yes.

[00:41:42] Ramit: Alright. I think you should both be recognized for how far you’ve already come. I’ve gotta give them credit. I’m really impressed that Mike and Noel have created a debt payoff plan. That’s a big deal, especially since Noel just got involved in their finances. But I’m a little concerned that their debt payoff plan is too aggressive, maybe even unrealistic.

[00:42:00] And it’s interesting because the relationship we have with debt in America is often all or nothing. Many of us will ignore debt for a long time. We don’t open up envelopes when the statement comes. We pay the minimum. We don’t really understand how debt works, but we just know debt is bad. I have debt, therefore I am bad.

[00:42:20] In rare cases, I will see couples like Mike and Noel and they’ll finally go, oh, alright, alright, we gotta pay down this debt. And then what they will do is they will go all in. They will literally put every single dollar they have towards debt. They think they’re doing the right thing, but really they are operating by the invisible script.

[00:42:40] It’s all or nothing, but that all or nothing relationship with money is very unhealthy. Remember, just a minute ago, they said they’ve already spent $3,000 on guilt-free spending this month. That’s nearly double what they’ve accounted for in the CSP. That alone tells me that unless they’re able to drastically reduce their fixed costs, this plan’s not gonna work.

[00:43:03] I appreciate that they want to attack this debt. I wish more people felt that aggressive about paying off debt and about building their retirement instead of buying a freaking commodity that they don’t even really want. But the question I have is, are they actually prepared to make the choices that go along with this plan?

[00:43:22] Are they willing to make significant lifestyle changes or are they basically setting themselves up for failure? If you are looking at your own spending and you are realizing that something is not working. If your plan looks good on paper, but for some reason it never sticks, I want to help. You can join my money coaching program and I will show you what your sticking points are and how to get unstuck so you can start moving towards your rich life.

[00:43:49] Go to iwt.com/money coaching.

[00:43:55] Can we look at the, um, the fixed cost for a second?

[00:43:59] Noel: Yeah.

[00:43:59] Ramit: Your fixed cost rate, 82%. That’s high. That explains a lot. Not all, but a lot of why you are stressed out about money.

[00:44:07] Noel: Can I say that? Since we filled that out, we had to buy Mike a new car.

[00:44:12] Mike: Oh good.

[00:44:13] Noel: So that

[00:44:13] Ramit: I

[00:44:13] Mike: love hearing you. Oh, good.

[00:44:16] Noel: It’s not new. What kind of car did you get, Mike?

[00:44:18] Mike: I’m, wait, I’ve been, wait, I’ve been waiting to say that. Tell me. Uh, so like I said, I drive two 60,000 miles and I’ve put, I probably put in about, uh, $3,500 into my. 240,000 Chevy. 2009 Cobalt. How much did the car cost out the door? 14. Eight.

[00:44:37] Ramit: Okay. Alright. I respect that

[00:44:39] Mike: used car. Great. Yeah,

[00:44:41] Ramit: love it. Alrighty, let’s take a look at the fixed costs.

[00:44:43] Here we go. So we will update the car payment as necessary, but let’s take a look. Your rent and all that is 22 or 23%. Not bad. Not bad. And how about your car payment, total gas, all of it.

[00:44:57] Noel: So add 2 65 to that number.

[00:45:00] Ramit: Okay. We’re going in a direction that usually we don’t go on this show, but alright. We’re at 87% fixed cost.

[00:45:06] Let’s take a look at the rest of it now. So we have, um, car payments of $1,213 a month. Debt payments $2,161 a month. Groceries, 800 a month, clothes a hundred. Phone is 88 pets three 16 Charity 500 and subscriptions 183 per month for a total fixed cost of 87%. What do you think about that? I don’t know what to think, but it seems high.

[00:45:34] Noel: I, I did everything I could to try and like bring that down and make it reasonable, but it just seemed impossible. Like we were spending $600 a month on doggy daycare. Mm-hmm. It was like literally the same as childcare. And I’m, I’ve switched to going on Rover and getting a dog walker to come by our house during the day, and that saves a lot of money.

[00:45:57] Ramit: Do you guys think that this is sustainable? Financially speaking?

[00:46:01] Noel: What do you mean?

[00:46:02] Ramit: The fact that you ha are spending 87% on fixed costs, that you have zero in savings. Zero roughly. Zero invested.

[00:46:11] Noel: I mean, I think some of this is temporary because we are spending 20% on debt, right? And like ideally in 15 months, once the credit cards go away, that number is gonna go sub substantially down.

[00:46:23] Um, some of these are choices that we’ve made, like the 5% of our income goes to charity. Like that’s obviously something and we’ve negotiated that ’cause that I initially was really hard nosed on that being a 10% number

[00:46:39] Ramit: uhhuh. And

[00:46:39] Noel: we have negotiated that down to 5%.

[00:46:42] Ramit: Is this sustainable? ’cause it sounds like you’re, you’re, um, like comforting me.

