{"id":118867,"date":"2024-09-17T12:48:52","date_gmt":"2024-09-17T16:48:52","guid":{"rendered":"https:\/\/www.iwillteachyoutoberich.com\/?p=118867"},"modified":"2026-02-18T15:52:29","modified_gmt":"2026-02-18T19:52:29","slug":"174-forest-kathleen","status":"publish","type":"post","link":"https:\/\/www.iwillteachyoutoberich.com\/174-forest-kathleen\/","title":{"rendered":"Episode 174. \u201cWe make $300k but spend like we make $1M\u201d"},"content":{"rendered":"<p><iframe title=\"\u201cWe make $300k but spend like we make $1M\u201d\" src=\"https:\/\/www.youtube.com\/embed\/2GJ_6efb2u8\" width=\"100%\" height=\"400\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><iframe style=\"border-radius: 12px;\" src=\"https:\/\/open.spotify.com\/embed\/episode\/7LWidYukCvkMw5Iv4MKlIU?utm_source=generator\" width=\"100%\" height=\"352\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>Meet Forest, 40, and Kathleen, 43, a couple living in California with two kids. Despite Forest\u2019s $300k salary, they\u2019ve racked up $150k in credit card debt. They want to maintain their adventurous lifestyle, but the reality of their finances is catching up. Can they change their mindset on money before it\u2019s too late?<\/p>\n<p><strong>This episode is brought to you by:<\/strong><\/p>\n<p>Fabric by Gerber Life | Protect your family today with Fabric by Gerber Life. Apply today in just 10 minutes at\u00a0<strong><a href=\"https:\/\/meetfabric.com\/ramit\">https:\/\/meetfabric.com\/ramit<\/a><\/strong>.<\/p>\n<p>Mint Mobile | To get your new wireless plan for just $15 a month, go to\u00a0<strong><a href=\"https:\/\/mintmobile.com\/ramit\">https:\/\/mintmobile.com\/ramit<\/a><\/strong>.<\/p>\n<p>Masterclass | For unlimited access to every class and 15% off an annual membership, go to\u00a0<strong><a href=\"https:\/\/masterclass.com\/ramit\">https:\/\/masterclass.com\/ramit<\/a><\/strong>.<\/p>\n<p>Shopify | Sign up for a $1 per month trial period at\u00a0<strong><a href=\"https:\/\/shopify.com\/ramit\">https:\/\/shopify.com\/ramit<\/a><\/strong>.<\/p>\n<p>Facet | Get affordable, accessible financial planning with a flat fee membership. For a limited time, the $250 enrollment fee will be waived when you sign up at\u00a0<strong><a href=\"https:\/\/facet.com\/ramit\">https:\/\/facet.com\/ramit<\/a><\/strong>.<\/p>\n<h2><strong>Links mentioned in this episode<\/strong><\/h2>\n<ul>\n<li><a href=\"https:\/\/iwt.com\/moneyforcouples\">Pre-order my upcoming book: Money for Couples<\/a><\/li>\n<\/ul>\n<h2><strong>Show Transcript<\/strong><\/h2>\n<p>[00:00:00]\u00a0<strong>Ramit:<\/strong>\u00a0On today\u2019s episode\u2013<\/p>\n<p>[00:00:01]\u00a0<strong>Forest:<\/strong>\u00a0\u201cWe can\u2019t afford it\u201d is a phrase that we need to add to our vocabulary.<\/p>\n<p>[00:00:05]\u00a0<strong>Kathleen:<\/strong>\u00a0My first instinct is like, let\u2019s not worry about it. It\u2019ll all work out.<\/p>\n<p>[00:00:09]\u00a0<strong>Ramit:<\/strong>\u00a0Meet Forest and Kathleen.<\/p>\n<p>[00:00:10]\u00a0<strong>Kathleen:<\/strong>\u00a0We\u2019re richer than 99% of the world\u2019s population. We have such a good life except\u2013<\/p>\n<p>[00:00:15]\u00a0<strong>Ramit:<\/strong>\u00a0They are drowning in credit card debt.<\/p>\n<p>[00:00:17]\u00a0<strong>Forest:<\/strong>\u00a0We think everything is rosy, but if one card were to tip, that could smack us in the face.<\/p>\n<p>[00:00:22]\u00a0<strong>Kathleen:<\/strong>\u00a0We can\u2019t trust ourselves with credit cards.<\/p>\n<p>[00:00:23]\u00a0<strong>Ramit:<\/strong>\u00a0They\u2019re losing $5,000 per month, so at the end of the year, they\u2019re down $62,000. This is brutal. They\u2019re effectively broke.<\/p>\n<p>[00:00:30]\u00a0<strong>Forest:<\/strong>\u00a0I make almost $300,000 a year. I should be able to go to $150 a month gym membership.<\/p>\n<p>[00:00:35]\u00a0<strong>Kathleen:<\/strong>\u00a0I\u2019m feeling shitty that we have this much credit card debt.<\/p>\n<p>[00:00:38]\u00a0<strong>Ramit:<\/strong>\u00a0Kathleen is an avoider, and Forest is an optimizer.<\/p>\n<p>[00:00:41]\u00a0<strong>Forest:<\/strong>\u00a0I like automating my spreadsheets and automating my finances. A lot of that I do pretty well.<\/p>\n<p>[00:00:46]\u00a0<strong>Kathleen:<\/strong>\u00a0I wasn\u2019t really allowing myself to worry. He\u2019s going to get the right job at the right time.<\/p>\n<p>[00:00:50]\u00a0<strong>Ramit:<\/strong>\u00a0It never occurs to the avoider that they\u2019re in trouble, and it never occurs to the person managing the money that they should somehow get help.<\/p>\n<p>[00:00:57]\u00a0<strong>Forest:<\/strong>\u00a0It makes me feel like I do have control over it.<\/p>\n<p>[00:01:01]\u00a0<strong>Kathleen:<\/strong>\u00a0What are we going to do if he loses his job?<\/p>\n<p>[00:01:04]\u00a0<strong>Ramit:<\/strong>\u00a0You have $2,000 in savings. If you lose your job you have enough to get by for about four or five days.<\/p>\n<p>[Narration]<\/p>\n<p>[00:01:15]\u00a0<strong>Ramit:<\/strong>\u00a0Meet Forest and Kathleen. He\u2019s 40 and she\u2019s 43. Now, even though Forest makes $300,000 per year, they are in $150,000 of Credit card debt.<\/p>\n<p>[00:01:29]\u00a0<strong>Ramit:<\/strong>\u00a0Today we\u2019re going to explore the psychology of how people get into serious debt. And as we begin, I want you to listen to how their conversation about money starts.<\/p>\n<p>[00:01:39]\u00a0What do you notice? But before we get into their story, I was listening to a couple of past episodes and I realized I want to start looking at people\u2019s numbers earlier. I already do this before I speak to couples, I look at their CSP. So I figured, why don\u2019t I just let you in on what I do?\u00a0What is my process? So here is me reviewing Kathleen and\u00a0Forest\u2019s CSP before I meet them. Take a look. Take a listen. What do you notice?<\/p>\n<p>[00:02:06]\u00a0I\u2019m taking a look at the CSP from\u00a0Forest\u00a0and Kathleen. Assets $618,000; investments 168; savings 2,000. Already you can tell there\u2019s a huge disparity between investments and savings. That\u2019s a red flag. And then debt at 506, and they broke out their debt\u2013 they actually went above and beyond and calculated what we have been spending. Whoa.\u00a0Dining out and drinks, 2,200 a month; shopping $1,859 per month.\u00a0So they\u2019re losing $5,000 per month. All right, well, I have my work cut out for me, and if I can help this couple, it would feel like a very good use of time.<\/p>\n<p>[00:02:57]\u00a0Wow. All right, let\u2019s meet\u00a0Forest\u00a0and Kathleen. Listen to how their conversation about money begins.<\/p>\n<p>[Interview]<\/p>\n<p>[00:03:04]\u00a0<strong>Forest:<\/strong>\u00a0We had had a couple of our finance dates, we call them, maybe the week before. And they didn\u2019t maybe go as well as I had hoped they would. It was something that we have been trying to put on our calendar on a regular basis. I think it was a Saturday or Sunday morning. The kids were watching TV plan, and we set up the laptop in the dining room, and said, okay, let\u2019s really go through the numbers.