270. “We’re sacrificing our retirement to pay for our kids’ college”

00:00:00:21 - 00:00:05:04
Ramit
You are spending the most amount of money we pay for our kids college.

00:00:05:06 - 00:00:09:13
Mia
If you say, well, give yourselves more money and don't give money to the kids, that feels selfish.

00:00:09:14 - 00:00:12:12
Jake
Growing up in the Midwest, you just save money than you die and you give it to your kids.

00:00:12:12 - 00:00:20:12
Mia
My anxiety increases because a budget has always been really hard for me. There's always this tension of, you know, we can't even go out to dinner this week.

00:00:20:13 - 00:00:23:20
Jake
I feel like this pressure, just like I'm like, gosh, here we go.

00:00:23:21 - 00:00:26:10
Ramit
You are now spending more than you make every.

00:00:26:14 - 00:00:27:16
Jake
It explains the savings.

00:00:27:17 - 00:00:29:07
Ramit
How's that feel to you?

00:00:29:08 - 00:00:30:00
Mia
Scary.

00:00:30:01 - 00:00:34:01
Jake
That's why we're here. I just want someone to put their arm around me and say, sign. This is what you're supposed to do.

00:00:34:02 - 00:00:45:11
Ramit
That person doesn't exist. What if, instead of following that feeling, I followed the numbers by connection, by conversation, and by a rich live vision.

00:00:45:13 - 00:00:52:19
Jake
In 20 years, I don't want them flying to California to have your kid tell them about money.

00:00:52:21 - 00:01:15:13
Ramit
You know, in America, we do some pretty funny things with our money. In the name of the kids, extracurriculars, huge birthday parties, SUV when they are two months old. And college, of course has to be fully funded. Now, I don't have a problem with any of those things, as long as they are intentional and as long as you ran the numbers.

00:01:15:15 - 00:01:35:11
Ramit
The problem, of course, is almost nobody does that. Most parents simply follow a script, and that script often costs them their own financial future. Today I'm talking to Mia and Jake. She's 40. He's 38. They've been married for four years. They have a blended family with three children, two from Mia's previous relationship and one child that they share together.

00:01:35:11 - 00:01:57:24
Ramit
And this idea of paying for their kids college is causing resentment between them. Mia applied, and here's what she wrote. I don't think either of us realized how difficult it was going to be to create a stepfamily. Money is a real sticking point because my ex-husband does not contribute very much, and I want to provide my kids with what I can because we're able to.

00:01:58:01 - 00:02:35:12
Ramit
Okay. Pretty complex situation. How would you reconcile this if you were sitting in my chair? Let me show you the numbers so you have a little bit more information. Assets 443,000. Investments zero. That's interesting. Savings 13,900. Low with three kids. Debt 176,410. Total net worth $280,490. Okay. Fixed costs at 50%. Very nice investments at 22%. I'm confused because their investments above are at zero.

00:02:35:18 - 00:02:54:03
Ramit
Not sure what to make of that savings at 25%, which is quite high. Guilt free spending at 3%. I don't believe that. Honestly, I'm kind of confused by their numbers. They're very perplexing, so I need to talk to them to figure out what's going on. And I have a lot of questions. Let's get started with Mia and Jake.

00:02:54:05 - 00:03:15:21
Ramit
Mia, you wrote the application, and in the application you wrote something I wanted to ask you about. You said our values are mostly aligned and we have a plan with our money. But when it comes to implementing it, I feel resentment from my husband that a big chunk of our money goes to support my two kids, who are not his biological kids.

00:03:15:23 - 00:03:18:22
Ramit
Is that an accurate reason for why you're here today?

00:03:18:23 - 00:03:43:03
Mia
I think that Jake and I really do agree on our values. Like like this is what we want to do. But in the implementation of it, the reality is that a big chunk of our money is going to make up for the fact that I didn't plan and save earlier when my two biological kids, our oldest kids, were younger.

00:03:43:04 - 00:04:11:11
Mia
There's always this tension of like, well, I just, you know, we can't even go out to dinner this week, right? And I'm like, oh, that's true. No we can't. And then there's some guilt that I feel, and I don't think that there's any resentment about me or like our values because, like, we've agreed to it. But there's this like underlying tension that I'm afraid we'll get worse if we don't sort of come to a place where where that underlying resentment is gone.

00:04:11:12 - 00:04:39:15
Jake
Yeah. I mean, I think that it's not resentment. I think it's just frustration would probably be the the better term for it. You know, I'm making more money than I ever have. I've gotten my job that I've really been trying to get. That's given us a lot more money. You know, my ideal life would be, you know, being able to go out to eat without thinking about it, you know, like, that's kind of like my rich, rich life is like being able to buy a few things here and there without being very stressed about things and not thinking about money, which I know is not a realistic thing, but I mean, just even walking around

00:04:39:15 - 00:04:51:01
Jake
here, you know, just yesterday I was like, wow, these are the things we could buy with all the money that we're putting into to school. But I don't resent Mia or anything in the kids or what they were doing. That's where they were at their time.

00:04:51:01 - 00:04:56:10
Ramit
And when you say walking around here yesterday. These are the things we could buy. What's an example of that?

00:04:56:10 - 00:05:15:13
Jake
I'm noticing that a lot of my rich life revolves around our house and our idea of like, making it a really great spot for us and the kids, and it's our forever home, hopefully. And that's ideas of maybe getting a hot tub or getting landscaping done. We put a fire pit in and I was like, oh, you know, if we just put like one of the kids tuitions, you know, would be able to do it in a couple of months.

00:05:15:13 - 00:05:17:07
Jake
So it's like that kind of thinking.

00:05:17:08 - 00:05:19:12
Ramit
Got it. Did you have this conversation today or yesterday?

00:05:19:13 - 00:05:20:23
Jake
Yesterday. Yeah, yeah, just walking around.

00:05:20:24 - 00:05:36:10
Mia
I think the exact comment was man in. If we just took the money that we were spending on college in eight months, we could do a hot tub and probably start on the landscaping. And I literally don't know what we were walking by.

00:05:36:12 - 00:05:38:08
Jake
Probably a landscaping hot tub store.

00:05:38:09 - 00:05:43:10
Ramit
So yeah. Yeah, there's one. Right? Right. Yeah. And what was your reaction to that when you heard that?

00:05:43:11 - 00:05:52:03
Mia
I think my general reaction is just to be quiet, like I think internally. Like I don't even think I said anything. I think I maybe laughed when I was like, yeah, yeah.

00:05:52:04 - 00:05:53:21
Ramit
How long are the two of you been married?

00:05:54:01 - 00:05:55:14
Mia
So just over four years.

00:05:55:16 - 00:05:58:17
Ramit
Yeah. Okay. For years. And how many children total?

00:05:58:21 - 00:05:59:13
Mia
Three.

00:05:59:14 - 00:06:00:04
Ramit
Three kids.

00:06:00:04 - 00:06:04:07
Mia
That's two from my previous marriage. And then we have a daughter together.

00:06:04:08 - 00:06:06:21
Ramit
How old is your daughter? Three. Three. Okay, great.

00:06:06:22 - 00:06:09:12
Jake
And we're spending a fortune on her preschool right now, too.

00:06:09:13 - 00:06:09:23
Ramit
Really?

00:06:09:24 - 00:06:10:06
Mia
Yeah.

00:06:10:07 - 00:06:14:03
Ramit
Yes. Oh, okay. And how about the two other children? How old are they?

00:06:14:04 - 00:06:15:13
Mia
14 and 11.

00:06:15:14 - 00:06:16:24
Ramit
Oh, okay. That's good to know.

00:06:17:00 - 00:06:31:11
Jake
And can I just clarify one thing, too? Yeah, it's one of these weird things. It's like, I know what's best for the kids in our family and investing in their school. And it's like, I think it's the right thing to do, but I'm not sure. And that's kind of why we're here. It's just like we want to, you know.

00:06:31:12 - 00:06:32:16
Mia
The background, the balance.

00:06:32:20 - 00:06:33:20
Jake
It feels off. Yeah.

00:06:33:21 - 00:06:35:16
Ramit
It's like we balance of what.

00:06:35:18 - 00:06:39:06
Mia
The money we're putting towards the kids versus the money we're putting towards the things.

00:06:39:06 - 00:06:43:10
Jake
That and like our savings is probably not where we want it either. We want more money in our savings to.

00:06:43:11 - 00:06:46:01
Ramit
Okay. Hold on. What's what's off with the balance?

00:06:46:02 - 00:07:16:06
Mia
We're really emphasizing as much money as possible towards the kids between saving for college and the our youngest preschool. And so like our daily spending or like sort of like our guilt free spending is like really minimal and that doesn't feel sustainable. But also like if you say like, well, give yourself more money and don't give money to the kids, that feels like selfish.

00:07:16:08 - 00:07:19:02
Jake
Yeah. You agree? I would agree with that. Yeah.

00:07:19:03 - 00:07:23:11
Ramit
Okay. That's interesting. Do the two of you make decisions about money?

00:07:23:12 - 00:07:24:24
Mia
Do you mean together?

00:07:25:01 - 00:07:31:19
Ramit
Well, that kind of answers my question, right? No. Yeah. Let's start with together. Do you make decisions together about money?

00:07:31:20 - 00:07:40:24
Mia
I would say big picture. Yes. Although I'm not sure that we've always been doing that. It's not something we think about a lot.

00:07:41:00 - 00:07:42:16
Ramit
Okay. Do you agree or disagree?

00:07:42:17 - 00:07:54:21
Jake
Yeah I would, I would agree that it's been something that we haven't talked a bunch about. I've always enjoyed. Just like we're just we save a bunch of money. You die with a bunch of money. That's that's what happens. Oh.

00:07:55:01 - 00:07:55:23
Ramit
You grew up in the Midwest?

00:07:55:24 - 00:08:00:19
Jake
Yes. Yes, yes. I guess I'd grown up in the Midwest. You just saved money. Then you die and you give it to your kids.

00:08:00:20 - 00:08:06:03
Ramit
Yeah. How did the conversations about money and kids typically go?

00:08:06:04 - 00:08:12:16
Mia
I usually say something like, so we have to do the budget.

00:08:12:17 - 00:08:16:00
Ramit
Okay. And what is your reaction to that, Jake?

00:08:16:01 - 00:08:20:24
Jake
Just anxiety and and anger. Anger probably.

00:08:21:04 - 00:08:23:11
Ramit
I feel anger too when I hear that word. Yes, yes.

00:08:23:12 - 00:08:47:11
Mia
I probably my anxiety increases because to be completely honest like that has a budget has always been really hard for me. Like I, it's hard for me to like wrap my head around like, what are the right buckets to think about? And so I'm trying to explain, thinking like, here's my thinking, Jake. Here's what I think we should do.

00:08:47:13 - 00:09:10:00
Mia
But it's probably not making a lot of sense because I barely understand it. I just know, like money is going out and it's probably more than we should have going out. And then Jake's like, well, but what about this? And then which is usually a super reasonable question. I'm like, I don't know, you know. And so then I get stressed and then he gets stressed.

00:09:10:00 - 00:09:12:06
Ramit
And then where do the kids come into this?

00:09:12:12 - 00:09:13:10
Mia
As in.

00:09:13:11 - 00:09:21:21
Ramit
Like the primary question today is we sending too much right towards our kids. And this is a source of potential conflict where the kids come in.

00:09:21:21 - 00:09:37:14
Mia
I would say my default is to treat that money as if it doesn't exist. Maybe like where the kids come in is if we it's like, well, what if we spent a little more money here? And then my response to that is like, we don't have that.

00:09:37:15 - 00:09:45:02
Ramit
Got it. So the kids money is sacred, like it does not exist. Non-negotiable. Got it. Yes. Are you open to changing that?

00:09:45:03 - 00:09:46:13
Mia
I'm open to it.

00:09:46:18 - 00:10:15:09
Ramit
Just imagine if Jake had said I don't want to send a single sent to your kids. That would be incredibly complicated to unravel. But fortunately, they do seem to have similar values. So now the question becomes, with a blended family, how do we decide the right amount of help to give? And I am starting to suspect they have only thought about help in terms of how big of a check they can, right?

00:10:15:10 - 00:10:28:22
Ramit
But there are a lot of other ways you can help kids to. And Jake, what about you? Like when the you mentioned like, hey, can we spend a little bit more eating out or doing x, y, z? And she says, well, we can't. What's your reaction?

00:10:28:22 - 00:10:45:12
Jake
It's like confusion because I'm making more money than I've ever made in my life. A little backstory, like when we first got together, we bought a huge house that was great. Everything on our is like ten out of ten wishlist. Perfect. Oh, I had a big truck trying to act really tough. You know that tough guy? You know, that's that's what I needed.

00:10:45:18 - 00:10:46:00
Ramit
I didn't.

00:10:46:00 - 00:10:46:17
Jake
Know this. Yeah.

00:10:46:18 - 00:10:48:14
Ramit
So this is when you got married? Yes.

00:10:48:15 - 00:10:59:12
Mia
It was like. So we're both. This is both of our second marriage. And I think we were both, like, so happy to have happiness. We were just like, let's just like, spend. Let's have everything that we'd ever.

00:10:59:12 - 00:11:00:15
Jake
I don't know how we survive.

00:11:00:16 - 00:11:02:05
Ramit
So you bought a how big is the house?

00:11:02:06 - 00:11:03:22
Jake
Was that. It was. It was.

00:11:03:23 - 00:11:05:16
Mia
Like a almost 4000ft².

00:11:05:17 - 00:11:06:09
Ramit
Holy.

00:11:06:11 - 00:11:06:21
Jake
Yeah.

00:11:06:22 - 00:11:07:22
Mia
Three car garage.

00:11:07:23 - 00:11:10:02
Ramit
That's for two of you and a little baby.

00:11:10:03 - 00:11:10:16
Mia
Yeah, well.

00:11:10:16 - 00:11:11:12
Jake
And the time.

00:11:11:16 - 00:11:18:24
Ramit
Babies need space. Yes. 4000 square foot. Okay, so then you bought the truck. What kind of truck?