[00:46:48] Noel: I think it’s possible. I don’t think it’s fun.

[00:46:52] Ramit: What’s not fun? You have, um, a relatively new car. You have a place you rent, looks like a nice place. You have a dog walker, you have food. What’s not fun?

[00:47:05] Noel: I don’t know. I think the way we lived before was so nice. I would love to like have a little bit more of that back, which is part of the reason I want an alternative income.

[00:47:16] Mm-hmm. So

[00:47:17] Mike: Mike, tell me a little

[00:47:17] Ramit: bit about what you do for a living.

[00:47:19] Mike: So I do in-home sales, so I go to people’s homes and I sell ’em on, uh, bathroom remodels and showers. Okay. And is your, uh, salary, is it commission

[00:47:30] Ramit: based? How

[00:47:31] Mike: did, how do you get Yeah, a hundred percent. Hundred percent. A hundred

[00:47:33] Ramit: percent commission based?

[00:47:34] Mike: Yep. The good news is the TR trajectory has just been, uh, has just gone up uhhuh, but monthly’s the bigger swing than yearly. I’d say right now, you know, our lowest month, I think in January was, I think I brought in five or 6,000. Mm-hmm. Net It

[00:47:51] Noel: was like 4,500 was the lowest month like that, and the highest was $27,000.

[00:47:56] It Wow.

[00:47:57] Ramit: How do you plan around that?

[00:48:00] Noel: I made a plan. I,

[00:48:03] Ramit: hold on. I wanna come to you, Noel. One sec. But I know you only recently started getting involved in the finance, correct. So, Mike, how, how do you previously

[00:48:09] Mike: plan around that? I never did. I never did. Which is one of the main I wanted to ask you about it. I, ’cause I just didn’t know.

[00:48:18] My buddy always told me to save, save, save. ’cause he’s been doing it for so long. Mm-hmm. And we just never did. Okay. So,

[00:48:24] Ramit: and Noelle, what about when you started participating with the finances? What, what did you do regarding these swings?

[00:48:31] Noel: So I made a separate savings account. Uh, we have a separate savings account that’s the rollover fund.

[00:48:38] Since the biggest swing we saw was 4,500. I wanted enough to make up for that 4,500 in a rollover account. So the way we’re doing it is, um, 10,000 goes into the main account and then up to 5,000 goes into the rollover account. If the rollover account ever gets above 5,000, that goes into, uh, credit card debt.

[00:49:03] And on the second of every month we make the transfers, but we don’t make transfers any other times.

[00:49:09] Ramit: Okay. That’s pretty good. Uh, I like that. I like, I like the. Conceptually what you’re doing. Can I make a quick suggestion? Yes, please. So the fact that you are, um, building the, you called it a rollover fund based on 4,500 is a good start.

[00:49:25] I would encourage you to do six times 4,500 because if Mike were to get laid off or business were to dry up or whatever, one month of the lowest income he ever made is not gonna cut it like that will be destroyed very quickly consumed. I also wanna say, I don’t know that I typically don’t do the 4,500, the lowest amount he made.

[00:49:50] I do the amount that we need to keep the lights on. That’s a key difference. So the amount we need to keep the lights on means what we need to pay our fixed costs. Six times your fixed cost, which would be considerably higher, would be six times $8,711. And that’s separate from an emergency fund. By the way, that’s separate.

[00:50:11] An emergency fund is totally separate. This is just for people who have, um, big swings in their income as somebody who makes a hundred percent commission. Does. Please remember though, nobody fills up six months fast. It takes years.

[00:50:30] Noel: So, but is that smart to have that when like you have debt that the percentage that it’s growing in savings is not, does not equate to the percentage that you’re losing in the 27% credit card rate will just like destroy you.

[00:50:46] Ramit: This is an excellent question and so yes, if you have high interest credit card debt like you do, you should probably paying aggressively towards it. But at the same time, what if Mike loses his job like tomorrow? What would happen to you guys? I’d have to find another job. I’d

[00:51:03] Noel: have to borrow more money.

[00:51:05] Ramit: No, that’s not really an acceptable answer. We’d have to borrow more money. You guys are up to your eyeballs in debt right now. Yeah. Yeah. Over $244,000 of debt, so that’s not really great. You’d be in a bad spot. You don’t have enough to even get one day without an income. You have no savings. And so that is why sometimes you have to make a trade off that says, Hmm, we need to put some money in savings even though it’s gonna cost us more in the long term.

[00:51:40] Noel, you look like either confused or you disagree with me. Tell me you don’t have to agree with everything I say.

[00:51:46] Noel: I don’t know. I guess maybe I’m just looking at it too much as a math problem, as a very simple, like, this is this percent, this is this percent. Just follow the money uhhuh, but. I, I don’t, yeah.

[00:52:00] But if that’s

[00:52:01] Ramit: okay,

[00:52:01] Noel: I’ll obviously do whatever you say, but

[00:52:04] Ramit: hold on. I don’t want you to do whatever I say. I want you to take the principles that I talk about and adapt them for your own needs. I don’t mind if the guests I have on my show, including both of you, disagree with 30% of what I have to say.