<\/p>\n<p>[00:03:34]\u00a0Let\u2019s look at where we\u2019re at from a debt perspective, from a what our goals are perspective. It was something that we hadn\u2019t done, like how much do we need to save for the next vacation that we want to go on? And so we sat down and we put some numbers to those things. And at the end of that whole conversation, it actually felt like it went really well.<\/p>\n<p>[00:03:56]\u00a0<strong>Kathleen:<\/strong>\u00a0I felt really good that we were talking about things that we both wanted to do realistically. I want to go to Napa. He wants to go on a ski trip. So let\u2019s put that in and think about how much money do we have to save each month? Because that\u2019s always a sour spot, is I want to travel and he\u2019s not really ready to because we don\u2019t have the cash up front sometimes or all ever really. And so I was like, great. We can plan for this. This looks really good. If we just follow this plan, I\u2019m going to Napa. He\u2019s going skiing. Life is good.<\/p>\n<p>[00:04:32]\u00a0<strong>Forest:<\/strong>\u00a0Maybe a couple of days later, after having actually a good conversation around where we\u2019re at, because this is what I do, is I look at our spreadsheet too often, I realized that there was probably some things that we missed from our costs perspective. And so I think I approached Kathleen the next day or a couple of days later. I can\u2019t remember exactly what she said, but it was like, what the\u00a0fuck?\u00a0I thought we were good.<\/p>\n<p>[00:05:04]\u00a0<strong>Kathleen:<\/strong>\u00a0I felt defeated because I thought we finally got to a good point. And my reaction was, I was upset that here I was feeling good and now it\u2019s 48 hours later and it\u2019s like, ugh, things aren\u2019t as good as I thought, and that sucks.<\/p>\n<p>[00:05:23]\u00a0At the end of the day, we really don\u2019t have the money to do all the things that we want, and I\u2019m not sure exactly how to go about changing that. And without a specific plan in mind, it feels overwhelming. It feels unattainable sometimes. And so like, why bother? No. But that\u2019s my attitude, is I\u2019m not working full time right now. I will be in the next couple of years as the kids get older, and we\u2019ll catch up.<\/p>\n<p>[00:05:54]\u00a0And it doesn\u2019t stress me out the way it stresses him out. So when I hear this, I always tell Forest, you\u2019re so doomsday about it. And I get it. It\u2019s very stressful to him. He\u2019s the one looking at the numbers every day. And I\u2019m not, so I\u2019m a little bit less connected, and I have the attitude of, we\u2019ll catch up. It\u2019ll all work out.<\/p>\n<p>[00:06:16]\u00a0<strong>Ramit:<\/strong>\u00a0And does it work out?<\/p>\n<p>[00:06:17]\u00a0<strong>Kathleen:<\/strong>\u00a0We are in debt, and we don\u2019t want to be, so it hasn\u2019t worked out yet in that sense. But I look at it like we\u2019re so grateful and lucky to have a house and two healthy kids and food and clothes and two cars. Life is good. We\u2019re okay. I have this glass half full attitude.<\/p>\n<p>[Narration]<\/p>\n<p>[00:06:37]\u00a0<strong>Ramit:<\/strong>\u00a0Back to my question, what did you notice about their money conversation? I think the good news is that they had a money conversation at all. They set a time and a place, the kids were occupied, and they did it together, which is really impressive. But I notice that Kathleen got upset when\u00a0Forest\u00a0brought up some details about their finances a few days later.<\/p>\n<p>[00:07:00]\u00a0Why? Because deep down I suspect she dislikes money, so she wanted to get the money conversation over with as quickly as possible. Oh, most of us love having money. We love spending it, but we don\u2019t love managing it. We don\u2019t love talking about it. And to me, that\u2019s really what managing money is. It\u2019s talking about it. It\u2019s planning how to use it. And that is a core part of respecting money.<\/p>\n<p>[00:07:30]\u00a0Respecting money is not simply having it and spending it. Respecting money is talking about it and planning it. In other words, managing money. This love-hate relationship with talking about money really describes how most people see money. They sigh. They avoid. They say things like, fine, let\u2019s have a conversation as if one conversation about money and it\u2019s all going to be over forever.<\/p>\n<p>[00:07:57]\u00a0Money is not something you talk about once or twice or even 10 times. If that is how you see your finances, as something to be over and done with as quickly as possible, of course, you\u2019re going to be upset that it gets brought up again. The truth is you\u2019re going to be talking about money for the rest of your lives together, so it\u2019s really important that you accept that and find a way to enjoy it.\u00a0Let\u2019s dig in and hear more about how\u00a0Forest\u00a0and Kathleen talk about money.<\/p>\n<p>[Interview]<\/p>\n<p>[00:08:23]\u00a0<strong>Ramit:<\/strong>\u00a0When you two talk about money, is there one person who tends to bring it up?<\/p>\n<p>[00:08:29]\u00a0<strong>Kathleen:<\/strong>\u00a0Forest.<\/p>\n<p>[00:08:30]\u00a0<strong>Ramit:<\/strong>\u00a0Kathleen, do you typically engage or do you avoid talking about money?<\/p>\n<p>[00:08:38]\u00a0<strong>Kathleen:<\/strong>\u00a0If it is something that we\u2019ve planned, I will engage. But if it\u2019s sprung on me, I tend to avoid. And even if it is planned, I\u2019ll admit, I am like, okay, I got it. Looks good.<\/p>\n<p>[00:08:53]\u00a0<strong>Ramit:<\/strong>\u00a0So when I asked you, do you engage or avoid? You\u2019re like, well, if it\u2019s planned, I engage. But actually, even if it\u2019s planned, I avoid. So you avoid.<\/p>\n<p>[00:09:02]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, I think I do.<\/p>\n<p>[00:09:04]\u00a0<strong>Ramit:<\/strong>\u00a0Why are you avoiding admitting you avoid right now? This is weird, right?<\/p>\n<p>[00:09:08]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, not to be neurotic, but no, because I want to have these meetings, and I want to be on the same page and I want us to reach all the goals that we have. And then I think I get uncomfortable in the moment with all the bad news about it. So we\u2019ll sit down and I\u2019m like, okay, I see. I know.<\/p>\n<p>[00:09:28]\u00a0<strong>Ramit:<\/strong>\u00a0I always say, in order to live a Rich Life, we have to be honest, honest with ourselves, and honest with the people around us. Forest, I heard Kathleen say she described herself as glass half full and she admitted that she avoids generally speaking about money. But she said overall, things are good. You have two children, two cars, a house, etc. She said, we\u2019re okay. Things are good. Do you agree with that assessment?<\/p>\n<p>[00:09:58]\u00a0<strong>Forest:<\/strong>\u00a0Yeah, I totally do agree. I think we do have a great life and I love everything that we do. I wish there was a way that we could do it and not always be behind the eight ball from a financial perspective.<\/p>\n<p>[00:10:18]\u00a0<strong>Ramit:<\/strong>\u00a0I have to admit, I\u2019m a little surprised by both of your answers because on the very application that you yourself filled out, we ask on a scale of 1 to 10, how serious is this issue? You wrote 10. Not 9, not 8, 10. You wrote, Forest, I am essentially the only income in our household and I was laid off earlier this year. Luckily they kept paying me for 3 months and I was able to get rehired. I\u2019m afraid this could happen again and EVERYTHING, that\u2019s in all caps, would collapse on us.