280. “We have $11M in assets. Why are we still living month to month?”



 

Ramit unpacks what happens when a couple earns more than $1 million a year but still feels like they’re living month to month, and how a lifestyle built around family, community, and tradition can become almost impossible to afford.

Ramit Sethi of I Will Teach You to Be Rich talks with Margo and Kevin, 42 and 52, who live in Brooklyn with their five children. They take home around $600,000 a year and have approximately $11 million in assets, yet only around $50,000 in savings. Once Ramit uncovers expenses missing from their original plan, including private school tuition and summer camps, their fixed costs climb above 100% of their take-home pay, revealing that they’re spending more than they make every month.

Their biggest challenge isn’t simply earning more money. Kevin has taken on most of the finances while Margo has had limited visibility into their overall financial picture, and neither of them has a clear picture of where their money is actually going. Ramit helps them confront how community norms and family traditions shape what they see as non-negotiable, and the difficult choices they may need to make around private school, their homes, their children, and the lifestyle they’ve built.

In this episode we uncover:

• How a couple earning over $1 million a year can still live month to month
• Why they describe themselves as “rich poor people”
• How missing expenses push their fixed costs above 100% of their take-home pay
• Why $160K in tuition and camps completely changes their financial picture
• How a $400K–$500K mold crisis wiped out much of their financial cushion
• Why they have $11 million in assets but only around $50K in savings
• Why Kevin manages most of the money while Margo has limited visibility into their finances
• How childhood money lessons shaped their “earn more, spend more” cycle
• How community and tradition shape their spending
• Why they may need to make major changes to their homes, education costs, and spending to finally start saving and investing

Chapters:

(00:00:00) Introduction 

(00:02:00) Why they call themselves “rich poor people” 

(00:25:00) Ramit opens up their numbers 

(00:43:00) The hidden expenses pushing them over 100% 

(01:06:00) How their childhoods shaped their money habits 

(01:11:00) How community and tradition shape their spending 

(01:15:00) They finally confront what has to change 

(01:33:00) Why $11M in assets still leaves them cash poor 

(01:36:00) Private school, their homes, and the difficult decisions ahead 

(01:58:00) Follow-ups

 

This episode is brought to you by:

Notion | Learn more about how Notion can support your business at https://notion.com/ramit 

Wildgrain | Get $30 off the first box — PLUS free Croissants for life — at https://wildgrain.com/ramit

 

Skylight | Get $30 off a 15-inch Calendar at https://myskylight.com/ramit

NordVPN | Get an exclusive NordVPN deal + 4 months extra at https://nordvpn.com/RAMIT

Ladder | Get a free 7-day trial and $10 off your first month at https://ladder.fit/RAMIT


Want to know exactly when you’ll hit your first $100K? Rich Life: Road to $100K gives you a step-by-step system to automate your money, accelerate your timeline, and build your Rich Life along the way. Join today: iwt.com/100K

Apply to be coached for free on this podcast at https://iwt.com/apply

 

Transcript:

Ramit: Let me read you something from your application that caught my attention. You wrote, “At the moment, we are rich poor people, high income with no savings, and living month to [00:05:00] month.” Tell me about that
Margaux: it’s exactly what I wrote. Thank God we’re very fortunate to have a beautiful life, and my husband makes a very nice living. He works really hard, and he built everything himself. So, you know, it’s not anything that was given to us. It was something that was, worked for.
And in the grand scheme of things, if you look at his income, we’re considered a top whatever percent wealthy people.
However, there’s a struggle to pay the bills month to month So every month he’s figure out how to pay the bills ’cause he does the money? I don’t know if it’s month to month. It’s more like, at the end of the year when we’re getting down to the bottom of things, like h-how is it that we’re short?
Ramit: You’re short at the end of the year?
Kevin: Well, there’s not much left when there should be
Ramit: Which is it? Are you short or there’s not much left?
Kevin: I wouldn’t say losing. Hmm.
Ramit: wouldn’t say losing.
Kevin: But spending every single penny
Ramit: Okay. And then what is a rich poor person?
Margaux: Somebody that lives a wealthy [00:06:00] life, very comfortable lifestyle, owns homes, is able to go on vacations, and at the same time has such a high cost of living, there’s no savings. There’s no cushion.
Ramit: Mm.
Margaux: Margo, when you wrote that application, what was going through your head?
So for a long time, I’ve seen my husband working really hard, sweating for making things work, keeping up a very, I would say high lifestyle, paying the tuition bill with private school, and just trying to keep everything intact and keep everybody happy. And, I think he consistently would say, “I don’t understand. How is it possible that this is what I made this year, and I don’t have anything left at the end of the year? It’s another year. How is it possible?” And so I started to listen to some podcasts on finance and,
just trying to, you know, figure out how I could help us as a couple, as a family [00:07:00] financially, shift the energy and shift it the way things are going so that we’re-
Ramit: application though sounds like there was some tough stuff going on. Like, at the moment we are rich poor people. What was going on then?
Kevin: We have
Margaux: a very high tuition bill, that’s a very big part of our income. And my dad helps with some of it, and we decided that we’re gonna, take on the whole thing next year. So if that being the case, that’s gonna be an even more difficult, pill to swallow next year with everything going up.
The food is consistently going up. The tuition bill goes up a little bit every year, and we have, five kids to pay tuition for
Ramit: You have five kids in private school?
Margaux: You have five kids in private school? Yeah.
Ramit: Oh, wow. Okay. So let me make sure I understand. Margo, your dad was helping with some of the tuition bill. You both decided, we’re gonna do this on our own, and when faced with the cost of five kids in private school, knowing that even with the help from your dad, you were already not putting aside a lot of money, and now it’s gonna be even a bigger [00:08:00] expense.
You’re like, “What are we supposed to do?”
Margaux: Exactly
Ramit: Is that what brought you to applying to speak to me?
Margaux: Yes. Okay.
Ramit: Good to know. Kevin, what’s your take on this whole s- situation as Margo described it?
Kevin: You know, as the kids get older, they get– it’s more expensive to take care of them. So just maybe that pressure she felt of kids starting to go to college, getting older, having more needs. She
Ramit: Who feels more pressure about money?
Margaux: Kevin.
Ramit: Ah. Is that because you manage the day-to-day or what?
Kevin: It’s been a part of my history, worrying about money
Ramit: you worried for a long time?
Kevin: Oh. You worried for a long time? It’s always there somehow. As I get older and I’m dependent on a business to keep performing- … it’s becomes a question, you know, when am I putting away savings, and when is that gonna benefit me?
Ramit: Gotcha. Okay.
Money Stress in Marriage
Ramit: when you think about the word money, and money in your relationship right now, what’s the first word that comes to mind?
Margaux: fun
with
Kevin: we have fun with it
Ramit: Money’s fun. Okay.
Kevin: Yeah.
Margaux: Stress
Ramit: Fun, stress. [00:09:00] Okay. How long has money been a source of stress for you?
Margaux: I think it was maybe a few years into the marriage- where it started to become stressful for Kevin, because I don’t really deal so much with the finances.
He’s the one that makes the money and pays the
Ramit: So is he the one who’s stressed out about it,
Margaux: Yeah, but it causes stress in the relationship because when he’s stressed about it, I’m the one who’s running the home. So it becomes a questioning of what’s, you know-
Kevin: Yeah, she gets the brunt of my
Ramit: worry. He does. So you get stressed, Kevin, and then you start asking questions. Why are we doing this? Can’t you save money on that? Is that how it works?
Kevin: Uh, sort of. What else?
Ramit: So you get stressed about money, and then how does it rub off on her?
Kevin: I wanna understand the stress. So you get stressed out now- St- well- … how does it rub off on her? I could get upset about it, be in a bad mood about it.
Just, you know, things like that, where she’ll get the brunt of that, and then-
Ramit: Margo, you wanna add anything?
Margaux: It affects the dynamic of the relationship because once he’s stressed about money, things just feel like they’re constantly revolved [00:10:00] around that, and it’s, “Why is the bill this high?” “I don’t know, hon. Let’s look at it together. I brought it home. Why don’t you look at it?”
And it’s like, oh, kosher meat in New York. We’re feeding, an army in the house. And it’s a lot. I don’t know. I don’t know what to say. I was never one to, ir- responsibly go shopping and buy myself things that I shouldn’t. So it’s kinda like we both don’t know why we’re in this position constantly.
Ramit: this position constantly. You
Kevin: He’s confused.
Margaux: He’s confused. I’m trying to…
Ramit: I have a question for you ’cause this is t- twice now. So I asked, “How do you feel about money?”
He goes, “Fun.” You go, “Stressed,” but it’s actually him feeling stressed. What do you feel?
Margaux: It’s fun to make it. It’s fun to make it. Okay. And then I ask how, do you feel confused about money? You go, “He feels confused.” What do you feel? I feel That we live a very high lifestyle, and in order to be able to keep our kids in private school and keep this lifestyle, we have to find a way to make more income because it doesn’t seem to me, that there’s anywhere very significant where we can cut.
Ramit: You agree?
Kevin: Yeah.
Ramit: Okay.
Margaux: Do you agree? Uh, yeah. Okay. But maybe
Ramit: But maybe- Are [00:11:00] we about to have the shortest conversation in the history of this podcast? Y’all just need to make another, what, million bucks?
Margaux: half a, another half a mill, right.
Ramit: Call it a day.
Kevin: good. Until we’re not.
Margaux: Call it a day. And coming up. And there’s another something that we didn’t mention, was that we have plans to build a summer home. Okay. So, it’s been in the making for a couple years now. we’re living in a, like this house the way it is, and, we would love to be able to fix it. That’s a big thing for us. But it’s like, how?
Ramit: Okay.
Jersey House Debate
Ramit: What’s a time in the last few months or even year that you have disagreed about money?
Margaux: Kevin thought that maybe it would be a possibility to move to New Jersey. It would bring our expenses way down because the schools there would be a lot less than what we’re paying in New York.
And I don’t wanna move there,
Ramit: You don’t wanna move to Jersey? No. Okay. Why?
Margaux: It’s just not for me. It’s, like, really quiet and desolate in the
Kevin: slower pace.
Margaux: it’s just, I’m not [00:12:00] ready to make that move. It’s a big move. the pressure would really decrease by a lot. I think that the cost of living would go down. But it’s a very different lifestyle, and it’s a commitment
Kevin: I brought it up a few times, but I knew it was off the table. She wasn’t doing it, so I just gave up after a little bit
Margaux: after a little bit. Is that
Ramit: but it’s a very different lifestyle How long did you talk about this and disagree about this? I brought it up a few times, but I knew it was off the table. She wasn’t doing it, so- Oh … I just gave up after a little bit. Is that a typical trend? You bring something up-
Margaux: No,
Kevin: Is that a typical trend? You bring something up- No, this is a big move, you know, to do that.
The idea that there’s a lot of, s- whatever you wanna call it. There’s a lot of liquid sitting in the home.
Ramit: If we
Kevin: sold it, invested some,
And had a strategy of how to earn on that, it might bring the pressure down that we’re under and just live a better lifestyle.
A little lower key, a little less hectic
Ramit: And Margot, you said no because you don’t wanna move there. It’s-
Kevin: And sh– yeah That’s our, like, safety net, and
Ramit: … it’s an asset that hopefully will keep going up.
Margaux: Have it for, our children down the road if we decide to move or to [00:13:00] change, our lifestyle and, go somewhere else, so we have an asset.
Ramit: That what he was proposing? You have an asset- But I’m not gonna sell
Margaux: Yeah, but I’m not gonna sell that now because
we have a great home. We live in a really great block in a great neighborhood.
The kids are happy. We’re very comfortable.
Ramit: We have a lot of kids. Okay, so you wanna keep it the way it is for now? For now-
Margaux: So you
Ramit: And then I have a question. You mentioned we have this asset so that one day we may give it over to the kids.
But you have five kids in one house, right. I know you have other houses, but this one, how do you envision distributing a house to five kids?
Margaux: they’ll sell it, and they’ll distribute the funds
Ramit: money …
Margaux: They’ll split the money
Ramit: Okay, cool. Have you talked about this? Oh.
Kevin: That’s the plan, but not
Margaux: the norm for- Yeah
where we come from.
Ramit: What does that mean, where we come from?
Margaux: We live in a community in Brooklyn … And we all live in kind like the same area. Yeah. And, so my grandparents left their homes to my parents, and my parents will probably leave, their homes.
And, generally speaking, everything has just consistently [00:14:00] gone up in value.
Ramit: So this is what you’ve seen happen for generations. Yeah. So that’s the plan here.
Kevin: Okay. Margot-
Ramit: feels most frustrating to you about your financial situation?
Margaux: The hamster wheel of constantly just trying to keep up, pay the bills, and at the end of the day, there’s no savings. And it’s the same thing year after year, and we need to, educate ourselves, figure this out on our own, ’cause obviously nobody’s gonna teach it to us, and we have to have a plan.
And it’s enough is enough. There’s,
Ramit: is
Margaux: Enough is
Ramit: Hey, I love that phrase. Enough is enough. Let’s fucking do it. Gotta do it.
Margaux: We gotta do it. Enough’s
Ramit: enough. How long have you felt this way, like, “God, this sucks,” when it comes to money?