[00:52:17] Four, I don’t mind. But I want you to understand why. So if this were just a math problem, why come talk to me?

[00:52:26] Mike: Hmm. That’s a great question. It’s not just a math problem for me. I mean, it’s, uh, what I, deep down while I wanna security and I just haven’t been able to find it, grasp it, build a plan for it.

[00:52:40] Ramit: Okay.

[00:52:40] Mike: And Noel.

[00:52:41] Ramit: If this were just a math problem, why come talk to me?

[00:52:44] Noel: Because I, I’m, I’m very new, I guess, to finances and maybe I’m just like looking at it as a math problem, but I don’t know the realities of like, what it looks like if someone loses their job and what it looks, you know what I mean? Like, I don’t know what, if that’s what makes sense.

[00:52:58] You know, not putting, accruing more credit card debt in the event of a disaster happening, but instead just having a savings account, even if it isn’t appreciating at the level that their credit card debt is.

[00:53:13] Ramit: I can give people the perfect freaking money plan, but if they just hate debt, they just hate it.

[00:53:22] They’re gonna go, I just wanna pay the debt off right now. Just get it off my back. Just get it off my back. And I have to account for that. I want you to account for that too. Noelle, you could roll the dice and treat this like a math problem, purely put all your money towards credit card debt and. Maybe you will pay it all off in two and a half years, and, and that’s great.

[00:53:45] More likely. Here’s what I think happens, I think in the next two to five years, one of you has some type of career pause interruption. It could be a layoff, downsizing, lateral move, salary, decrease, whatever that happens. I’m not saying it’s you two, it just happens. I think that, um, the two of you may be debt free, but if you were debt free tomorrow, would you have a healthy relationship with money?

[00:54:12] Probably not.

[00:54:12] Mike: No.

[00:54:13] Ramit: So as soon as you were debt free and you’re making a lot of money with the combined incomes, what would happen? You go right back into debt and then you’re playing this game for the next 40 years of your life. That’s why I’m not treating this only as a math problem. The math matters for sure, but there are so many other elements going on here.

[00:54:36] I wanna talk about the fixed cost. Here you have. $800 going towards groceries. Is that accurate?

[00:54:43] Noel: Uh, actually what we’ve been historically doing is 1200 and that’s not eating out. ’cause I’m the big spender when it comes to that. And I know I can change that. Um mm-hmm. But like, but what do you buy? But I would get the most expensive.

[00:54:56] Like if I’m gonna make capr, I’m gonna go and I’m gonna buy the fancy mozzarella B bal cheese. How much is that? I’m going to, what is that, like $20 I’m gonna get, it’s

[00:55:09] Mike: probably like 10 to 15

[00:55:11] Noel: for that one. Okay. I think so. If I’m gonna get, but I’m not looking at prices. I’m always getting exactly what I want and I’m just being honest.

[00:55:18] Like that’s kind of what it looks like. And then like, even like, sorry, just to give you an idea, but this isn’t part of our grocery budget, but I’ve, since then we’ve talked about it and I’ve, I’ve worked my way. But like Glade plugins, I would get the most expensive plugin one where like I’m literally spending.

[00:55:38] Like 150 to $200 a month on Glade plugins for a house.

[00:55:42] Ramit: Did you grow? Did you grow up poor?

[00:55:43] Noel: Yeah.

[00:55:44] Ramit: Yeah,

[00:55:45] Noel: I did.

[00:55:46] Ramit: Glade plugins, like this is a big tip off. Okay. A lot of people are gonna get really mad at me. I Ramit. Are you saying I grew up poor? ’cause I’ve gladed plugins. Maybe if you have like seven of them in your house, odds are pretty good.

[00:56:02] You grew up poor,

[00:56:04] Noel: I think. I thought we have money and now we, I don’t have to. I wanted to buy all the things I could never get.

[00:56:10] Ramit: I get that when I was

[00:56:11] Noel: younger.

[00:56:11] Ramit: And then how much do you spend on these plugins? You said a hundred bucks a month?

[00:56:16] Noel: Yeah, so I’m probably buying, they’re like $30 for a pack of five.

[00:56:21] I’m probably going through about four months. I get the most expensive one. The vanilla one is like the most expensive one. We’ve since switched and I budgeted myself to using five every two weeks and I’ve got the cheapest cent,

[00:56:34] Ramit: you know. Ramit Safety doesn’t like to judge. Okay. Okay. Re Ramit Safety wants to create a safe space.

[00:56:42] Is this gonna be the first time I violate my own rules and just tell people no more. Buying $1,000 per year of Glade plugins. When you have $244,000 of debt, how does that strike you?

[00:56:58] Noel: I didn’t know we had 200. I didn’t know when I was doing that. I really had no idea. Like I thought that we were making really good money and everything would always work out because it always has before.