<\/p>\n<p>[00:10:53]\u00a0<strong>Forest:<\/strong>\u00a0That is how I feel. From a personal and what we have perspective, our life is good. But I think we\u2019re living on the edge, if you will. That situation with my job, I did get laid off. We were weeks away from, like, if my income stopped coming in, it would not be good from a financial perspective. We would pretty quickly lose everything.<\/p>\n<p>[00:11:26]\u00a0<strong>Ramit:<\/strong>\u00a0Lose the cars, lose the house, lose all the assets, all of it, within a matter of weeks.<\/p>\n<p>[00:11:36]\u00a0<strong>Forest:<\/strong>\u00a0Probably, yeah. It would have to be all sold to just keep the lights on.<\/p>\n<p>[00:11:41]\u00a0<strong>Ramit:<\/strong>\u00a0So what you\u2019re saying is quite serious. It\u2019s also quite at odds with the way that the two of you are describing your situation. Like, oh, it\u2019s good. Glass half full.<\/p>\n<p>[00:11:52]\u00a0<strong>Forest:<\/strong>\u00a0I think that\u2019s accurate. We keep living this life where we think everything is rosy, but if one card were to tip, the reality of it could smack us in the face.<\/p>\n<p>[Narration]<\/p>\n<p>[00:12:08]\u00a0<strong>Ramit:<\/strong>\u00a0This is something I call the money minimization paradox. I\u2019ll speak to a couple who fills out an application saying things are incredibly bad. We can\u2019t go on like this. And then the minute I talk to them, they suddenly start minimizing it. Oh, it\u2019s not so bad.\u00a0It\u2019s actually better in the last couple of weeks. I think we just need to get on the same page.<\/p>\n<p>[00:12:29]\u00a0It turns out that we would rather stick with a bad dynamic that we know rather than try to switch to something potentially better, but unfamiliar. I cover this concept of the money minimization paradox in my new book, Money for Couples, along with exactly how to get on the same page with money in your relationship.\u00a0You can pre-order it at iwt.com\/moneyforcouples. I\u2019m so excited to be able to share this book that I\u2019ve been working on for years with you.<\/p>\n<p>[Interview]<\/p>\n<p>[00:13:00]\u00a0<strong>Kathleen:<\/strong>\u00a0He\u2019s right. If that happens again and he loses his job, we would be up Schitt\u2019s Creek. So is it possible for both things to be true? Like our current reality, I don\u2019t feel terrible about, but it\u2019s a really scary reality because if he did lose his job, we don\u2019t have savings to fall back on. In fact, we have debt and that is so stressful for him. And I feel bad that he takes on all that stress because he\u2019s the one that\u2019s checking the numbers every day.<\/p>\n<p>[00:13:28]\u00a0<strong>Ramit:<\/strong>\u00a0Why is it stressful for him and not you? You two are both married; you have two daughters. Why is that?<\/p>\n<p>[00:13:35]\u00a0<strong>Kathleen:<\/strong>\u00a0That\u2019s a good question. I guess I just wasn\u2019t really allowing myself to imagine that reality, which is probably naive of me.<\/p>\n<p>[00:13:44]\u00a0<strong>Ramit:<\/strong>\u00a0What are you hoping to get out of today\u2019s call?<\/p>\n<p>[00:13:47]\u00a0<strong>Kathleen:<\/strong>\u00a0I think it would be helpful for me to learn specific strategies on how I can behaviorally be better about the finances. So how can we get prepared? How do we get from where we are now to where we want to be with three months savings or whatever the goal is as painless as possible and continue to be able to live the life that we\u2019ve been living. But I\u2019m okay with making some sacrifices. I want to be realistic about it.<\/p>\n<p>[00:14:29]\u00a0<strong>Ramit:<\/strong>\u00a0What\u2019s that? I just heard a lot of circular talk. I want to have an emergency fund, and I wat live a life that we\u2019ve been living. What? You can\u2019t do that.<\/p>\n<p>[00:14:40]\u00a0<strong>Kathleen:<\/strong>\u00a0No, I know. That\u2019s contradictory. I know. We can\u2019t do that.<\/p>\n<p>[Narration]<\/p>\n<p>[00:14:42]\u00a0<strong>Ramit:<\/strong>\u00a0Let\u2019s take a quick break to hear from our sponsors.<\/p>\n<p>[00:14:45]\u00a0Now back to the show.<\/p>\n<p>[Interview]<\/p>\n<p>[00:14:47]\u00a0<strong>Ramit:<\/strong>\u00a0When was the first time you had a serious conversation about money?<\/p>\n<p>[00:14:51]\u00a0<strong>Kathleen:<\/strong>\u00a0Maybe not until we had kids.<\/p>\n<p>[00:14:53]\u00a0<strong>Forest:<\/strong>\u00a0I think that\u2019s accurate. I think probably not until, not even just when we had kids, really not until maybe just the last couple of years.<\/p>\n<p>[00:15:06]\u00a0<strong>Ramit:<\/strong>\u00a0And what precipitated that first conversation?<\/p>\n<p>[00:15:10]\u00a0<strong>Forest:<\/strong>\u00a0I don\u2019t know. I think probably me just realizing that I haven\u2019t been as good about controlling the ship as I should have been and asking for some help, maybe.<\/p>\n<p>[00:15:25]\u00a0<strong>Ramit:<\/strong>\u00a0Is that true? I don\u2019t know if I buy that. That\u2019s the first conversation you had about money, was you asking Kathleen for help?<\/p>\n<p>[00:15:32]\u00a0<strong>Forest:<\/strong>\u00a0I can\u2019t remember if it was you that initiated. I\u2019m assuming it was me just maybe being stressed out about saying, hey, we don\u2019t have enough money to pay off the credit cards again, and the balances are going up. I think we need to do something about this.<\/p>\n<p>[00:15:48]\u00a0<strong>Ramit:<\/strong>\u00a0That sounds more realistic, the idea that you basically both coasted by for several years in your marriage with money and you only started to have more serious conversations about it. Serious meaning, like, hey, we really have to talk about this. This isn\u2019t an offhand thing. We need to sit down and discuss this only when the situation became pretty dire.<\/p>\n<p>[00:16:11]\u00a0<strong>Kathleen:<\/strong>\u00a0I know we talked about goals and aspirations and dreams and the kind of life that we wanted to live, but we didn\u2019t sit and plan for how that was going to be. I feel like my attitude is just going with the flow, trusting the process, everything will be okay. That it\u2019ll all work out. Yeah.<\/p>\n<p>[00:16:32]\u00a0<strong>Ramit:<\/strong>\u00a0Do you remember that phrase from your upbringing? It\u2019ll all work out. Things work out, that kind of thing.<\/p>\n<p>[00:16:39]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, I think so.<\/p>\n<p>[00:16:42]\u00a0<strong>Ramit:<\/strong>\u00a0Here\u2019s what I propose. I propose we look at your numbers first. What was it like to go through the process of doing the Conscious Spending Plan together?<\/p>\n<p>[00:16:52]\u00a0<strong>Forest:<\/strong>\u00a0It\u2019s something that we had tried to do previously, and I think doing it again, together, in the context of, hey, if we\u2019re going to have to show somebody else this, let\u2019s make it accurate.<\/p>\n<p>[00:17:04]\u00a0<strong>Kathleen:<\/strong>\u00a0But I could hear myself in the conversation wanting things to be better than they are.