Margaux: from where we come from, almost everybody sends to, to private school, and everybody seems to be struggling to keep up, not just us.
And if you think about it logically, it makes absolutely no sense. Like, how we’re just going and spending all this money every year. We don’t have savings. Our kids are not set up. What is this doing for us? we want a [00:15:00] certain future, and if we’re not gonna make the changes now, we’re not gonna get there.
It’s just logical. If you see where we are now and where we wanna go, we’re not kind of, like, on that path.
Narration: I’m not sure what the dynamic is between the two of them because there’s so much information coming at me. But a few things are clear to me already. They both have a story about money, and I can tell that they have repeated this story a lot. And it is entertaining. I’m kind of enjoying it, but I’m wondering when are we gonna get to the real stuff? I mean, after all, the application speaks for itself.
I think the way they’ve set it up is this traditional sense of he makes it, she spends it. But I think there is something deeper beneath here. I just don’t know what it is yet.
Allowances and Saying No
Kevin: we do spend. We go out for dinner a couple nights a week. The kids go. They come. They get allowances.
Ramit: How much is their allowance?
Kevin: My one in college, I’m probably giving 300 a week to-
Ramit: They get my– One in college, I’m probably giving 300 a week to- 300 a week? Yeah.
I was once 18 years old. Weren’t you both? Yeah. Did you need [00:16:00] $1,200 a month for food?
Kevin: No, I know. I was working at 16, so I didn’t come from- I … all this giving
Ramit: all this privilege. Hold on,
Kevin: I grew up without money, so I knew how hard it was to get 10 cents out of my, my dad. May he rest in peace. Um, because at 15 I was working for myself. I was all on my own. Yeah,
Spending Lifestyle Tensions
Ramit: what do you think is stopping you from changing this financial situation?
Kevin: I like the fun. We like to go away. We go to Italy in the summers. We just got back from a fantastic ski trip in Europe. So those things are tempting to me. I spend on them. There are certain things we could cut out, but then, I feel like we’re just not enjoying what we like to enjoy.
And that-
Ramit: the crux of it though?
Margaux: I mean- No. We went to Europe because it was a quarter of the price as to go to
Ramit: margo, listen, listen, I’m gonna repeat what you just said out loud so
Margaux: It was literally…
Hello, America
Kevin: Instead of going to Vail,
Margaux: We
Kevin: decided to take our family of seven to Europe.[00:17:00]
Margaux: our family of seven to Europe. Aren’t we- It was- … economically- It was cheaper … conservative? Care to respond? It was cheaper. Significantly cheaper.
Kevin: respond? It was
Margaux: sticking with it. But It was- That same, that was the same. No. It was significantly- I’m trying to save you here
it was literally significant. Was it not significantly
Ramit: sticking with
Kevin: But it was ex- at the same time, it was
Ramit: the same time- S- d- do me a favor,
Margaux: All right. But
Ramit: trying to save you here.
Kevin: Literally significantly.
Was it not significantly cheaper?
Ramit: Yeah. It was literally
Margaux: saying, okay,
Ramit: make our own decisions in life. God bless. Fair enough. All right.
CSP Not Done Together
Ramit: shall we take a look at your numbers?
Margaux: your numbers? If you’d like to. Oh, the
Ramit: if you’d like to. Oh, the mood shifted. That’s interesting.
How was it to do the conscious spending plan together?
Margaux: We did not do it together.
Ramit: Okay. Now I just wanna point out, this is quite an interesting scenario because Margo, you’re the one who applied. Part of the instructions are that you should do the CSP together.
Did you see that?
Kevin: Yes.
Margaux: Okay. Now, I just want to put, it’s quite an interesting scenario because Margo, you’re the one who applied. Part of the instructions are that you should do the CSP together. Did you see that? Yes. So I was like, “Let’s do this together. I don’t… What do we have to do?” Okay. And Kevin said, “I’ll do it. I’ll take care of it.”
Money Talk Avoidance
Ramit: you say, “I’ll take care of it”?
Kevin: did you say, “I’ll take care of it”? Because if I went to her with a question about something, she doesn’t have the answer. Okay.
On what I’m spending a month on, whatever, the cars, the subscriptions.
She’s not really aware,
Ramit: so it’s don’t ask her ’cause she doesn’t know.
Margaux: [00:18:00] it’s don’t ask her because she
He wants to change, but I feel like He’s not committed to, just figuring it out with me somehow
How Others Afford It
Ramit: do other couples do this? it?
Kevin: Do you have other couples? I don’t know. A lot of, couples that we know are dependent on, of course, themself, what they earn, but there’s a lot of extra help in our community.
Well, you guys-
Ramit: Well, You guys, at least right now, for the moment, do, have a limited amount of that. So you don’t know how other couples do it. Margot? How do other couples
Margaux: This is a conversation that we have consistently. How is everybody else doing it? You’re making X amount. How is everybody else
Ramit: there possibly a podcast that shows in depth what other couples talk about behind closed
Kevin: doors?
No, like we were home for, Passover this year, and I could have laid down in the middle of the street a soul around There’s no one in Miami. Everybody went to
Margaux: of, 10 families home.
Everybody’s away. How is
Kevin: everyone’s on a-
Margaux: bill? Paying their summer homes and vacat-
Ramit: Okay, I understand the curiosity. That is interesting, but is this like a woe is me?
Margaux: No, no, we’re very appreciative of the lifestyle we live. Absolutely not. Okay. We’re [00:19:00] very, very fortunate. But you’re wondering, like, how do they do it? But how does… Like, you’re making a nice salary. Like, how is this possible?
Ramit: Cause,
Kevin: we’re spending it. There’s a part of my brain that doesn’t know how to put aside, and when I do and it’s there, it’s just in the bank. So that doesn’t do anything for
Do It Together
Ramit: I will show you different ways of changing it, but problem number one is that you did not actually do this together. That is the problem. When I met my wife, not surprisingly, I knew a lot more about money. It would’ve been really easy for me to be the money guy. “Hey, I’ll do this. Give it to me. Blah, blah, blah. I have the thing that works already.” And what do you think would’ve happened had I done that?
Kevin: I that? That would just would’ve continued-
Ramit: Yeah. It would’ve been me being the money person for our entire relationship. She would’ve had no visibility. Once in a while, she would’ve probably gotten anxious, maybe disagreed with me. Maybe I would’ve said, “Ah, it’s fine,” blah, blah, blah, ’cause I know all this stuff in my head. Maybe one day I get hit by a bus.
Maybe she doesn’t know what to do anymore. Maybe Morgan Stanley or, God forbid, Wells Fargo calls her up, tries to charge her one point five percent [00:20:00] AUM. She’s defenseless, crying. Now we don’t know what to do. Plus, she’s paying fucking AUM to a worthless financial advisor.
what happens? I’m looking up from hell. I’m there because I didn’t help my wife become equipped about money the way that I was. Right.
Margaux: Right.
Ramit: Not a good situation, especially if you yourself are not particularly equipped. Right. Shall we change this?
Margaux: Yes, sir.
Kevin: Thank you.
Narration: Um, actually before we do that, let’s talk about how they talk over each other, they interrupt each other. Like, what are you noticing about their general communication style, and what might that suggest about them? I’m finding it really diff… I don’t know about you, but I’m finding the communication style pretty difficult.
I’m not used to having couples who talk over each other and talk at me at the same time. It’s a little overwhelming. And I think what’s going on here is this need to share their story.
Everyone feels like, “I just need to make sure you know what’s going on.” And I also think there’s a bit of, “This is what the people around us do, and so this is what we’ve learned and this is just natural. This is how our parents probably talk. This is how we talk.” But I’m an outside third party. I’m here to gather information.
I’m here to help. And part of what I suspect is gonna happen in today’s conversation is the [00:21:00] stories they tell themselves, everything from the way they think about money to the way they communicate with me, with each other, those will probably need to come under question. They may need to change those things.
At least that’s my suspicion.
We’re gonna take a look at the numbers right after this
Ad break 1
Ramit: Let’s take a look at the numbers. Kevin, I would like you to read off the word in bold and the number next to it for this entire box, please.
Go ahead.
Assets,
Kevin: 11 million
Ramit: uh,
Kevin: Uh, investments, half a million. Savings, it’s about accurate.
Ramit: Wait, are you gonna read
Kevin: are you reading? Oh, 50,000, yeah. Debt, student loans, credit cards,
2.3 million.
Ramit: Total
Kevin: net worth,
Ramit: 9.25 million. Okay. What do you think about those numbers?
Kevin: 9.25
Margaux: So-
Ramit: wealth in your homes
Kevin: worth in your homes In assets, we’ll call them.
Ramit: Margo, what do you think about those numbers?
Margaux: think about those numbers? Just the savings is ridiculous. Okay. For, in comparison to the assets. Yeah.
Ramit: [00:22:00] Okay for,
Margaux: And,
Ramit: Yeah And, yeah. about the good stuff?
Kevin: Yeah, that’s good. The net worth at the end of the day,
Ramit: Thank God. I know.
Kevin: God.
Margaux: know. We’re
Ramit: This is the most depressing f- How many digits in this fucking number? One, two… A lot. A lot of digits. I never heard a more depressing answer.
“Thank God. Ah, fuck.” That’s the response?
Kevin: fuck. That’s the response? No, it’s good. We’re very, very appreciative of what we
Margaux: really are very fortunate.
Kevin: What,
Ramit: are the assets, by the way? Um,
Kevin: the assets? Um, it’s, uh, homes and, my business. We have two.
Margaux: the two homes.
Ramit: homes. How much are those worth total?
Kevin: Between,
Margaux: I’d say about nine
Kevin: million
Ramit: Um, between, I’d say about nine, eight or nine. 9 million for the two homes. Yeah. Great, and then the business you valued at 2 million? Yeah. Okay. How did you value that, just out of curiosity?
Kevin: I was offered a buyout at that number. Whoa. But I didn’t
Ramit: I didn’t take it. We have a real business value on this show.
Amazing. Yes. Too many times people come on this show, they go, “Hmm, I make 150K. That’s probably worth $22 million.” I go, “What the fuck? Ah, whatever.”
Margaux: No,
Kevin: I had an offer that I declined.
Ramit: I declined. Amazing. All right, well [00:23:00] done. Your investments at 500K, what are those investments in?
Kevin: Stocks
Ramit: Okay, like a 401K type of thing?
Margaux: It’s
Kevin: It’s not 401ks. It’s
real stocks. Between
Ramit: Individual stocks? Yeah, individual stocks.
Kevin: Individual
Ramit: it. Savings at 50K, low compared to assets. I think you recognize that, Margo. And then what’s the debt, 2.3 million? What is that?
Kevin: That was just the, mortgages.
Ramit: That’s just the, mortgages.
Margaux: Yeah.
Ramit: Two mortgages. Yeah. 9 million value, 2.3 million left to pay. Yeah. What’s your interest rate on both of those?
Margaux: They’re fantastic.
Kevin: It was during COVID, so the rates were cheap, 2.9- Is that what it was? 2.9 to, 2.9, yeah
Ramit: Well done. Al
Income And Distributions
Ramit: l right, Margo, can you read off the combined gross monthly income, please?
Margaux: please? Zero.
Ramit: Yeah. That’s interesting. Y’all make $0 gross?
Kevin: I put the net.
Ramit: the net. The net is 50K a month. Yeah. Where’s the gross?
Kevin: It’s probably 70, 60s.
Ramit: You make 60K gross and [00:24:00] 50K net? I don’t think so
What’s your gross income per year, ballpark?
Kevin: What’s your gross income per year, call it? Let’s call it, s- 700.
700. You pay any taxes? What- Yeah … does that look like? Like your tax rate-
Margaux: it, s-seven hundred.
Ramit: S- 700. 700. Do you pay yourself a salary?
Kevin: a salary? Yeah, of course, that is the salary that I pay myself
Ramit: 50k net is the salary you pay yourself. Net. And are you an S
Kevin: yeah. Yes.
Ramit: Okay. You take distributions as well? Yes. How often?
Kevin: I could get it in once a year.
Margaux: How
Ramit: year. How do you decide how much you can take?
Kevin: depends what’s there at the end of the day. Ah.
Margaux: Ah.
Kevin: the end of the-
Ramit: what’s
Margaux: be tough for planning. Yes, because
Kevin: the business fluctuates. There’s years we’ll have an incredible year, I’ll be able to pull a lot more, and then there’s challenging years with, all that’s gone on in the business that I’m in.
Tariffs plays a big role, shipping, the consumer.
Margaux: kind of
Ramit: And there’s challenging years with,
Margaux: I do, wholesale.
Ramit: I’m in, I do, wholesale. Wholesale. Okay. So you have
Importing certain types of goods.
Tariffs have affected those goods- Yes … making it more expensive. Yes. Is your net [00:25:00] income down over the last, say, year or two?
Kevin: Um, yeah
Ramit: Okay. Got it. We’re gonna find out the approximate gross monthly income that you would make in order for you to net 50K. Okay? And we’re gonna put it in.
We might be right or wrong, it depends, but considering I don’t see any pre-tax deductions like a 401, it will be relatively straightforward given that you live in New York, et cetera. So we’ll be able to extrapolate that. That will clarify a lot of stuff.
So y’all are making about $96,500 per month gross. How does that number strike you?
Kevin: It’s a nice number. Beautiful number.
Ramit: Margo, 96,000? It’s a very
Margaux: high
Ramit: It’s a lot of money, right? It’s more confusion. More confusion. Right.
Margaux: More confusion. More confusion. All
Ramit: So did you know that approximately y’all make about $1.15 million per year?
Margaux: per year? Do you, though? No,
Kevin: run the numbers like that
