278. "We spend 108% of what we make. Are we screwed?"

Money For Couples with Ramit Sethi

Ramit Sethi helps newlywed couple Grace and Chris confront their financial chaos despite strong assets and low housing costs. They spend 108

Key takeaways

• Spending more than you make leads to financial instability even with high net worth.
• Avoiding money conversations creates emotional strain and prevents real change.

Main topics

• Couple financial dynamics
• Avoidance of money conversations

Notable quotes

"I feel like I'm crying for help on a sinking ship and no one is coming to help me."

"We're going out. Amazon packages are coming to the door and we're going out to eat. And then that just kind of stacks up."

Conclusion

Grace and Chris acknowledge their financial avoidance and emotional barriers but must

Transcript preview

Speaker 2 (0:00) If you are looking for a better job right now, you can keep sending your applications into the void, you can keep rewriting your resumes, you can keep wondering why nobody is responding, or you can learn what's actually happening after you hit apply. On Wednesday, September 16th, Google recruiter and career coach Nikki Slavich is revealing the hiring decisions that most people never see, including what makes a recruiter keep reading, and when to apply, even if you don't meet all the qualifications. This live event is free, and if you are looking for a job, you will not want to miss it. RSVP today at iwt.com slash expert session. Speaker 1 (0:42) I feel like I'm crying for help on a sinking ship and no one is coming to help me. Speaker 2 (0:46) Whoa, what's that number, Grace? Speaker 1 (0:49) Wait, do I? Speaker 2 (0:51) 108%. What does that tell you? That Speaker 1 (0:52) we spend more a month than we make. You have no mortgage. Correct. Speaker 3 (0:56) So where's the money going? We're going out. Amazon packages are coming to the door and we're going out to eat. And then that just kind of stacks up. Speaker 1 (1:03) We had a conversation. I need this amount and this amount for the taxes and the monthly bills from your paycheck. But then I'm watching him get beer after beer, buying other people drinks. You Speaker 2 (1:11) two are skating on very thin ice. If I looked at these numbers, I go, give me a machete. I will cut this so aggressively. I Speaker 1 (1:19) would try and sit down and have conversations about it. And he wouldn't engage in it. I Speaker 2 (1:23) don't know exactly Speaker 3 (1:24) how to talk about it or what's Speaker 2 (1:27) really going on. You all are on the path to losing what you've got and potentially having to sell the house in the future. But that still has not made you have honest conversations about money. And you're married and talking about starting a family. Speaker 1 (1:41) Can I take a sec? Speaker 2 (1:46) How many times have you watched couples argue about money on this show? Might even be the reason that you watch. And I don't mind because I think arguing about money is natural. It is the way that most of us relate to money. And I would rather have you disagree, even argue about money, than not talk about it at all. Today, I'm speaking to Grace and Chris. They are 30 and 29 years old. They've been married for six months. They want to start a family. And they can't even bring themselves to have healthy conversations about money. They don't argue. They don't disagree. They simply do not talk about money at all. I'm going to pull up their conscious spending plan. Assets, $390,000. Investments, $119,000. At age 29 and 30, that's very good. Savings, $7,350. That's lower than I want to see. Debt is $22,000. Total net worth, $494,000. Okay. So far, so good, but look at the next number. Fixed costs, 108%. What's going on here? Let's meet Grace and Chris. Let me take a look at the application because Grace, you wrote something that caught my attention. You wrote, we are unable to make big life decisions like starting a family because he refuses to engage or participate in any of the money management while I know that we are struggling and need to make changes. Do you remember writing that? Speaker 1 (3:15) Yeah. What Speaker 2 (3:17) was going on at the moment that you wrote that? Speaker 1 (3:18) That was a tough day for me. I think there, you know, we had had a really