00:11:19:03 - 00:11:27:02
Jake
Toyota tundra. And I didn't stop there. I got I spent $3,000 on rims because that's what you need at 35.

00:11:27:04 - 00:11:28:21
Ramit
Totally. How much is it? Tundra?

00:11:28:23 - 00:11:32:15
Jake
I like 50,000. Something like that. It was great.

00:11:32:17 - 00:11:34:18
Ramit
Paul. Yeah. Okay. So then what else did you get?

00:11:34:19 - 00:11:35:03
Jake
I mean.

00:11:35:04 - 00:11:36:16
Mia
I mean like new furniture.

00:11:36:17 - 00:11:41:05
Ramit
Furniture like. So you had the house, the truck, etc.. Yeah, it sounds like this is.

00:11:41:05 - 00:11:56:21
Jake
And then and then. Yeah. And then we kind of started talking about finances and that's what kind of got us into it. And then through conversations, we decided that the house is a money pit and we didn't I mean, not a money. It was just we're probably house broke at that point.

00:11:56:22 - 00:11:57:04
Ramit
Wow.

00:11:57:05 - 00:12:16:01
Jake
So we sold the house $200,000. House cheaper. Same neighborhood. It feels so much more like us. It's fantastic. We sold my truck. We have one car that we had. Two cars paid off. We had to get a bigger car just recently because.

00:12:16:04 - 00:12:16:12
Mia
The four.

00:12:16:16 - 00:12:18:03
Jake
Of our kids are now.

00:12:18:05 - 00:12:21:24
Ramit
But, like, how long to make the decision to sell the house? That's a huge decision.

00:12:21:24 - 00:12:37:22
Mia
It was a big decision. But I feel like we just looked at each other and we were like we were we were so housebroken. And it just seemed like, why are we doing this? Because it wasn't like neither of us were attached to it. We were like, if there's something that we can change, like, what can we change?

00:12:37:23 - 00:12:39:24
Mia
And to be like.

00:12:40:01 - 00:12:40:06
Jake
Yeah.

00:12:40:07 - 00:12:52:03
Mia
Credit to our credit to our parents. Both of us were taught from a young age like, do not go into debt other than for a house. So like, we didn't have other debt. So it was sort of like, okay, if we have money to play with, this is it. It's like the house.

00:12:52:03 - 00:12:54:23
Ramit
What was this sign that you were house poor?

00:12:54:24 - 00:12:55:19
Jake
I mean, this was probably.

00:12:55:19 - 00:12:57:09
Mia
Were thinking about every penny.

00:12:57:11 - 00:12:58:03
Jake
Yeah. And we.

00:12:58:03 - 00:13:15:10
Mia
Were that's when I was doing, like, the spreadsheet. And it wasn't just like it wasn't big idea numbers. It was like we spent $12.37 at donut getting donuts for the kids. Like, we cannot spend that. It was. Yeah.

00:13:15:11 - 00:13:18:10
Ramit
How would you describe money felt at that time?

00:13:18:12 - 00:13:22:19
Mia
It was horrible. It just felt like being strangled.

00:13:22:20 - 00:13:23:23
Ramit
Right? Wow.

00:13:24:00 - 00:13:36:00
Jake
Well, like, we've even, like, we had a big house gym that we worked out in. It was lots of expensive things that I'd been collecting during Covid. Sold all that, like Planet Fitness is a bunch of weirdos, but it's still pretty good.

00:13:36:02 - 00:13:38:04
Ramit
How did it feel to just sell all that stuff?

00:13:38:07 - 00:13:52:01
Mia
It felt good. Good. Again, we got married. We were so happy to have happiness, spent all the money. And then it was like feeling like, okay, now we're making smart decisions. It was almost like we had an entire relationship in like three years.

00:13:52:02 - 00:14:13:14
Ramit
Well, what I appreciate about this is I don't mind people making decisions about money, even mistakes about money. We all make mistakes, I make them, we all make them. What I really appreciate is that you caught it, and you took a dispassionate look at the numbers and you were like, this does not work. We got to make a change.

00:14:13:14 - 00:14:27:20
Ramit
If you actually build that skill, of course, correcting, you can actually go through life making a lot of mistakes because you're like, let me move fast knowing that if something goes wrong, I will correct it, learn from it, and I won't make that mistake again. So I'm willing to bet the two of you will never be house poor again.

00:14:27:24 - 00:14:28:20
Ramit
Yeah, yeah.

00:14:28:21 - 00:14:38:17
Jake
And that's what I love about Mia is how reflective and honest. And I think those conversations are what brought us together, Wolf. Very effective and honest. When we make a mistake, we need to fix it.

00:14:38:18 - 00:14:56:22
Ramit
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00:16:01:17 - 00:16:03:10
Speaker 4
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00:16:21:07 - 00:16:40:18
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00:16:59:07 - 00:17:17:20
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00:17:28:10 - 00:17:52:07
Ramit
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00:17:52:07 - 00:18:16:18
Ramit
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00:18:16:18 - 00:18:23:20
Ramit
It felt horrible. Is it different now because you mentioned like you can't really go out to eat?

00:18:24:01 - 00:18:28:06
Mia
I think we took all the extra money and put it towards college.

00:18:28:08 - 00:18:31:14
Jake
It's like that, like yanking the steering wheel this way. And now I'm like.

00:18:31:15 - 00:18:42:09
Mia
It's like you weren't saving any. Like we're not saving enough for the kids is like a to some extent, maybe an overcorrection. But again, there's that whole tension about like, well, isn't that the right thing to be saving for?

00:18:42:15 - 00:18:45:14
Ramit
Well, isn't a house the right thing to be buying?

00:18:45:16 - 00:18:57:09
Jake
Yeah. Fair point. Yeah. We don't know what the right answer is. I think that, you know, I keep having someone I just want them to put their arm around me and say, sign. This is what you're supposed to do. You know, it's like, feel free to put your arm around me and tell me.

00:18:57:13 - 00:19:03:01
Ramit
That's actually quite interesting. What if I told you that person doesn't exist?

00:19:03:03 - 00:19:06:16
Jake
That's what I expected. Yeah. Otherwise, yeah.

00:19:06:18 - 00:19:12:20
Ramit
It's not your dad. It's. No. Nobody is going to be that person for you except.

00:19:12:20 - 00:19:13:13
Jake
You, right?

00:19:13:14 - 00:19:14:17
Ramit
How would that strike you?

00:19:14:17 - 00:19:30:10
Jake
I know, I say I want somebody to come and put their arm over me, tell me what to do. But I want to be confident in the decisions that we're making, okay? It'll make it easier to not spend that money or do this or make that decision knowing it's in the right spots in our money's worth. You know that term money working for us?

00:19:30:12 - 00:19:37:10
Jake
I hear people say that all the time to. I don't know what that means, though. Really? Yeah. I'm serious.

00:19:37:12 - 00:19:38:24
Ramit
What what do you think it means.

00:19:39:00 - 00:19:47:08
Jake
Putting it in the stock market? I don't know, I've just. Yeah. I mean, my Midwest is probably showing right now. Just. You saved money and you put it away and hand it off the next group.

00:19:47:08 - 00:20:10:23
Mia
I wonder if part of it is that we get a pension. And so we've never had to think about, like a 401 K, or like, where does the 401 K money go? Like, there was never any conversation about that. I want to understand the idea of a pension. Like I get it conceptually, but on a day to day basis, like should I be, should I be investing more?

00:20:10:23 - 00:20:11:18
Mia
I don't know.

00:20:11:24 - 00:20:16:13
Ramit
Have you asked about this?

00:20:16:15 - 00:20:19:02
Mia
Person? No one. Okay, I'm asking you.

00:20:19:03 - 00:20:19:17
Ramit
Okay. That's a.

00:20:19:17 - 00:20:37:08
Jake
Fair and like with with the pension what we are a little that we know about it is that you get retirement is a top three years. So an average in average. So I've got two master's degrees I'm now I'm going to be a principal next year. And that's I just keep wanting to add income. So at that top three years as high as possible.

00:20:37:09 - 00:20:51:06
Ramit
Okay. When it comes to the money in your relationship, the tension is around how much Mia that you are sending towards your kids. Jake, what would you do with the money if you had more of it?

00:20:51:08 - 00:20:53:17
Mia
No judgment.

00:20:53:19 - 00:21:11:02
Jake
I don't know. My mind is going a a lot of different ways. Like I'd probably save it. I'd put it into savings somehow, try to collect interest, that kind of thing, put some money into our house, like, you know, the landscaping idea that we wanted to do our family really liked. We inherited a hot tub and that broke.

00:21:11:04 - 00:21:30:24
Jake
That would be something I'd probably put it into. Those are kind of my ideas and maybe a food service we talked about, like possibly something that, you know, health is really important to both of us. We both exercise regularly, and I think to have healthy food options consistently and not add it as a stress, because when we come home from work, just everybody's dumping their problems on us.

00:21:31:01 - 00:21:35:19
Ramit
Have you all talked about these three things saving house food.

00:21:35:20 - 00:21:36:24
Mia
We've talked about it.

00:21:37:01 - 00:21:38:08
Ramit
Any conclusions.

00:21:38:08 - 00:21:59:07
Mia
We do want to save for the house stuff? That's probably like the most conclusion. I agree that having some sort of like a food problem, I think we probably agree on that. Like if we could have like healthy food prepped and delivered to us, that would be amazing. But any food service is just like so much more than what we spend on groceries.

00:21:59:07 - 00:22:01:13
Mia
It just doesn't seem to make sense.

00:22:01:14 - 00:22:05:10
Ramit
Are you too aligned about money?

00:22:05:12 - 00:22:22:17
Jake
I would say most of the things. The only thing I think that would cause any conflict on us would be vacation, I think is something that Mia wants to travel and I'm not. I feel like if we're putting all that money into school, it's like, I'd love to. I'd like to go sometimes, but it's not a need of mine.

00:22:22:19 - 00:22:24:04
Speaker 4
This couple is very likable.

00:22:24:04 - 00:22:45:00
Ramit
I like talking to them, but I am noticing that because they are so compassionate with each other, it's difficult to get a straight answer out of them. I'm not even sure if they agree or disagree. And so much of what's happening here is being polite to each other. Polites good, but sometimes I need somebody to say, I don't like that.

00:22:45:00 - 00:23:05:15
Ramit
No, this is what I want. That is what I'm pushing for. Here it is now, my personal mission to show Mia and Jake that they can be direct with each other and be polite. Y'all like feeling anxious about money? No, no. Let's try that question again. Do you like feeling anxious about money?

00:23:05:16 - 00:23:06:06
Mia
No.

00:23:06:11 - 00:23:23:18
Ramit
Both are saying no. No. Like yes. Very affirmatively. No, no. And yet the dynamic you've built allows you to both constantly feel anxious. Okay, let's let's find out what the numbers say and then we'll talk about them. All right. What was it like putting the CSP together?

00:23:23:19 - 00:23:39:10
Mia
It was actually really nice because it gave me a concrete way to think about our big picture, which is nothing that I've ever been able to do before. Like I had no idea. Like if somebody asked, like, what's your net worth? I don't even know how to calculate.

00:23:39:10 - 00:23:56:06
Ramit
That and consider how many years you kept a budget. Yes. Like we're tracking this and like you mentioned, like, should we be tracking the price of groceries or the price of soda? Yeah. It's unclear. Why do you think, looking back for the many years that you kept a budget, why do you think you were keeping that budget?

00:23:56:06 - 00:24:00:16
Mia
Because that was the number one thing I was taught about money is you balance your checkbook.

00:24:00:18 - 00:24:12:09
Ramit
Right? And so since nobody balances their checkbook anymore or basically uses one, you adapted that for today and we're using Excel or some tool using Excel.

00:24:12:10 - 00:24:13:07
Jake
Google Sheets.

00:24:13:08 - 00:24:16:11
Mia
Yeah. Do you want to know what I was doing? Because it's pretty crazy.

00:24:16:11 - 00:24:17:07
Ramit
I would love.

00:24:17:07 - 00:24:42:07
Mia
To tell them. So I would again, we spend on the credit cards because I get points for that. But we never don't pay them off. Great. Okay, so I would copy everything that was spent in the credit card statement, put it into an Excel spreadsheet. So I'm just copying and pasting it and then line by line one, make sure everything looked like there wasn't anything there that shouldn't be there.

00:24:42:07 - 00:25:05:10
Mia
And then I would try to sort them into categories. Categories. I don't know why I came up with those categories, I just did, and then I would try over multiple months to track, to see, like, are we spending on clothes, what we said we should spend? Are we spending on going out to eat what we should spend? But it was like dupe like I knew I was duplicating work like it's already there, but that's what.

00:25:05:11 - 00:25:09:16
Ramit
So I keep going. Why? Why do you think you were doing all this? What did it get you?

00:25:09:17 - 00:25:14:09
Mia
I think I felt like I was controlling our money.

00:25:14:10 - 00:25:35:17
Ramit
Exactly, exactly. This is a classic example. I'm actually really thankful that you're sharing this with everybody, because there's so many people who go through the motions of playing money. They are playing money. They are moving things from here to there. Why? You know, like the concept of a paper pusher. Let me pick this piece of paper up, push it over there.

00:25:35:18 - 00:25:50:04
Ramit
Like we all know that's useless, but we do it. And nobody forced you to write. No one sat you down and said, like you got to do this. No. If anything was echos from your parents, maybe grandparents, it doesn't work. Like if we actually took an honest look at it and be like, what am I getting out of this?

00:25:50:05 - 00:26:16:03
Ramit
But we get a sense of control and we like to feel like motion is productivity. Another great example of you correcting that and being like, hey, made a mistake, went down the wrong rabbit hole of a budget, we're going to stop that. And you did amazing. Okay, let's take a look at the numbers. Maya, can you read the word in bold and the number next to it for this entire box, please?

00:26:16:06 - 00:26:31:22
Mia
Assets 443,000. Investments zero. Savings 13,900. Debt 176,000 and $410. Total net worth 280,490.

00:26:31:23 - 00:26:33:18
Ramit
Cool. What do you think of these numbers?