[00:57:09] I think I used to be, I used to be what? Like you called? I wanna say like a dreamer or what did, what is it? It’s the one that like tends to be the get rich quick, quick steam. Yeah. That’s the dreamer type. The dreamer. I think I used to be, I think more like that, but that’s just because I would call him and I’d be like, Hey, I wanna get this.

[00:57:29] Does it fit in our budget? And then he would just basically. Look at and see how much incoming he made. Is it a good month or is it a bad month? And it was a good month, I can get it and if it’s not a good month, I can’t get it.

[00:57:40] Ramit: Wow. This, this is so fascinating, uh, on your fixed costs. I have questions because we have um, $316 a month on pets.

[00:57:49] What’s that?

[00:57:50] Noel: So he has $180 a month dog food. I think that’s not including, we mix two foods together. One is $180 a month. The other one is we get two bags of the green food that mixes in with it a month. And that ends up being like another $200. And is this a joke? $600 on He is our child. I guess it’s not, no, this is for

[00:58:10] Mike: real.

[00:58:10] Noel: This is, yeah. So we pet costs will include, I’ll include in that like if we go to the dog beach, you have to spend $15 for parking and like that should go into a dog fund. ’cause this is a, for the dog, if every time I buy ’em a toy or how

[00:58:24] Ramit: often or whatever

[00:58:26] Noel: a toy, probably a few times a month.

[00:58:28] Ramit: Hmm.

[00:58:30] Noel: Yeah. Damn.

[00:58:32] So a lot of money goes to the dog. A lot of money goes to our dog.

[00:58:36] Ramit: What’s the minimum you could spend on your dog? I know this, I know this sounds callous to all the dog owners, but we have somebody in $244,000 of debt. I have to ask the question, Noelle,

[00:58:46] Noel: how much was the Purina that we used to get?

[00:58:50] Mike: $72.

[00:58:52] Noel: So, and that would last how long?

[00:58:55] Mike: Six weeks I think roughly.

[00:58:58] Noel: Okay. So about $70 a month. We’ll just say that to be safe. And then, um, $33 a week for the dog walker. So $105 a month

[00:59:11] Ramit: total? Yeah.

[00:59:12] Mike: Yeah.

[00:59:13] Noel: Mm-hmm. That would be minimum, bare minimum. Yeah.

[00:59:15] Ramit: I’m taking this number down because we gotta get the number going in a different direction.

[00:59:19] What’d you say? Okay. One. 100 and what?

[00:59:21] Noel: 1 0 5.

[00:59:22] Ramit: 1 0 5. Love it. Look at this number. 87%. 85%. That’s what I’m talking about. You said you spent $3,000 on guilt free spending this month?

[00:59:30] Noel: Yes. Yes. What did, oh, over that.

[00:59:32] Ramit: What’d you spend

[00:59:33] Noel: going out? I bought shoes that were over a hundred dollars. We went to go get like some board games and spent $80.

[00:59:41] Mike: We added some friends in town, so we overextended ourselves. We wanted all of us to have a really good time at a theme park, so we bought certain things. Hmm. Uh. Yeah. What does that mean? Certain things? You bought what? Well, like, like we bought a cabana so everyone could be there.

[00:59:56] Noel: We have all the fast passes.

[00:59:57] We got a cabana. We just kinda like get whatever we want, whenever we want it.

[01:00:01] Ramit: Do you want to keep doing this?

[01:00:03] Noel: No, I wanna be more thoughtful about it. I still wanna be able to do nice things for myself, but I wanna make a choice about it. But you know what? I do wanna have a Glade budget. I don’t why I care so much about these plugins.

[01:00:15] Oh. But I do want a Glade plugin budget. I do want. Um, I, I do want to be able to get myself nice skincare.

[01:00:23] Ramit: Alright, let’s, uh, whatever. It’s your money. And then, uh, charity. We’re coming back. See, that’s

[01:00:29] Noel: hard. Yeah. That’s, it’s not that hard. I already bent like 5% and that’s like a religious thing for me. It’s like the most important thing.

[01:00:39] Ramit: I’m jumping in here because this is frustrating to hear and I know what you want from me. You want me to verbally eviscerate them for the choices that they are making for spending money on things like theme parks and cabanas and refusing to give up glade plugins, plus giving 5% to what she’s calling religious charity, better known as tithing.

[01:00:58] There’s a reason I’m not raising my voice and getting frustrated with them, even though it is frustrating. Think about it. If you were locked into something that became part of your identity, maybe it’s going to this specific gym. Maybe it’s treating yourself to a latte every Tuesday after you drop your kids off at daycare.

[01:01:17] If somebody like me came in and just berated you for the choices you’re making, how would you feel? Really, think about it for a sec. Think about something that is near and dear to you and your identity. Like if somebody came to me and started yelling at me about my choices to stay in luxury hotels, I would feel angry, maybe even ashamed, even if I was making a bad financial choice.