great conversation about where we wanted our life to go next and that we are 100 % on the same page about starting a family. But whenever I try and have conversations with Chris about it, it's usually, I know what the situation is. I just need to make more money. And I feel like I'm... crying for help on a sinking ship and no one is coming to help me. And it feels very chaotic, which causes a lot of stress. And then when you have a partner who isn't really ready or unable to have those conversations, it makes it really hard to kind of offload and partner on things. You Speaker 2 (3:54) said it feels chaotic. What feels chaotic? Speaker 1 (3:57) Our day-to-day living expenses, our monthly expense, like just the financial aspect of our life feels chaotic and very unstable. Speaker 2 (4:05) Okay. Chris, what's your take? on what Grace just said? Speaker 3 (4:09) We don't really set checklists. We don't really have plans. And I do take responsibility for that too because I don't know exactly what to do or how to talk about it or what's really going on. Then we're going out and doing this and Amazon packages are coming to the door and we're going out to eat and friends, family. And then that just kind of stacks up and then we look back at it and we're kind of sinking. Do you want to have the conversations about money? Yeah, I'm very open to it. Open to it? Or do Speaker 2 (4:50) you want to have them? Speaker 3 (4:51) I want Speaker 2 (4:52) to. Speaker 3 (4:52) Okay. I want to. She makes more money than I do in our situations. So I feel like... I feel like I don't have a whole lot of like control in it Speaker 2 (5:04) necessarily. Speaker 3 (5:06) It's like I, you know, paycheck to paycheck, she asks me for money and I give it to her and that's kind of it in my role. I just. I feel like I'm just kind of like the side, like the side person. You know, she asks for what she needs for our, you know, taxes and our monthly stuff. And I just kind of give it to her. And that's just kind of how it goes. Speaker 2 (5:29) That's the role, as you put it. Speaker 3 (5:31) Yeah. Who created that role? She did. Speaker 1 (5:34) Well, I did, but it was because I would try and sit down and have conversations about it and he wouldn't engage in it. So I'm like, okay, well, if someone needs to figure out how to manage it, I'm going to manage it. Is Speaker 2 (5:44) it working? Speaker 1 (5:48) It's working in the sense like I'm good at numbers and I know what needs to go where it's not working in the sense that I know what needs to go where but I also am not a good person to say no to things and we also prioritize social and like experiences beyond what we can. Speaker 2 (6:07) What does that mean? Speaker 1 (6:09) Like. We, for example, we had family in town and they wanted to go to a baseball game. And so we're like, yeah, let's go. Knowing farewell, we had $100 to spend for the whole weekend and that was not going to cut it. Oh. Speaker 2 (6:20) And Speaker 1 (6:21) we still went. Speaker 2 (6:22) How'd you pay for it? Speaker 1 (6:23) I pulled out of the money that we used to pay our taxes at the end of the year. Oh. Yeah. Speaker 2 (6:27) Okay. So are you good at it? Speaker 1 (6:30) No. Speaker 2 (6:31) Chris, is she good at it? Speaker 3 (6:32) She is very good at. writing the plan. I see her do it all the time. She has her sheets out. She, this goes here, this goes here, this goes here. Speaker 2 (6:42) And Speaker 2 (6:44) life happens. Execution Speaker 1 (6:45) is poor. Yeah. Speaker 2 (6:47) Planning is good. Execution is good. Planning's great. And then are you skilled at money, Chris? No, I, no. Okay. When was the last time you talked about money in a substantive way? Speaker 1 (6:58) I wouldn't say really ever. From my perspective, whenever I try and bring up like, hey, I want to sit down and go over this plan. Like I'm stressed about this. I want, I want to talk this through. This is where we're at. How. It's kind of like, I know it's bad. I just need to get a new job with more money. It's fine. And that'll fix it. And I'm Speaker 2 (7:14) like, Speaker 1 (7:14) no, Speaker 3 (7:14) that. Speaker 1 (7:14) What's behind that, Chris? Speaker 3 (7:16) I think it's on me. I think I just kind of curl into a little shell. Speaker 3 (7:22) Don't talk about