<\/p>\n<p>[00:17:11]\u00a0<strong>Ramit:<\/strong>\u00a0That\u2019s very insightful.\u00a0Okay. Let\u2019s take a look at the CSP, shall we? Okay. Let\u2019s see. Kathleen, can you read off the word in bold and then the full number next to it?<\/p>\n<p>[00:17:25]\u00a0<strong>Kathleen:<\/strong>\u00a0Sure. Assets, 618,000; investments, 168,113; savings, 2,000; debt, 506,098; total net worth, 282,015.<\/p>\n<p>[00:17:45]\u00a0<strong>Ramit:<\/strong>\u00a0What do you think about that number, all those numbers?<\/p>\n<p>[00:17:48]\u00a0<strong>Kathleen:<\/strong>\u00a0I wish we had less debt and more savings. Not great, but I feel a little embarrassed or ashamed. I wish that we had done a better job. I wish they were better.<\/p>\n<p>[00:17:59]\u00a0<strong>Ramit:<\/strong>\u00a0Forest, can you read off this number here, combined gross monthly income?<\/p>\n<p>[00:18:04]\u00a0<strong>Forest:<\/strong>\u00a0$23,884.<\/p>\n<p>[00:18:07]\u00a0<strong>Ramit:<\/strong>\u00a0So the two of you make $286,604 a year. Did you know that?<\/p>\n<p>[00:18:15]\u00a0<strong>Forest:<\/strong>\u00a0I did, yeah.<\/p>\n<p>[00:18:16]\u00a0<strong>Ramit:<\/strong>\u00a0Forest, you make 23,217 per month of the 23,884. And then, Kathleen, you make $667 a month gross, correct?<\/p>\n<p>[00:18:29]\u00a0<strong>Kathleen:<\/strong>\u00a0Correct.<\/p>\n<p>[00:18:30]\u00a0<strong>Ramit:<\/strong>\u00a0Let\u2019s look at your fixed costs. Kathleen, what\u2019s this number here, fixed costs?<\/p>\n<p>[00:18:35]\u00a0<strong>Kathleen:<\/strong>\u00a091%.<\/p>\n<p>[00:18:36]\u00a0<strong>Ramit:<\/strong>\u00a0All right, what do you think of that number?<\/p>\n<p>[00:18:39]\u00a0<strong>Kathleen:<\/strong>\u00a0Doesn\u2019t leave much room for much else.<\/p>\n<p>[00:18:43]\u00a0<strong>Ramit:<\/strong>\u00a0At 91%, what does it tell me?<\/p>\n<p>[00:18:46]\u00a0<strong>Forest:<\/strong>\u00a0That we have no money.<\/p>\n<p>[00:18:47]\u00a0<strong>Ramit:<\/strong>\u00a0Yeah, that\u2019s correct. You have no money left. You\u2019re effectively broke. If 91% is going towards fixed costs alone, I don\u2019t even have to look down the rest of the CSP to know that you\u2019re not saving. You\u2019re not investing. You\u2019re probably still overspending on guilt-free spending, but you don\u2019t really have that much.<\/p>\n<p>[00:19:05]\u00a0And this right here, that one number, is the source of enormous stress to American households. Right there. So you did something that I really love. You created a little category at the bottom, what we have been spending, and I appreciate this. You actually broke it out for me. This is really helpful. So dining out and drinks, $2,200 a month. Shopping at Amazon, etc., $1,859 a month. So those total costs are $4,000 a month.<\/p>\n<p>[00:19:40]\u00a0What we actually have left is negative $5,200 a month or negative 62,000 over the course of a year. Guys, you\u2019re broke. So how do you reconcile seeing these numbers, Kathleen, with saying, we\u2019re doing okay?<\/p>\n<p>[00:20:03]\u00a0<strong>Kathleen:<\/strong>\u00a0I can\u2019t help but just feel like in my head when I see that it\u2019s this immediate defense mechanism of, but if I start making 80, $90,000 a year working full time in the next couple of years, we\u2019re going to be able to come out of this and we are going to be okay.<\/p>\n<p>[00:20:21]\u00a0<strong>Forest:<\/strong>\u00a0True, true. Yeah.<\/p>\n<p>[00:20:22]\u00a0<strong>Ramit:<\/strong>\u00a0What do you think the real problem is here?<\/p>\n<p>[Narration]<\/p>\n<p>[00:20:25]\u00a0<strong>Ramit:<\/strong>\u00a0Before we hear his answer, I need a quick favor from you. If you are enjoying this show, please hit the Subscribe button because it really helps my team and me.<\/p>\n<p>[Interview]<\/p>\n<p>[00:20:34]\u00a0<strong>Forest:<\/strong>\u00a0Yeah, I think spending money with thought that we\u2019ll eventually have the money and not having it up front, not actually doing what\u2019s necessary to be able to afford those things, living a lifestyle that we can\u2019t afford.<\/p>\n<p>[00:20:52]\u00a0<strong>Kathleen:<\/strong>\u00a0To me, I think that we are both very similar in that I say we\u2019re both the take the trip kind of people. You only live once. Let\u2019s live our lives to the fullest and enjoy it. And again, this naivete of everything will work out. Forest likes to ski and cycle, and I like to go to yoga and travel. And I know those are bougie things, but I don\u2019t care that my house isn\u2019t as nice as my neighbor\u2019s house, but I know I do care about the adventure and the fun and that kind of lifestyle.<\/p>\n<p>[00:21:26]\u00a0<strong>Ramit:<\/strong>\u00a0Kathleen, that\u2019s what makes this so difficult. Because the story you just told me, paraphrased is, it\u2019s not like I\u2019m living some crazy millionaire life. My car has dents in it. Sure, I like to ski, but I\u2019m a simple person. But you\u2019re not. The number that we did not talk about is one of the most important numbers on this CSP. It\u2019s this number right here.<\/p>\n<p>[00:21:54]\u00a0Under debt, you helpfully broke out the debt. Mortgage, 320k, fine. Home equity line of credit, 97,000. That raises some red flags. And finally, credit card debt. Read that number to me, Kathleen. 65,000 of credit card debt. How have we had this whole conversation so far like, oh, we\u2019re simple people? What\u2019s the 65,000 of credit card debt?<\/p>\n<p>[00:22:22]\u00a0<strong>Kathleen:<\/strong>\u00a0A trip to Montana, yoga classes, eating out, skiing for the family.<\/p>\n<p>[00:22:35]\u00a0<strong>Ramit:<\/strong>\u00a0What do you think? Are you worried about 65k of credit card debt?<\/p>\n<p>[00:22:39]\u00a0<strong>Kathleen:<\/strong>\u00a0It\u2019s scary to worry about this stuff, so maybe I don\u2019t let myself worry about it as much as I should.<\/p>\n<p>[00:22:44]\u00a0<strong>Ramit:<\/strong>\u00a0I don\u2019t believe what you just said. I don\u2019t believe that it\u2019s so scary that you simply don\u2019t allow yourself to think about it. I think that\u2019s a nice story, but I don\u2019t believe it for a second. I think there\u2019s no reason for you to worry about it. Your husband doesn\u2019t really involve you in the money. Every time he tries, you avoid it. Still go to yoga. Still have, theoretically, putting money aside for this trip to Napa.<\/p>\n<p>[00:23:09]\u00a0Why bother? Why worry? Life\u2019s going to be fine. It\u2019s been fine so far. Even when he lost his job, he figured it out, and family\u2019s good, and we still eat out, and we have a nice time. Forest, what is behind this $65,000 of credit card debt?<\/p>\n<p>[00:23:25]\u00a0<strong>Forest:<\/strong>\u00a0I\u2019ve been in the trap of doing balance transfers. This is also not the first time we\u2019ve had that much or more credit card debt like that. We at least twice bailed ourselves out by cashing out money from 401k to pay off credit card debt because I couldn\u2019t transfer it around to be 0% interest anymore, which is also very embarrassing to say, but that\u2019s the reality.<\/p>\n<p>[00:23:56]\u00a0<strong>Ramit:<\/strong>\u00a0Why did you get into credit card debt multiple times?