[01:01:39] I definitely would not want to listen to that person’s advice, though a lot of you have gotten too used to seeing random financial personalities screaming at people on the internet about their bad decisions, and you think that’s how behavioral change works. A lot of you believe that money is just about making decisions on things like bagels and what potatoes to buy.

[01:01:58] Money is far more complicated than that. Money is about the systems and structures around you like healthcare and your ability to attend higher education. It’s also about identity, which is often passed on from your parents and grandparents. And yes, money is also about personal responsibility.

[01:02:17] Everything that they’re describing, spending money on has become a part of their identity. Me sitting around and yelling at them about spending money on some commodity is not going to change their identity. It’s just gonna make them retrench. Agree with me for five minutes and then go right back to the thing they were doing.

[01:02:34] Think about their identity, showing their friends a good time when they visit. Having a house that smells good is part of Noelle’s identity, and tithing is too. So now instead of yelling at them, I’m gonna get more curious about where all of these hidden Scripts stem from. Can I understand a little bit more in aw will about how you grew up?

[01:02:53] Noel: Sure. Yeah.

[01:02:54] Ramit: Take me back to your childhood. If, if you think back to what your family said about money when you were young, what do you recall?

[01:03:01] Noel: My mom was always really smart with money. She had me at 18, um, moved all the way across the country. It was just me and her. Um, we’ve at times lived in one bedroom apartments where we’d have to share a bed.

[01:03:16] We, you know, would live off like. The cheapest food you can think of, like ramen and spaghetti noodles and like things that were very affordable. But I was, I was happy. I felt like my mom kept us feeling safe and, and, but we didn’t have extras. Like I would, we would go out to eat once a year. I’d get to go to Red Lobster on my birthday.

[01:03:37] Ramit: Wow.

[01:03:38] Noel: Um, and that I thought was so fancy. Mm-hmm. And then eventually, you know, you get older and you’re starting to see that other people have things that have like brand names or, or just like look nice and you realize you’ll never have those things. Um, I just feel like lesser

[01:03:55] Ramit: What was the brand that you first remember feeling envious of?

[01:03:59] Noel: So I grew up in the Abercrombie Age. Mm-hmm.

[01:04:02] Ramit: Mm-hmm.

[01:04:03] Noel: You know, so like that was the thing for girls, like the girls that were pretty, and you know, we’re all able to afford and wear Abercrombie and Yeah. And I’m overhearing 2-year-old gap and thrift store workflows, you know. Yeah. So

[01:04:18] Ramit: did you ever find yourself, um, purchasing something from Abercrombie?

[01:04:23] Noel: I have a large part of a large, even though Abercrombie is not what it used to be. A large part of my wardrobe is Abercrombie today.

[01:04:30] Ramit: What does it feel like to buy stuff from Abercrombie now as an adult?

[01:04:33] Noel: I feel good. Like, I feel like I made it. Like it’s that feeling of like I made it. Yeah.

[01:04:38] Ramit: Okay.

[01:04:38] Noel: Like, everything’s okay.

[01:04:39] Ramit: Is your mom still with us?

[01:04:41] Noel: Yeah, my mom is a college professor now. She was going through school the whole time that I was growing up.

[01:04:47] Ramit: Wow. So that’s why we were so broke. What did your mom tell you about money?

[01:04:51] Noel: Uh, I don’t know if she even told me anything. Like, I don’t feel like it was ever spoken. I think she was a very stressed person when I was younger.

[01:05:01] Sometimes I feel like she might rain on my parade a little bit by telling me when things are unrealistic in my dreams.

[01:05:07] Ramit: Like, like

[01:05:08] Noel: if I wanna do certain, like I told her that I. I really wanted for a retirement plan to like buy a house in Costa Rica and invest in that. And she was just like, that’s not smart.

[01:05:20] And that, you know, and she’ll just tell me when she thinks something isn’t realistic.

[01:05:24] Ramit: Oh.

[01:05:24] Noel: And like she’s raining on my parade. Mm-hmm. Like, I can’t have nice things or I can’t have, you know what I mean? Or when I do it, it’s like an act of rebellion almost.

[01:05:34] Ramit: Talk more about that.

[01:05:35] Noel: We are the, we’re the opposite.

[01:05:37] Like my mom and me, right? Like she had, uh, I love her so much, but we are different. Like we, I guess I’ll come back to this, like, I had a $60,000 wedding. Her wedding, she knew, wanted to have as cheap as possible. She will get her wedding ring off Amazon. I got, you know, both of us, like between us. I got a, how much were our wedding rings?

[01:05:59] I don’t even remember. It’s Mike.

[01:06:01] Mike: Mm. 10 grand.

[01:06:03] Noel: For both of, yeah. So yeah, she wouldn’t even dream of doing something like that, you know? And so when I do things like that, I think she’s kind of like, oh, you are bougie. I don’t know where you get that from, but

[01:06:14] Ramit: mm-hmm.