Ramit: I just took what you made and I added on taxes, et cetera, reverse engineered it. It might be off by a few [00:26:00] tens of thousands here or there, but in the grand scheme, here we are. Now, by a show of hands, who knew that you make approximately 1.05 to $1.15 million per year? Put your hand up if you knew it. Okay, Margo says no. You put a half hand up. What is that?
Kevin: Yeah, I know what I make. I just, it’s not always that number.
Ramit: Yeah, Some years up, some years down, but just in general, we have to average it, right? Yeah. To pick something. Right. Did you know that?
Kevin: Yeah.
Ramit: Okay. All right.
Can we go down the rest of these? Sure. All right. Margo, what’s this number here under fixed costs?
Margaux: 67%?
Ramit: 67%. So typically, I like to see that number below 60%. And for very high earners, which I would call you, at netting, $600,000 a year, that number should probably be way under 60% in general. Now, y’all have five kids, and you live in a very expensive area. So, all right, I don’t mind if it’s 60, but too high.
Okay? [00:27:00] Let’s keep moving. What’s the investment number, Kevin?
Kevin: What does that say? A thousand?
Ramit: Now, I don’t know about you, but I don’t really believe 1,000%, and I don’t believe you’re putting $500,000 a month into investments.
Kevin: Was that a monthly- Yes … thing? Oh, it was. Sorry. No.
Ramit: This should be zero,
Kevin: Yes.
Ramit: That’s more like it. So nothing is going to investments. No. I kinda liked it better at 1,000%, but- Yeah … reality is reality. All right, let’s keep going. Savings are at 80%, that’s wrong. I don’t think you spend $30,000 a month on vacations,
Kevin: No.
Margaux: right. So I’ll- Let’s keep going. Okay.
Vacation Spend Reality
Margaux: savings are 80%, that’s wrong. I don’t think you spend $30,000 a month on vacations, but- No, that’s,
Kevin: I thought this was yearly. Sorry, my bad.
Ramit: I thought this was yearly. Sorry, my bad. So you spend 30K a year on vacation?
Kevin: At the least.
Ramit: What’s the actual? Don’t be shy, just-
Margaux: spend more than that.
Kevin: Trip alone was that.
Margaux: It was 20.
Kevin: trip. No, was it? It was 30.
I would say 30.
Margaux: say 30. I, we don’t spend more
Kevin: I would put another 10 on that.
Ramit: I would put another 10 on that. That’s it, 40? 40 for a-
Kevin: let’s call it that.
Ramit: No, let’s not. Let’s call it the real number. I feel like it’s way higher than 40.
You all have five [00:28:00] kids. You obviously like to travel nicely.
Margaux: Let’s call it the real number. I feel like it’s way higher. Yeah. You all have five kids. You obviously like to travel. I’m telling you, we don’t, we use points.
Ramit: No. All right,
Margaux: Okay. Fine. Is it more than 40?
Kevin: Let’s call it 40.
Gifts And Birthday Costs
Ramit: Gifts says 10,000. That’s wrong ’cause that’s 10,000 a year you give in gifts. Is that right? What’s the gifts?
Margaux: Gifts, like big family, so baby gifts, wedding gifts. I don’t know.
Kevin: Birthdays,
Margaux: Thing.
Ramit: How much you give for a wedding gift these days?
Margaux: give for wedding gifts? We just gave a thir- his friend 360
Ramit: Just gave a, his friend 360. Okay. Sounds reasonable to me- what about for birthdays?
Kevin: I don’t know, my daughter just got a ring for, it was 500,
Ramit: a ring for 500. 500 for a ring? What about the birthday parties and dinners and stuff like that?
Margaux: It’s more like I’ll do a Friday night dinner and invite my family over.
Ramit: Does anybody know any numbers?
Kevin: my family over.
Does
Ramit: do you
Margaux: okay. Every, I just, every Friday night
Ramit: Let me put- let me tell you something.
I am asking simple questions. Income, how much do you spend on vacation per year? I’m not asking complicated questions. I don’t even mind if you’re off by $10,000. What I’m looking for are straight answers from you, and neither of you can give it. [00:29:00] In fact, what I notice is that you live in your story. So what you’re doing, you don’t realize it though, is you’re giving me just the scratching of the surface, I don’t care if it’s 100 or 10,000, I truly do not care. It’s your money and your life. I want you to both start dealing with reality. Give me a ballpark number and estimate high, but don’t give me, “We spend $500 on a ring,” ’cause it’s bullshit
Margaux: Okay, it was a thousand dollars on Marie’s birthday. We took her out for dinner.
Kevin: I mean, it’s easily a thousand on the boys,
Margaux: So figure a thousand
Ramit: Okay. Could it be higher?
Margaux: Marie’s birthday was the last one. We spent $1,000. Total.
Ramit: Everything. Ring, cake, food, decorations, taxis, Ubers, et cetera, all of it.
Margaux: We don’t do that stuff. Yeah.
Ramit: 1,000 bucks, good. You have five kids. I know the youngest is maybe not as costly. Maybe. All right, so 5,000 there plus 5,000 for friends and family, 10,000 a year.
Sounds reasonable to me. I’m gonna change it to [00:30:00] 1,000 a month, which is 12,000. I don’t mind. I’d rather have you have a little bit of extra.
Vacations, I’m gonna say, 3,500 Emergency fund? Nothing. Nothing. Okay. And then guilt-free spending. Well, if the numbers we just put are true, y’all have 12,000 extra dollars per month.
Kevin: What about groceries?
Do you have any clue how
Margaux: interesting. Sixty-seven percent fixed costs. Let’s drill into it, okay? Your
Kevin: there’s a large meal. Yeah.
Ramit: Shabbat- Yeah
which means there is a large meal. Okay.
Kevin: the meat is kosher.
Ramit: The meat is kosher. Let’s look. Let’s look.
Fixed Costs Deep Dive
Ramit: So I wanna look at your fixed costs ’cause they’re very interesting. 67% fixed costs. Let’s drill into it, okay? Your mortgage is $11,000.
Kevin: For the two homes, yeah.
Ramit: $11,000 is very reasonable, especially for a couple making 96,500 a month gross.
Margaux: So
Ramit: well done on that. Utilities 2,000. All right, insurance 5,000. What’s that?
Margaux: Insurance
Kevin: is a high
insurance, for the family is 4,500 a month[00:31:00]
Ramit: for the family is 4,500
Margaux: I don’t see how it’s 5,000 if just our health insurance is 45, and then we have auto, dental, and homeowners. How did you get to 5,000?
Kevin: The medical insurance comes through the company, so yeah, it is a little higher then.
Ramit: How much?
Kevin: Let’s call it seven. Okay.
Ramit: Let’s call it
Kevin: You all see the pattern? Yeah. What is it? That, that we don’t really know our set expenses. Exactly. Yeah.
Ramit: Let’s continue on. Car, 2,500 a month. Does that include gas?
Margaux: No, it doesn’t. No? It’s not 2,500 a month. It is?
Kevin: 2,500 a month. It’s 3,000.
Margaux: You didn’t- Do
Kevin: be more efficient for me to just take every number and just double it?
Margaux: Think it would be more efficient for me to just take every number and just double it? Well-
Kevin: why
Margaux: are we doing this? I don’t know. What the hell is going on? No, but also calculate the number properly. I don’t
Zooming Out On Patterns
Ramit: D- I wanna just zoom out for a second and ignore the numbers. So can we all take a second and like almost as if there’s a game of chess being played, I would like you to zoom up and look at what’s happening on the chess board. You asked Margo to come and [00:32:00] meet because obviously something does not feel right.
There’s a high income. Yes, you live a very nice life, but like where’s the money going? So you fill out all this stuff. You wanna be a little bit more harmonious, a little bit more united, a little bit less, annoyed and annoying a- about all this stuff. Like, why is money such a problem when we make presumably a lot of it? Like, what are we doing wrong? So you get the CSP. The instructions explicitly say do it together.
You don’t, and here we are now, right? Again, I’m not here to beat anybody up. I wanna help you understand your own behavior.
Kevin: Yes
Ramit: What are we noticing from looking at these numbers? Kevin?
Kevin: that we don’t really know our own-
Ramit: Yes. The numbers are wrong. I don’t mind that the numbers are wrong. Almost everybody I talk to, the first time they do their CSP, the numbers are wrong. Some of this stuff is a little complicated the first time around. But importantly, I noticed that Kevin, you said, I’ll take care of the CSP,” But looking at the numbers, they’re all wrong. So what are we to make of this, “
Kevin: Hey, Kevin, let’s do this together.” Yes. “I’ll take care of it.” But looking at the numbers, they’re all wrong. So what do we make of this, Kevin? Then, then I [00:33:00] don’t know what I’m spending probably
Ramit: Yes, I agree.
Feeling Excluded
Ramit: Margo? He doesn’t include me in
Margaux: He doesn’t include me in the finances. He just gives me the brunt of his, upset about it and his stress.
Ramit: He doesn’t include you in the financial conversations. I agree with that. Anything else?
Margaux: We’re not making any segue. We’re not
Kevin: not on the same page with it
Margaux: him.
We’re definitely not on the same
Ramit: on the same page, not making progress. That’s what I’m hearing. Yeah. And
how does it feel to you? How would you put it?
Margaux: I get it that he feels like this is his territory, and I am in charge of a lot in our lives. I’m in charge of the kids and the household, and I make a lot of decisions.
However, I think that it would be a lot better for our family, our marriage, our finances, and everything in our life if we start to be a team and we start to work on this together because, obviously it needs work. It’s not gonna work itself out sure. You are very busy. I’m very busy, but this is important
Ramit: but this is important. Love it. Great. Uh, Kevin, when you are thinking about money and, the CSP or managing expenses, et cetera, what are you [00:34:00] feeling when you think about sharing more information with her?
Kevin: It became a,
Margaux: an
Kevin: argument or stress for her, so I just decided to, not do that to her
Ramit: Because? ‘ Cause
Kevin: not being on the understanding that I have and she has are not being met,
Margaux: Yeah
Money Talks Breakdown
Kevin: then it just becomes frustrating.
So I guess I just took it to myself to manage.
Ramit: Can I paraphrase? Tell me if I’m getting this right.
Kevin: I paraphrase? Tell me if I’m getting it right. Sure.
Ramit: Whenever we talk about money, it doesn’t really go anywhere. We get in a fight, it gets stressful. We don’t see eye to eye. She doesn’t understand money the way I do. So if we’re gonna have those conversations and fight, I might as well just do it myself, and that way she doesn’t need to be bothered, and I can deal with whatever problems there
Kevin: Well said.
Partners Not Solo
Ramit: And now that you’re hearing Margo’s reaction to some of this, what do you think about that idea?
Kevin: I’m more open to sitting and coming up with a [00:35:00] plan that we can both focus on, share thoughts, and, be on the same page with everything that’s going on.
Ramit: Good. You’re open to it. I appreciate that. Margo, you’ve been asking for that, so I appreciate that coming together a little bit. I also think if I can be candid, these numbers are, like, very wrong. So I actually think not only might you be open to it, you might actually need Margo’s help when I brought my wife in, and it took us a long time, it was hard, man. I could’ve done it myself much easier, but I was like, “Nope, we need to both be partners in this,” but guess what I discovered after several years of working for us to come together?
I was like, “Oh, shit. She’s actually better at some of this than I am.” I was like, “I’m the I will teach you to be a rich guy. How’s my wife better at this?” But actually, I needed that. Not just that I’m open to it or I want her, but it’s like, oh, she’s actually fucking good at this. I just didn’t put her in the position and us in the position which you now can.
Okay? [00:36:00]
Income High Spending Higher
Ramit: All right Let me just summarize what we know about these numbers. I see a very high income, almost $100,000 a month gross. That’s more than most people make in a year. Okay? I see a high net income, 50K a month take-home. That’s $600,000, a huge amount of money.
Now, I understand that you have high living costs. I understand where you live. Your mortgage is low. Like, wow. Unbelievable. And, I see some expenses that are really high. And as I dig in, I go, “Uh-oh,” I don’t think you really know your numbers enough for us to, go line by line. But I can essentially see what you are telling me, which is at the end of the year, you don’t have much to show for it.
You have a beautiful house. Your kids go to private school, and you take some nice vacations, yes.
Narration: hey, listen, I need to cut in here because I know I’m about to get 5,000 comments from people [00:37:00] saying, “Boo-hoo, another high-earning couple.” let you in on a little secret that they don’t even know yet.
They are spending more than they make every single month.
Tuition Shock Reveal
Kevin: Camps, sleepaway camps we left out
Margaux: You didn’t put tuition in there. Where’s the tuition bill? Yeah. That’s a huge, huge, huge bill.
Is-
Ramit: per year?
Margaux: Sure, sure. Coming year. 150.
Ramit: And then what about the camp?
Kevin: Camps came down a little bit this year, close to 10,000.
Yeah
Ramit: fifty plus 10K, one sixty?
Margaux: 160
Ramit: I like how, s- once in a while you have somebody, feeling between the couch cushions. And remember, like, when we were kids, we used to find a quarter? We’re like, “Oh my God,” “I’m going to the arcade.” But in your case, we just found $160,000 of hidden expenses in your couch cushion.
So if I’m doing the math right, we’re at around 13,000 a month. I like how that was just left off, by the way. Yeah.
Fixed Costs Over 100%
Ramit: Beautiful. Hey, what’s that fixed cost number right now? And then I would do gross- What’s the number? Yeah, you’re spending more than you [00:38:00] make every single month.
Margaux: single month. That’s about exactly where we’re at, we’re just right at the border we tinker.
Under, over, under, over, under.
Ramit: But do you understand that when you spend 103% on fixed costs, you actually are way underwater because you also have travel, which is not included in fixed costs. You also have gifts, you have eating out, you have all the discretion. That’s tens of thousands per year. So you are spending far more than you make every single month.
So
Margaux: Now it makes sense why h- he’s so worried and stressed.