<\/p>\n<p>[00:23:59]\u00a0<strong>Kathleen:<\/strong>\u00a0Spending money that we didn\u2019t have on things that we wanted to do and just saying we\u2019ll worry about it later.<\/p>\n<p>[00:24:05]\u00a0<strong>Ramit:<\/strong>\u00a0Why?<\/p>\n<p>[00:24:06]\u00a0<strong>Kathleen:<\/strong>\u00a0Because we wanted to do the things more than we wanted to deal with the consequences.<\/p>\n<p>[00:24:13]\u00a0<strong>Ramit:<\/strong>\u00a0Do either of you ever say no to spending?<\/p>\n<p>[00:24:17]\u00a0<strong>Forest:<\/strong>\u00a0I think the simple answer is no, we don\u2019t.<\/p>\n<p>[00:24:20]\u00a0<strong>Ramit:<\/strong>\u00a0If we want to fix these numbers, we can, but it will require you changing your entire worldview on money, on your relationship with it, and candidly on your relationship with each other. You want to do that? It\u2019s a lot of work.<\/p>\n<p>[00:24:48]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, I do.<\/p>\n<p>[00:24:51]\u00a0<strong>Forest:<\/strong>\u00a0When we first started this conversation, I was like, hey, I don\u2019t know, I feel like we have to make some major life change for this to start working.<\/p>\n<p>[00:25:01]\u00a0<strong>Kathleen:<\/strong>\u00a0I would love for us to get to a point where one day we can take the trips that we want and we can do the activities that we love to do and help our kids with their down payments on their house or whatever it is. I would love for that to happen one day, but I do know that something or many things have to give in order to get there.<\/p>\n<p>[00:25:25]\u00a0<strong>Ramit:<\/strong>\u00a0Okay. I believe you. I\u2019ll take you at your word, and I appreciate that because if you\u2019re both open to making big changes now, I can work with that. We\u2019re going to talk about specifics in terms of making changes. That\u2019s when the rubber meets the road and we will see.<\/p>\n<p>[Narration]<\/p>\n<p>[00:25:46]\u00a0<strong>Ramit:<\/strong>\u00a0Let\u2019s take a quick pause to support our sponsors.<\/p>\n<p>[00:25:50]\u00a0Now back to\u00a0Forest\u00a0and Kathleen.<\/p>\n<p>[Interview]<\/p>\n<p>[00:25:52]\u00a0<strong>Ramit:<\/strong>\u00a0Let\u2019s start at the beginning. I need to understand how you got into this situation because right now you\u2019ve made a lot of poor financial decisions. And I\u2019m grateful, actually, that we get a chance to talk about it. I\u2019m grateful. That takes a lot of courage.<\/p>\n<p>[00:26:13]\u00a0So I appreciate that. And I\u2019m glad at 40 and 42 years old, with two kids, that we get to have this conversation now. Because it\u2019s way better to have it now than 20 years from now. I can\u2019t help you at 20 years from now. Kathleen, I want to understand your relationship with money. When you were a kid, what do you remember your parents saying about money around the house?<\/p>\n<p>[00:26:39]\u00a0<strong>Kathleen:<\/strong>\u00a0I think my parents didn\u2019t talk about it much. I wasn\u2019t taught much about money at all, but it felt like we always had enough. But I think my parents did a really good job of living below their means because they grew up very poor.<\/p>\n<p>[00:26:57]\u00a0<strong>Ramit:<\/strong>\u00a0Who managed the money in the house? Mom? Dad?<\/p>\n<p>[00:27:01]\u00a0<strong>Kathleen:<\/strong>\u00a0My mom did.<\/p>\n<p>[00:27:02]\u00a0<strong>Ramit:<\/strong>\u00a0Mom, okay. And what was dad\u2019s relationship with money?<\/p>\n<p>[00:27:07]\u00a0<strong>Kathleen:<\/strong>\u00a0He was obsessed with money. I would say he had a gambling problem. Oh, I don\u2019t want to make my dad sound bad. My dad made most of the income, but my mom worked full time. And I didn\u2019t know when I was a kid, I didn\u2019t know until I was a teenager that he had a gambling problem and that he was accruing debt.<\/p>\n<p>[00:27:29]\u00a0And I don\u2019t think my mom knew about it either for a while. And then once that came to light, I think that might\u2019ve been when my mom took over with the finances. And he didn\u2019t bet on horses after that. I think my dad was obsessed with money, and I didn\u2019t want that to ever be my focus.<\/p>\n<p>[00:27:49]\u00a0<strong>Ramit:<\/strong>\u00a0That actually makes a lot of sense. When you earlier said, I don\u2019t want to stress about money, it\u2019s almost like calling to the echoes of your dad. Because relationship with money was tortured, was stressful, was in many ways indulgent. I think we see some similarities there. Forest, what do you remember about money as a kid?<\/p>\n<p>[00:28:13]\u00a0<strong>Forest:<\/strong>\u00a0So I grew up in pretty rural northern California. My parents were a little bit kind of hippies. They lived very frugally. I don\u2019t think have done a really great job of saving a ton of money for retirement. They are retired, but they live a comfortable, happy life and they\u2019re not worried about money, I don\u2019t think. I think they are very good about living within their means, which I\u2019m not sure why I\u2019m not.<\/p>\n<p>[00:28:46]\u00a0It\u2019s something I struggle with. It goes back to like, I don\u2019t know how to say no to anybody really. When I was like 18, 19, got my first credit card, I dabbled with a gambling problem myself back then. And I ran up credit cards. And my parents bailed me out of that. They made me sign a contract with them saying, hey, we\u2019ll pay off this $10,000 worth of credit card debt, but you\u2019re going to move back in with us.<\/p>\n<p>[00:29:22]\u00a0And for maybe a year, I had my paycheck deposited in my parents bank account. I\u2019ve always had some solution to move all of the chess pieces around that worked for me in the past.<\/p>\n<p>[00:29:37]\u00a0<strong>Ramit:<\/strong>\u00a0Yeah, it worked. It\u2019s worked since you were 19 years old. Your parents came in, swooped in, saved the day. Then your 401k came in, swooped in, saved the day. Balance transfer came in, saved the day. You guys can keep going on like this.<\/p>\n<p>[00:29:54]\u00a0<strong>Forest:<\/strong>\u00a0Until we can\u2019t, right?<\/p>\n<p>[00:29:56]\u00a0<strong>Ramit:<\/strong>\u00a0Yeah. It\u2019ll be like driving a semi into a brick wall. It will hit you all at once. And that\u2019s the end. Behaviors leave clues. And when I hear about avoidance on your part, Kathleen, you\u2019re an avoider. You employ conscious and unconscious techniques to just avoid money. Even your attitude about money is it\u2019ll all work out. And a lot of that\u2019s shaped by your dad and also what you saw him doing with money and his relationship with money.<\/p>\n<p>[00:30:37]\u00a0Forest, the clues start at age 18 or 19 for you and they continue on. Just because you paid off that credit card debt, which was laudable, and I love that your parents did that, and they had a solution. That\u2019s great. But the lesson didn\u2019t get internalized.<\/p>\n<p>[00:30:58]\u00a0You took away a lesson that is perhaps different than what others would do. Others might say, holy\u00a0shit, I hated being in debt, having my own wages garnished by my mom and dad. I am never going back there. Your solution was, oh\u00a0shit, it all worked out. So let me just keep spending, and then I\u2019ll find a way to make it work out again in the future. So as your income has increased to a very high income, $300,000, you still haven\u2019t gotten ahead.