it. Because? Because I'm just avoiding it. Speaker 2 (7:26) Okay. Speaker 3 (7:27) Honestly, yeah. Speaker 2 (7:28) Have you ever acknowledged that before today? Speaker 3 (7:31) Probably not. Speaker 2 (7:32) No. I Speaker 3 (7:34) guess I just don't feel like stable enough. I just, maybe it comes more of like an embarrassment that she. Talk to her. Yeah, that you make more money than me and I'm lower than you on that poll. Speaker 3 (7:50) Yeah, it's kind of embarrassing as being the male in the relationship. And that's Speaker 1 (7:57) something. Sorry. Speaker 2 (7:58) That's powerful. I appreciate that. Can I ask a couple questions about that? Yeah. Okay. Did you ever make more than Grace? No. And you mentioned it's kind of embarrassing as a man. Yeah. What's that? Speaker 3 (8:16) I don't know. You're supposed to be the man of the house, the taking care of everything. What does that mean? Taking care of what? You know, bills and the house. And the main thing is just the bills. Okay. Speaker 2 (8:30) So that's what a man does. And then what does a woman do in this vision? Speaker 3 (8:35) Well, she can my goal would be for her to do whatever she would like to do. Oh Stay home have a job do whatever just whatever she would like to do you ever play a sport soccer Football tennis. Yeah, I played baseball basketball football growing up. Speaker 2 (8:53) Okay, that's a lot of students now I'm like anything about baseball baseball Speaker 1 (8:57) was his main one which Speaker 2 (8:58) one baseball baseball. Okay. Hold on for Speaker 1 (9:01) football. I need to put I know even Speaker 2 (9:02) less about football. Let me just put myself in the mindset. Okay. You all are on a baseball team Speaker 3 (9:06) and Speaker 2 (9:07) you play first base. She's on your team. Speaker 3 (9:13) And Speaker 2 (9:13) I go, hey, what position does she play? And your answer is, I just want her to do whatever she wants. Have you ever heard that said on a team? No, because Speaker 3 (9:22) normally people have like certain skill sets for different positions. Speaker 2 (9:27) Agreed. So she's playing shortstop or she's outfield or whatever, right? Grace, what do you think about this team metaphor? Speaker 1 (9:35) I like the team metaphor and that's what I want. And that was what I was going to kind of chime in. I'm not so much of like, I make more, you make less. It just doesn't really matter to me. I look at it as we're a team. More or less, put them together, it's one whole thing. Speaker 2 (9:48) Is this working? Probably not. This is a dynamic as old as time. We've seen it many times on this very podcast. We have a husband, not particularly engaged with money. Whatever, she's handling it. She's better at math than I am. Then we go over to the wife. Wife is the one furiously keeping spreadsheets and doing random ways of tracking things. Does she know what it all means? Not really, but she manages the day-to-day. And when I ask them, is it working? They both go, no. But nothing changes. They have their roles and they are seemingly intractable. How long have the two of you been together? Speaker 1 (10:29) Seven years. Speaker 2 (10:30) Seven years. Married six months ago, right? Speaker 1 (10:32) Yeah. Speaker 2 (10:33) Congrats. Thank you. Okay. I understand in your application, there's been a discussion about starting a family. Speaker 1 (10:39) We're kind of on the same page about starting the family. It really is just my, in the back of my mind, like, okay, we're on the same page of what we want to do, what we have in mind, what our family will look like. How many kids? Two. Speaker 2 (10:50) Two kids? Yeah. Speaker 1 (10:51) Cool. And Speaker 2 (10:52) is there a timeline? Speaker 1 (10:56) Soon. Yeah. Within the next year. Speaker 2 (10:58) Cool. Soon. Okay. Everybody's on the same page. Great. Speaker 1 (11:01) So right. We're on the same page with these conversations. We have wonderful conversations. The, you know, the idea is great, but then in the back of my mind, I'm like, okay, now where is any of the money going to come from to pay for that child's food and daycare, daycare? Oh my God. Um, things like that. So that's where the disconnect gets kind Speaker 3 (11:19) of started. I think that, uh, Like we're very much on the same page. We want the same