00:26:33:24 - 00:26:50:16
Mia
I feel like our net worth is low considering how much we both make. I don't understand the investments line again, like we've got the pension, so I don't know if that should be higher.

00:26:50:17 - 00:26:51:03
Ramit
Okay.

00:26:51:05 - 00:26:56:10
Jake
I feel amazing about the debt. I think that that's something. It's it's our house. That's all.

00:26:56:16 - 00:27:00:05
Ramit
That's all. Yeah. Mortgage debt. Yeah. What's the interest rate?

00:27:00:07 - 00:27:01:00
Mia
6%.

00:27:01:01 - 00:27:01:14
Ramit
Yeah. Okay.

00:27:01:15 - 00:27:03:18
Mia
It's also a 15 year mortgage, so we're proud.

00:27:03:18 - 00:27:08:02
Jake
Of that. Yes. We sold from a 30 year to a 15 year. That was something else that were actually paid off.

00:27:08:03 - 00:27:08:14
Ramit
Nice.

00:27:08:14 - 00:27:16:17
Jake
Yeah. Yeah. I don't know what. I just don't know enough about net worth. Yeah. Obviously I want it to be higher, but I don't know like why.

00:27:16:20 - 00:27:24:19
Ramit
Yeah that's a good answer. That's honest. Yeah. That's actually common I would say most people feel that way. Do you looking at these numbers make you feel anything?

00:27:24:21 - 00:27:29:01
Jake
I think the only thing I would feel would be guilt. And I think it would be debt.

00:27:29:02 - 00:27:33:19
Ramit
Like, I think I could show you this glass of water and you'd feel guilt, like.

00:27:33:21 - 00:27:34:18
Jake
Yeah, I think so too.

00:27:34:19 - 00:27:38:24
Ramit
That's a default baseline. Okay. So you feel guilt because.

00:27:39:04 - 00:27:44:24
Jake
I don't feel guilt. I said if I felt if debt was way higher, I would feel guilt. That's the only feeling that I would have.

00:27:45:00 - 00:27:50:08
Ramit
That's quite an interesting response, though. Yes. Mia, how do you feel, if at all, looking at these numbers?

00:27:50:09 - 00:28:14:13
Mia
I'm proud that our net worth is something right. Like, I'm proud that there's something there. I'm proud of the decisions that we've made that have gotten us to have that. And I also feel I do think guilt is a default, but guilty that it's like, not more like, I wish I would have made some different decisions earlier in my life.

00:28:14:14 - 00:28:15:09
Mia
Cool.

00:28:15:11 - 00:28:22:14
Ramit
I appreciate that. Let's look at the income. Jake, what's the gross combined monthly income, please?

00:28:22:16 - 00:28:24:16
Jake
18,862.

00:28:24:17 - 00:28:33:08
Ramit
Cool. That means that your household income is $226,000 a year. Did you know that number?

00:28:33:09 - 00:28:33:18
Jake
Yes.

00:28:33:18 - 00:28:34:17
Ramit
We knew that. You knew that.

00:28:34:17 - 00:28:39:10
Mia
I had never made that calculation of our gross. I knew our net.

00:28:39:12 - 00:28:43:13
Ramit
So you didn't know? What did you think that you made as a household? Ballpark.

00:28:43:15 - 00:28:45:23
Mia
I probably would have said, like, 200,000.

00:28:45:24 - 00:28:47:23
Ramit
Okay. What do you think about that income?

00:28:48:01 - 00:28:49:03
Mia
I think it's great.

00:28:49:04 - 00:28:52:12
Jake
Yeah. No. It's great. And that's why it stresses me out. I don't know why we're.

00:28:52:13 - 00:28:53:11
Mia
Like, why are we counting.

00:28:53:12 - 00:28:54:11
Jake
Pennies jammed up.

00:28:54:11 - 00:29:06:24
Ramit
Like this? Is. This is funny. Like, people don't make enough money. They go, I'm stressed out. Then people make a ton of money. They go, I'm stressed out because why don't I feel better about money? Yeah. How much do you need to make to not be stressed out? Jake.

00:29:07:01 - 00:29:13:21
Jake
Well, I know that it'd just be better problems, you know, I've. I've read the subtle art where it's just you want to have good problems. So these are pretty good problems to have. But.

00:29:13:21 - 00:29:18:20
Ramit
But you're still stressed out, right? Yes. Maybe if you make 500 K, will you still be stressed.

00:29:18:22 - 00:29:22:12
Jake
If we kept our current assets? No, I wouldn't be stressed. Oh, really?

00:29:22:13 - 00:29:26:15
Ramit
500 is all you need to make. Just double.

00:29:26:16 - 00:29:30:02
Jake
I feel like you're leading the witness. I definitely. I'm sure I'd be stressed always.

00:29:30:03 - 00:29:30:15
Ramit
Yes.

00:29:30:16 - 00:29:31:20
Jake
Yeah.

00:29:31:22 - 00:29:48:13
Ramit
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00:32:15:15 - 00:32:33:00
Ramit
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00:32:33:06 - 00:32:34:19
Mia
50% okay.

00:32:34:23 - 00:32:36:04
Jake
Quite good.

00:32:36:06 - 00:32:58:18
Ramit
That's on the lower end of the 50 to 60%. That's exactly what I would expect to see for a high income couple. When your income goes up like disproportionately up, this number should come down because, you know, you can only spend so much on toothpaste. So I think you're all doing a very nice job. I mean, look at that mortgage, $1,776.

00:32:58:20 - 00:33:03:21
Ramit
That's crazy. 9% of gross. Well done.

00:33:03:23 - 00:33:04:07
Jake
Thank you.

00:33:04:08 - 00:33:09:18
Ramit
Thank you. Especially considering you had a McMansion before. And this is amazing.

00:33:09:18 - 00:33:11:10
Mia
I'm very proud of that.

00:33:11:12 - 00:33:15:01
Jake
And the other one was 2000. Way more. Yeah.

00:33:15:03 - 00:33:19:09
Mia
And I think that's probably maybe one of my, our proudest money decisions that we made.

00:33:19:09 - 00:33:19:14
Jake
That.

00:33:19:19 - 00:33:20:21
Ramit
I love that.

00:33:20:23 - 00:33:21:24
Jake
That's so cool.

00:33:22:01 - 00:33:24:04
Ramit
You all ever celebrate that that you made that tough.

00:33:24:08 - 00:33:30:17
Mia
I think we do actually like we talked. We look at each other, I would say pretty regularly and like, oh my God, I'm so happy we did this.

00:33:30:23 - 00:33:36:04
Jake
And it feels better. Like it feels like home to its like the added bonus. It feels more like us to. Yes.

00:33:36:04 - 00:33:48:07
Ramit
So this is great energy. This is what now that I see that you can do this and that you do celebrate and you have I'm in my head, I'm going, cool. They can do that. So now I just need to transfer that.

00:33:48:08 - 00:33:48:20
Mia
I would love.

00:33:48:20 - 00:33:49:20
Ramit
That over to other parts of.

00:33:49:20 - 00:33:50:12
Jake
Your money. I mean.

00:33:50:13 - 00:33:56:06
Ramit
This is very good. Okay. Let's keep going. We have investments. What's that number.

00:33:56:10 - 00:33:57:20
Mia
22% okay.

00:33:57:21 - 00:34:15:09
Ramit
So that is your pension which is about $3,000 a month going to your pension. Yep. Okay. And I can see there's like a little bit of confusion on your part of like what's happening with this pension. What does it mean. But overall great savings. What's that number.

00:34:15:10 - 00:34:16:14
Mia
25%.

00:34:16:15 - 00:34:34:04
Ramit
Okay. The bulk of this is kids 529 and then you have an emergency fund. Okay. Personally I would have put the 529 under investments. Okay. But it's fine. Either way. It shows me where your priorities are. And then finally let's go down to guilt free spending. What's that number?

00:34:34:04 - 00:34:35:03
Mia
3%.

00:34:35:04 - 00:34:36:24
Ramit
Do you only spend $364.

00:34:36:24 - 00:34:38:08
Mia
A month? That's not right.

00:34:38:09 - 00:34:40:17
Ramit
Okay. How much do you spend? Like you don't know?

00:34:40:19 - 00:34:43:10
Mia
I bet that's just like what was left. Probably.

00:34:43:11 - 00:34:43:13
Jake
Yeah.

00:34:43:14 - 00:34:44:16
Mia
That is. That's just.

00:34:44:17 - 00:34:48:24
Ramit
So do you think that you were spending more than 364? That would be extremely lean.

00:34:49:00 - 00:34:50:02
Mia
Yes, of course we are.

00:34:50:03 - 00:35:00:08
Ramit
How much do you think that you are spending every month on discretionary items, including eating out, coffee, vacations spread out over 12 months, etc.?

00:35:00:12 - 00:35:09:06
Mia
I bet it's closer to like 1500. And even that probably is us being really strapped.

00:35:09:08 - 00:35:13:10
Ramit
Let's not do that. Let's be. Let's. How much are you realistically?

00:35:13:12 - 00:35:17:19
Mia
No, no, I think we're realistically spending probably 1500 to $2000 a month, but.

00:35:17:19 - 00:35:40:15
Ramit
I'm say 2000. Okay. When I do these numbers, I always want to be conservative because I never want to be surprised. Owing more money. If anything, I want extra money at the end of the year. Yeah. Cool. So at 2000, then the question is where's that money coming from? Yeah, I have a question. Your long term emergency fund says 700 bucks a month, but you have only $14,000 in savings.

00:35:40:16 - 00:35:44:00
Ramit
Yeah, you're pulling money out of your savings occasionally.

00:35:44:02 - 00:35:46:21
Mia
Yes, we have been. Which we want to stop doing.

00:35:46:22 - 00:36:05:04
Ramit
Well, that's. This all makes sense. Yes. So you're spending more than the CSP is reporting? Yeah. It's not planned for. And then you pull out of savings. Yes. Okay. You know, your savings is about two months of expenses. Were you aware of that?

00:36:05:05 - 00:36:05:21
Mia
Yes.

00:36:05:22 - 00:36:07:21
Ramit
Okay. How does that feel to you?

00:36:07:22 - 00:36:08:14
Mia
Scary.

00:36:08:15 - 00:36:09:13
Jake
That's why we're here.

00:36:09:15 - 00:36:17:20
Mia
That is why we're here. All right. I think us being here gives us hope, right? Like, I think if we had.

00:36:18:01 - 00:36:18:24
Ramit
Kind of answer that.

00:36:18:24 - 00:36:25:22
Mia
Because I would be more mad if I didn't feel like I'm going to talk with her. Me? He's going to help me figure this out.

00:36:25:23 - 00:36:26:08
Ramit
Wow.

00:36:26:09 - 00:36:43:01
Jake
I think that with me, it kind of reminds me of how I treated girls went before. I like when I was going through puberty. It scared me. I didn't understand it, so I just avoid it, okay? And I wanted, like, I can't be mad. I don't understand it well enough. I think that that's kind of where I'm at.

00:36:43:01 - 00:36:44:16
Jake
I just like this.

00:36:44:16 - 00:36:45:17
Ramit
Is quite analogy.

00:36:45:19 - 00:36:46:05
Jake
Yeah, it's.

00:36:46:05 - 00:36:50:03
Ramit
Yes. But what's the conclusion? Because now you're married. Actually, you've been married twice.

00:36:50:04 - 00:36:54:11
Jake
Yes. So I'm not afraid of girls anymore. Sort of.

00:36:54:13 - 00:36:55:15
Ramit
Are you afraid of money?

00:36:55:22 - 00:37:13:02
Jake
Yeah. I think I'm confused by it. And I think there's a deep seated fear of seeming dumb, and it's seeming like asking questions, you know, and I, I joke about not knowing what people say, making their money work for them. I think that this just like a knowing gap and I want to get it fixed. So that's kind of where I'm at.

00:37:13:02 - 00:37:21:02
Jake
So I can't I can't be mad that I don't, you know, it's like learning a new sport. You're not mad the first day. It's like I'm just trying to drink it in as much as I can right now.

00:37:21:02 - 00:37:26:02
Mia
And I think I'm just more scared than mad. The fear is bigger than the anger for me.

00:37:26:04 - 00:37:46:11
Ramit
I love Jake's analogy about being afraid to talk to women when he was growing up. I think a lot of men can really connect with that memory, but I also think that at a certain point you have to face your fears. There is no way but straight through those fears to go and talk to somebody to apply for a job.

00:37:46:11 - 00:38:07:12
Ramit
If you've been nervous about your career, you've got to face your fears with money and realize nobody else is coming to save me. And I was put on this earth. Not simply to save money in a savings account, but to live a rich life. Therefore, I'm going to start facing my fears. I'm going to learn how money works, and I'm going to start feeling good about it.

00:38:07:14 - 00:38:37:19
Ramit
For me, I always naturally understood money, but things like fitness, I felt like I was the odd man out like everybody else learned it and I just don't get it. And so when I talk to people and they don't understand money, I have a lot of compassion. It's kind of complicated. You get a million different people telling you a million different things, and as long as you got a roof over your head, it kind of seems like it's fine.

00:38:37:21 - 00:38:43:17
Ramit
So I appreciate you being so honest about it. Mia, you said you feel fear. What's the fear of.

00:38:43:22 - 00:38:52:00
Mia
The fear is that if something happened, if there was a catastrophic event, we don't have money to deal with it.

00:38:52:01 - 00:39:12:23
Ramit
If you had a fear of that, like, let's say I had a fear of slipping in the shower. Okay, I might get one of those plastic mats you have a fear of. If something happened, you won't have enough money, but your savings account is still $13,900. What's the difference?

00:39:13:00 - 00:39:21:05
Mia
I think in the moment that I want to go on a trip or I want to buy something, I'm just like, I'll deal with it later.

00:39:21:07 - 00:39:23:04
Ramit
Yeah. How often does that happen?

00:39:23:07 - 00:39:29:00
Mia
Oh, probably all the time. Right. Because if I was really afraid, I wouldn't be doing that.