Kevin: agreed
Ramit: stressed. Kevin? Uh, agreed. Did you know this before now?
Kevin: Did you know this before now? Yeah, I knew it. I just, I left a few things off, I guess, for you to say.
Ramit: You want me to, you wanna put me through my paces?
Kevin: You want me to– you want to put me through my paces? I want you to earn this.
Ramit: this. Okay,
Kevin: we’re back on.
Ramit: Um, so what do y’all think about that?
Margaux: Um, what, h- I don’t know how we’re gonna do how we’re gonna [00:39:00] pay that tuition bill
Ramit: Mm-hmm. This year. Yes. It’s a big, it’s a big one. Yes. It’s a huge amount. What else are you realizing? You had problems before tuition was being covered. You still had problems.
Margaux: We have to allocate savings before spending somehow.
Yeah.
Ramit: Yeah. I don’t know. Are you realizing that this is a pretty bad situation?
Margaux: I guess so, yeah Kevin, what were your answers? Yeah,
Ramit: yeah. Yeah. Kevin, what are you
Kevin: Yeah, I agree with what you’re saying, but I have a tendency to look at it a little different where, okay, we’re getting through the year, we’re behind a little. A good distro could bring everything back.
Ramit: And then what?
Kevin: And then what? And then, th-
Margaux: what? And then,
Kevin: we did have a decent cushion. Which if it didn’t get wiped out, I don’t know if we’d be sitting here
Ramit: What happened?
Margaux: There was mold. The kids were having health issues and,
and we went to do- a doctor that was recommended that didn’t take insurance- Oh … and the treatment was, at the time, not covered on insurance. Oh. Now-
Kevin: mold in your house?
Yeah. Yeah. Really bad black mold covered the entire bod
Ramit: that was recommended- Oh … that didn’t take insurance, and the treatment was, at the time, not covered on insurance. Oh. And- You had, really bad mold in your house
Margaux: You had, really bad mold in your house? Yes. Yeah, really, like [00:40:00] black mold covered the entire under the vinyl
Ramit: Oh my God. With five
Kevin: and each kid had
Margaux: It
Kevin: and the doctor visit was 11,000 per kid, and we
Ramit: how much did it cost for mold remediation?
Kevin: didn’t take all of them. Okay. How much did it cost for all three of you? That was, all this that we just mentioned was about $400,000,
Margaux: And we didn’t,
Kevin: half a million
Margaux: for some reason we didn’t have the right home insurance We didn’t get back anything, barely anything.
Ramit: Half a million dollars for mold. Horrible. Is it all fixed now?
Margaux: There’s a little work to be done, probably 10 to 15,000 worth
Ramit: okay. The money part, this sucks, but just the idea of this thing could be lurking-
Margaux: Yeah … anywhere,
Ramit: with kids is like…
Margaux: everywhere
Ramit: Totally. Okay. Y
Health Costs Keep Coming
Ramit: eah. Is the plan to get the remediation again, and then- I
Margaux: like- n- yeah
Ramit: Fair enough. You can fight -one battle, two battles, even three battles at [00:41:00] once, but 10 battles just too much. Yeah. Okay.
Margaux: Now I have two kids on herbal remedies, which has been fantastic, and they’re doing great but, what is it? Every month it’s about 500 a month for that.
And then the human growth hormone for my daughter. She stopped growing when, with this, all this health stuff
so that together is about 1,000 a month, yeah. 1,000 a month
Grocery Spending Reality
Ramit: point out a couple of other things on your fixed costs.
Groceries at 4,000 a month.
Margaux: At least.
Just Friday night dinner costs 500 between the meat and the groceries and the- Yeah … whatever it is. 4,000.
Ramit: What do you think about that number for a family of seven?
Margaux: I don’t know. I have no idea. Is it high?
Ramit: It’s really
Margaux: I go to Trader Joe’s, and then I’ll fill in in the more high-end grocery store near us,
And then … the meat is really ex- really expensive
Ramit: Meat is really expensive And is that a necessity?
Margaux: To eat meat? Yeah I mean-
Ramit: I mean, that amount?
Margaux: I don’t do, I don’t… Nothing-
Ramit: I can tell by your
Margaux: goes in the garbage.
Ramit: answer is no. Nothing goes in the gar- Like,
Margaux: Like, we’re eating. It’s not like food waste. It’s
Ramit: That’s not what I’m talking about.
Kevin: Could you have pasta or [00:42:00] do you need the meat? Yeah. ‘Cause pasta’s a tenth of the price
Ramit: could you eat what I ate when I was a kid? Then again, my family didn’t make 96,500 a month,
Margaux: not buy Kosher organic chickens?
Ramit: I cannot buy organic chickens. Kosher organic chickens. Yeah. How much does that cost,
Margaux: About $28, $30 for a chicken
Ramit: $30 for a whole chicken. And how many of those do you buy?
Margaux: on Friday night I buy one, but then there’s a roast, there’s a chicken, there’s a vegetable. There’s another, like, meat dish. Mm-hmm. There, there’s rice. Then there’s, like, the salads and- Mm. You know. There, it’s a big meal every Friday night.
Narration: You know I love these stories. We didn’t go to Vail. We went to Europe. It was cheaper. We love points.
Shabbat dinner every Friday. Oh, and we have to have kosher meat. Think about what any of these stories individually represents, and then all of them combined. These stories are basically ways to distance themselves from having to make tough decisions about money.
I’m not sure the two of them have ever actually said [00:43:00] no when it comes to money, because of course, we have to do this dinner. We have to have this type of meat. We have to go on this vacation. Actually, we’re saving money. We’re actually really economical. These types of stories make it hard for me to actually deliver on what people come to me for. It’s fascinating. They will write these applications. They will go through a ton of screening, and when they come to me, they almost put a force field up by telling these stories. They don’t realize what they are doing, but they are trying to insulate themselves from me getting to the heart of the matter. I gotta find a way to get through this
Ad break 2
Ramit: I’m feeling, a bit stuck.
Margaux: Okay
Ramit: And why? One, I feel on shaky ground because not only are the numbers incorrect, which I don’t mind. But we’re off by maybe $25,000 a month. We’re not off by $2,000 a month. We’re off by tens of thousands a month.[00:44:00]
That’s number one. Number two, when I ask, some questions about things like food, you actually have really good answers. Like, well, we have this thing on Friday there’s a lot of people, et cetera. All that may be true, but that doesn’t solve a problem here, which is like if we can’t even agree that, oh, maybe we’re spending kind of a lot on food, 4,000 a month is an astronomical amount.
Is it?
Margaux: Is
Ramit: Yes. Most people who come in to speak to me, as a couple, maybe they have a young kid, they spend roughly
Kevin: eight
Ramit: to 1,000
Margaux: one kid?
Ramit: Yes, but most of them don’t shop to a number. As the family grows, of course it’s more expensive, especially as the kids get older, they’re eating a lot of food, no doubt. But, there are economies of scale to be had, and at five kids, here’s the fact: If you wanna feed your family like an amazing, set of food, you could do that.
Absolutely you can do that. You have the income to do it. But you can’t do that [00:45:00] and do tuition and do summer camp and do vacations and do the insurance that you have and the mold remediation and, and, and When was the last time either of you said no to spending money? She brought up wanting to
Kevin: summer camp and do vacations and do the insurance that you have and the mold remediation and. When was the last time either of you said no to spending money? Okay. She brought up wanting to send one of the boys on a summer… It’s like a three-week program for them to go. I said no to that.
Ramit: Margot, what about you?
Margaux: Instead. I don’t know. It’s more me consulting with Kevin, should we purchase this or can we purchase, this right now? So you have said-
Ramit: with Kevin. Should we purchase this, or can we purchase, this right now? So you ask him, “Can we purchase this, or can we do this thing?” And then he says?
Margaux: Not right now or yes, we can
Ramit: Yeah.
Vibes Not Numbers
Ramit: and what are you realizing from his mastery of these numbers?
Margaux: you realizing from his mastery of these numbers? I don’t think he’s aware of the numbers.
Ramit: Exactly. So when Kevin responds to you, “Yes, we can do this,” or, “No, we can’t,” where do you think it’s coming from? ‘Cause it’s not the numbers.
Margaux: based on,
h- his bank account and credit card bills. I
Ramit: I think it’s just a vibe.
Margaux: a
Ramit: How [00:46:00] do I feel today? Do I feel good? Do I feel bad? Did I get these orders in? What’s the distribution maybe gonna be three months from… It’s just a vibe.
Margaux: Right.
Kevin: Like I said, I’m a giver. Like why did my son need the car? I’ll say, “Well, he’s gonna spend 300 on Ubers to get around, and then he’s gonna, be on us for our cars when we don’t have it, and that’s just another, burden to deal with.”
Ramit: This is vibes. This is what I’m talking
Kevin: This is vibes. That’s what I’m talking about. Right. So the car makes sense for a few hundred dollars more for him to be independent, go to work,
Ramit: What do you mean independent? You bought him the car. That’s not independent.
Kevin: What do you mean be independent? You bought him the car. That’s not independent. Well, he has to get to work, so if he can’t get to work every day, I’m paying for him to get to work.
So I think, that I would spend more money on him if I didn’t get him the car
Ramit: Are we here to make changes or are you here to explain
Kevin: I’m telling you why But
Ramit: I appreciate knowing and I wanna know some of the why, but I’m not interested in rehashing the stories. Because the more you tell me the stories of why you’re doing what you’re doing, the more you concretize your, narrative [00:47:00] about yourself.
Well, Ramit, I told you, look, we had this and then we had that, and I figured this, and if he didn’t do that, then he would’ve done that, and now you just spent three minutes explaining to me and where are we?
Margaux: But The cars is a big example because hard for him to make the change, but, I’m willing to downgrade my car. There’s a Kia with a third row. How do we get rid of it? No, it’s too much of a hassle because They’ll charge us more to give the car back.
But okay, we have to go further and try to find a solution on how to get rid of the car and get a cheaper car, even though BMW won’t let us cut the lease early. But, like, still
Ramit: You all are just doing it again. In fact, you’re doing what I just told you’re doing. You’re going right back into the story. I don’t care. I’m not trying to be disrespectful. You came here because you want change, but what you are doing is you’re just rehashing the old story and explaining why.
Do you wanna walk out of here being like, “Ah, we told this guy all the reasons. We changed nothing, but we told him all the reasons we do what we do.” Is that what you want? No. No. We want a
Margaux: We want the solution.
Ramit: okay, so why are we going back and telling me about your third wheel and this and that? I don’t, it’s irrelevant.
No,
Kevin: No, because you’re looking for ways for us to [00:48:00] save.
Ramit: I’m not. I haven’t even gotten there. I’m looking for you to understand what is going on here, and you don’t yet understand it. Why is it that your wife comes to you and says, “Can we do this?” And why do you give her that answer?
Kevin: It’s in that moment of what’s going
Ramit: Exactly. You just arbitrarily pick. Yes, no, the sun is in orbit. I- what?
Kevin: No, it’s based on things that are going on in my life.
Ramit: Based on things that are going on in my life Right, but there’s no use of actual numbers. And until you both realize that your understanding of reality is so out of alignment with the numbers, then you will keep making decisions based purely on vibes.
Right now, you make very close to no decisions based on numbers. Why? Because there’s such an abundance of money, at least seemingly. With a high income, it’s like, do we really need to track the price of Pringles? No. Who gives a fuck? But the problem is it’s not just Pringles anymore. It’s multiple cars, multiple properties, camps, multiple tuitions, and on and on and on.
And it actually has gotten to the point [00:49:00] where even at a million dollars a year, you actually can’t keep up.
Cut Costs Or Earn More
Ramit: So you have choices. What are the choices you have?
Margaux: We need to cut, costs
Ramit: could cut costs. What else?
Margaux: Make more money.
Ramit: Anything else?
Margaux: I don’t know. What would be else besides
Kevin: spoke about discussing it together and
Ramit: That’s good …
Kevin: With plans
Ramit: think that’s really good. Coming up– Doing it together is a good part of the process. I totally agree that needs to happen.
out of cutting costs and earning more, which one are you more philosophically inclined towards? Do you wanna earn more or do you wanna cut costs?
Margaux: earn
Ramit: You wanna earn more.
Margaux: I think we’re both always trying to earn more. So the only thing we can change is how much we spend.
Kevin: Amazing.
Ramit: The only thing we can change is how much we spend. Okay, amazing. So you propose Margot focusing on cutting costs, and Kevin, you propose earning more so do you see right here, right now, you’re already out of alignment. Right there with that fundamental question, what approach should we take? If you don’t actually talk about that and agree on it, then each of you is rowing in a different direction for the next [00:50:00] ten years. So how are you going to come to a resolution on that?
Kevin: Discuss it more.
Margaux: Get all the numbers on paper-
Ramit: Sh- we just did
Margaux: to the T. Yeah, you
Ramit: It’s a good team yeah, you can improve your accuracy, I agree, but y’all are here. You might as
Margaux: but you all
Ramit: well make a decision right now. Earn more or cut costs?
Margaux: Let’s make a decision right now. Earn more or cut costs? If we can have earn more in our power, that we would’ve had it already, so we have to cut costs.
What choice do we have?
Kevin: I’m trying to think of areas where we can cut
Margaux: and
Kevin: And how much it would save us at the end of the day. I don’t know those numbers. So cutting costs for now is probably a good strategy until there is more earning, and then hopefully we’ll know what to do with the extra earning as we leave here and get some advice from you.
But, uh until then, it looks like if I earn more, we’re gonna spend more, and it’s just gonna be a cycle
Ramit: What’s a decision? Down grade our spending. It’s just, it’s a nerve-wracking thought. Because?
Margaux: I don’t feel like I’m overspending. And
Kevin: I think where? Where can I cut-
Margaux: keep doing that. Okay, where could we cut? Okay, but, you know, I’m not [00:51:00] gonna buy less food.
That, how could we buy less food? We’re not gonna not send our kids to private school next year.
Kevin: Or camp. We’re not
Margaux: ready to change their
Kevin: ready to change their- Or vacations.