things with like starting a family. The biggest thing with us is we just don't bring in like enough money for. What we want. That's it. Speaker 2 (11:35) That's the problem. Speaker 3 (11:36) Well, it's some of Speaker 2 (11:38) it. Speaker 3 (11:38) I Speaker 2 (11:39) would say. What's the rest of it? Speaker 3 (11:40) Just like lack of motivation. And on my side of things, she's a doer. I get very comfortable in my situations and I don't like change. I think that's like the big thing that she gets frustrated with me about. That you're not Speaker 2 (11:59) motivated. Speaker 3 (12:00) That I just get. complacent and I just get kind of stagnant in my day-to-day routine. How do you get connected about that? How do you reconcile that? If I could change one thing about myself, that would be it. I hate not being comfortable, but nothing's comfortable. Like going out doing job interviews is uncomfortable. This is uncomfortable. Talking to random people is uncomfortable, but... Those are just things that move you along and even make you a better person. Speaker 2 (12:36) You talked to Grace Speaker 3 (12:37) about Speaker 2 (12:37) this? Have you told her this? No. Speaker 1 (12:39) No? Speaker 2 (12:40) Grace wants to say, I've been telling you this for years. Go ahead, Grace. Have your moment. Speaker 1 (12:45) No, I have known that that is in there and I've known that that is the thing, right? I've known that that is his thing is that he is so capable. But he just hates being uncomfortable. I Speaker 3 (12:58) just think that I need to stop thinking about myself. And I need to think more about our future. You would think that that would be enough to light the fire and to figure something out. But? I'm just kind of stagnant sometimes. Speaker 2 (13:15) Is this a thing where it's like, hmm, this isn't working. Let's have kids. That'll fix it. No? My team at IWT is fully remote, and I love that. Because of that, we're constantly sending messages through Slack, through Google Drive, through all kinds of different technologies. And that's why my team is such a big fan of WhisperFlow. WhisperFlow turns the way you naturally talk into clean, ready-to-send text in any app on any device. I'm talking about Slack, Gmail, Notion. iMessage, even chat GPT and Claude on Mac, Windows and Android. With Whisperflow, you just hit a hotkey, speak, and the text appears way faster than typing it. Plus, it's smart, it's adaptive, so you don't send a block of huge incoherent text. And unlike other dictation apps, It corrects mistakes, it gets names right the first time, and it can format bullet points and lists on the fly. I find that particularly useful. So if you send tons of emails and messages every day, if you want to be able to capture your own ideas just by talking, Whisperflow is a no-brainer. Get one month of Whisperflow Pro for free at whisperflow.ai slash Ramith. That's whisperflow.ai slash Ramith. W-I-S-P-R flow.ai slash Ramit or click the link in the description. It's kind of funny when I talk to small business owners who are super frustrated by the vendors that they work with. Because I'm like, y'all know you're the boss, right? You can fire them. You can make changes today. So if you don't like the platform that you are working with, move off of it. I've done it many times. If a CPA that you are working on goes dark on you after April, find somebody who's better. And that is where our partners at Gelt come in. 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Speaker 1 (16:06) I believe in him so deeply and I know he's so capable of like moving on to the next thing, but he just gets in his own way of his own initiative. Speaker 2 (16:13) And Speaker 1 (16:14) I think that's what holds him back is more of himself because it's not that he's not capable. It's not that he cannot move on to the next job or the next thing. Do Speaker 2 (16:22) you find yourself encouraging him, giving him advice, you know, if you just do this or if you say this at work, that kind of thing? Speaker 1 (16:29) We're navigating that, I think. And that's something that we actively work on outside of here in our own. therapy. Um, because yes, because I am a helper. I want to be a helper. And so I, I will admit full stop. You watch me do it. I love to fill in his gaps because I know