<\/p>\n<p>[00:31:30]\u00a0<strong>Forest:<\/strong>\u00a0I definitely have some regret about the last 10 years. Had we taken a different path, the income that we\u2019ve been making, we could basically be 180 degrees in the other direction had we played the game correctly.<\/p>\n<p>[Narration]<\/p>\n<p>[00:31:52]\u00a0Kathleen is an avoider and\u00a0Forest\u00a0is an optimizer.<\/p>\n<p>[00:31:56]\u00a0<strong>Ramit:<\/strong>\u00a0Now we each have a money type, but what\u2019s even more important is the dynamic that exists in your relationship. For example, does one partner chase and the other avoid? That\u2019s the chaser-avoider dynamic. To put it another way, what is the culture of money\u00a0in your household?<\/p>\n<p>[00:32:16]\u00a0And when I ask this question, most people have to really think. They\u2019ve never really thought about the culture of money in their household. But you have a culture for a lot of things, of parenting, of food, of sex, of leisure, and yes, a culture of money. You create your culture of money, and if you want, you can change it.<\/p>\n<p>[00:32:40]\u00a0Let\u2019s find out now where they\u2019ve been spending their money, which will tell me a lot about\u00a0Forest\u00a0and Kathleen\u2019s money culture. Some of these items include travel, tickets to professional sports games, entertainment, trendy. First of all, who the hell calls it a sports game? Probably a guy who doesn\u2019t go to any. Tickets to professional,\u00a0whatever,\u00a0trendy outdoor cooking equipment, yoga classes, subscriptions, and bikes. Listen in.<\/p>\n<p>[Interview]<\/p>\n<p>[00:33:09]\u00a0<strong>Ramit:<\/strong>\u00a0How expensive?<\/p>\n<p>[00:33:11]\u00a0<strong>Forest:<\/strong>\u00a0One was $5, 000, and the other one was $6,000 that I didn\u2019t have the money for.<\/p>\n<p>[00:33:17]\u00a0<strong>Ramit:<\/strong>\u00a0What the\u00a0fuck? What\u2019s a 6,000-dollar bike? Bike? Motorbike, bike? What is it? What the\u00a0fuck? That just looks like a Huffy. Let me make sure my logic is correct. I\u2019m just looking at the number. I just want to make sure I understand this. You have $65,000 in credit card debt and you have a 6,000-dollar bike on camera right behind you. Did I get that right?<\/p>\n<p>[00:33:41]\u00a0<strong>Forest:<\/strong>\u00a0Yes.<\/p>\n<p>[00:33:43]\u00a0<strong>Ramit:<\/strong>\u00a0Do you realize how ridiculous that sounds?<\/p>\n<p>[00:33:46]\u00a0<strong>Forest:<\/strong>\u00a0Yes.<\/p>\n<p>[00:33:47]\u00a0<strong>Ramit:<\/strong>\u00a0Okay. We\u2019re going to make some\u00a0fucking\u00a0changes if you guys are ready, but I want to understand what just happened. If you guys were making a million dollars a year, okay, you could live this lifestyle, but you\u2019re not. More importantly, it\u2019s not simply one decision or two, because if we simply try to do it by decisions, it\u2019s like playing whack a mole. It\u2019s not about whack a mole. It\u2019s about going deeper. It\u2019s about understanding the principle, not the tactic. What is the principle that guided your financial decisions for the last decade?<\/p>\n<p>[00:34:36]\u00a0<strong>Forest:<\/strong>\u00a0I think there wasn\u2019t one.<\/p>\n<p>[00:34:39]\u00a0<strong>Kathleen:<\/strong>\u00a0Mine was that it was all going to work out eventually.<\/p>\n<p>[00:34:43]\u00a0<strong>Ramit:<\/strong>\u00a0Yeah? What else, Kathleen?<\/p>\n<p>[00:34:45]\u00a0<strong>Kathleen:<\/strong>\u00a0And let\u2019s not worry about it.<\/p>\n<p>[00:34:47]\u00a0<strong>Ramit:<\/strong>\u00a0Bingo. Well, that\u2019s quite a powerful two principles, incredibly powerful. Because given virtually any financial decision that comes your way, what do you individually, Kathleen, and what do you as a unit, Kathleen and Forest, decide to do if presented with a choice, should we buy this thing or should we not? What do you almost always do?<\/p>\n<p>[00:35:11]\u00a0<strong>Kathleen:<\/strong>\u00a0We buy it.<\/p>\n<p>[00:35:12]\u00a0<strong>Ramit:<\/strong>\u00a0You got to change that principle. So can we start by coming up with a new principle or a new vision for how money works in your relationship? What do you think? I\u2019ll start. In our relationship, when it comes to money, dot, dot, dot. Give me your vision.<\/p>\n<p>[00:35:34]\u00a0<strong>Kathleen:<\/strong>\u00a0In our relationship, we only spend what we have.<\/p>\n<p>[00:35:39]\u00a0<strong>Ramit:<\/strong>\u00a0Okay, what else?<\/p>\n<p>[00:35:40]\u00a0<strong>Kathleen:<\/strong>\u00a0And we get comfortable with saying no.<\/p>\n<p>[00:35:43]\u00a0<strong>Ramit:<\/strong>\u00a0Oh, we say no to what?<\/p>\n<p>[00:35:45]\u00a0<strong>Kathleen:<\/strong>\u00a0Spending money, to each other, to ourselves.<\/p>\n<p>[00:35:50]\u00a0<strong>Ramit:<\/strong>\u00a0But give me some examples.<\/p>\n<p>[00:35:52]\u00a0<strong>Kathleen:<\/strong>\u00a0Okay. We say no to trips.<\/p>\n<p>[00:35:56]\u00a0<strong>Ramit:<\/strong>\u00a0Trips. What else?<\/p>\n<p>[00:35:58]\u00a0<strong>Kathleen:<\/strong>\u00a0We say no to eating out.<\/p>\n<p>[00:36:00]\u00a0<strong>Ramit:<\/strong>\u00a0Oh, okay, good.<\/p>\n<p>[00:36:01]\u00a0<strong>Kathleen:<\/strong>\u00a0We say no to buying things we don\u2019t need.<\/p>\n<p>[00:36:06]\u00a0<strong>Ramit:<\/strong>\u00a0All right. So that\u2019s good. So that\u2019s, in our relationship, when it comes to money, we only spend what we have. If we don\u2019t have the money, we say no to trips, eating out, alcohol, etc. What else? Forest, what about you? What\u2019s your vision for money in your relationship?<\/p>\n<p>[00:36:21]\u00a0<strong>Forest:<\/strong>\u00a0The vision is, out of the credit card debt, and we\u2019re saving money, and when we want to go on a trip, we were able to actually save the money to do it. So that in two years when we have a trip that we know we\u2019re going on, we can go on that trip and feel great about it.<\/p>\n<p>[00:36:38]\u00a0<strong>Ramit:<\/strong>\u00a0Who\u2019s doing the money in the relationship right now?<\/p>\n<p>[00:36:41]\u00a0<strong>Kathleen:<\/strong>\u00a0Forest?<\/p>\n<p>[00:36:42]\u00a0<strong>Ramit:<\/strong>\u00a0And Forest, you have all these spreadsheets and stuff, right?<\/p>\n<p>[00:36:45]\u00a0<strong>Forest:<\/strong>\u00a0Yeah.<\/p>\n<p>[00:36:46]\u00a0<strong>Ramit:<\/strong>\u00a0What\u2019s the point of all that stuff?<\/p>\n<p>[00:36:47]\u00a0<strong>Forest:<\/strong>\u00a0I don\u2019t know.<\/p>\n<p>[00:36:50]\u00a0<strong>Kathleen:<\/strong>\u00a0Organized torture.<\/p>\n<p>[00:36:52]\u00a0<strong>Ramit:<\/strong>\u00a0It\u2019s just a meaningless way of boosting your perceived control without actually increasing your control.<\/p>\n<p>[00:37:03]\u00a0<strong>Forest:<\/strong>\u00a0Yeah, that makes sense.<\/p>\n<p>[00:37:04]\u00a0<strong>Ramit:<\/strong>\u00a0Yeah. It\u2019s like doing the dishes in the sink when your house is on fire. Well, I got to clean the dishes. It\u2019s like, no. What the\u00a0fuck? No, you don\u2019t. Smash that dish and get the\u00a0fuck\u00a0out. Your house is on fire. That\u2019s the level of urgency we need to approach this situation with.