00:39:29:01 - 00:39:44:02
Ramit
Yeah. How much do you think your relationship with money is problem oriented? Where you talk about the problems, you agonize over, the problems, you discuss the problems versus solution oriented where you say, okay, that's the problem. Here's what we are doing about.

00:39:44:02 - 00:39:46:01
Mia
It, 95% to 5%.

00:39:46:03 - 00:39:47:13
Ramit
Yeah, 95%. Problem.

00:39:47:14 - 00:39:48:23
Mia
Problem.

00:39:49:00 - 00:40:03:03
Ramit
Common. Really common. Just imagine with me for a second if we flipped it just flipped it 95% solution oriented, 5% problem oriented. What would that look and feel like to.

00:40:03:03 - 00:40:17:24
Mia
You that would feel like like when you said that you liked that we celebrated are the decision that we made about the house? To me, it would feel like having that 95% of the time, which sounds amazing.

00:40:18:04 - 00:40:20:07
Ramit
So you'd celebrate more. What else would you do?

00:40:20:08 - 00:40:35:23
Mia
I would worry less it like, and I could spend that energy doing something I enjoy. Like what? Hanging out with Jake. Spending time with the kids. Like I wouldn't be trapped to the spreadsheet.

00:40:36:00 - 00:40:37:15
Ramit
Are you trapped now?

00:40:37:17 - 00:40:42:14
Mia
Yeah, I watch it all the time. It still doesn't make sense to me. And again, I'm just like paper pushing.

00:40:42:16 - 00:40:53:07
Ramit
Yeah, yeah. Okay, I have a couple more questions about this. So you have preschool at $1,266 a month. How long will that last for?

00:40:53:08 - 00:40:55:21
Mia
Another 15 months.

00:40:56:00 - 00:40:56:19
Jake
One more school year?

00:40:56:20 - 00:40:59:17
Ramit
Yeah, one more school year. Yeah. Okay. And then after that.

00:40:59:18 - 00:41:00:18
Mia
Then public school.

00:41:00:23 - 00:41:07:02
Ramit
Got it. Cool. We have a deposit into an account. What's that for?

00:41:07:03 - 00:41:17:13
Mia
That is a joint account that my ex-husband and I each put that much money in. And it's like savings for, like when the kids need clothes. Like for the sort of bigger expenses.

00:41:17:14 - 00:41:33:08
Ramit
Got it, got it. So that's kind of day to day versus the 529 that you are saving for. Okay. Great. I mean, I love seeing this car payment at $398 a month, amazing debt at 459. That's what.

00:41:33:10 - 00:41:36:17
Mia
Treadmill. That's a treadmill that is done in three months.

00:41:36:18 - 00:41:38:23
Ramit
Yes. What is the interest rate on a treadmill?

00:41:38:24 - 00:41:39:21
Mia
It was.

00:41:39:23 - 00:41:54:01
Ramit
Yeah. Okay. All right. By the way, I noticed that something interesting. Your preschool amount is not being accounted for in the total. So let's go ahead and adjust that right now. Wow. What just happened to your fixed cost number?

00:41:54:01 - 00:41:55:21
Mia
It's a big jump 10% jump.

00:41:55:22 - 00:42:23:19
Ramit
Yeah jumped 10%. So let's recognize a couple of things. Number one childcare and preschool. Very expensive. Number two suddenly having that really high income and the low fixed cost, which was something I was like. Great job. It's not so low anymore right now. Preschool is temporary. And as you mentioned, public school after. So this number will go down.

00:42:23:20 - 00:42:28:09
Ramit
Yeah. But things are not so loose all of a sudden. What does it tell you.

00:42:28:10 - 00:42:34:01
Mia
It reinforces that we don't really know kind of what's going on.

00:42:34:02 - 00:42:44:09
Ramit
Agree. That is true. And what does it imply for the rest of your money if you just jump from 50 to 60%, what does it imply for the rest of how you're spending your money?

00:42:44:11 - 00:42:45:02
Jake
That shrinking?

00:42:45:03 - 00:42:45:07
Mia
Yeah.

00:42:45:08 - 00:42:51:13
Jake
That's true. I'm like feeling my hands getting hot right now. Yeah. Like I feel like this pressure. Just like I'm like, gosh, here we go.

00:42:51:14 - 00:43:11:11
Ramit
Okay, here's how I think about it I appreciate that. That's real for me. I'm still like, we got a puzzle here and we're going to figure it out. Certainly you do not have a lack of money. You all make a lot of money. So we got a puzzle. We just need to figure out which way the pieces all fit.

00:43:11:11 - 00:43:14:15
Ramit
So I'm not feeling hot hands at all right now, okay?

00:43:14:16 - 00:43:23:06
Jake
I have that confidence. And like, you have, like, you understand. And that's where it's like, I want that feeling. Where it's like where most of in life there's a problem. We'll fix it.

00:43:23:07 - 00:43:46:14
Ramit
Exactly. All right. We got to make some other adjustments. We have this deposit for your kids that was also not reflected. Look at the number now on your fixed costs, we're at 64%. So the financial picture has actually dramatically changed. Now I'm going to be a little more directive on my questions because at 50% I really don't care what you're doing.

00:43:46:16 - 00:43:54:15
Ramit
You do whatever you want. But at 64% I have questions. Utilities are 409. Why? That's a lot.

00:43:54:17 - 00:44:06:13
Mia
I would assume that our electric and gas are high, because I basically run the washing machine 100% of the time, and then the hot tub. Also.

00:44:06:15 - 00:44:10:17
Ramit
What how much is a hot tub cost? I truly do not know.

00:44:10:18 - 00:44:14:05
Mia
Well, just the electricity to run it to heat the water.

00:44:14:06 - 00:44:15:13
Ramit
How often do you get in the hot tub?

00:44:15:14 - 00:44:16:02
Jake
Well, it's.

00:44:16:04 - 00:44:17:05
Mia
Well now it's broken.

00:44:17:06 - 00:44:17:22
Ramit
So great.

00:44:17:23 - 00:44:20:21
Jake
It was so old it had a CD player on it, so.

00:44:20:23 - 00:44:25:01
Ramit
But, like, can I ask you, like when it broke, did you notice your utility bills going down?

00:44:25:02 - 00:44:28:01
Mia
I have not figured out how to.

00:44:28:03 - 00:44:28:10
Jake
We have.

00:44:28:15 - 00:44:32:18
Mia
Disconnected like to to stop.

00:44:32:22 - 00:44:33:01
Jake
Yeah.

00:44:33:01 - 00:44:35:19
Mia
That's basically we're still paying for a broken hot tub to run.

00:44:35:20 - 00:44:45:07
Ramit
Yes. Fix that. Yes. All right. This number is unusually high. And at 64%, we don't have room for that. Yeah, debt payments at 459. Again.

00:44:45:07 - 00:44:46:09
Mia
This is your three months.

00:44:46:10 - 00:45:00:24
Ramit
Oh, okay. Let's zero it out then just to see okay. So watch. So this we zeroed it out and it brings us down to 60%. Okay. Nice. Okay I'm going to leave it at zero. Groceries and gas are first of all why did you combine those two. It's a little odd combination.

00:45:01:01 - 00:45:06:06
Mia
Because it's what we put on the credit card. Like, it all goes on the credit card.

00:45:06:07 - 00:45:31:16
Ramit
You should change that. Okay. Gas should go with your car, cars, everything related to the car. Okay. So gas, parking tickets, parking, all of it should go there. That way you just have a good sense. A lot of times people don't realize, oh, my car payments 350, which mine used to be. And then when I netted out everything else, I added all together was over $1,000 a month, including parking and gas and everything.

00:45:31:17 - 00:45:34:06
Ramit
So we got to know these numbers. Know your numbers.

00:45:34:07 - 00:45:37:23
Jake
So move. So move the gas up to the carpet. Exactly. Okay.

00:45:38:00 - 00:45:39:21
Ramit
How much are you spending on groceries per month?

00:45:39:21 - 00:45:43:21
Mia
I do think we probably spend about $1,200 on groceries per month.

00:45:43:22 - 00:45:48:09
Ramit
Okay. What are you buying for 1200? I'm not the grocery Grinch. I'm just curious.

00:45:48:10 - 00:46:07:11
Jake
I think that's an area where we could really cut back. And I think that it's so cyclical, too, because when you add two grown children, like the meals change and we're trying to be proactive. And when when the older kids are not with us, then we try and do leftovers or things like that, and then it's just trying to save money.

00:46:07:11 - 00:46:09:18
Jake
But I definitely think that that's a spot.

00:46:09:19 - 00:46:10:19
Ramit
What do you think.

00:46:10:21 - 00:46:12:08
Jake
That we could save?

00:46:12:10 - 00:46:17:08
Mia
I agree that we can we probably could cut back on that a little.

00:46:17:09 - 00:46:21:16
Ramit
If you could bring this number down your groceries instead of 1200, what would you bring it to?

00:46:21:17 - 00:46:25:17
Mia
I think we could realistically do 800. I think we'd do 200 a week.

00:46:25:18 - 00:46:26:21
Ramit
You cut 400 off.

00:46:27:00 - 00:46:27:13
Mia
I think we could.

00:46:27:14 - 00:46:29:00
Ramit
I agree, that's pretty good. Okay.

00:46:29:01 - 00:46:36:00
Jake
How do we do that though? Like that's what's the action steps like you just do you just pull out $800 in every time you go and then it's just.

00:46:36:01 - 00:46:57:15
Ramit
That's it. Excellent question. When you start, most people in America do not shop to a number. They go to the grocery store and they're just like, that looks good. And when you are building this skill of sticking to a number, you can do that. You can literally pull out $200 a week in cash, or a simpler way is to simply, you know, your number.

00:46:57:15 - 00:47:22:09
Ramit
Every week. We're going to spend $200. Now, a lifestyle is lifestyle. If you go in twice a week, fine, it's 100 bucks each time. But you got to keep a note on your phone somewhere where you were tracking it over time. What I found is that people who are effective at hitting their grocery number, they basically eat the same thing a lot, like people who are hitting a number, especially when they need to hit a strict number.

00:47:22:10 - 00:47:46:00
Ramit
They basically come up with a meal plan and that's it. So that's number one. The second thing I've learned about patterns of successful people hitting a grocery number is one person is doing the shopping because they just know the numbers. They're connected. If another person goes and buys it, sometimes they have to, but they may not have that tacit knowledge that the primary person does, right?

00:47:46:02 - 00:47:47:08
Ramit
So that's what I would do.

00:47:47:09 - 00:47:47:19
Jake
Okay.

00:47:47:20 - 00:47:48:24
Mia
That's really helpful. Thanks.

00:47:49:00 - 00:48:07:01
Ramit
Cool. I'm going to take this down to 1100. Still leaving your gas in here which you can move later. And that brings you down to 57%. Honestly you're in great territory. Great territory. It's a little higher than I would like considering your income, but 57% is within parameters. Subscriptions at 315. What's this for?

00:48:07:03 - 00:48:14:12
Mia
So that would be all of the different TV services. So like every single one which I think we could totally.

00:48:14:13 - 00:48:15:10
Jake
Yeah we could.

00:48:15:12 - 00:48:17:00
Mia
I don't care about that very much.

00:48:17:01 - 00:48:18:10
Ramit
Yeah. How much can you take it down.

00:48:18:10 - 00:48:19:07
Mia
To 200.

00:48:19:13 - 00:48:20:11
Jake
At least. Yeah.

00:48:20:12 - 00:48:43:23
Ramit
Yeah. Okay. Great. I love that you say easy. Let's keep it easy. Okay? All right, 200. We don't need to cut to the bone on everything, right? You know, I'm interesting noticing that the two of you are very good at cutting costs. Like, I have not seen any resistance from you. It's uncommon. Most people, like, fight consciously and unconsciously.

00:48:43:23 - 00:48:50:17
Ramit
The two of you know, you're like, yeah, we can cut that. Yeah. Like what? What is that? Why is it so easy for you to cut costs?

00:48:50:18 - 00:49:00:12
Jake
For me, it's it's the greater good of our family. And I think that, like, financial stability would create such a safe environment in a household where we're comfortable moving forward.

00:49:00:13 - 00:49:02:04
Ramit
And what about you, Mia?

00:49:02:05 - 00:49:14:23
Mia
I agree with Jake, and I think I'm comfortable with it because it's just hypothetical when push comes to shove and I'm actually like, there's a pair of shoes I want I like.

00:49:15:00 - 00:49:31:12
Ramit
That's quite interesting. Wow. Very insightful. Both. We're going to tackle that as well. I think that you also might both be really comfortable with this because it's what you know. How long have you been told got to cut costs. Got a that's bad. Don't spend money forever. Yeah.

00:49:31:15 - 00:49:34:15
Jake
You know that's my that's my education on money is don't spend money you don't have.

00:49:34:16 - 00:50:01:16
Ramit
Exactly. So to me it's like me saying like drink a glass of water. Yeah. You've been drinking water, you know, for a long time, right. It's quite striking how easy it is for Mia and Jake to cut costs. Most couples do not find it this easy. They resist at every turn, even if they're in severe debt. But I also suspect that there is something much deeper going on here, which is that for Mia and Jake, being good with money means not spending a lot at all.

00:50:01:16 - 00:50:20:03
Ramit
And so while I want to cut some of their costs because I think they are a bit out of their parameters, I also know that that alone is going to take them back to their comfort zone. Cut costs shrink. I don't want to spend any money. That's not the path to a rich life for them. The path to a rich life manager costs.

00:50:20:03 - 00:50:32:11
Ramit
But also think critically about these major decisions like your investing, your 529 and yes, even their guilt free spending, your pension. Can we just talk about this for a minute.

00:50:32:11 - 00:50:33:05
Mia
I appreciate that.

00:50:33:06 - 00:50:40:20
Ramit
All right. So your pension I looked into it and I understand that you looked into it a bit as well before you came here. What have you learned about your pension.

00:50:40:20 - 00:50:51:06
Mia
When we retire? If we max out our pension. So if we wait till we're whatever the rule is, right? Like there's a formula, I think.

00:50:51:08 - 00:50:56:03
Jake
Of 88, it's the year's top. Plus how old you are, 88.