what I think he's trying to get at, but not. And I need, I know I need to control that better in myself. Um, but I hate, I don't like to see people struggle or, um, have people be uncomfortable. And so when someone I love is struggling and uncomfortable, then I want to step in. What Speaker 2 (17:00) if I told you that I love that? Speaker 1 (17:03) It's good to struggle and be uncomfortable. And that's where growth happens. And I know that, but it's easy for me to do that in my career because I do that all the time. Which is? Speaker 2 (17:12) I'm Speaker 1 (17:12) a therapist. Okay, Speaker 2 (17:14) amazing. And then you are in therapy as well, couples therapy. Yeah, and Speaker 1 (17:18) individual, yeah. Amazing. All the things. Speaker 2 (17:21) Okay, and Chris, what's your Speaker 3 (17:22) career? I'm a warehouse manager for an industrial sales company. Speaker 2 (17:26) Great, okay. Is there a recent conversation where you can recall where you... clashed or disagreed about money? Speaker 1 (17:34) 100%. Go ahead. It was just recently. We were at that baseball game and everybody knows you want a beer at a baseball game, you're running about $25 a beer. And we had a conversation prior to going into the weekend of like, hey, I need this amount and this amount for the taxes and the monthly bills from your paycheck. You've got 100 left to spend for the weekend. Like, just know that. And we had that conversation and then we get to the baseball game and I'm... watch and I want him to have fun. I want him to have fun. But then I'm watching him get beer after beer, buying other people drinks. And I'm like, okay, a hundred dollars is long gone. So what now we're supposed to go to dinner and do other things with this family all weekend. Where is that coming from? Speaker 2 (18:13) Where was the actual conversation? Where did that happen? Speaker 1 (18:16) Miller park. Oh, Speaker 2 (18:18) oh yes. At Speaker 1 (18:19) the Speaker 2 (18:19) game. Speaker 1 (18:20) So Speaker 2 (18:20) can we go through that? Can we actually recreate it? Speaker 1 (18:23) I was like, Hey, uh, Speaker 2 (18:25) talk to him. Speaker 1 (18:26) Hey. Like that's your fourth beer. Like where's the money coming from for that? Like you know we had $100 and how are we going to pay for dinner tomorrow with your family? Speaker 3 (18:35) I don't know. My family's in town and we're just having fun so we'll figure it out later. Speaker 1 (18:40) And then I got up and walked away because I was like I'm not going to, this isn't going to go the way I want. We're not going to have a productive conversation. I'm just going to go sit by my in-laws. So I moved seats. Speaker 2 (18:49) What happened later as you went to dinner and paid for more things? Speaker 1 (18:53) Um, that's where I pulled from our annual funds. You Speaker 2 (18:57) didn't talk to each other at dinner about, are we paying and how are we going to pay? Speaker 1 (19:02) Nope. I had just moved some money and was like, well, I'll figure it out later. Speaker 2 (19:06) Okay. So that's interesting. So Chris, you said we'll figure it out, right? Yeah. And then who's we is going to figure it out. Speaker 2 (19:16) You're gesturing at her. Grace. Grace is going to figure it out. So really it's you're going to figure it out later. Yeah. Grace, where did you pull money from? Speaker 1 (19:25) So we own our home. So the money that we pay, we don't pay a mortgage, but we have like the taxes at the end of the year. And so I have, we have like a short money market account. And so what I do is I collect that money each month and then I put it in there to grow. So this is a terrible way to think about it. And I know that this is a pattern, but I pull from that money because I'm like, well. I can just hope that the short money market grows enough to make up for the 150 I had to borrow from it. Speaker 2 (19:49) Oh. Yeah. Does it work? Speaker 1 (19:51) I don't know. Haven't checked. Haven't checked. Hoped Speaker 2 (19:54) it Speaker 1 (19:54) worked. I actually love the Speaker 2 (19:55) answer. I love that you didn't even say no. You go, I don't know. I Speaker 1 (19:58) have no idea. We just pray it. It's working. I don't know. Speaker 2 (20:01) Why not just tell Chris, all right, hey, listen, I understand you bought the beers. I