<\/p>\n<p>[00:37:23]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah.<\/p>\n<p>[00:37:24]\u00a0<strong>Ramit:<\/strong>\u00a0So the spreadsheets are not doing anything for you. If anything, they are distracting you from the fire that is burning. If I were you, Forest, I would say as part of the vision, in our relationship, when it comes to money, we are both equal partners. Are you interested in that?<\/p>\n<p>[00:37:45]\u00a0<strong>Forest:<\/strong>\u00a0When we were talking about doing this with you I said, I really want us to be able to do this together as opposed to, yeah, what you said. I have been running the car into the ground if you will.<\/p>\n<p>[00:38:02]\u00a0<strong>Ramit:<\/strong>\u00a0It\u2019s okay to just say, I need a partner in this. I can\u2019t do it alone anymore.<\/p>\n<p>[00:38:07]\u00a0<strong>Forest:<\/strong>\u00a0Yeah, I think that\u2019s true.<\/p>\n<p>[00:38:10]\u00a0<strong>Ramit:<\/strong>\u00a0You want to say it to Kathleen?<\/p>\n<p>[00:38:14]\u00a0<strong>Forest:<\/strong>\u00a0Kathleen, I need a financial partner because doing it by myself has not worked, and I feel like I\u2019m as much at fault for all of our overspending as anything, but I think I need help following the rules that we talked about. I can\u2019t be the only one that follows the rules if I don\u2019t have somebody that is signing the contract and saying, these are our rules and we agree upon those rules and both doing the same thing together.<\/p>\n<p>[00:39:01]\u00a0<strong>Kathleen:<\/strong>\u00a0I hear you. And that makes a lot of sense. And it\u2019s not fair that I\u2019m avoiding. It\u2019s not fair that I\u2019m putting it all on you to find the gimmicks to get us out of it and let you carry that emotional stress and it\u2019s not working.<\/p>\n<p>[00:39:19]\u00a0<strong>Ramit:<\/strong>\u00a0Fuck\u00a0yeah, this is awesome. Okay. I\u2019m feeling good about this. Sounds like you\u2019re both feeling good about this. Any objections or reservations so far?<\/p>\n<p>[00:39:29]\u00a0<strong>Forest:<\/strong>\u00a0Just maybe one quick thing.<\/p>\n<p>[00:39:33]\u00a0<strong>Ramit:<\/strong>\u00a0He goes, one quick thing. We don\u2019t want to say no to trips, eating out, alcohol, gyms, extracurriculars.<\/p>\n<p>[00:39:42]\u00a0<strong>Forest:<\/strong>\u00a0We have to be able to find a balance between having some sort of existence, other than just work and pay off debt. And I want to make sure that plan that we come up with, that we\u2019re both bought into and Kathleen is bought into it as well. What do you think, Kathleen, about making a large commitment to changing our lifestyle and sticking to it?<\/p>\n<p>[00:40:13]\u00a0<strong>Kathleen:<\/strong>\u00a0I think we can do it. I really feel like we\u2019ve had this reckoning facing I\u2019m getting my head out of the sand these last four months and seeing the reality that we\u2019re in, and I know we\u2019re capable of having the life that we want in the future. I know we are, and I envision it for ourselves, and I can commit to anything. And especially with you by my side, I\u2019m in, baby. It\u2019s fine.<\/p>\n<p>[00:40:43]\u00a0I will make the sacrifices needed to have the life that we want in the future. How are you going to be able to say no to the things that are really valuable in your life that you surely deserve\u00a0but we can\u2019t\u00a0afford?<\/p>\n<p>[00:40:59]\u00a0<strong>Forest:<\/strong>\u00a0This is why I wanted to do this and have this conversation, is to make us both feel like we\u2019re connected to a goal that we can achieve.<\/p>\n<p>[00:41:12]\u00a0<strong>Kathleen:<\/strong>\u00a0Mm-hmm.<\/p>\n<p>[00:41:14]\u00a0<strong>Ramit:<\/strong>\u00a0First of all, great job. Take the win. That was a very healthy conversation. I liked that a lot.<\/p>\n<p>[Narration]<\/p>\n<p>[00:41:18]\u00a0<strong>Ramit:<\/strong>\u00a0Okay, I want you to notice my process so far. I let them explain how they see their situation. We took a glance at their numbers. I checked in with them again. Then I helped them understand the severity of their situation, and we still have not made a single change yet. That is by design. I\u2019m doing this on purpose. It\u2019s very tempting to have something like this, a podcast. People come in with their problems. I go, okay, I took a look. Now you need to fix this, this, this. Cut your cable. That\u2019s outrageous. I can\u2019t believe you go to the farmer\u2019s market. That feels good to everyone watching.<\/p>\n<p>[00:41:54]\u00a0It feels good to the person giving the advice, throwing stuff around and shrieking in a high-pitched voice, but that doesn\u2019t actually change people\u2019s behavior. It certainly doesn\u2019t change the way they feel about money. I\u2019m not here to entertain a bunch of people in their basement who leave comments on my YouTube saying, oh my God, this is so slow.<\/p>\n<p>[00:42:14]\u00a0Ramit needs to be hard love, tough love. No. That might make you feel good, but I\u2019m not here for that. I\u2019m here for the couples. That\u2019s why I go slow on purpose. To go fast, go slow. And so much of developing a healthy relationship with money involves not jumping right into cutting back on HBO, but rather zooming out and talking about how you see money and understanding how serious this situation really is.<\/p>\n<p>[00:42:44]\u00a0It\u2019s not just the numbers on the page; it\u2019s how we got here. We, the two of us. Now, I do want to point out this common pattern that I see where\u00a0one person manages the money, but they\u2019re not even really good at it. And I see this over and over. Usually, in these situations, the other partner is an avoider, so it never occurs to the avoider that they\u2019re in trouble.\u00a0That\u2019s because they avoid money.\u00a0And it never occurs to the person managing the money that they should somehow get help.<\/p>\n<p>[00:43:12]\u00a0They\u2019ve just become used to struggling. With\u00a0Forest\u00a0and Kathleen, I don\u2019t think they\u2019ve ever really had a positive conversation about money, so I\u2019m going to walk them through an exercise from my new book called Your First Positive Money Conversation.\u00a0Watch how it sets the stage for them to make real changes to their spending.<\/p>\n<p>[Interview]<\/p>\n<p>[00:43:31]\u00a0<strong>Ramit:<\/strong>\u00a0Let\u2019s start off with why this meeting is going to be awesome.<\/p>\n<p>[00:43:33]\u00a0<strong>Kathleen:<\/strong>\u00a0Forest, this meeting that we\u2019re going to have today about our money is going to be awesome because I\u2019m excited to sit down with you and look at where we\u2019re going and how we\u2019re getting there. And I can visualize us in our retired years, having the life that we want. And I\u2019m excited to get there with you.<\/p>\n<p>[00:43:51]\u00a0<strong>Ramit:<\/strong>\u00a0Next one is how I feel about money.<\/p>\n<p>[00:43:54]\u00a0<strong>Kathleen:<\/strong>\u00a0All right. I feel anxious when we talk about money because I know it\u2019s not good news and I don\u2019t like hearing the bad news and I avoid it. And I don\u2019t want to feel that way about money. I want to feel like we\u2019re doing the right thing and we\u2019re proud of the decisions we\u2019re making and the headway we\u2019re making and where we\u2019re going. And how do you feel about where we\u2019re going and about our money conversations?