Kevin: What do we- That’s what happens when we discuss cutting costs. We don’t know where to cut them or how much value that cut would bring to the table
Margaux: I don’t think we know how to cut costs. I don’t know, I think we know how to live differently. This is what we’ve been doing for 20 years,
Kevin: It’s what we’ve been doing forever. Yeah. Earning, spending, earning, spending. Make more, spend more. So-
Margaux: think we have to allocate a certain amount of time a week where we sit down and we put our time and effort into this, and it’s gonna be a project, but it has to get done
Kevin: to get done.
Okay.
Stop Homework Make Decisions
Ramit: was good, but that doesn’t work for me.
I’ll tell you why. You all just gave yourself homework.
What better scenario will you have to make big, bold decisions than literally right here with me watching?
Margaux: here with me watching? But we need your guidance. We don’t know what to
Ramit: Okay, well, you can ask questions, [00:52:00] but you didn’t do that what you did was there’s a feeling of discomfort in the room because holy shit, we’re actually having to talk about this substantively for the first time in a long time, and unconsciously it’s like, “Oh, this shit feels bad, so let’s do this.
Let’s agree that we need to sit down and talk about it, and we’ll do it, and it’s gonna be hard, but we’ll do it.” It all sounds great. It’s very PC. It’s very nice. The problem is you didn’t do the one thing that matters, which is make decisions right now.
Are you gonna cut costs? I did not hear both of you agree to that
Margaux: Yes, we’re gonna cut costs. I agree to that. Do you agree to
Kevin: Yeah,
Ramit: That’s the first time I heard a question asked. That’s the next thing I wanna point out. Do the two of you ask each other questions, or do you just talk?
Margaux: We just talk. Exactly.
Ramit: You cannot get where you need to go by just talking at each other. Because what’s happening is, although you are both quite polite, which I appreciate, if I had a sport right here on the table, it would be, like, boxing. Not that you are [00:53:00] fighting each other, that’s not what I’m saying, but you are each in your own corner, and you come to the middle to basically deal blows. They just happen to be like, “This is what we need to do.” “Well, what about this?” “I can’t do this.” And there is no team. And how can you be a team if you don’t ask questions of each other?
“Hey, what do you think?” “Oh, you say we can’t cut groceries? Tell me more about that.” I don’t buy the groceries, so I don’t know, And then you say, “Hey, you mentioned, it’s not gonna be a good year. What do you mean by that?”
Kevin: I’ve definitely asked those questions.
Ramit: I don’t think you’ve asked a single question substantively about money of Margot while we’ve been sitting here
Kevin: substantively about money of Margo while we’ve been sitting here Not while we’ve been sitting here, but when we do discuss it and I take out the credit card bills-
Ramit: we’ve
Kevin: Oh, you do? What do you say? And I s- no, I say, what could we do without?” And it comes back as, I’m getting what I need to run our home.”
So how much pushback can I get? Should I tell, “Don’t buy food or buy less of the food”?
Ramit: Yes. But also asking the question when you have a credit card bill in your hand and saying, “What can we do without?” While I think, Margo, you need to be more open to [00:54:00] spending less, a lot less, I do think that waving around a credit card bill does not evoke cooperation, especially if somebody’s a mom of five and she’s running the household, and somebody’s coming in saying like, “What, what the f- what can we do with this?”
Even I would be like, “I don’t know. I’m running this shit. If you wanna do it, you do it,” but like, what are you talking to me about?
Margaux: That’s exactly it
Ramit: It’s not setting up a healthy conversation. Here we can have a healthy conversation.
Therapy And Money Mess
Ramit: In therapy, do you two see a therapist?
Margaux: No. Um, not really.
Ramit: Okay. Would you be open to it?
Margaux: Yeah. We have someone that we talk to once every so often.
Ramit: Open to it?
Margaux: Yeah.
Ramit: Kevin? Yeah, I’m open. Amazing. Great. I highly recommend it, in part because having these conversations, having a facilitator who can help point out certain things you definitely do not notice on your own, invaluable. We’ve done it. A lot of my guests have done it. Highly recommend. Okay?
Kevin: funny, I could do it in my business, but not in my personal life, so but-
Ramit: funny. A- actually, that’s a great way to put it. [00:55:00] I can’t figure it out, so therefore I’m gonna get help. If I’m the two of you making $96,000 a month, I’m like, “We come first. We, the two of us, because without us, everything else falls apart.”
Kids are unhappy, houses go away, everything dies. So we will put ourselves first. What is it gonna take? Well, we need to be communicating. And even though, yes, we’re nice and we love each other obviously, everybody needs a little help sometimes. Boom. Not denying that. Yeah. Okay. When you’ve looked at how your money is set up, the way that you talk about money, do you think your money set up is simple or complicated?
Kevin: It’s definitely not simple
Margaux: it’s not organized. It’s messy. Messy?
Okay. You wanna fix it? Yes
Ramit: Good answer. Kevin? Of course.
Margot Money Childhood
Ramit: I wanna know, Margot, what you remember about money when you were a kid.
What did your family say about money?
Margaux: My family didn’t talk about money much. There was enough of it, and my dad was the breadwinner. I [00:56:00] remember every Sunday night my dad would leave, cash for, my mom, on her bathroom, sink and that was her money for the week. And, it was never really discussed. It was never a stress.
It was never an issue.
Ramit: They say any phrases you remember like, money doesn’t grow on trees or can’t afford it or, spend money on education, any of those things?
Kevin: No. Okay.
Margaux: Maybe once in a while, you know, it’s too expensive.
Kevin: Did you have a
Ramit: As I was getting to be a teenager, yeah. Hmm. She, you know, um, yeah, I was more of a little kid. Okay. Did you have a job when you were a teenager?
Margaux: Yeah. I was a tutor through high school, and I was, a lifeguard in the summers, and I worked at summer camp. And I saved all that money, and I invested it from a young age, and that’s my investments.
Ramit: You serious? Yeah
Margaux: And then anytime I made money, I would put more into it.
Ramit: You have half a million dollars in investments. That came from you as a teenager?
Margaux: A portion of it is also stocks that my grandfather bought me that I never sold, I held onto. Cool.
Ramit: So this thing about your grandparents gave you investments and then you as a teenager invest your money, it’s [00:57:00] all quite interesting to me. Who talked to you about investing? Most teens don’t know about it
Margaux: Um, nobody.
Ramit: And then I had some money, and, I would get a little bit of cash from my grandparents, and my dad’s like, “I’ll put it in your bank account, and I’ll save it for you.
Margaux: We’re gonna save it.” So I would always save, and then, like, when I worked at camp and lifeguarding, my friends would, like, spend their money at the end of the summer, and I would give it to my dad to put in my bank account. So I never spent any of the money that I made. I always put it into the stock market.
Ramit: We need to make changes starting today. Great.
Kevin Money Scarcity
Ramit: Kevin, what do you remember your family saying about money when you were younger?
Kevin: Money was a issue. There was not much of it. I’m the youngest child. I worked from a young age. 15, same system. Making, spending, doing well, spending, I was never taught any kind of managing money skills in any way, shape, or form
Ramit: younger.
what did your parents do for a living?
Kevin: My dad had retail stores.
My mom stay-at-home mom. And then he was in the [00:58:00] ticket business, which was very successful. But then there was some state regulations that come into place, and when he lost that, I was about 13. So from then on, I really never went to him for money.
Never asked.
Ramit: Did he struggle with it?
Kevin: Yeah, they both did.
Ramit: Okay. Are they still alive?
Kevin: My mom is
Ramit: Your mom. How’s she with money?
Kevin: Right now she’s supported by the brothers and sisters. We support her. They did have two homes. They sold them.
Money Lessons From Parents
Kevin: They lived off them. They spent it, invested some that went bad. Not the smartest sequences,
Ramit: form. Do you think your dad knew how to manage money? Seems like he knew how to make it.
Margaux: to make it.
Kevin: He could make it at times. He was unbelievably creative, but he had no clue how to manage it. It was in his suit pocket
Ramit: Ah, and did he spend a lot?
Kevin: like- Did lot? No, my mom did. Your
Ramit: Your mom spent a lot. What’d she spend it on?
Kevin: Whatever. Brand names, shoes, clothing.
Ramit: Does this sound familiar? Not that it’s an identical situation, but, like, [00:59:00] the dynamic. Dad is good at making money. Do we know anybody like that? Sort of,
Kevin: yeah. You? Yeah, me. I know.
Ramit: me. I know. There’s only three of us in this room.
Kevin: What the hell’s wrong with you?
Margaux: on here?” No.
Ramit: He doesn’t think so. No, I know. What
Margaux: don’t know that he thinks he’s good at making money though.
Ramit: on here? I’m like, what? I don’t know that he
Margaux: said it 20 ago.
Ramit: thinks he’s good at making money though. Y- you said it 20 minutes ago, “I’m good at making money. Nobody taught me how to save.” What’s the reluctance of admitting this?
Kevin: of admitting this? It’s not a reluctance of admitting. He
Ramit: worked.
Kevin: Seven days a week. I do, but I, he didn’t enjoy anything.
So maybe that’s part of the, the problem. I saw that and I’m like, “What kind of way is this to live? Work, make money, not enjoy it?”
Ramit: Oh, okay. So got
Kevin: So that-
Ramit: gotta enjoy the money that we make, hence the nice living standard of living. Okay, fine, fair enough.
Credit Card Bill Dynamics
Ramit: your mom, spent a lot of money on things around the house and stuff.
Kevin: n-
Ramit: Materialistic. Okay. Again, I’m not applying directly here. I haven’t quite heard that, but think of the way that you wave the credit card [01:00:00] bill around and bring it to your wife. What is the implication behind that?
Margaux: First,
Kevin: to get an understanding of why it’s nine pages long.
Margaux: Second of
Kevin: all, to…
I don’t have an answer for
Ramit: Second of all, to… I don’t know really. I don’t have an answer for that. Is it possible that you see her, at least in part, as spending a bunch of money that doesn’t need to be spent?
Kevin: Or at least in part, the spending of much money that doesn’t need to be spent? I think that, but then the few times we do a review, I’m like, “O- okay, makes sense.” food is food. Education’s education.
Ramit: know, food is food. Education’s education. Not really.
Kevin: Camp’s camp. No, it isn’t. It is in our world, and that’s sort of the-
Ramit: think that might be the problem?
Keeping Up Pressures
Margaux: be the problem We live in a community where everybody sends to one of three schools, and everybody sends to one of three camps, and everybody
Ramit: the phrase? Keeping up with
Margaux: Joneses
Ramit: y’all.
Kevin: But they’re looking us at where the Joneses, like,
Ramit: This is the problem. It’s called pluralistic ignorance Yeah. Everyone is in on it, but no one wants to admit it.
Kevin: I feel like there’s no escape from it.
Ramit: I feel like there’s no escape from it Of course there is. We looked at a public school for my son. [01:01:00] Yeah
Margaux: we told him we’re not gonna bust our butts to send you to private school. You’re not even working that hard.” It’s the first time in 16 years that his grades are up.
But do we pull him out for the last two years of his high school to, and put him in public school?
Kevin: Him alone is 50,000 a year. So-
Ramit: Sorry, I’m not interested in the stories again. I’m not interested in rehashing that, and I
Kevin: No, not a story. How could I put him in an environment that he has never been in, that’s filled with things that we don’t believe
Margaux: but it’s just one part of the picture.
Kevin: just a hard decision. I know. So that’s why the decision’s hard, so we keep doing it.
Ramit: with the Joneses.
Kevin: No, keeping up with what community values. I wouldn’t say Joneses so much, but there are community values.
The value of learning our heritage, being in a environment that we feel is safe for our child, not in a public school environment,
Ramit: guys, I’m not pushing you. It’s not my place to tell you to send your kids to public school or private school. It’s up to you.
Kevin: No, I’m just throwing this out that these are part of the decisions we have to make. So I’m [01:02:00] always gonna make the one that I feel is gonna benefit my child in the long run,
Margaux: it. Keeping up with the Joneses. Boy, don’t I love this, and it is a rare opportunity that we see today where we have a couple that is literally keeping up with the community around them.
Narration: And I pointed this out to them, and did you notice their response? “Oh, well, I mean, we’re not really keeping up with the Joneses. This is our tradition. These are our rituals.” Think about what that represents. That answer’s almost a impenetrable story that I cannot argue against.
Who am I, Ramit Sethi, to come here and say, “Well, um, those traditions are actually putting you in the poor house”? I can’t really say that. So they expect me to go, “Well, I guess that makes sense.” That’s not gonna happen on this podcast. I will not allow couples, whether they are earning $75,000 a year or a million dollars a year, to thoughtlessly spend and then assign the blame to their heritage, to their [01:03:00] rituals, to the community that they live in. No, you chose to make those decisions, and if you want to, that’s okay.
It’s your money. But we cannot blindly say, “Well, I do that because everybody else did that, and that’s what I saw growing up.” Okay, and you’re an adult. It’s time to take responsibility for your decisions, and we’re gonna start doing that right now
Margaux: Ad break 3
Rich Poor Reality Check
Ramit: you do not have enough money to send your kids to private school starting now. You have no money set aside for college for your kids. You have no retirement for yourself, although you do have two expensive properties which you could sell, but you both are extremely reluctant to discuss that.