[01:06:14] Noel: At the same time, I, I think there is a slight bit of disappointment.

[01:06:18] Ramit: What is your reaction when she says that? Well,

[01:06:21] Noel: I wanna be def I wanna defend it. I think part of me just wants to be like, it’s, you know, like if I’m allowed to, to wanna be cute and I’m allowed to wanna have a nice wedding and I’m allowed to have my values and you’re allowed to have your values and they don’t have to be the same thing and neither of us is, right?

[01:06:40] Mm-hmm.

[01:06:41] Ramit: Mike, I’d love to ask about how you grew up with money. What do you remember your family saying about money when you were young?

[01:06:50] Mike: What I learned about money in the beginning, how I grew up is I got everything I wanted. I really did. I was in a middle class family. I remember one year I got like. A drum set and a PlayStation for Christmas, or a new 10 64 or something like that.

[01:07:05] But that’s just a lot for a kid. Um, I was the youngest of three. I have two sisters and, uh, I, I truly was the youngest one. I just got everything I wanted from what I can remember. Um, so when it came to like financial lessons, I just learned that I should be able to get what I want. Hmm. Um, my dad provided he, we were a one income household.

[01:07:31] My mom stayed at home, um, and my dad was, was working a lot. And then, uh, you know, I was too young to really understand the dynamic, but the, the parents got divorced and then, you know, my, my dad, his business didn’t work out that was providing so well for us, but I still felt like I got what I wanted. Um, you know, emotionally it was a kind of a whirlwind, but it’s, in terms of financially, I always felt like, you know, I played lacrosse, a very expensive sport.

[01:07:57] Mm-hmm. Um, got all my gear. Went on all the trips and I was in private school for, uh, six years. Um, yeah, I just seemed like I, I got what I wanted and then when I got my first credit card, it turns out there’s fees associated with that. I remember I like bought like nothing fancy, but like two $2,500 worth of watches.

[01:08:23] ’cause I just wanted it ’cause I had a, a credit card. Um, and, uh, then I, then I remember going into debt six or just not, almost not being able to pay my rent. And my rent was like 500 bucks at the time. And I went and pawn all these watches that I spent $2,500 on and they gave me like 200 bucks. And, uh, so that was my first lesson with credit card debt.

[01:08:46] What was the lesson? Couldn’t that’s, yeah, I, I, I think I’m just lying around my teeth because I didn’t really learn anything because I got into credit card debt way after that. Mm-hmm. But the lesson should have been, you know, live within your means. But I didn’t take that way. How long have you been in credit card debt?

[01:09:02] Since I was 20. Since I was 20. That’s 14 years ago. Yeah. I think it’s been twice where I’ve had over $20,000 worth of credit card debt. But I was able to get out of it, uh, being responsible, being, you know, paying off, just allocating everything to just credit card debt. And I was working a 60,000 year job and I got out of it in a year.

[01:09:29] And, uh, you know, after Noelle and I’s wedding, we, you know, we were in 40, but we were able to get outta that with my income. Plus the windfall we’ve got, which is

[01:09:40] Ramit: it all just feels a little frantic to me.

[01:09:43] Mike: Ugh. It is.

[01:09:44] Ramit: Like Fran. It is, it’s been frantic for decades, you know? Yes. Go getting a credit card, going to buy a bunch of watches, pawning ’em debt, pay it off.

[01:09:53] Do this. Yes. Make this income. Pay it off. That’s not how I think about my money and that’s not how I want anybody to think about their money. I actually want them to be calm and cool and Sure. Get a nice thing, get a couple nice things depending on your abilities and what you love, but calm and cool.

[01:10:12] Simple.

[01:10:14] Mike: Yeah. Not

[01:10:14] Ramit: rushing around and making one-off decisions. Question for both of you. How do you think your experiences growing up with money show up in this

[01:10:25] Mike: relationship? So I very much treated the money that I’ve made as mine and I’ve really, I’ve really never, as much as I’ve told her, as much as I’ve, you know, said you can get whatever, I’ve never subconsciously truly like, I’ve never considered it our money before.

[01:10:47] That’s honest. Alright, thank you very much. Noelle.

[01:10:51] Noel: Money is scary, I think is what I learned. So I avoided a lot of responsibility. I think it was very stressful for my mom. It was kind of a very serious thing that was maybe better if someone else dealt with it. And I think, you know, ever since then, I would let other people kind of deal with the financial situation and, and I would be a supporting player.

[01:11:15] Ramit: I do love hearing how people grew up with money, but if I’m being honest here, I’m not sure. Mike and Noel fully understand the connection between their childhood and how they behave with money today. Here’s what I notice with Noelle. She grew up not having a lot and everything she talks about screams, I don’t want to go back there.

[01:11:34] I’ll do anything to not go back there. And that shows up in how she chooses to spend her money on expensive pet food, on upgraded Glade plugins on Abercrombie. It’s a quiet way of rebelling against that scarcity that she felt when she was young. And for Mike, who shared that his parents didn’t leave him wanting for anything expensive, game consoles, sports equipment, drum set that created some compulsive behaviors.