00:50:56:04 - 00:51:09:21
Mia
So if we wait to that then we get for the rest of our lives. Every month, 80% of the average monthly income of our top three years.

00:51:09:22 - 00:51:15:05
Ramit
Great. And when will you be able to retire based on that?

00:51:15:05 - 00:51:16:20
Mia
Between 55 and 60?

00:51:16:21 - 00:51:23:17
Jake
Yeah, I think it was 54 even because we both had been in going into that pension since 21. So. Great.

00:51:23:21 - 00:51:24:19
Ramit
How do you feel about that?

00:51:24:20 - 00:51:30:11
Jake
Good, good. It feels good. Feel good. Yeah. Yeah. It's just like this in the distance thing. I've never it's.

00:51:30:12 - 00:51:46:15
Mia
I guess one question I have is I don't know if, you know, 20 years from now, 80% of what I make. If that's enough to live on. Like, I don't understand how to make the the estimation of like how much will inflation go? Like I don't.

00:51:46:17 - 00:52:09:13
Ramit
Well, I don't know the details of that, but I'm willing to bet a little bit that your pension indexes for inflation. So usually a lot of different types of pensions and the like will account for inflation. They're not just going to pay you in today's dollars 20 years from now, because it would be worth far less. You could look into that.

00:52:09:13 - 00:52:26:16
Ramit
And literally you could just type in IP address inflation. Yeah. And I would not be surprised if it's like yeah we account for inflation etc.. Got it. Do you have a sense of how much you might make in the last three years? Average like a ballpark is helpful.

00:52:26:20 - 00:52:29:09
Mia
Like each year. You mean like what our yearly income would be?

00:52:29:10 - 00:52:31:15
Ramit
Yeah. Like, what can we use to project?

00:52:31:17 - 00:52:37:14
Mia
Sure. I think it'd be safe to say 140 each.

00:52:37:15 - 00:52:44:19
Ramit
Each. Okay. We can make some rough estimations, but in general, that's like quite amazing. Like, very few people have pensions like this anymore, you know that.

00:52:44:19 - 00:52:46:23
Jake
That's what we heard. Yeah. Everybody we talked to that.

00:52:47:00 - 00:53:04:19
Ramit
And the benefit of this like is back in the day in our parents time a lot of people had pensions. So basically like the two of you, they're kind of like I don't really think about investing like it's taken care of. All I know is I need to put the X money in the pension and then they retire, and then they just get a check every month.

00:53:04:19 - 00:53:21:24
Ramit
And by the time the two of you retire, your house will be paid off. Your expenses will be way lower. No more, you know, perhaps the food goes down. Certainly all the savings going to 529 is investing. All that stuff goes away and you're just like, oh wow, this is a lot of money. And we're 5455, which is quite young.

00:53:22:00 - 00:53:41:01
Ramit
Yeah, it's a great life. That was more typical in our parents time. And then companies took that and they said, this is really expensive, especially because people are living longer. And also we can get away with just shifting it on the burden of people. Let's make them save for it. You are responsible for your for one or your IRA.

00:53:41:01 - 00:53:59:21
Ramit
And like we don't have to account for this for the rest of their lives. So cool you all living in the, the public system of getting a pension. It's awesome if you are in it. Awesome. Okay, saving $700 a month. How did you pick that number?

00:53:59:22 - 00:54:11:14
Jake
I think it was 1000. I think we started with a round number, didn't we? Yeah. And then it was just like. That seemed like too much with what we were spending, and we just kind of went down to 700, I think. I don't know, there's, there's not like it's it's just.

00:54:11:20 - 00:54:12:10
Ramit
It's arbitrary.

00:54:12:11 - 00:54:13:03
Mia
It's arbitrary.

00:54:13:04 - 00:54:14:02
Jake
It could be anything.

00:54:14:02 - 00:54:22:12
Ramit
So I just want to point a couple of things out. If as we have made some adjustments, you'll notice that you are now spending more than you make every.

00:54:22:15 - 00:54:23:23
Jake
What explains the savings?

00:54:24:02 - 00:54:41:19
Ramit
Yeah. That's why your savings are being depleted. And that's why in part you feel. Yeah. Scared about money and scarce and like it's bad news because it kind of is. Yeah, but we could make some changes. What are the other big numbers on this CSP that are kind of flashing bright red.

00:54:41:20 - 00:54:45:11
Mia
Well the 529 is a lot.

00:54:45:12 - 00:54:57:01
Ramit
Yeah, that's a big one. So tell me, what is the thinking behind the $2,700 a month going towards the kids? 529.

00:54:57:03 - 00:55:21:22
Mia
When I was growing up, my parents told me what you want to avoid more than anything else is debt. And even though paying for school is a good investment, if you can avoid debt, do it. And they helped me so that I didn't have any debt coming out of college. So that's one is probably like that's just in my mind, like something that was just always like a given.

00:55:21:23 - 00:55:28:09
Mia
Like, if I can pay for my kids college that they don't have debt when they graduate college, I want to do that.

00:55:28:09 - 00:55:31:15
Ramit
Because debt is bad.

00:55:31:16 - 00:55:32:16
Mia
Because debt is bad.

00:55:32:17 - 00:55:34:00
Ramit
Anything else?

00:55:34:02 - 00:55:54:23
Mia
Like the cost of college now? Like it's just so outrageous. If it was, you know, even like 15 years ago and they were taking out like a total of 60 K for college, like, okay, not ideal, but now it's like 100, 150. Like that's so much debt. It just seems so big.

00:55:55:00 - 00:56:01:13
Ramit
Okay, okay. Is there any element of this was done for me. So I want to do it for them?

00:56:01:15 - 00:56:14:19
Mia
Yeah. I think the reason I hesitate is because I'm just trying to like emotionally gauge. Like is it that and I do think there's some like element of like pay it forward. Right. Like I was given that like this is what parents should do.

00:56:14:20 - 00:56:26:08
Ramit
Like yeah that's reasonable. What if the two of you did not make 230 plus $1,000 a year? What if you made 75 K year? Would you still be saving for kids? 529.

00:56:26:09 - 00:56:30:08
Mia
I think we would probably still doing a think we'd still do some.

00:56:30:09 - 00:56:49:16
Jake
Yeah, I don't think we could, but I'd be doing everything I can. I think that my my thing is it was done for me and I want my kids to have that same advantage that I had and that like, we'll give it to you, but you got to go earn it after that kind of thing. And I know there's so many different avenues of making money, but like, my way of thinking is safe.

00:56:49:16 - 00:57:00:05
Jake
And just go to school, get a job that pays and that's that's all I was told. And so I think that that's just like anxiety telling me to like, make sure my kids have that same opportunity that I had.

00:57:00:06 - 00:57:00:17
Ramit
Yeah.

00:57:00:19 - 00:57:10:10
Jake
Okay. Yeah. This is like the more you dig in and it's harder to defend and talk about, but I just don't know. It's just like this, an agreed upon truth that we've really not dove into.

00:57:10:15 - 00:57:11:23
Ramit
Agreed upon truth being.

00:57:12:01 - 00:57:14:14
Jake
That we pay for our kids. College because.

00:57:14:17 - 00:57:15:12
Ramit
It's like.

00:57:15:14 - 00:57:15:19
Jake
It's.

00:57:15:19 - 00:57:18:08
Ramit
Just this universal truth and axiom.

00:57:18:12 - 00:57:24:24
Jake
Yeah, it's like an agreed upon that we've never really dug into why. And I think that that's I think this is very eye opening.

00:57:24:24 - 00:57:39:21
Ramit
That's what I specialize in. Yes. And that is what I love. I don't mind if people take a quote, universal truth that we have, like, I should buy a house and they end up buying. I don't mind that, but we've got to interrogate the logic.

00:57:39:22 - 00:57:40:23
Jake
Yeah.

00:57:41:00 - 00:58:02:05
Ramit
There's a very simple message that many parents in America have, and that is I need to pay for my kids college now. I think it's a very nice idea. I also think it is a bit simplistic, the idea that I simply need to take all the money I've got and hand it over to my kids. I don't know how much, I don't know where they're going to go.

00:58:02:05 - 00:58:35:20
Ramit
I haven't talked to them about it, but I will sacrifice heaven and earth so that they don't have to go into debt. It feels really good, but it lacks any analysis at all. This is not about loving your kids. It's about thinking critically about one of the biggest financial decisions in your life. And what I am begging everyone on this podcast, and everyone who watches it to do, is to go deeper, go beneath the surface of this very nice, positive idea of helping kids and calculate how much how are they going to use it?

00:58:35:21 - 00:58:50:06
Ramit
What if we contributed this much? Not that much. What if we gave them nothing? What if we give them a million and really start to craft that decision as part of your rich life? Mia, can you tell me what your family said about money as you were growing up? What do you remember?

00:58:50:08 - 00:59:10:03
Mia
I just remember do not spend. And I remember always feeling like I always wanted to spend money. I was a kid who, like, I got babysitting money. It did not go into savings. I wanted to spend it right away. And I felt I always felt like I was doing something wrong. Spending money is wrong. Like, my parents are so amazing.

00:59:10:06 - 00:59:19:14
Mia
They're true minimalists. Like they don't need much stuff. They will eat the exact same meal for the rest of their lives.

00:59:19:15 - 00:59:20:13
Jake
You would like them?

00:59:20:15 - 00:59:21:07
Mia
Yeah.

00:59:21:10 - 00:59:40:07
Ramit
Interestingly, they also did take you to travel, and you've mentioned you would like to take your kids to travel. So a lot of similarities in how your parents raised you. Of course, the college thing paying for you, you want to pay for them makes sense. Did you ever find yourself confronting any contradictions about money?

00:59:40:09 - 00:59:59:01
Mia
I feel like the only contradiction that we ever confronted was the fact that I didn't seem to be able to do what they were doing. Like the contradiction was they do it. They're able to do it. It doesn't seem hard to them. And for me. I'm not able to do it. It seems very hard to me like that was the contradiction.

00:59:59:02 - 01:00:07:01
Ramit
Is it still hard? Yeah. Okay. Are they still alive? Still married? Yep. Cool. How are they with money now?

01:00:07:03 - 01:00:20:12
Mia
Exactly the same. Really incredibly responsible. I think maybe the only difference is that they're spending more on travel in their retirement than they did when we were kids, which I think rakes sense.

01:00:20:13 - 01:00:22:01
Ramit
Are they enjoying their money.

01:00:22:02 - 01:00:22:24
Mia
1,000%?

01:00:23:00 - 01:00:27:21
Ramit
Wow. This is a very healthy relationship in general.

01:00:27:22 - 01:00:56:21
Mia
Yeah, maybe I wish that they could have explained to me how it felt easy to them. Like what I saw was like there were spreadsheets and there was money tracking I didn't see, and they didn't talk about maybe the choices that they made, like, we could buy this, but I'm not buying it because we want to travel or like, I didn't see any of that.

01:00:56:22 - 01:01:01:07
Mia
They're super responsible with money. They were obviously making trade offs.

01:01:01:08 - 01:01:01:16
Ramit
They didn't.

01:01:01:16 - 01:01:02:23
Mia
Tell you, but they didn't tell me that.

01:01:02:23 - 01:01:07:04
Ramit
Okay, Jake, anything that Mia's missing partners often know best.

01:01:07:06 - 01:01:16:09
Jake
I mean, they are. They're a unit, and they are methodical. And they. Everything she said is exactly correct. It's just. It just seems flawless. They just. It seems it seems.

01:01:16:14 - 01:01:18:09
Mia
Like they never make a mistake.

01:01:18:11 - 01:01:24:10
Jake
Like we go over their house. I know exactly what meal we're going to get every single time. Oh, really? Yeah. It's. Yeah.

01:01:24:11 - 01:01:25:05
Ramit
That's interesting.

01:01:25:06 - 01:01:29:24
Jake
Yeah. And it's like they just it's very systematic. I mean, it's like.

01:01:30:00 - 01:01:31:20
Ramit
Do you have that with your food at home?

01:01:31:23 - 01:01:33:16
Jake
No no no.

01:01:33:18 - 01:01:39:21
Ramit
Do you have that with your savings. Like how did you choose the number 700. Is it methodical.

01:01:39:22 - 01:01:43:06
Jake
No, no. They they have they have a system where.

01:01:43:10 - 01:01:43:21
Mia
I don't know.

01:01:43:21 - 01:01:46:15
Jake
What it is. Yeah. I don't know what it is, but they definitely have something.

01:01:46:16 - 01:02:11:05
Ramit
But it's quite interesting, right? It's not that they are the perfect unit. It is that their behavior and attitudes are methodical. Yes. The clue is when you go over there, you know exactly what you're going to eat. That actually is a huge reveal. Yeah, that they have some type of system. It's not surface to you, but they have it just the same as if you ask me, what's my savings amount and savings rate.

01:02:11:06 - 01:02:18:04
Ramit
There's a reason for it. Right. And the best part of all is you all can do that for your system.

01:02:18:05 - 01:02:28:10
Jake
And I think the part that I'm most envious about is how much they're willing to help their family and, like, help their kids or, you know, Mia's brother or whatever, those, those kind of situations.

01:02:28:15 - 01:02:30:08
Ramit
But you're helping your family a lot.

01:02:30:09 - 01:02:33:12
Jake
Yeah. And I think that maybe that's part of what the allure is to.

01:02:33:13 - 01:02:35:08
Mia
I do think that's something we both value.

01:02:35:09 - 01:02:38:15
Jake
I really helping out my kids when when they're older.

01:02:38:17 - 01:03:02:11
Mia
Like when you talk about I know consciously that like the idea of paying for college 100% doesn't necessarily need to be like, it doesn't have to be 100%. Right. But like when you talk about lowering that, it makes me feel a little, you know, like, oh, I don't know if I can do that because I think there is we both have this value of like we take care of our family.

01:03:02:11 - 01:03:03:17
Mia
Like, that should be.

01:03:03:18 - 01:03:22:06
Ramit
So what? So what if when I suggest which, by the way, I have not even done today. But so what if I were to suggest instead of paying for 100% of college, you pay for 90 or 80 or 50 and it makes you feel anxious and guilty. So what?