Margaux: No.
Ramit: Exactly. Where, why would I sell? That would just give us more access to go through. No. Because fundamentally, you don’t trust yourselves. Any money we have, we as a couple spend it. So having our money in real estate, at least it’s locked up, so even we cannot spend it. At least that is safe
Margaux: At least that is safe. But it’s also an asset. It’s not a, unintelligent thing to say, “Let’s have our savings in real estate-
Ramit: On one hand, you’re telling me having an asset is [01:04:00] intelligent, it’s smart, it’s gonna grow in value, it has grown in value, and on the other hand, in your own application, you’re telling me we live month to month making over a million dollars a year, and we can’t figure out how to spend less.
Margaux: So we, we need to cut costs
Kevin: Okay.
Ramit: If I put your numbers back up on screen right now, we
Margaux: put your numbers back up on screen right now,
Ramit: would get nowhere.
Margaux: we would get you nowhere. Why?
Ramit: Because when I’ve asked you about groceries, you were not willing to concede even $1. When we talk about school, you’re not willing to concede In fact, you doubled down.
Vacations, have not heard either of you entertain even the concept of that. In fact, if anything, you’re underestimating how much you spend and you have this idea, “Oh, we’re actually saving money ’cause we didn’t go to Vail. It’s actually quite good. We love points.” Where are you gonna cut? You two actually read the situation better than you think because you both said, “Where are we supposed to cut?”
Exactly. In the situation you have put yourself, where you live, the choices you have made, you have actually created a knot that is so tight it is impossible to untie unless you decide to play an entirely [01:05:00] different game
Margaux: We’re open
Kevin: to that. You are? Yeah.
Ramit: Okay. Margo?
Margaux: Yeah. All right. Marta? Yes. What’s the entirely different game? Like, move?
Ramit: You t- you tell me. Let’s play it out. What
Kevin: play.
Define The Rich Life
Ramit: are some options if your goal is to stop being stressed about money while making a million dollars a year, to actually feel good about money? What else would be the vision here? What’s the rich life vision? Really.
Margaux: I’d like to build my summer home. Okay. I would love to have, a ski home one day
Ramit: ski home, where’s it gonna be?
Margaux: I don’t know.
Ramit: Okay. And then the summer home, where would
Margaux: the summer home, where would that be? The summer home we have already, which we just wanna build. Okay. And, yeah, not being stressed about money. Being able to spend in a way where we feel like we’re living a comfortable life- … and we’re also saving at the same time
Ramit: build. Okay. And, yeah, not being s- stressed about money. Being able to spend in a way where we feel like we’re living a comfortable life- … and we’re also saving at the same time. Okay. Wanna add anything?
Kevin: Rich life vision is, in my opinion, the least having s- savings, something to show for it at the end of the year that you could move forward [01:06:00] with and save each year on
Because life’s moving quickly. In 20, 30 years when I turn around and we’ve married off our kids and we’re looking at each other, we wanna have, like we said in the beginning, our assets of course, if we could hold onto them.
But we wanna have
Margaux: money
Kevin: we can en- enjoy that time. I don’t wanna be working at
80, 77, 75.
but I could have a few fantastic years and work and the knots untied, and there are ways to save and put away that money. I just have to learn how to actually do that
Ramit: I’ll tell you, especially with a business owner that’s consistently making a million bucks, a million dollars can make up for a lot of financial mistakes.
A lot. Like, if you’re making a million dollars, there’s just so much cash sloshing around that you can kind of make things work. I’ll tell you when it stops.
Usually, it stops when somebody stops making that kind of money, like their business [01:07:00] goes down.
We all know business owners, it goes down, down, down, down, down, and it goes down forever, and that’s over. So that’s number one, when that ends. Number two, it ends when, the person is unable to sustain anymore. Maybe they get older, injured, whatever,
And then third, this is the most rare, is when they simply have such high expenses that they just can’t keep up with them and they just drown. In your case, it may be a combination here. The expenses are astronomical, you could untie the knot line by line, or you could simply say, like, “This isn’t the way we wanna do it.”
Kevin: it.
Community Knot Explained
Ramit: I’ll tell you why I think it’s difficult for everybody right now, is that this is what you’ve known. And Margo, you said we were born into the knot. What’d you mean by that?
Kevin: into the known. What’d you mean by that? I was just gonna say that
Margaux: We live in a community that is, very traditional, and it’s the same schools that I went to is the school where my kids are going to. And, the holidays cost a lot of money. The cost of living is so much higher even when you account for inflation, that the percentage of my [01:08:00] income of what I’m paying for tuition and food and just basic cost of living compared to my parents … It’s so much more astronomical. So they were able to do it, and it made sense.
I think there’s a lot of couples my age that are having the same struggles to keep up
Ramit: It’s very insightful, and your conclusion thus far has been what?
Margaux: Something has to change. Something has to give
Ramit: has been giving so far?
Margaux: What has been giving so far? What has been giving is every single penny of what we’re making
Ramit: And more And more
Margaux: And more
Ramit: more than you make. You’re basically hoping it all works out. And maybe next year you take a nice 100K distribution. That might cover some debt you’ve accrued, but what happens the year after and the year after? Essentially what you’ve done is you’ve taken on a massive amount of risk. Massive. It works until it doesn’t.
Tuition Help And Emotions
Ramit: One question I have, Margo, is, you mentioned your dad used to help with the tuition. How many kids was he paying for in private school?
Margaux: He would offer to pay for just, a portion of one of the school’s tuitions. This year was it, 70? [01:09:00] 70 out of
Ramit: of how much?
Kevin: Two hundred.
Ramit: And then you mentioned that he will not pay for the tuition.
What happened in that conversation?
Margaux: We just felt like we wanted to be independent and not have to ask This is our family, and it’s something that we should be doing on our own.
Ramit: on our own. Okay. I appreciate that. Is this the first time you’ve looked at the numbers of how much it’s gonna cost for paying for private school for everybody? We
Margaux: Is this the first time you’ve looked at the numbers of how much it’s gonna cost for paying for private school for everybody? We know the numbers because that’s one of the biggest expenses that we have, I think it’s the first time that we looked at it in the context of what are we spending on other than that, and what is he making?
Ramit: And what is he making? So what do you think? Where’s the money gonna come from?
Margaux: Hence, that’s when I put the application in Oh,
Kevin: the money gonna
Margaux: For it to come here. I’m like, how do you think we’re gonna do this next year? Like,
Kevin: come from? Hence, I put on the application. That’s when I put the application in. From cutting other costs, of course. How do you think we’re gonna do this next year? Cutting in other areas to support that, we feel very strong about that. Okay. But-
Margaux: feel very strong about that. Okay. But w- where are we gonna cut?
Ramit: gonna
Kevin: Shall we look? Shall we can look.
Pick Numbers For College
Ramit: Okay, I’m gonna put these up on screen, but let me suggest something. You mentioned [01:10:00] private school is very important to you for the kids. Is paying for their college important, too?
Margaux: Yes. I don’t know that they have to go to American private university that costs $90,000 a year. Now, I’m okay with, you know, city university. I’m okay with international. How much?
Ramit: Do they have a blank check? Somebody wants to go to NYU, can they go? Is there a number?
Margaux: We’re living month to month. We’re not planning. We’re
Ramit: Exactly,
Kevin: We’re not at
Ramit: two of you are not willing to pick numbers. So that is what we’re going to do now. Oh my God.
Margaux: Oh my God.
Ramit: I take a lot of joy in this. It might not be as joyful for you, but for me
Margaux: I’m so happy that we’ve brought you joy from Brooklyn, New York
Ramit: I’m happy that we’ve brought let’s recall a couple of things here.
Assets, what’s that number again? Can everybody say it out loud? One, two, three. 11
Margaux: million 11 million.
Ramit: 11 million. Never heard a more morose group of people talking about $11 million.
Kevin: Oh, 11 million.
Ramit: [01:11:00] Oh, $11 million.
Kevin: we’re very thankful. Don’t… We’re very extremely fortunate and thankful.
There’s no question about it.
Margaux: I
Ramit: yeah. I heard you guys say that before, but I don’t feel it.
Margaux: We’re very nervous.
Ramit: I appreciate that. That is honest. We are nervous.
Margaux: a joke.
I have five kids to, to support. We have a crazy tuition bill coming up in September. Yes. September 1st,
we do not have a plan on how we are gonna get through the year next
Ramit: to support. We have a crazy tuition bill coming up in September. Yes. September 1st,
Margaux: and then talk. We do not have a plan.
Ramit: which already some good is due probably soon. I still have to pay, so count on that. Oh. And we do not have a plan on how we’re gonna get through the year. Okay. Sit back in that mic. We do not have a plan.
Urgency And Shut Up
Ramit: This is the first time I have heard a sense of urgency from you. This. How many hours into our conversation are we?
I
Margaux: I don’t know.
Ramit: Living in your old story. You are finally saying, as the clock ticks down, “We do not have a plan and we are nervous.” And I appreciate that because finally you might be ready to change.
Margaux: ready to
Ramit: This is not a joke. It’s not. You have five kids, you have very high expenses, and as long as everything keeps going great, yeah, you could kinda make it work, sort of. But the [01:12:00] day it doesn’t, you are in serious trouble, and if it happens two bad years, it’s over.
Well, you got $11 million, but you’re gonna have to make some really tough decisions you don’t want to. So it’s time.
Kevin: And
60 Second Cost Cuts
Ramit: normally, what I tell couples is they need to get these numbers to less than 60% on the fixed costs What I would like to do is spend 60 seconds max, going through your fixed costs and each of you calling out what number you can reduce your fixed costs to. Who wants to go first?
Kevin: Save the car payment
Ramit: Okay, what do you wanna take it down to?
Kevin: Half.
Ramit: How are you gonna do that?
Kevin: Get rid of my car. Use my son’s.
Ramit: Get rid of my car. It’s my son’s. Love, love it. Dad is repo’ing his own son’s car. I fucking love it. Good job. All right, 1,200, very nice. That takes you down to
Margaux: 105%.
Ramit: 105%. Margo, you’re up next.
Margaux: Groceries, we could take it down to three.
Ramit: Yes, good answer. 3,000. 3,000. Okay, you’re up, Kevin.
Kevin: What’s all this miscellaneous things that we forgot?
Margaux: [01:13:00] MyCSP
Ramit: adds 15% because most couples do not carefully track their fixed costs, and they have expenses that they do not account for, such as maintenance on their car, some pet accident, whatever stuff they don’t account for. If you are in a financially difficult position, you cannot afford to have 15% just unaccounted for, especially when it’s $6,680 a month. Right. So what number should we have that is your overflow buffer that’s reasonable but under control?
Margaux: What’s that? I don’t know. What do you think? Two for miscellaneous a month?
Ramit: . Y’all have three teenage kids? Put them to work. Like what? They are the ones who figure out what’s miscellaneous. You ever gotten them involved in the money? They just
Margaux: They just ask for money, and he says yes.
Ramit: Yeah, they ask for money ’cause they are not involved in it, just like they ask for food ’cause they don’t have to cook it.
But maybe when it comes to miscellaneous, we can cut this number down to, I say, 1,000 because [01:14:00] we are going to effectively enlist the help, first of each other, and second of our kids. Because by the time they get older, by the time they’re 18, 19, they need to know this stuff. They need to know how to plan a grocery list, how to plan a vacation.
This is how kids learn, so you can change the trajectory of their lives. All right, we’re at 1,000 bucks here. Y’all are at 91%.
Kevin: Okay.
Ramit: What other changes you wanna make? $2,000 a month for clothes? I don’t think so.
Margaux: You wanna lower that number? I’m- I
Ramit: Is
Margaux: really love my job. There’s seven people in the house. Yeah.
Ramit: do they shop?
Kevin: Amazon Basics add
Margaux: Anna … Zara- Don’t
Ramit: me that bullshit. Where else do they shop?
Kevin: Where Zara, H&M-
Margaux: Yeah, we’re very Zara, H&M. That’s where we are. J. Crew.
Kevin: Yeah.
Margaux: Yeah, there’s no brand name. There’s none of that. I don’t buy brand name.
Kevin: She just bought me this
Ramit: It’s very
Margaux: n- She just bought me this.
Sparenos. 10 bucks, J. Crew, when they’re on sale, extra sale, that’s where I buy him his stuff.
Ramit: I buy things Wow, I’m
Kevin: I have had these for six years
Ramit: I
Margaux: for six years. Guess that… Those? 63 bucks, Bloomingdale’s [01:15:00] on Memorial.
Ramit: I mean, y’all can talk all you want. You can play the sitcom game with each other, but our time is running out, and you’re gonna go home saying, “Wow, we really had
Kevin: it to 1,000? Cut it in half?
Ramit: I’m not gonna just make up numbers
Margaux: What’s a normal number for that?
Ramit: Well, let’s break it down.
Kids, how much do you want to give each kid per month for clothes?
Margaux: In other words, give each kid their own allowance- Sure … and let them work with it?
Ramit: Wouldn’t that be a great way to teach them?
Margaux: Yes.
Ramit: bet you they wouldn’t be buying J.Crew anymore.