[01:12:00] The same behavior that has had him in credit card debt since he was 20, and also has him checking his bank account 20 times a day. Now, I think candidly, the fact is they will eventually earn more money and quite soon, but until they create a shared vision, these behaviors are just gonna get amplified.

[01:12:19] Plugins and impulsive credit card purchases will probably escalate to buying expensive cars and $40,000 a year private school for their kids. Let’s keep going to see what we can do here. What will life look like when Noelle, when you start earning money? How’s that gonna change the dynamic in the house?

[01:12:36] Noel: Um, I think what’ll free us up hugely when it comes to like our savings, ourReg investments. Obviously right now you saw we were spending $80,000 on fixed costs. That will change.

[01:12:48] Ramit: Mm-hmm.

[01:12:49] Noel: Um, won’t be 82%. Won’t

[01:12:50] Ramit: be. Yeah.

[01:12:51] Noel: Yeah. We’ll get out of debt pretty quickly. I’m hoping the timing works out nicely because I am with kids, you know, working on having that currently we’re still, we’ve been, been working on that and you know, hopefully that lines up so that when they are ready to go to school, my income is there to provide for that.

[01:13:12] Ramit: Cool. So your income is, is on the way. Uh, when do you start earning an income?

[01:13:17] Noel: So I’m in my second year of law school. I’ve got two more years left.

[01:13:20] Ramit: I love that things are gonna change for the positive with an extra hundred thousand dollars a year. I agree, it’s gonna be awesome, but we can’t wait two years for that to happen.

[01:13:34] There’s no way. So we need to make some changes right now. I’m gonna put the CSP up on screen. I’m gonna ask the two of you to help me figure out what to do. Our goal is to bring the fixed cost number down to 60% or lower. You’re gonna have to make some tough decisions. The reason for this is that you do not wanna have to be a couple making $250,000 a year and treading water.

[01:14:00] In my opinion, this is the time to make a change right now before kids, before the second income comes in. Fix this problem, do it aggressively, and set yourselves up for the rest of your life to be successful. That’s my philosophy. Are you down? Absolutely. Alright. I’m putting it up on screen. I want you to help me figure out how to get this fixed cost down to 60%.

[01:14:25] Let’s see what you can do. Right now we’re at 85%. Uh, Noelle, you first pick a number. Talk about it.

[01:14:32] Noel: I could probably get groceries down.

[01:14:34] Ramit: It’s currently 800. You mentioned it was 1200. You could get it down to 800. It’s 800 already?

[01:14:40] Noel: Yeah, I could probably get it down further.

[01:14:42] Ramit: Tell me what number

[01:14:44] Noel: I think it’s possible to do 600.

[01:14:46] How do you feel about that, Mike?

[01:14:47] Ramit: I’m pretty confident in that actually. $600 a month for two people. That’s pretty low. I’m gonna put 700 ’cause even I’m like, yo, this is nuts. We can’t do

[01:14:55] Noel: Okay.

[01:14:57] Ramit: 700, which means goodbye to those mozzarella balls. Are you down? Okay.

[01:15:01] Noel: Yeah.

[01:15:02] Ramit: Glade, we’re coming for you in a second.

[01:15:05] Glad I know you’re not part of the grocery store.

[01:15:06] Noel: Glad Plugins is $16 a month. That’s it.

[01:15:10] Ramit: Okay. Well I’m, it’s

[01:15:11] Noel: on a subscription with Amazon, so it just automatically comes.

[01:15:15] Ramit: Good subscription for great. This is insanity. It gets worse. And I can’t even believe that I have zero things on subscription. This is crazy to me.

[01:15:24] Noel: Will you save 15% if you do it that way?

[01:15:27] Ramit: No, that’s not how you think about it. You know, you save a hundred percent if you simply don’t buy ’em.

[01:15:32] Noel: That’s true.

[01:15:33] Ramit: What else you want to cut? Alright, Mike, your turn. I can cut all clothes entirely. Okay. That’s a hundred bucks a month. Is that you? Yeah. Okay, great. Zero.

[01:15:42] Done. We’re down to 83% Noel.

[01:15:45] Noel: Okay. So we have pet insurance. We spend $110 a month on like health insurance for our dog.

[01:15:51] Mike: 110? No, no, 110. I think it’s like, uh

[01:15:53] Noel: oh. No, no, you’re right. ’cause I’m just for, because it comes out annually and we’ve got one coming up in a couple months. So I have us budgeted as 110 because that’s what we need to save each month in order to afford it.

[01:16:04] And a few months.

[01:16:05] Ramit: Can I point out what’s happening here? Yeah. You’re deep in the weeds. Okay? You are. You’re looking at individual line items and you’re like, is this worth it? This comes out every four months, et cetera. You are never going to make radical changes starting in the weeds. Hmm. Never. You could eliminate the entire pet insurance.