01:03:22:08 - 01:03:31:21
Mia
Well, that doesn't feel a lot better than feeling anxious. So if I was already feeling anxious about money and you say, like, let's just trade the anxiety for guilt, that doesn't sound very good.

01:03:31:22 - 01:03:54:00
Ramit
My point is that just because you feel guilt does not mean that you have to follow that feeling. So sometimes it just the question is so wet, oh, I feel guilty. And yeah, I'm going to feel guilty. That's how I was trained for generations. I'm going to acknowledge that feeling. I'm going to ask, why am I feeling guilty?

01:03:54:01 - 01:04:15:14
Ramit
Oh, because my invisible script is that I have to pay for 100% of college. I'm going to write that down, and I'm going to turn the page and say, okay, I'm gonna set that aside for a minute. So what? Yeah. What if, instead of following that feeling, I followed the decision, the one that's informed by numbers, by connection, by conversation, and by a rich live vision.

01:04:15:15 - 01:04:37:11
Mia
Can I just stop there for a second? Because that feels like a really big, like shift in my thinking. Is that idea of like. I don't think I realized how much I was letting feelings and not decisions impact the money picture. Like, I never thought of it that way. And I feel like that's exactly like you just captured it.

01:04:37:12 - 01:04:42:08
Mia
Like I let the feelings instead of the decisions control what I'm doing.

01:04:42:09 - 01:05:08:11
Ramit
Yeah, amazing. But well done. That takes a lot of introspection to make that connection. Feelings are valid, but in my experience, way too often I'm talking over 95% of the time, people are making life changing financial decisions through feelings alone. Feelings do not come first on this. We've got to start with the vision of a rich life and then the numbers.

01:05:08:12 - 01:05:16:10
Ramit
And then we can talk about the feelings. Great insight. Okay, Jake, what do you remember your family saying about money when you were a kid?

01:05:16:11 - 01:05:36:18
Jake
My parents were fantastic. They were so supportive. But just money was never discussed at, like, ever. I, I knew we were well off. I knew we got basically whatever we wanted, but it was just it was never I have to this day, no idea how much money we had or what they had, what they have currently. They're separated now.

01:05:36:20 - 01:05:38:09
Jake
I've no idea.

01:05:38:13 - 01:05:42:13
Ramit
Would you you mentioned well-off. Would you say, like upper middle class? Well.

01:05:42:16 - 01:05:50:03
Jake
I would say. I would say upper middle class, probably towards wealthy in Midwest, in the small town that we grew up in.

01:05:50:05 - 01:05:51:06
Ramit
They help you with college?

01:05:51:07 - 01:05:51:19
Jake
Yes.

01:05:51:20 - 01:05:53:03
Ramit
Yes, they paid for the whole thing.

01:05:53:05 - 01:06:12:20
Jake
Yeah. I didn't really try and tell about 25. Like, I think I was kind of a late bloomer. I joke about I wasn't getting scholarships. It was just like getting into school. So they just blindly supported me, and they. And they got me. And I have had conversations with them that said, you know, we we gave you that opportunity, but you took it and run with it and ran with it.

01:06:12:20 - 01:06:14:00
Jake
And that was the.

01:06:14:02 - 01:06:19:08
Ramit
Are they going to give you money as part of an estate or inheritance?

01:06:19:09 - 01:06:24:08
Jake
Yes. I've talked a little bit about my to my dad. It's a mythical number. I don't know.

01:06:24:11 - 01:06:24:20
Ramit
He hasn't.

01:06:24:20 - 01:06:35:16
Jake
Told, you know, and I've discussed a little bit with him, but it's just it, it just the way they. I have no hard feelings. I just it's just not a conversation we've had ever in 38 years.

01:06:35:18 - 01:06:42:07
Ramit
So what money messages do you think you are bringing from your childhood to this relationship?

01:06:42:08 - 01:07:00:01
Jake
I think I follow every pattern of the idea of just avoid it, shut the door, pretend it doesn't exist. Like, are we rich or poor? I just love to just just ignore it. But I think that that that's something that's been really hard because I think there's a there's the fear and then the unknown. So it's just avoiding okay.

01:07:00:02 - 01:07:02:01
Ramit
So avoiding what about you mean.

01:07:02:03 - 01:07:09:12
Mia
I think I watched my mom, you know, every weekend she would be on the computer doing spreadsheet. I think.

01:07:09:17 - 01:07:10:21
Ramit
I just like, copied it.

01:07:10:22 - 01:07:13:16
Mia
Yeah. And I don't know what she was doing, but I have a spreadsheet.

01:07:13:17 - 01:07:32:22
Ramit
She's really funny. It's just the same thing generation after generation. It's a little ironic, isn't it, that Jake's parents are going to give him some amount of money? It sounds like it could be somewhat large. And he's afraid of money. He doesn't know what to do with it. He doesn't want to pay attention to it, doesn't want to pick up a book about it.

01:07:32:23 - 01:07:54:17
Ramit
He's playing defense. And yet at the same time, that is the exact same lesson they are passing on to their kids. These generational messages do not fade easily. If you do not fight to develop a new relationship with money, you're probably just passing on the one that your parents gave you. And frankly, although most parents try to do their very best, most parents didn't know what the hell they were doing with money.

01:07:54:18 - 01:08:09:00
Ramit
So I want you to do more. Your parents didn't have access to YouTube. They didn't have my book at their public library. They didn't have access to all this stuff for free. You do. What is your rich life vision together?

01:08:09:02 - 01:08:30:11
Mia
I think both of us agree that in our rich life, we don't have to track every penny. I think that would be like number one for me. I would love to have that feeling I feel about the house, like I made the right decision. I'm doing the right things. That is what I want. And I think for both of us, like that is what we want to feel great.

01:08:30:13 - 01:08:32:06
Ramit
Okay, what else is in your rich life?

01:08:32:06 - 01:08:49:24
Jake
I would add that I think after this, just in this conversation alone, it's changed to I want to be confident in the decisions we're making. I think, you know, knowing we're doing this. And I love that the conversation about using data to make those decisions, like, right now we're just using opinions and feelings, and that's something we hate at our work.

01:08:50:00 - 01:08:54:03
Jake
Yeah. It's like, well, if we're just going off opinions, we're going to go off of mine. Then, you know.

01:08:54:04 - 01:08:54:15
Ramit
Exactly.

01:08:54:15 - 01:08:55:06
Jake
I say that.

01:08:55:06 - 01:08:55:18
Ramit
A lot.

01:08:55:19 - 01:09:00:20
Jake
Yes. And it's just like and we in our jobs, like we're always trying to use data to make decisions. And then.

01:09:00:21 - 01:09:01:06
Ramit
I think.

01:09:01:06 - 01:09:01:16
Jake
The two of.

01:09:01:16 - 01:09:21:06
Ramit
You have been playing not to lose with money. I don't sense if you were playing to win right now, it's like, let's just not make a mistake and let's just put the money for the 529. Yeah. Is there anything about in the rich life, anything about. We want to get food delivery service three times a week. We want to travel.

01:09:21:07 - 01:09:26:10
Ramit
We want to take our kids or put them in this type of tutoring service. That's at what else? Give me specifics.

01:09:26:11 - 01:09:31:06
Mia
1,000% the landscaping. And like the hot tub? Yep.

01:09:31:07 - 01:09:33:05
Ramit
How come you're saying that even though it's your thing?

01:09:33:06 - 01:09:50:07
Jake
I agree, I think I think we I think it is like that's something that we constantly we're talking about that lately. And I think it started with your book. That's what really that I never, ever thought about what I was saving my money for. And I think that that's really kind of driven me a little bit more about like where we're saving those money.

01:09:50:08 - 01:09:51:14
Ramit
So you you never.

01:09:51:15 - 01:09:52:19
Jake
I never had a thing.

01:09:52:20 - 01:09:53:18
Ramit
You never had a vision.

01:09:53:19 - 01:09:58:01
Jake
No, I would be. I just want to save money. I don't want to spend money.

01:09:58:06 - 01:09:58:14
Ramit
I want.

01:09:58:14 - 01:10:02:15
Jake
Not to. Yeah. Playing not to lose. I mean, that was. That was my M.O. 100%.

01:10:02:17 - 01:10:09:03
Ramit
You know, in life, if you do not have a vision for your money, one will be created for you.

01:10:09:04 - 01:10:09:10
Jake
Right?

01:10:09:11 - 01:10:19:03
Ramit
And that vision typically is by a big house, by a big car, et cetera, etc., etc.. And then just fast forward until you die. Actually, exactly what you.

01:10:19:03 - 01:10:20:23
Jake
Just said. Pause and rewound. But then.

01:10:20:24 - 01:10:43:13
Ramit
Yeah, you went back and so you unwound some of that, which was awesome, but still did not replace that with a new vision. It was just like, save the money. And then Mia, your vision was first we need to have the house, etc. and then after unwound, it's like, well, I need to be doing these things that my parents taught me.

01:10:43:14 - 01:11:04:22
Ramit
And so how am I going to do that? Take all the money and put it for my kids $3,000 a month? The thing about this is actually like a very loving decision. It can be seen as a very rational decision. All those can be true. But I don't think you would be here if it weren't actually causing a problem.

01:11:04:23 - 01:11:08:09
Ramit
Right. And what is that problem in a sentence?

01:11:08:14 - 01:11:10:03
Jake
We don't have the money to do it.

01:11:10:04 - 01:11:16:18
Mia
It's making us take out of our savings. Yeah.

01:11:16:20 - 01:11:18:16
Ramit
So you agree we don't have the money?

01:11:18:18 - 01:11:20:06
Mia
Not the way we're spending now.

01:11:20:06 - 01:11:26:15
Ramit
Okay, I want to get back into the numbers. But before we do that conceptually, what do you think needs to happen?

01:11:26:15 - 01:11:39:06
Jake
I think the number one thing is we can't spend take we cannot take money from savings anymore. Like that is our last thing. And I think I'd almost like to put more money into savings because of the fear of, you know, I think.

01:11:39:11 - 01:11:40:23
Ramit
Where's the money going to come from?

01:11:41:00 - 01:11:47:06
Jake
Probably the 529 I think would be one. I think we talked about those minimal things that we talked about.

01:11:47:06 - 01:11:50:01
Ramit
Mia. What do you think conceptually needs to happen with your money?

01:11:50:02 - 01:12:09:01
Mia
We need to make a decision about the amount of money that we feel is right for college, and then use that decision to then make the rest of the money work. Like right now, it's just it should be 100%, but should it be like we've never actually questioned that in any way.

01:12:09:02 - 01:12:14:01
Ramit
Yeah. You never thought about the number itself. Whoa. Okay. I have to ask some questions.

01:12:14:02 - 01:12:21:03
Jake
Because it's that blind like that. Like you're supposed to do this, and it's like this ghost telling us that we have to do this.

01:12:21:03 - 01:12:30:16
Ramit
Well said. It's a ghost. Probably no one has even ever explicitly said you need to be funding 100% via 529. Nobody.

01:12:30:16 - 01:12:35:05
Jake
If somebody would have said it would have been but Jillian Dollars, I'm like, all right, well, let's start saving work.

01:12:35:09 - 01:12:37:01
Ramit
It's a midwest work ethic.

01:12:37:02 - 01:12:37:23
Jake
It's like it's the grinder.

01:12:38:01 - 01:12:57:14
Ramit
The goal, and we can execute. In fact, you even asked me to do that for you today. Yes. Give me a plan and let me execute. I don't want to have to think about it. And you notice I listen. But I never accept that mantle. Because you too will have to think. And then it will make it that much more likely that you will actually follow through.

01:12:57:15 - 01:12:58:10
Jake
Yeah.

01:12:58:11 - 01:13:19:24
Ramit
I think me and Jake have this one invisible script that is so firmly rooted in the center of everything related to their money discussions, that they just cannot see around it whenever they start talking about money. This looming ghost, as they called it, is standing right in front of the living room and it's saying, you got to pay for your kid's college.

01:13:19:24 - 01:13:34:17
Ramit
In fact, you have to send them every last cent you've got. On the question of the amount that you are putting aside, which is $2,700 a month for 526. Do you know how much that will turn into for your kids?

01:13:34:19 - 01:13:37:05
Jake
Yes, it's like 98 for.

01:13:37:08 - 01:13:46:03
Mia
Our oldest because we have the least amount of time. It's because he'll be in college in four years. So that'll be like 100. About 100.

01:13:46:05 - 01:13:47:01
Jake
It was 98.

01:13:47:03 - 01:13:49:13
Ramit
Let's say 100. That's fine. And then how about for the others?

01:13:49:14 - 01:13:55:19
Mia
And then I think it's 130. And then for our youngest who's three, I think it's.

01:13:55:20 - 01:13:56:16
Jake
Like 50.

01:13:56:17 - 01:13:58:17
Mia
No, I think it's more than I think it's like 170.

01:13:58:18 - 01:14:03:04
Ramit
So like, is that the right amount?

01:14:03:06 - 01:14:04:02
Jake
I have no idea.

01:14:04:03 - 01:14:04:24
Ramit
It's not.

01:14:04:24 - 01:14:06:23
Jake
Amusing is it not? Not about that.

01:14:06:24 - 01:14:13:24
Ramit
Like shocking that you are spending almost the most on this entire sheet. I'm just looking. Is there any number higher than that?

01:14:14:05 - 01:14:14:23
Mia
I don't think so.

01:14:14:24 - 01:14:24:14
Ramit
Your pension. But aside from that, you are spending the most amount of money and you haven't asked yourself, is this the right amount?

01:14:24:15 - 01:14:31:21
Jake
No. We've never. And then we get the idea that like, well, if it just it'll transfer over the next kid or something like we just like justify without of course.

01:14:31:22 - 01:14:55:06
Ramit
No wonder you feel guilty. You don't know even the basic numbers. And in many ways, I think you like feeling guilt because it's a familiar feeling the minute you you sold the house, which was a momentous move, What are we doing? Put it over here for five minutes. It's like no time to stop and think and say like, what is the right decision for us?