I don’t know. Who cares? It’s up to them. Figure it out. And if they can come to you and if their goal, this isn’t enough, go, “Okay, make the case. Put a PowerPoint together and make a proposal, but right now this is how much you get. Good luck.”
You’re taking so much burden on yourself, especially with five kids.
Margaux: much burden.
Ramit: And yet you’re just, like, giving them what they want. $2,000 a month for five kids is a lot of money, Pick a number. It’s way less than this.
Margaux: a thousand? Okay.
Ramit: 1,000, and that means you have to pick a number that each of them
Margaux: That includes my clothes,
Ramit: That includes my clothes? You’re not getting any new clothes for a while. Okay.[01:16:00]
Margaux: got it.
Ramit: I feel like this is preposterous but with the expenses you have incurred every month, like $13,000 of private school per month, there are no new clothes.
Margaux: These
Ramit: the trade-offs you end up having to make if you want what you said you want. We want savings. We wanna have upward trajectory, not downward. Well, then you have to make tough choices. If it were anything, it’d actually be probably less than that. It’s probably more like 700 a month, if that. We didn’t spend, as a kid, $100 a month on clothes. We didn’t. We got cheap, shitty clothes from Kmart and Target. We didn’t know any better. Your kids live in Brooklyn, so they do know better. That’s part of the not. So it’s gonna be very difficult for you to be like, “Here’s $100 a month. Good luck.” They’re gonna look different than their friends A lot of quiet over here.
What,
what are you realizing? Realizing we don’t
Kevin: realize we don’t have to do some of the things we do. Yeah, we’re giving too much to the kids, for sure.
Ramit: Yes, and that the costs of the situation you have put yourself in are more than are immediately apparent. [01:17:00] The community you live in it costs more than just the mortgage and the schools.
It’s also the food and the type of clothing. None of these things would be normal in a different community or geographic area. So again, if you wanna live there, it’s fine. It’s up to you, but these are the costs that you-
Kevin: it comes with
Ramit: , exactly. I’ll put it at 1,000. I don’t know if you’ll hit it, but I think you could
Kevin: easily.
Ramit: Well, y’all are at 89%. It’s still too high. You’re spending more than you make every month No money for college. No money for savings That’s,
Margaux: that’s the price we pay with this tuition bill.
Ramit: bill. Yep.
Structural Deficit Revealed
Ramit: So what you are now seeing is that you have structurally put yourself in a position where you just don’t have enough money every month, and it is crazy to say that making $96,500 per month, but you are paying multiple kids’ private education in New York. That’s it. What do you wanna do?
Kevin: I don’t know. If you start to cut out the tuition, you’re talking about life-changing [01:18:00] events.
So it’s off the table.
Ramit: Can I make a proposal?
Kevin: Yeah.
Margaux: First
Ramit: all, I really like what’s happening right now. You two gave it a fair effort. You did. You did a nice job bringing some numbers down. That was good. I’m noticing that you are both realizing this is not as easy as you thought. I appreciate that. And so now we’re gonna make some tougher decisions.
All of this based on what you told me you want. You wanna be able to have a comfortable life. It is important to you that you send your kids to private school, et cetera, et cetera. Okay, so how are we gonna do it? Well,
Real Estate Maintenance Math
Ramit: there’s one number jumping out at me right here. What’s that number?
Margaux: You wanna sell my summer home?
Ramit: The assets Assets $11 million. Appreciation. So right now you’re at $11 million, and presumably those numbers grow over time because they are your houses. Well, first off, they cost money. That I didn’t really even see.
Kevin: Upkeep is tremendous on
Ramit: Where is that? I don’t see it here. Another 30, $40,000 missing per year at least
Margaux: much? For [01:19:00] what?
Ramit: A proper way to do it is to take your house and take 1 to 3% of the purchase price every year for maintenance.
Every year. Now, I know and you know the prices in Brooklyn, Manhattan, et cetera. When I estimate how much it would cost me to own, it’s like 3 plus percent because everything’s expensive there.
Sticker Shock Repairs
Ramit: People don’t understand
Kevin: Yeah, to get the plumber to come to the house is three fifty
Ramit: had somebody come…
I gotta tell you something. I rent a place there, and, we have this fridge, and I told– I love posting on Twitter about how I rent, not own, ’cause people think I’m stupid, and they don’t understand costs in New York, Brooklyn, whatever. The handle on our fridge was loose. Do you know how much it costs for somebody to come and fix a fridge handle?
This is a nice fridge. I estimated at least $1,000, probably double. Three guys wearing booties came into our apartment, came, looked at it, go, we don’t have the right part.” Come back a few days later. Imagine how much that costs in New York.
Cash Poor Reality
Ramit: [01:20:00] So the upkeep on your home’s very expensive, you are cash poor, you’re losing money every month, but you have $11 million in assets.
What’s occurring to you right now?
Margaux: Rent out our summer home for the winter?
Ramit: That’s one way to go.
Kevin: one way
Ramit: I like that option.
Okay, that’s one.
Sell Or Rent Options
Ramit: Why don’t we put all the options out on the table?
Kevin: out the business is in there. Should we take that off?
Ramit: The business is in there. Should we take that off? No, I think it’s fair to put it in there. 2 million bucks is fair. I wouldn’t, but you could. Already have a choice in it. Okay, great. So that’s an option. What about with the houses?
Kevin: What about with the houses? What other options are than selling one, renting one,
Ramit: What other options are there than selling one, renting one, Those are the options. You never put those out on the table. Sell them, rent them. How would that change your picture?
Margaux: What could we get for the summer house? don’t know
Kevin: I never put it out there
Ramit: how much could you sell it for?
Margaux: for?
Two. 2
Kevin: much
Ramit: Two. 2 million? It’s not bad. And then you… the house you live in, that’s the big one, right? What is that, like Seven?
Kevin: Yeah, between six and seven. Damn. Seven million
Ramit: Damn. $7 million house and spending more than you make. [01:21:00] This is house poor But
Kevin: year it goes up
Ramit: it goes up. Yeah, but where’s the money? I hear you. And then is there another house?
No, like, land or something you’re building or all that stuff?
Kevin: The summer home. That’s
Ramit: summer home. That’s the one in Jersey?
Kevin: to go on the ground.
Ramit: Ah. Hmm what do you think, Margo?
Margaux: We have plans, but we’re not going forward with anything
Ramit: Are you open to renting it? Renting it out-
Margaux: it out for the summer?
No, ’cause where would I go? Right. Are you
Ramit: Are you open to renting it out for the summer?
Margaux: open to
Kevin: where would I go?
Ramit: No, ’cause where would I go? Right. Are you open to selling it?
Margaux: Selling? I, I don’t wanna be open to selling it. That’s my summer home. Yeah. That’s my future
Ramit: you open to not taking any more vacations for the next- 10 years?
Margaux: 10 years? Yeah. Yes. Really? S- I don’t wanna sell my homes.
Ramit: homes. I love that answer. You’re willing to not take vacations for the next decade if you can keep your house.
Margaux: With the hope that I’ll start making money and Kevin will start making more money. And in two years w-where Isaac is out. And so that’s a big [01:22:00] relief. What, are
Ramit: but he’s gotta go to college
Margaux: I don’t know that Isaac’s going to college. We’ll see.
Ramit: One way or another though, like the next kid’s gonna go to college. Like, … there’s a factory you’ve got with five kids that even if one doesn’t go, whatever, there’s gonna be something else. So I appreciate maybe one or two won’t, fine. But we’re still-
Margaux: in two more years, Ray will be done with college and Isaac will be out of high school, that’s a relief. Now we
Ramit: but once we, in two more years, once we have that, Ray will be done with college- … Isaac will be out of high school, that’s another, like that’s a relief.
Tuition Vs Lifestyle
Ramit: Can you tell the kids we’re not gonna pay for college? Would you be open to that?
Margaux: No, I would not tell them I’m not gonna pay for college, but
he can go to Hunter College or Baruch, which is a good business school, and you pay city tuition prices. It’s not-
Ramit: pay city tuition increases. It’s not He’s gonna pay or you’re gonna pay?
Margaux: pay? Good question
Ramit: the answer?
Kevin: don’t know. I’d probably tell you in two years when the time comes.
Ramit: Y’all are the parents. You decide
Margaux: So maybe we don’t have to pay Reese full tuition next year. He found himself a job there that he’s gonna start working next year. Why do I have to pay my son’s second year full college tuition and dorm? It’s a big bill.
Why do I have to always be struggling for the [01:23:00] kids?
Kevin: Again, that’s something where we came from. They’re constantly building up their kids, bringing them into the businesses that they created. I
Ramit: understand. My parents are the same way. My community is the same way. They will spend an effective unlimited amount for education for their kids, even if it puts them into debt. I understand deeply. However, my group of Indian parents and my parents’ friends, their spending was radically different than this.
First of all, they didn’t make this kind of money, but second of all, we didn’t go to private schools, camps, vacations, none of it. We had no clothes. Like, go look at an Indian kid’s picture. We don’t look good. Indians have a Indian glow-up. Indian parents want us to not look that good, so we focus on school.
Again, I’m not saying it’s right or wrong. Different communities, fine.
But, like, the math is the math And I wanna say one thing. It would be difficult for me as a kid whose parents live in a six or $7 million house and take quite nice vacations and stuff like that for them to put me into, let’s say, $95,000 of student [01:24:00] loans. That would be difficult. Again, it’s up to you. If you were to just be like, “We’re not paying it,” I’m like, “Cool. I’ll help you tell them.” But is something a bit out of whack? What do you think?
Margaux: I agree. It’s again, it’s the system that we’re tied into.
Yes. The elementary and high school tuition is so high, and now with the cost of living being so high It’s, like, almost impossible to pay the… We’re, we’re tinkering on just being able to get by, but This has happened to us for so many years now.
What do you think Well, you don’t own a home, so I would assume you would sell one of the homes ’cause you’re a believer in renting
Ramit: You’re a I’m a believer in running the numbers, yeah. What else would I do?
Kevin: But you would sell something that you know is gonna appreciate?
Like in 18 months,
Margaux: Also,
Kevin: be worth another million than it
Margaux: rental market in here is, slim to none
Ramit: I’m sorry, are we asking me what I would do or are you trying to convince me you’re right?
Kevin: What worries me is that I’ll burn through that money
Ramit: because your dad did that, and that’s what you’ve seen, and that’s what you know.
But there are people who do it [01:25:00] differently
Kevin: Right. With investing and putting away money and making that money work for you-
Ramit: It’s not
Kevin: It’s not my specialty … it’s not my specialty. So what?
Margaux: You ever heard of a book called I Will Teach You
Kevin: Be Rich? See right there? Yeah, I see it. You
Margaux: You ever read it?
Kevin: I have not. It’s specialty
Ramit: your specialty because you never did the
Kevin: I don’t know. We look at assets as very important value, but I hear you, and I did bring it up. He did bring it up
Margaux: He did bring it up.
Ramit: Okay, so back to your original question. What would I do? What I would do is I would talk to my partner and I would say, ” What do we want? What do we really want? Because our whole life, we grew up here, we went to these schools, now our kids go to these schools. Everybody we know is around us. Every Sunday we do the same thing. Every Friday night we do this thing we know.
It’s our ritual. It’s our heritage. It’s what we know.
We make a ton of money, and we have not been able to get ahead in many years, and we take one step forward, it seems like two steps back. Even when we save four, five, $600,000, this thing comes out of left field and just kneecaps us. Do we want to go the next 30 plus [01:26:00] years like this? More importantly, what are we teaching our kids? Because it sure seems like the lessons our parents taught us about money, which were close to none, are the ones that we are teaching our kids. Keep up with the Joneses. Of course, we want continuity, live in the same neighborhood. It’s gonna be even more expensive for them.
How are they gonna compete? How are they gonna even keep up? So if we don’t make changes, they are going to be in our position in 15, 20, 30 years, but it’s gonna be even worse for them, and they’re not gonna know why. So we can’t just delegate this and pass it on to them. We gotta actually make changes now.
It’s gonna be hard ‘ cause this is what we know. So what do we want? I think we want, as a family unit, to understand the value of money. I think we wanna enjoy our lives. I think we wanna set our kids up for success. We wanna teach them valuable lessons. How do we do that? Well, first of all, we make a lot of money, so earning more is not really on the table.
I hope we do, but we already make a million dollars. We can’t make it work. Two million’s gonna be the same thing. We have [01:27:00] assets. We probably need to tap into some of those assets. There might be one house. We sell that house.
go great. I can invest the money and make 10 times also. Here’s the fact of the matter. You’re losing money every month. You cannot continue on this way. Bottom line. How many years of private school tuition would selling that house get you?
Margaux: of private school tuition would selling that house-
Kevin: it would get us through a five-year period
Ramit: periods Five years, that’s not enough. Pull him out
Margaux: Why don’t we send Isaac to school for the next two years in Jersey?