[01:16:26] You could eliminate your pet. It won’t change a thing. I need you looking at these numbers and I need you to focus with me

[01:16:33] Mike: what’s next because of our situation. It just depends on how you feel, Noelle, about the charity. I know that was coming

[01:16:41] Noel: up.

[01:16:42] Mike: I,

[01:16:43] Noel: I think I feel guilty or afraid that like really scares me.

[01:16:49] I think like, ’cause the whole point of it is right that like, it’s about trusting, it’s about trusting that God trusting in God. And I feel like taking away that is like telling God I don’t trust him. And by doing that I feel like,

[01:17:04] Ramit: yeah,

[01:17:05] Noel: I like I’m being. Self-reliant and greedy, and I don’t know, it feels wrong.

[01:17:13] Ramit: Is self-reliant and greedy, like correlated? Like what if you’re just self-reliant but not greedy?

[01:17:20] Noel: I think self-reliant is still bad.

[01:17:23] Ramit: Why?

[01:17:23] Noel: I guess just being like, I think you need to understand some of this, the background of like being sober, but like, you know, the working like 12 steps. Like the big thing is like that I am, I can’t handle things on my own and like trusting that God takes care of it.

[01:17:41] If I like, you know, work towards reducing my defects. Relying on God being of service. Yeah. And like handing my money over is an active like service.

[01:17:53] Ramit: Okay. And d, does the amount matter? Like what if it was 50 bucks?

[01:17:58] Noel: I don’t think 50. Do 50 bucks seems a little, ’cause then it’s not really because. I don’t know.

[01:18:05] You

[01:18:05] Ramit: can I, can I ask a question? First of all, let me say, if you choose to keep this, I won’t fight you on it. It’s your money. Okay. And, and anytime somebody comes on here and they go, I tithe or I give money, uh, I go, are you sure you wanna keep it? They go, yeah. I go, cool, we’ll work around it.

[01:18:19] Noel: We can work around it.

[01:18:20] Okay. Okay. However, I think I’ve already, I’ve, I literally went from 10, 10% to 5%, so I’ve already cut that in half

[01:18:27] Ramit: since we talked. Yeah. I, I wanna, this is a very good point because I want you to change something that I’ve noticed that you do, which is benchmark against where you were a couple of years ago.

[01:18:37] Can I just be really candid with you? You were putting yourself into debt. You were in debt, so. That’s like someone who spends like a million dollars a month for a few months and they’re like, whoa, I’m only spending a hundred thousand dollars a month now. That’s not the place to benchmark. You need to benchmark starting at zero.

[01:18:53] Noel: I thought I already cut it down to the bare minimum and cutting it down further. It feels like cutting off fingers

[01:19:00] Ramit: right now. You spend $6,000 a year on charity and your income is $156,000. You’re in $244,000 of debt. So if you tell me Ramit, I wanna keep it at this amount, I will keep it. But if you tell me Ramit, I want to give of myself, I want to give some money, and I know that right now we’re in a crisis.

[01:19:23] I can give 50 bucks and as we make more money, I want that built in the plan that we are gonna increase it to a hundred, to 500 to a thousand, and eventually we will donate more than we ever would’ve donated. We can build that too. You tell me. I have a lot of empathy for how difficult this decision is for Noelle.

[01:19:43] Her relationship with Faith is deeply intertwined with her sobriety, so to her, tithing is deeper than simply being charitable. It represents something you and I probably don’t appreciate, but the fact is it’s also hurting them financially, which is why I am making sure she knows she has several choices when it comes to tithing with $244,000 in debt.

[01:20:06] The fact remains, they are going to have to make some serious changes to how they spend their money and how they relate to money Together. We’re gonna answer this question about tithing and dig into the rest in part two. Next week we will finish the rest of this conversation and I promise you’re gonna want to tune in because I invited them five weeks later to come back and show me the changes they have made.

[01:20:29] You will not want to miss it next time. On Money for Couples, this was not easy. There was a lot of hikes with money.

[01:20:36] Noel: That was my moping for the first couple of weeks. I was just not living in

[01:20:38] Ramit: reality, kids will go wild if they don’t have certain constraints. Well, guess what? As adults we’re no different.

[01:20:43] Mike: Debt for me is already

[01:20:45] Ramit: a fire lit. I can’t stand it. It drives me crazy. It took you a while to get into debt. It’s gonna take you a while to get out.

[01:20:50] Noel: The way that I was looking at money before was so childish, it didn’t mean anything to me.

[01:20:56] Ramit: We can’t set up a financial system that requires us to be perfect ’cause we would always fail.

[01:21:02] Noel: Like if we have kids, are we cool with our kids potentially feeling like fully abandoned and being just raised by nannies just so that I can have nice things.

[01:21:11] Mike: I, I’m terrified of us. This, of our old situation not changing. Make sure you hit subscribe so you don’t miss

[01:21:18] Ramit: part two of this episode.