01:14:55:06 - 01:15:06:00
Ramit
Even though we made this huge life change? Yeah. Is 100 K right or not, I don't know. Have you talked to your kids about college funding?

01:15:06:01 - 01:15:06:11
Mia
Yes.

01:15:06:12 - 01:15:06:16
Jake
A.

01:15:06:16 - 01:15:09:02
Ramit
Little bit. Was the 14 year old say what's the conversation been?

01:15:09:03 - 01:15:27:22
Mia
The conversation has been we can help you with public university, but we if there's something else that you want to do, you're going to have to, you know, do scholarships or loans. And I think I've talked with him too about, you know, you don't as much as possible, you know, you don't want to have debt.

01:15:27:24 - 01:15:48:02
Ramit
Can I suggest a reframe of that conversation. Because it feels like almost every conversation that people our age, that the parents who were lucky enough to talk to us, that's how they talked. So it's like, all right got a dust off this document. All right. Here's what I can do for you. I can pay for this, but not that.

01:15:48:03 - 01:15:48:12
Ramit
That's all..

01:15:48:12 - 01:15:50:01
Speaker 5
You need to not do this.

01:15:50:01 - 01:16:13:14
Ramit
And it's just like a lecture. Meanwhile, you're actually telling them something amazing. Hey, dad and I saved up this much money. We worked really hard. I want to tell you what it took for us. This is what we did. And then this happened. And we, as you know, has been so amazing for us. We went to college. We teach.

01:16:13:16 - 01:16:38:01
Ramit
ET cetera. And so when it comes time for you to get to college, we want to give you an amazing gift. And that gift is that we can fund $75,000. Now, that could be your first year. You could split it out over four years. At that point, you're an adult. It's going to be up to you. But we are going to teach you and we trust that you will make the right decision.

01:16:38:02 - 01:16:43:18
Ramit
But we worked really hard and we love you and we trust you. What is the difference?

01:16:43:19 - 01:16:49:05
Mia
Well, one, it communicates the message of him being the decision maker.

01:16:49:06 - 01:16:50:12
Jake
Yes.

01:16:50:14 - 01:16:52:11
Mia
Also, it shows confidence.

01:16:52:12 - 01:16:54:23
Ramit
Yes. Keep going. What else?

01:16:55:00 - 01:17:04:17
Jake
It makes him like a collaboration. Like we're bringing him in like he's collaborative. It's part. It's work together and not like. Stop whining. I'm paying for your college. Like, totally like the message.

01:17:04:19 - 01:17:09:00
Ramit
Like exactly what about the part about how you share what it took for you?

01:17:09:02 - 01:17:15:16
Mia
What about totally different than. Than what we got? Like, that's one of the things I said I wish my parents would have done is say, how did you do that?

01:17:15:17 - 01:17:16:10
Jake
Yes.

01:17:16:15 - 01:17:16:21
Mia
Yeah.

01:17:16:22 - 01:17:38:04
Ramit
And I love that you caught that. Yes. Notice that you were invisibly passing on the same message to them. Don't tell them how it happened. Because deep down, a lot of parents believe we got a shield. Our kids from money. Wrong. You get the gift of talking about money in every function at the grocery store, at a department store, and for college.

01:17:38:05 - 01:17:56:17
Ramit
You get the gift of talking to them about that. So flip that entire worldview. We don't get to protect them. No, that's that's not they're not weak, little fragile beings. They are strong. And and of course what this really, really, if you peel it all the way back implies we need to get good about money.

01:17:56:22 - 01:17:57:16
Jake
So we can share.

01:17:57:21 - 01:18:15:03
Ramit
So that we can share that with our kids. And guess what? It's totally okay to tell your kids. In fact, they love it when you admit mistakes. Hey, we don't actually know any of this. Yeah, we had to fly across the country, meet this guy who who lit us up, and that's why we came back and we started reading this book.

01:18:15:05 - 01:18:17:24
Ramit
Yeah. Kids eat that up.

01:18:18:00 - 01:18:18:24
Jake
Yeah.

01:18:19:01 - 01:18:42:04
Mia
Can I tell you, like, what I'm feeling right now? Yes. Like, I had a way bigger emotional, positive, emotional response to thinking about empowering my kids with money. Then I like when I thought about saving for college. There was no feeling associated with that. But the feeling of like, I want my kids to know how to do this, like that, that's what I want.

01:18:42:05 - 01:18:48:22
Jake
It's like everything we believe in, in education and like building kids up. Powering power. Yes, you can handle it. And like, you're part of this.

01:18:48:24 - 01:18:49:20
Mia
And I don't know why.

01:18:49:21 - 01:19:00:14
Jake
I, I'm just thinking about, like, in 20 years, I don't want them, you know, flying to California to have your kid tell them about money, you know. So, yeah, it's like.

01:19:00:15 - 01:19:29:16
Ramit
That's amazing. It's funny when you mentioned that, actually, I felt my own heart beating faster. Yeah, it's very powerful. What is happening right now, especially the fact that you are both teachers, is like, you're incredibly connected to this concept of teaching and empowering. Like, I love that I'm a teacher as well, just in a different format. I actually think me, based on what you told me, it would be more empowering for you to give 30 K and teach than to give 120 K.

01:19:29:17 - 01:19:32:06
Ramit
Yeah. So what does that open up?

01:19:32:08 - 01:19:52:22
Jake
My mind just blown right now. I just like I like you know, we always at a phrase that I do I talk about my school is that high expectation with high support. And I have low expectation with low support. And I and like do not look at that and let's make decisions on feelings. It's like I am having the most cognitive dissonance I've had in 20.

01:19:52:23 - 01:20:04:05
Jake
It's just like, I like it's like this weird. You keep talking like, and this is no longer I'm not like sweat. My hands aren't sweating. It's like tingling. Feeling a little bit like that's that's really interesting. I just yeah, it's.

01:20:04:05 - 01:20:07:22
Mia
It's maybe like the first time that I felt, like, hopeful about money.

01:20:07:24 - 01:20:09:07
Jake
Yeah. I would agree with that too.

01:20:09:08 - 01:20:11:18
Mia
We just weren't making decisions.

01:20:11:20 - 01:20:14:08
Jake
Correct? No, we were doing everything. Was feeling based.

01:20:14:08 - 01:20:19:05
Ramit
Invisible scripts, feelings. Yeah. And letting those guide everything.

01:20:19:06 - 01:20:20:11
Jake
Yeah.

01:20:20:13 - 01:20:36:15
Ramit
Honestly, pretty amazing to watch this breakthrough. But what you're about to see makes this all the more magical. Because at this moment, while we were talking, we stood up to take a quick break, and I walked out of the room, but the cameras kept rolling. Take a look.

01:20:36:17 - 01:20:40:24
Jake
I think that, like, I need to figure out the hot tub we to disconnect.

01:20:41:01 - 01:21:02:13
Mia
But I think with the kids, we could we could say like, guys food. We want to have healthy food. So we're going to eat pretty much the same thing every week. If there's something that you want that's different, we're going to give you a budget and you have that amount of money that you can spend a plan, a different meal, but otherwise we're going to just like every week, it's going to be the same thing because.

01:21:02:14 - 01:21:03:03
Jake
I love.

01:21:03:04 - 01:21:04:15
Mia
I want to spend our money.

01:21:04:17 - 01:21:10:00
Jake
And I think about the point where he said, like, I'm afraid of falling on the bath, but I'm not going to put a mat down.

01:21:10:02 - 01:21:12:13
Mia
The other thing that I'm realizing about.

01:21:12:14 - 01:21:15:07
Jake
The need to talk to the kids about what's the biggest thing?

01:21:15:08 - 01:21:32:14
Mia
Yes, for sure. But I think, like when he was talking about like having a different about feelings and not decisions, like I would just look at the budget and be like, we're spending too much. That was a feeling. So then like, we just have to spend less. But then it was just like, how? Where what? There was no.

01:21:32:15 - 01:21:34:18
Jake
Like chart.

01:21:34:21 - 01:21:51:04
Mia
There was no like, I want this. So that's what I'm going to do. Even though like, I knew that kind of, you know. Yeah, I don't I don't want my kids. I want to teach them.

01:21:51:06 - 01:21:54:12
Mia
And I love, like how he's talking about like, hey.

01:21:54:14 - 01:21:56:03
Jake
The way he phrase.

01:21:56:05 - 01:21:58:05
Mia
Yes. Yeah.

01:21:58:07 - 01:22:00:00
Jake
I'm giving you this.

01:22:00:02 - 01:22:09:05
Mia
So it's a gift and I'm so excited to be able to do it. Let's, let's, you know, whenever you want to look at your account, we can pull it up and see how much it's in there.

01:22:09:07 - 01:22:30:10
Ramit
This is why I do this podcast, and is why I am so proud that hundreds of thousands of people are here every single week to witness it. Well done. I am honored to watch this happen in front of me. Now let's get back to their numbers. The question is, what can we do to use our money to live our rich life?

01:22:30:10 - 01:22:31:21
Ramit
Who would like to go first?

01:22:31:22 - 01:22:50:16
Mia
I think I would like us to make a decision about, like an amount of money that we want to give the kids. And it's not hypothetical. It's not. It's like we're going to give you this much money. And then once we've made that decision and we know how much we have left each month, then we look at everything else and figure out.

01:22:50:18 - 01:22:51:19
Jake
That sounds awesome.

01:22:51:20 - 01:22:53:06
Ramit
Do you have a sense of the number?

01:22:53:10 - 01:23:01:10
Mia
My gut right now is saying like 75,000. If that feels high, I'm open to that being lower.

01:23:01:12 - 01:23:07:00
Jake
Let's meet in the middle and go like 60. I think that that because I was thinking 50, I think like, would that be something? Maybe.

01:23:07:02 - 01:23:10:17
Mia
Are you okay? Are you okay with 6550, 65?

01:23:10:22 - 01:23:12:00
Ramit
65,000 okay.

01:23:12:01 - 01:23:14:01
Jake
Is that like a random. Like, I feel like.

01:23:14:02 - 01:23:16:08
Mia
It doesn't matter if it's random, because at least we decided.

01:23:16:09 - 01:23:16:23
Ramit
Yes.

01:23:17:00 - 01:23:17:08
Jake
Yeah.

01:23:17:09 - 01:23:19:02
Ramit
Great. Great great great.

01:23:19:06 - 01:23:23:06
Jake
So do we get I mean, would you then adjust and go back and it's.

01:23:23:06 - 01:23:26:22
Ramit
Like what I'm going to try to do right now. So we know the age of your kids 14.

01:23:26:23 - 01:23:28:01
Mia
11 and three.

01:23:28:02 - 01:23:30:14
Jake
And your ex is contributing some to.

01:23:30:15 - 01:23:36:22
Mia
That is true. Is that their dad? It's a smaller amount, but 15,000 per kid.

01:23:36:23 - 01:23:57:02
Ramit
Oh, okay. So he'll contribute 15,000 for the two kids, the older kids. And then you want to get a total of 65,000. Let's look at the rest of this. We ran some calculations and we'll speak broadly. It will change specifically as you dive into your own numbers. But in general, what we found is that you need to be saving.

01:23:57:03 - 01:23:58:03
Ramit
You want to guess.

01:23:58:04 - 01:24:00:02
Jake
2300? Okay.

01:24:00:07 - 01:24:00:16
Ramit
What do you.

01:24:00:16 - 01:24:02:11
Mia
Think, 1900.

01:24:02:12 - 01:24:04:08
Ramit
Good. It's about 1600.

01:24:04:10 - 01:24:05:19
Jake
Okay, that's a lot.

01:24:05:20 - 01:24:06:23
Mia
That's a lot less.

01:24:06:24 - 01:24:07:22
Ramit
A lot less.

01:24:07:22 - 01:24:09:03
Jake
About half. Yes.

01:24:09:08 - 01:24:32:12
Ramit
Yeah. And the reason that you can save less and still hit your numbers. One, you've lowered the amount, although you didn't really even know how much you were saving anyway. Right. But two, your oldest obviously needs more because they're going to be going to college in just a few years. Your youngest has almost decades. So that number is like way less that you need to be putting.

01:24:32:13 - 01:24:56:12
Ramit
So when we combine it all, it's about 1600 a month. Again, the number will change depending on several variables. You should calculate this carefully at home. So let's put that in 1600. That's a lot from 2700 to 1600. Yeah. Okay. So let's take a look at what's going on here right now. We have 57% in fixed costs. We have your investments at 22%.

01:24:56:13 - 01:25:11:06
Ramit
That is your post-tax. Well, that's your pension. Yeah $1,600 a month going towards the kids, and then you've got 700 bucks going towards your emergency fund, leaving you only 4% in guilt free spending.

01:25:11:08 - 01:25:15:18
Mia
You know how you recommended like separating groceries and gas. Can we just, like, do that? Yeah. Okay.

01:25:15:19 - 01:25:17:23
Ramit
How much is gas?

01:25:18:00 - 01:25:19:20
Mia
Probably 200 a month. Yeah.

01:25:19:21 - 01:25:20:06
Jake
200.

01:25:20:07 - 01:25:23:19
Ramit
200. I'm moving gas up here to 609.

01:25:23:24 - 01:25:29:09
Mia
And then I think we can get the groceries and gas. I think we can get groceries to 800.

01:25:29:10 - 01:25:29:19
Ramit
Yeah.

01:25:29:20 - 01:25:30:23
Jake
All right.

01:25:31:00 - 01:25:34:07
Mia
We put the subscriptions down already.

01:25:34:09 - 01:25:36:15
Ramit
What's this? Miscellaneous.

01:25:36:17 - 01:25:40:04
Mia
I, I actually think that we don't.

01:25:40:05 - 01:25:40:16
Jake
Have.

01:25:40:16 - 01:25:46:13
Mia
To do that. Like, I think we could, like, if miscellaneous was half of that. All right. Because.

01:25:46:13 - 01:25:59:08
Ramit
Okay, let's do that. 600. Yeah. All right. You are down to 52% outstanding. Okay. Very good. You've got 9% or $1,216.

01:25:59:09 - 01:26:05:01
Mia
I feel okay with that because in a year we won't have preschool and that will free up another.