Margaux: For
Ramit: I don’t think the public school in Brooklyn is just the right one. And what about the other kids?
Like I cannot
Margaux: You want to pull them out of that? So I c- I cannot move them. Can’t do that. Okay. Absolutely not. All right. It’s not an option, but the high schooler, well, Why can’t we take a loan for the college one?
Ramit: Where’s the money coming from?
Margaux: For, we’ll pay it monthly. Let him pay some of it. He’s working
Ramit: For the… We’ll pay it monthly. Let him pay some of it. He’s working. That doesn’t solve the problem. Why? Because that’s a drop in the bucket. Is it? Yeah.
Margaux: Drop in the bucket. Is it?
Ramit: It’s 30 grand. Y’all are spending 150 plus per year on kids’ education.
Kevin: So
Margaux: you take that down to 120, ’cause you’re minusing the older one- … that’s not a drop in the bucket.
Ramit: If you take that down to 120- … minus-ing the older one- … that’s not a drop in the bucket. If you take, keep going. I like that. [01:28:00] Okay.
Margaux: and he can pay it, and if he wants to go to my dad and ask him to help him, he can do
Ramit: Great. That’s good. One. What else?
Margaux: Isaac goes to school in Jersey, which is half the tuition.
Ramit: Okay, that’s two. How-
Margaux: can go to Ocean Township and live by your mother during the week. I- that’s 50,
Kevin: Those are some hard decisions we have to discuss and make.
Margaux: Okay, but you’re selling my
Ramit: sell the- Wait, wait, wait, wait, wait. Hold on, hold on.
Margaux: no. Hold on … so
Ramit: let me correct
Margaux: pay this tuition, where he’s not even flourishing in this private school.
We’re killing ourselves to get through this tuition, and he’s not a studious kid
Ramit: Talking about these things does not mean you are making
Kevin: No, of course. I know that.
Ramit: Margo’s on a roll here Yeah I actually want you to encourage her because the two of you have not been able to unlock this. She’s on a roll. You can see it, right?
Kevin: Yes If you’re-
Ramit: you’re getting help, meet her energy and exceed it.
You go like, “Oh my God, that’s a really good idea. I never thought of that. What else could we do,
Margaux: so if he takes out a loan
let him start to contribute. We’ll meet him where he’s at, and the rest will be, have to pay over time. In other [01:29:00] words, “Ray, we need your help. We’re in a position where we’re spending more than we’re making, and we need you to chip in for the tuition.”
And I also don’t need to give him $300 a week. It’s ridiculous. Let him work this summer, save it. Do the best he can. Let him start to hustle a little bit. I don’t know.
Kevin: Okay. That’s awesome.
Margaux: awesome. So that’s- So That’s 30. So
Ramit: and do the best he can. Let him start to hustle a little bit. I don’t know Okay. That’s awesome. So that’s fifteen- Security So he needs to find a way to do it. He needs to find a way to do it.
So you can cut that down to 50 bucks a week. Good luck. Looks like you’re eating ramen. Fine. Figure it out. And-
Margaux: His tuition
Ramit: who’s paying that?
He is?
Kevin: Maybe cut that in
Margaux: He is? We’ll give him a, we’ll pay a portion of it now, so maybe cut that in half. 15 will be a loan for when he finishes and he’s working, he can pay it, and the other 15 he has to pay, half and we’ll pay half.
Hard Cuts Math
Ramit: How much do I reduce this number by? It currently says 16,000 a month for tuition.
Kevin: If you’re reducing him, it’s three thousand a month.
Ramit: Okay … through this.
Margaux: I don’t wanna sell my summer home. So let’s do what we can right now to get through this. Thirteen thousand
Ramit: takes you down to 88%. Okay. What else?
Margaux: My son in [01:30:00] high school’s tuition is forty-eight.
Ramit: It’s $4,000 a month.
Kevin: school’s
Ramit: wanna see what would happen if we took it down?
Kevin: month.
Margaux: would happen if we took it down? Sure
Kevin: wanna see what would happen if we took
Ramit: Watch this number at the top right, fixed costs.
Kevin: right, fixed costs.
Ramit: Dropped down to 80%.
Margaux: That’s it? We’re still at 80?
And we still have to get to 60?
Ramit: solution? Yep
Margaux: That’s cr– We have to get to 60?
Ramit: You could keep it higher. You are in a very expensive time in life, et cetera.
But right now you have very little liquid cash. It’s actually terrifying because you have about a month’s worth of savings. If something happened to you, y’all are in big trouble. One month’s worth of savings and your expenses are astronomical. Even with these changes we made, it’s $40,000 per month
Margaux: so let’s say hypothetically, now we got rid of Ray and Isaac. But we’re still not where we have to be. Yeah, because Sam-
Ramit: kids to school is a huge amount of money
Margaux: Is there anywhere else we [01:31:00] can cut without selling the houses? So what if we did rent out? Is it worth it to do that?
Ramit: We’ll just net out, 2,500 a month, okay? Watch what happens. Your fixed costs drop 3%, 77%.
It’s interesting, but not that interesting
Margaux: month. Okay. Watch
Ramit: I once had a woman on this podcast who, wanted a beach house, and she was saving every last penny.And it was causing her a lot of anxiety and stress, and I asked her, “What is behind this beach house?” and she told me that she grew up, they went to the beach, she wants the same thing for herself. And I said, “It sounds like a lovely vision. Is it possible there are any creative ways to get to this beach house?” And I proposed to her, what if she just rented a nice one for a week or two or something like that? And it, it kinda struck her. She was dumbfounded. She had never considered it.
can see. She’s in a different position than the two of you. You already own a house. You’re already accustomed to going there. Again, it’s different. It’s the same knot. It’s the people. It’s the same knot. It’s– I grew up there. The kids go to camp there. I love my summers. Like,
Yeah
Kevin: we say the year is so hard, but all my [01:32:00] friends are there. It’s really very
Ramit: We say that we are so hard, like all my friends are there, every girls, it’s it’s really very important part of my life. I get it
Kevin: important part of my life. I get it. Everyone picks up from Brooklyn and goes to Jersey. The North Shore area. The whole… So it’s the
Community And Identity
Ramit: can I tell you my perspective here? Yeah. So I’ll never tell a couple, a family, “Pack up and move I, I get that. It makes no sense, especially when you have your community embedded where you are. But where you are is not serving you, at least financially speaking.
And obviously it’s not serving you relationally because you all flew all across the country to see me. So this is not working. And again, it’s not working, and you’re having great years. A million bucks a year is fucking awesome as a business owner, but it’s not working. So if it were me and I wanted to stay with my community, but I couldn’t make this work, this is what I would do.
Big, bold changes, okay? Easy for me to say. I know that, but that’s why you came to me. I would get rid of one or both houses. I don’t know which ones. I would find a place that’s more inexpensive. I know it’s difficult for five kids. I know that. I know this is not [01:33:00] easy. But this is why sometimes we need to hear from someone else.
I would not own a second place. We simply cannot afford it. Finally, with the school, the kids would have to not be in private school.
It’s just not feasible. Now, if I could do that for three or four or five years and bank a shitload of money, and I would know the exact amount we need to have, which would allow us to pay for the kids’ college, perhaps, if that’s a priority, have a retirement and know the exact number that we need so we never have to go down, but rather go up, and I could do that for five years at a million bucks a year, if you actually contained your costs dramatically, you could lock away hundreds of thousands of
Kevin: million bucks a year, if you actually contained your costs dramatically, you could lock away hundreds of thousands- Well, also, if we have eight million earning interest and bringing in more money, it’s more money. Massive. We’ve had this conversation. Don’t think we didn’t. Okay. Liquidate. Yeah. Cash rich, invest it, rent.
Yeah. Step away from a lot of the problems. It’s so hard to do when you’re doing it for 40, 50 years of your life. You’re living in that same situation. It’s hard to just say, “Okay, liquidate. I’ll have eight million in [01:34:00] the bank, great. It will earn X. I could still make this. We’ll compound it.” but we’re living a completely different lifestyle than we’re mentally and physically used to.
It’s really hard. It’s a tough one. I love that option, but then the other part of me says, “Fuck, how could I do that?
Margaux: I gotta
Kevin: away from the community I was born into?”
Margaux: Why step away? Maybe it’s, a little bit different neighborhood. Maybe it’s a
Kevin: a block away
Ramit: it’s really hard it’s a tough one It’s really hard I love the, I love, I love that option. But then the other part of me says, “Fuck, how do I do that?” I gotta step away from the community I was born into. Why step away? Maybe it’s, a little bit different neighborhood.
Maybe it’s a few blocks away. It’s a little different. I know it’s not the same. I get it. Even a block away can be totally different. I get that. But again, this is not working
Kevin: not working.
Margaux: His parents sold their houses- Yeah
went through the money and ended up- This is less than 20
Kevin: parents sold their houses. Yeah. Went through the money. Listen, it lasted them 20 somewhat years
Ramit: we make sure that doesn’t happen?
Margaux: happen? How?
Kevin: I don’t think they did it that way. How?
Ramit: Y’all could invest in simple funds. You’ll be fine. I’m not promising some get rich quick bullshit. It’s simple. The investment part is not the hard part. It’s the two of you getting aligned on expenses. But if you had, I don’t know, eight million dollars, just interest?
Kevin: Two forty.
Ramit: Yeah, [01:35:00] $240,000 a year in safe withdrawal income coming from that.
So he would still be making, let’s just say, a million dollars a year. So you’re still bringing in the current income, plus you would have an extra $240,000 a year of money, which you could use however you see fit, probably saving.
Margaux: But that money would go towards rental of the home and the summer home. It would equal $200,000. Well, if you
Ramit: But that money would go towards rental of the home and the summer home. It would equal $200,000. If you chose to spend that much, it would. I have a lot of people to house. Yeah.
Margaux: You could. I have a lot of people to house. Yeah.
Kevin: Like you said, you can go to a different area where it’s a little bit less, but you’re still within the community.
Margaux: you wouldn’t be in Brooklyn, that’s for sure, because there’s nothing less than 10
Kevin: Of course you would. But, I, listen, I hear you
Ramit: Here’s the facts. Having multiple kids in private school, plus college, plus cars, plus food, all that stuff, it just doesn’t work. There’s no magical answer that I can give
Kevin: There’s no
Ramit: You wanna do?
Kevin: magical answer to that I know What do you wanna do? So that’s a lot to be discussed. We have to sit down and discuss things But yet at the end of the year, I if I make double [01:36:00] the income, with our habits, who knows if there’d be anything left anyway at the end of the day.
Yeah. But so we’d have to come up with a system, put it into effect, and make some hard decisions that we don’t want to. But,
Ramit: The one thing I wanna say is time is not on your side all are getting older, and a high income can help if you start late in life. Okay. Luckily, again, you have millions of dollars of property. That’s a enviable asset to have.
So my message to you is from the surface it seems okay, kind of like the way you look at your neighbors and you’re like, “How are they doing it all?” And maybe they are with parents’ help, maybe they make even more money than you think, or maybe they’re in similar situations where they’re just like, “Oh my God.” But when you have a family of five where you live, in those schools that you’re in, with the lifestyle which I understand, even a million dollars a year, it’s really difficult 20 years from now, I’m gonna be hopefully doing this podcast. Say I have one of [01:37:00] your kids come on, and I ask them about how they grew up, and I ask them what they learned from their parents about money. What are they gonna say?
Kevin: And any of them would say, “We had a great life. We have what we need. We’re getting it all. Um, are we teaching them the value of money? I would say, mm, probably not so well.
Ramit: Okay. Margo?
Margaux: I think that they witness us struggling and arguing about money. And I think that I don’t know that they feel the actual value of what things cost because they get a lot.
Ramit: Mm-hmm.
Margaux: What is the right way to have them being a part of this financial situation?
Ramit: Outstanding question. At four or five, they should be watching you click a button to pay the credit card bill, “Help me push the button. Great job. This lets us have a roof over our head.” Get them involved, have fun. At seven or eight, they’re coming to the grocery store with you, and you’re talking about, “Here’s how much we have to spend.
Can you [01:38:00] help me do it?” Age appropriate, small numbers. Keep that going. 10, 12, they should be the ones picking what’s on the menu when you’re eating out. “Here’s how much we have. What are we gonna get? Where are we gonna go?” As they get older, we’re talking about that same principle, the grocery store, the restaurant.
Now it’s with bigger amounts of groceries. Birthday party, “Here’s the amount. What do you wanna do? It’s up to you. You’ve gotta make the trade-offs. You’ve gotta tip the vendor,” all of that. Then it’s buying a car. Then it’s taking a family trip. By the time they graduate, they know taxes, tips. They know what it’s like to get ripped off.
They know maintenance costs. Right now, how much do your kids know of those things?
Margaux: We don’t even know. We don’t go into a vacation like calculating exactly how much we’re planning on spending.
Ramit: That’s not effective.
Margaux: have some sort of concept of money, yeah, but they don’t have a concept of it in relation to how much we have available to spend
and what, so what about the [01:39:00] 16-year-old?
Ramit: They should be close to running part of the household when it comes to finances.
They should be investing. They should be having a certain amount of money. I would not be giving a 16-year-old a bunch of money to go out and buy clothes compared to how much money they have to invest. Sure, they can have a little bit for fun.
For sure, they’re a 16-year-old, enjoy. But they’re talking about the difference between saving and investing, something that the two of you do not do. So all of this is a bit moot until the two of you get aligned, because you cannot do the thing where you go, “Do as I say, not as I do.” they’ll read right through that.
They’re too smart. So I appreciate the questions. They’re awesome questions. But until the two of you actually are dialed in with your money, until your fixed costs are at 60, even 65%, and you’re saving at least 10, 15%, investing 10, 15%, guilt-free spending is way down, they’re just gonna see this as a show, and I don’t think they’ve ever seen you make tough decisions about money. I’m s-
Investing And Next Steps
Kevin: And if we have money to invest, where would it go?
Ramit: 401k is a great place to start, especially with the options you have, or perhaps a SEP IRA. There’s a few different types of accounts that [01:40:00] business owners have access to. Within that account, you could pick simple index funds.
That’s where I have the majority of my money. We can’t predict the future, but we can see that typically it’s returned about 7, 8% after inflation every year.
That’s a lot of money
So the investing part is not difficult. The suggestion I have is that the two of you do start a book club, each of you. If anything, I would actually involve your older kids and be like, “We’re all gonna read this together.”
Okay. If you wanna change things, you need to really take it seriously, and your kids would actually need to see that. If I talk to them in six months, I should ask them what happened as of six months ago. They’d be like, “Holy shit, my parents really changed.” And I would challenge you to think about what that change is
Kevin: what
Ramit: and what you want them to see, ’cause right now
are equipped to the house, graduate college not really knowing anything about money, and I don’t want that for them.
I don’t want it for you
Speaker: The stories that we tell ourselves through the generations are incredibly sticky, and they can be things like, “Of course we send our kids to [01:41:00] college.” They can be things like, “Of course we buy a house.” so when I am speaking to this couple, and I am even proposing the idea that perhaps they can’t afford to send multiple kids to private school, perhaps they can’t afford to pay for their college, perhaps they might need to sell a beach house, you can see that it almost does not compute.
Why? It’s not that they’re stupid. They’re very intelligent. It’s that we are talking about generations of beliefs that have been passed down. It’s not easy to get rid of those things. One of the key lessons of money for couples is that money is not just about numbers on a page. It’s about beliefs. It’s about social systems.
It is about things that are passed down consciously or unconsciously, orally or not. And that is exactly what we are seeing here, a system, an interlocking system of beliefs that are showing up right there on their CSP, where they live, what schools the kids go to, what [01:42:00] activities, even where they go on vacation.
But sometimes those beliefs simply do not align with where you are financially, and that’s when you have to make some very difficult decisions.
My point is not that they should sell the house today. point is that I don’t think they’ve ever even considered the alternative. What if we took the money and invested it? What if we took five hundred thousand dollars of that and put it aside for the kids’ education, or a million?
What if we felt less stressed and actually had a vision together? But until they can rid themselves of this restrictive story, “We must own houses. We can never sell until we die,” they will be in this position forever. Margo and Kevin My wish for Margo and Kevin is that they systematically deconstruct the stories that they have surrounded themselves with.
You do not have to spend $4,000 on groceries per month. You do not have to send [01:43:00] five kids to private school, including college. You do not have to live in two different houses until the day you die and struggle with money, because that’s what everybody else does.
You choose. Right now, in a way, it almost seems like they are on autopilot with their stories, and you cannot live a rich life on autopilot.
Followups
Speaker: Unfortunately, Kevin and Margo did not submit any follow-ups. This is tough for me because I spend a lot of time with guests. I want the best for them, and I get involved. This becomes important to me. But I also think there’s an element of I’m not really surprised. I think that when you are faced with very difficult decisions, especially when you tie your identity to where you spend your money, it’s easier to just say, “We’re not gonna do it.
We’ll deal with it later.” Unfortunately, time is not on your side, especially as you get older, and I truly [01:44:00] wish for both of them to make radical changes and to do it sooner rather than later when they are forced to.
So Margo and Kevin, I wish you the best. Please keep in touch. I appreciate you coming on here. It’s a difficult conversation, and I really hope you’re able to make some huge, bold changes.