wouldn't have done it. You did it. You got to figure out where the money's going to come from. Speaker 1 (20:12) I don't know that I'd get done. I get anxious that it won't be fixed and then it'll be a problem I have to fix later. What Speaker 2 (20:18) if he has to fix it? Speaker 1 (20:19) That would be lovely if I would not have like a full anxiety freak out about it. I'm a very like, like I said, anxious kind of type A. Speaker 2 (20:29) I Speaker 1 (20:29) don't know that I trust him to fix it because I don't know that he understands. He's not sat down with me to look at any of the numbers or anything of what I'm doing. So I guess my thought is like, how could he fix a problem that he doesn't even know exists because he doesn't know the foundation of the problem? Speaker 2 (20:42) Maybe if you just keep figuring it out yourself, then one day he'll magically get it. Speaker 1 (20:46) No. Speaker 2 (20:47) No? Speaker 1 (20:47) No. No. Speaker 2 (20:49) Chris? Yeah, no. No. And this is the pattern, right? Speaker 1 (20:52) I know the pattern, but I cannot seem to change it. Speaker 2 (20:55) Can you tell me how money flows in your relationship? Where does the money go? You both work. What happens to the money then? Grace? Speaker 1 (21:04) Yeah. So I get paid once a month. He gets paid weekly. Like my paycheck immediately goes towards our monthly expenses and that's pretty much it. So mine, I don't really have any of after. Like mine is put in and immediately distributed. And then his each week is distributed differently depending. And then also out of his paycheck is our gas and grocery money. You Speaker 2 (21:25) mentioned as incomes variable, right? What if he didn't make enough to cover groceries? What would you do? Speaker 1 (21:31) I try to prioritize making sure those annual and monthly bills are paid. And then I lower the amount of money we have for groceries. So you're just eating ramen out of the pantry. Has Speaker 2 (21:41) that happened? Speaker 1 (21:41) Yeah. It Speaker 2 (21:42) starts to taste boring after a little bit. Which kind of ramen do you get? The chicken one. Top ramen? Yes. The orange one? Yeah. Speaker 1 (21:48) I love that. It's good. It's good. It's good. And I've mastered it in a microwave. Oh, Speaker 2 (21:54) okay. Wow. Speaker 1 (21:55) But no, it's not ideal. Is Speaker 2 (21:58) your money joint? Or is it separate? Speaker 1 (22:01) So it comes in separate, obviously, but then he just transfers over to me and I disperse it between our accounts. Okay. Speaker 2 (22:07) Do Speaker 1 (22:07) you Speaker 2 (22:08) have any joint accounts? Yes. Speaker 1 (22:10) It's been on a hiatus for a little bit, so we have not been able to put anything in it for a while, but that's usually like, hey, let's put this much in and he'll send it. We both have access to it, so we can send the money into it. Speaker 2 (22:22) Okay. I noticed that when I'm asking about the account flows, Grace, you're talking. Chris has been silent for quite a while. Chris, what's going on with you? I Speaker 3 (22:30) think just because she's just more knowledgeable and that I just... I don't really know what I'm doing. So for the most part. Speaker 2 (22:38) Okay. What do you notice about these roles that each of you are playing? It sounds very individual to me. Not, there's like no Speaker 3 (22:47) teamwork. It's like, oh, hey, I'm going to do this. Oh, okay. Speaker 1 (22:49) They're very passive. Speaker 3 (22:51) Yep. Speaker 1 (22:51) There's not much actual interaction. Speaker 2 (22:54) Why? I don't know. Speaker 1 (22:56) Avoidance. Speaker 2 (22:57) Yeah. Avoiding Speaker 1 (22:58) argument, avoiding disagreement. Speaker 2 (23:01) Yeah. What realizations are you having right now? Speaker 1 (23:04) I thought I had a handle on it more than I even did. And now talking through this, I realize I'm much more passive than I thought I was. I try to be the planner. I try to be the executor and engage others. Speaker 2 (23:15) But Speaker 1 (23:16) the follow through isn't great. It's kind of just in the clouds. Hoping that it works out. Speaker 3 (23:21) Chris? Well, I have no idea what I'm Speaker 2 (23:24) doing. Okay. All right. So there's work to be done. Speaker 1 (23:28) Yes. Speaker 2 (23:28) Let's put it that way. Okay. I'm going