01:26:05:02 - 01:26:05:18
Ramit
Oh, let's.

01:26:05:19 - 01:26:06:10
Mia
Look at it.

01:26:06:12 - 01:26:25:14
Ramit
I like it. Let's let's zero that out and see what happens. Are you ready? Yeah. So this is this is what the CSP is most powerful at is projecting ahead when you pay off debt like credit card debt, when you pay off a mortgage, when you don't have preschool anymore. It's like, let's just look at our crystal ball a few months in the future.

01:26:25:15 - 01:26:46:10
Ramit
Boom, here we go. You're at 52% fixed costs. I'm zeroing out your preschool. Whoa! Down to 43%. That's extremely low. Going down now. Y'all have 18% guilt free spending or $2,400. What do you think about that?

01:26:46:11 - 01:26:47:01
Jake
That seems like.

01:26:47:02 - 01:26:47:13
Mia
It.

01:26:47:15 - 01:26:52:22
Jake
Feels really good. That's really good. That's the the rich life. The idea of being able to spend.

01:26:52:23 - 01:26:55:04
Ramit
Okay. Now let's talk about it. Because what do you want to do with that money?

01:26:55:05 - 01:26:57:20
Jake
I'd like to put more into savings. I think.

01:26:57:23 - 01:27:04:16
Mia
I would feel most comfortable if we had six months of, say, like liquid money.

01:27:04:17 - 01:27:12:14
Ramit
Yeah. So that's about 30, 35,000, let's just say. So how much do you want to put into savings.

01:27:12:16 - 01:27:13:24
Jake
Per 1000?

01:27:14:01 - 01:27:15:22
Mia
At least a thousand.

01:27:15:24 - 01:27:17:01
Ramit
You're putting 700, right.

01:27:17:03 - 01:27:19:19
Mia
We do like 1200. Yeah 1400.

01:27:19:20 - 01:27:20:04
Jake
Double it.

01:27:20:05 - 01:27:25:05
Ramit
Yeah. All right. I like that 1400 a month, which is great.

01:27:25:06 - 01:27:26:06
Jake
Yeah, that feels really good.

01:27:26:07 - 01:27:36:18
Ramit
That now leaves you with $1,700 a month guilt free spending. Yeah, that's pretty cool. What would you do with that? Guilt free spending money?

01:27:36:22 - 01:27:40:22
Mia
I'm trying to decide if it's travel first or house first. You'd say house.

01:27:40:22 - 01:27:41:03
Jake
First.

01:27:41:08 - 01:27:42:14
Mia
House first. I'm okay with that.

01:27:42:15 - 01:27:56:01
Ramit
Great. So let's do this. Let's call instead of vacations, which sounds like you're not prioritizing. Let's call it house. And let's put let's put 750 a month. Let's just see what happens. 750.

01:27:56:02 - 01:27:57:01
Jake
One feels quick.

01:27:57:02 - 01:28:01:19
Ramit
Yeah. So how long would you need for you to be able to get something for the house?

01:28:01:20 - 01:28:04:22
Mia
Well, let's say we just started with a hot tub that's probably like six months.

01:28:05:01 - 01:28:05:10
Ramit
So that's.

01:28:05:13 - 01:28:06:07
Jake
Like a year, a year.

01:28:06:08 - 01:28:07:12
Ramit
A year. Yeah. Are you cool with that?

01:28:07:13 - 01:28:08:01
Jake
Yep.

01:28:08:02 - 01:28:20:09
Ramit
Great answer. Yep. Amazing answer. I just want to point something out to you. Most people, when I say like it'll take a year, sometimes it'll take seven years to get what they want. And I go, are you okay with it? They go. That seems like a long time. I go and.

01:28:20:10 - 01:28:22:01
Jake
Right. So what? Right.

01:28:22:02 - 01:28:38:14
Ramit
Everybody should be looking. Look, get tight on this shot. So what? Oh, it's going to take a long time, and you're going to be seven years older anyway. In seven years, you might as well have a ton of money, right? A year from now, that's nothing to be able to get this awesome hot tub and to have saved for it.

01:28:38:14 - 01:29:00:23
Ramit
No debt. Amazing, right? Okay. 750 a month that leaves you with $1,000 a month guilt free eating out. Random thing you saw on Amazon that you want to buy. But that's it. Yeah. And I personally would prefer you. Clear. Leave a little bit of like, do not get to $1,025. Yeah, right.

01:29:00:24 - 01:29:01:15
Jake
Right.

01:29:01:17 - 01:29:05:00
Ramit
Clear it with room to spare. Can you all agree to that?

01:29:05:01 - 01:29:12:02
Mia
Yes. Yes. And I would love some like, specific strategies for like like when people are doing that. How to.

01:29:12:02 - 01:29:12:14
Jake
Do it. Yeah.

01:29:12:19 - 01:29:29:14
Ramit
So the biggest thing that comes up here and surprises people is eating out. Eating out is a variable cost, and it's one of the very few numbers I suggest people track. Here's how you do it to make it even easier. You. Just like I said, people who tend to be successful with grocery store shopping tend to basically by the same thing all the time.

01:29:29:16 - 01:29:52:19
Ramit
Same thing with eating out. They go, okay, we are going to spend $400 a month eating out, okay? Each time we eat out, on average, this is how much we can spend. And so let's even reverse it. One more. How many entrees do we get our. We getting a drink or two or just none. You already know every month where you are going to go out to eat and what you're going to order.

01:29:52:20 - 01:29:54:02
Ramit
It's that boring.

01:29:54:03 - 01:29:54:23
Jake
I like that.

01:29:54:24 - 01:29:57:10
Ramit
People like they really do not like this. They're like.

01:29:57:16 - 01:29:58:23
Speaker 6
Takes all the fun out of it.

01:29:58:23 - 01:30:18:08
Ramit
I'm like, but it's actually really fun when you know that on Fridays pizza and, like, you're looking forward to it, you know, you get to think about it, you're talking about it. And then when you go there, you, you, you get to experience it like two times. One is planning it, thinking about it, talking about then two while you're there.

01:30:18:09 - 01:30:26:17
Ramit
Yeah. So yeah, you may not have as much serendipity, but didn't you both tell me you want to not have to worry?

01:30:26:23 - 01:30:31:20
Jake
Yeah. And that's the thing. Yeah. And that's a that's more than the other one.

01:30:31:22 - 01:30:34:16
Ramit
Exactly. And now you have a plan and you can just execute it.

01:30:34:17 - 01:30:36:00
Jake
Yeah I love it.

01:30:36:01 - 01:31:03:07
Ramit
Good question. Great question. If we zoom out of these numbers, are you living your rich life? Often when we are fiddling with numbers, we're down in the weeds. And I always like to zoom out and be like, hey, does this actually feel good if we if we execute on all this stuff flawlessly? Are we actually living our rich life, or did we just mechanic our way into moving numbers around in another way?

01:31:03:08 - 01:31:05:17
Ramit
So do you all like this as your rich life or not?

01:31:05:20 - 01:31:28:10
Jake
I absolutely do, and I think that having a plan and I think that through this conversation, part of my rich life is not stress of pulling from savings. And I think that that like I've re calibrated a little bit in a way of understanding it. And I and I'm like, now I'm trying so hard to not go straight to approaches and like how I'm going to do this, this, this.

01:31:28:10 - 01:31:40:13
Jake
But it's like I'm already like planning afterwards, like what the app's going to look like. And I think that that is going to be helpful, like knowing we know exactly what day we're going to go out to. And that is part of my rich life. And I've talked with that with me about those kind of things.

01:31:40:14 - 01:31:43:09
Ramit
And how do you feel is this living your rich life?

01:31:43:11 - 01:31:54:24
Mia
Yeah. And I think especially because I think I was confusing saving for college with preparing my kids for the future, and those aren't the same thing.

01:31:55:00 - 01:32:19:06
Ramit
Great insight, great insight, if anything, dumping a bunch of money on kids. I mean, it helps them with avoiding some amount of debt, but it doesn't teach them much. Right. You both are examples of that. And so you changing the generational messages you received, you know, in general you receive very good messages, which is nice. But because of the benefits your parents gave you, you can raise the bar on what you give your kids.

01:32:19:06 - 01:32:23:11
Ramit
That's amazing. What surprised you about our conversation today?

01:32:23:13 - 01:32:46:11
Jake
My biggest thing is how I'm perpetuating so much of what I had as my own childhood of money, being in how I've gone against every belief I have about using data, building capacity, trusting our kids, and how just because I was scared of something, I've been like the worst version of myself around. Money, I think, is probably what I would describe it as.

01:32:46:12 - 01:32:55:09
Jake
And I think that was very I opening today. And I think, like you said, is digging in. I'm starting to feel a little bit more comfortable digging in if there's an actual goal there.

01:32:55:10 - 01:32:56:24
Ramit
Nice. Beautiful. Mia.

01:32:57:00 - 01:33:17:15
Mia
I think my biggest surprise was that confusion between giving the kids money versus preparing them for money. Like, I did not think about it like that at all. And that feels so that just like I feel so much lighter.

01:33:17:17 - 01:33:40:16
Ramit
Yeah, yeah, I can see that that that specifically, I think probably because of your professions and the way that you relate to your kids like that really connects. And that's beautiful. Yeah. That's beautiful. What about resentment? When we began talking, there was a difference in how you looked at money. Do you think there will be resentment about money ongoing?

01:33:40:17 - 01:33:57:21
Jake
I don't feel like it because I think that, like, I feel like a weight has been lifted off our chest of taking from the savings. And I think that if we're if we follow our plan, which I know we will like, once we get a clear plan and have steps to it that we'll do it, that it's not going to be like, all this hard work isn't from nothing.

01:33:57:22 - 01:34:10:12
Jake
It's all this hard work is so that we're setting up for everybody to thrive and kind of do that, as opposed to saving, setting up all this hard work so that it can just all go to this big lump of money that we don't even know we haven't thought about. Great.

01:34:10:12 - 01:34:31:16
Mia
I absolutely do not think that there will be resentment. And I think one of the reasons is that we have a way to make a decision that we feel good about, and when we do that, there won't be resentment because we made the decision together. And that difference between letting feelings, guiding our money instead of decisions, guiding our money.

01:34:31:17 - 01:34:46:14
Jake
And that resentment or the resistance came from a lack of clarity and a lack of understanding. So I didn't want to dive in because it didn't make sense to me. And now I kind of like seeing you go through the numbers and like, we can do that, like that. That makes sense. Other than just clicking numbers on a keyboard.

01:34:46:15 - 01:35:09:15
Ramit
Totally. There's a purpose behind it. Yeah, I have a lot of confidence in them. Mia and Jake were so open with the feedback that I gave them so willing to engage, that I think they're actually going to do an amazing job. For years they have been talking around making decisions, and I help them immediately make some of the biggest decisions of their financial life.

01:35:09:16 - 01:35:22:02
Ramit
Watching them light up when they talk about getting their kids involved. That was when I knew this is going to stick, so I cannot wait to hear what they end up doing. Let's take a look at their follow ups.

01:35:22:04 - 01:35:28:17
Mia
Hey Ramy, it's Mia and Jake and we just wanted to follow up with our homework.

01:35:28:19 - 01:35:38:17
Jake
Our biggest surprise, for me at least, is be unwritten rules that I followed that were really guiding my past and I wasn't really diving deep into them. So it was really fascinating exploring that.

01:35:38:19 - 01:35:52:04
Mia
My biggest surprise is how much better I felt, even though we're standing less for college, and that's because we feel really aligned in the belief that we want to teach our kids about money, not just give them money.

01:35:52:06 - 01:36:05:05
Jake
My biggest takeaway is it doesn't matter how much money we have, I'm always going to have to be concerned with money. I used to think that if I could just keep making more and more money, eventually I wouldn't have to worry about it and all my problems would go away. But that's not the case. And I'm good with it because we have a purpose and a process.

01:36:05:05 - 01:36:06:04
Jake
Now for that.

01:36:06:05 - 01:36:31:12
Mia
My biggest takeaway is that we are finally aligned in the way that we talk about money, and that is aligned in our values. So we just feel really connected and it doesn't feel stressful anymore. We've made a few specific changes. So now that we know how we want to spend our money, it's been so much easier to go through our subscriptions and our just regular expenses and say like, yes, we want to keep doing that.

01:36:31:13 - 01:36:41:20
Mia
No, we don't want to do that. So it's probably like the biggest change that we've made so far is just really starting to audit our spending and say, like, keep doing it, stop doing it.

01:36:41:21 - 01:37:02:21
Jake
We have confidence in doing so. And that makes the biggest difference. So we just want to say thank you so much. We're so lucky that you guys took time to meet with us. Me, it's Jake and Mia here. We just got back from vacation and I actually enjoyed it because for the first time ever, I knew where our money was coming from and how much money we had and how much money we could spend.

01:37:02:21 - 01:37:05:01
Jake
So it really took a lot of the fear out of it.

01:37:05:05 - 01:37:28:21
Mia
Yeah, we've had two of our money meetings so far, and those are the first two conversations we've ever had as a couple about money that did not feel contentious. It actually felt like we were on the same team working forward, and it's allowed us to be super intentional with our money, which I think is one of the biggest shifts for us is we're not necessarily spending less.

01:37:28:22 - 01:37:35:19
Mia
We're just really investigating why we're spending what we're spending and then choosing to do it with much more intentionality.

01:37:35:21 - 01:37:51:09
Jake
Yeah. And I and I've really realized how we have to be consistent. You know, we can't just miss certain things, but it's definitely worth it because I'm no longer a grumpy old man on vacation. I'm so grumpy. But at least I know where the money is coming from. So we just want to thank you so much.

01:37:51:11 - 01:37:53:05
Mia
Thank you so much. It was life changing.

01:37:53:06 - 01:37:54:22
Jake
Absolutely. Thank you.

01:37:54:24 - 01:38:12:04
Ramit
If you want to know the exact month and year that you will have $100,000 in your investment portfolio, sign up for my new program, road to 100 K. I'll help you hit that number fast. Go to 100 K to sign up.