<\/p>\n<p>[00:44:21]\u00a0<strong>Forest:<\/strong>\u00a0I have a lot of anxiety around our money and I feel like often I can\u2019t say no when I know I probably should. And I have this envision of our future where I don\u2019t have that anxiety and that money is fun and awesome. Kathleen, how do you want to feel about money in the future?<\/p>\n<p>[00:44:56]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah. I want to feel proud of it, of our decisions around it. I don\u2019t want it to be a source of anxiety. I want it to be a source of empowerment.<\/p>\n<p>[00:45:04]\u00a0<strong>Forest:<\/strong>\u00a0I want to feel proud about what we\u2019ve done also.<\/p>\n<p>[00:45:08]\u00a0<strong>Ramit:<\/strong>\u00a0That\u2019s so cool. I love that. That is at the foundational level of what\u2019s going to make this successful.\u00a0We\u2019ve all referred to a plan. Y\u2019all want to go through the CSP and actually make the plan right now?<\/p>\n<p>[00:45:21]\u00a0<strong>Kathleen:<\/strong>\u00a0Yes.<\/p>\n<p>[Narration]<\/p>\n<p>[00:45:23]\u00a0<strong>Ramit:<\/strong>\u00a0Before we dig into their CSP, let\u2019s take a quick pause to hear from our sponsors.<\/p>\n<p>[00:45:28]\u00a0Now back to the show.<\/p>\n<p>[Interview]<\/p>\n<p>[00:45:30]\u00a0<strong>Ramit:<\/strong>\u00a0All right. Now, before we do this, you have three choices of what changes you want to make. You can make no changes, a few changes or big changes. What do you want to make?<\/p>\n<p>[00:45:41]\u00a0<strong>Kathleen:<\/strong>\u00a0Big changes.<\/p>\n<p>[00:45:43]\u00a0<strong>Forest:<\/strong>\u00a0Yeah. Big changes.<\/p>\n<p>[00:45:45]\u00a0<strong>Ramit:<\/strong>\u00a0Great. Let\u2019s do it. You have basically created a lifestyle where by default you spend a tremendous amount of money, literally by default. We want to flip that. As you described it, do a 180.<\/p>\n<p>[00:46:02]\u00a0The way I think about it is I want to, by default, be saving and investing a lot of money. You make $300,000 a year. What the fuck? You actually can save and invest, but first you need to pay this debt off. It\u2019s choking you. Okay. Well, if we look at your CSP, right now your fixed costs are at 91%. We need to bring this number down to 60%. So how do you want to do it?<\/p>\n<p>[00:46:33]\u00a0<strong>Forest:<\/strong>\u00a0Kathleen, do you think we can spend less on groceries?<\/p>\n<p>[00:46:36]\u00a0<strong>Kathleen:<\/strong>\u00a0Yes, I do. I think we can bring that number down. I feel like I could bring it down at least to 1,200 with the goal of 1,000. We don\u2019t need to eat as bougie as we do.<\/p>\n<p>[00:46:54]\u00a0<strong>Ramit:<\/strong>\u00a01,200 bucks.\u00a0All right, let\u2019s take a look. Watch the number at the top here. It\u2019s currently 91%. As I change your groceries from 1,700 to 1,200, what did that number change to?<\/p>\n<p>[00:47:07]\u00a0<strong>Kathleen:<\/strong>\u00a087%.<\/p>\n<p>[00:47:09]\u00a0<strong>Ramit:<\/strong>\u00a0Okay, we\u2019re going in the right direction. What else?<\/p>\n<p>[00:47:12]\u00a0<strong>Kathleen:<\/strong>\u00a0We could have that Amazon number go down. I feel like that could save $100 a month.<\/p>\n<p>[00:47:18]\u00a0<strong>Ramit:<\/strong>\u00a0Okay, I\u2019ll take subscriptions down from 401 to 301. Tell me what the number at fixed cost changes to.<\/p>\n<p>[00:47:24]\u00a0<strong>Forest:<\/strong>\u00a0Didn\u2019t change at all.<\/p>\n<p>[00:47:25]\u00a0<strong>Ramit:<\/strong>\u00a0Didn\u2019t change at all. What did that tell you guys?<\/p>\n<p>[00:47:29]\u00a0<strong>Forest:<\/strong>\u00a0We need to think bigger.<\/p>\n<p>[00:47:30]\u00a0<strong>Ramit:<\/strong>\u00a0Yes.<\/p>\n<p>[00:47:32]\u00a0<strong>Forest:<\/strong>\u00a0The car payments and what we\u2019re spending on gas and maintenance, in four months, you can take 587 out of that. The car will be paid off.<\/p>\n<p>[00:47:45]\u00a0<strong>Ramit:<\/strong>\u00a0Okay, so it\u2019s going to go down to 1,540. What did that number do right here on fixed costs?<\/p>\n<p>[00:47:53]\u00a0<strong>Forest:<\/strong>\u00a0Went down a couple points.<\/p>\n<p>[00:47:55]\u00a0<strong>Ramit:<\/strong>\u00a0It\u2019s now at 83%.\u00a0We got to make bigger changes.<\/p>\n<p>[00:47:57]\u00a0<strong>Forest:<\/strong>\u00a0We could sell one vehicle.<\/p>\n<p>[00:48:00]\u00a0<strong>Ramit:<\/strong>\u00a0Fuck,\u00a0yeah. Now we\u2019re talking.<\/p>\n<p>[00:48:03]\u00a0<strong>Kathleen:<\/strong>\u00a0Mm-hmm.<\/p>\n<p>[00:48:04]\u00a0<strong>Ramit:<\/strong>\u00a0Can you survive on one vehicle?<\/p>\n<p>[00:48:07]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, we did for a long time.<\/p>\n<p>[00:48:09]\u00a0<strong>Ramit:<\/strong>\u00a0What the\u00a0fuck? Why\u2019d you buy the second then?<\/p>\n<p>[00:48:12]\u00a0<strong>Kathleen:<\/strong>\u00a0Because we wanted a truck.<\/p>\n<p>[00:48:13]\u00a0<strong>Ramit:<\/strong>\u00a0I know this. And we all need a truck. How much can you get selling this truck?<\/p>\n<p>[00:48:19]\u00a0<strong>Forest:<\/strong>\u00a0The Blue Book value, I believe, was 30,000.<\/p>\n<p>[00:48:24]\u00a0<strong>Ramit:<\/strong>\u00a0Oh, that\u2019s a lot of fucking money. Whoa.<\/p>\n<p>[00:48:28]\u00a0<strong>Forest:<\/strong>\u00a0Oh. We owe 20-ish thousand on it.<\/p>\n<p>[00:48:32]\u00a0<strong>Ramit:<\/strong>\u00a0Oh, never mind.<\/p>\n<p>[00:48:36]\u00a0<strong>Forest:<\/strong>\u00a0Yeah.<\/p>\n<p>[00:48:36]\u00a0<strong>Ramit:<\/strong>\u00a0All right, fine. Sell the truck. You\u2019ll make a few thousand bucks off it. Fine.\u00a075% on fixed costs. Guys, we\u2019re actually really moving in a nice direction here. This is very good. Wow. Okay. I\u2019m impressed. Okay. So\u00a0subscriptions at 301. Hmm, what else is in this subscription?<\/p>\n<p>[00:49:04]\u00a0<strong>Kathleen:<\/strong>\u00a0Is it because your gym membership is 175?<\/p>\n<p>[00:49:07]\u00a0<strong>Forest:<\/strong>\u00a0Half is my gym membership. I would probably just get rid of the gym and [Inaudible] home gym equipment<\/p>\n<p>[00:49:14]\u00a0<strong>Ramit:<\/strong>\u00a0Yeah, you can\u2019t afford it. See how pervasive this idea of like, oh, I\u2019ll just go buy this thing. You look a little uncomfortable, Forest.<\/p>\n<p>[00:49:26]\u00a0<strong>Forest:<\/strong>\u00a0I make almost $300,000 a year. I should be able to go to 150-dollar a month gym membership, but obviously we can\u2019t. That doesn\u2019t make sense.<\/p>\n<p>[00:49:36]\u00a0<strong>Kathleen:<\/strong>\u00a0We can\u2019t right now.<\/p>\n<p>[00:49:36]\u00a0<strong>Ramit:<\/strong>\u00a0I totally agree. At $300,000 a year, it feels crazy to not be able to. And it\u2019s gotten you to where, if you count the home equity line of credit, y\u2019all have $150,000 plus of debt, not to mention the 401k that was cashed out and all kinds of stuff. So even though you make 300,000, you\u2019ve incurred a ton of debt.<\/p>\n<p>[00:50:05]\u00a0<strong>Forest:<\/strong>\u00a0Yeah.<\/p>\n<p>[00:50:07]\u00a0<strong>Ramit:<\/strong>\u00a0We have to change that.<\/p>\n<p>[00:50:08]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah. And we can do it. It\u2019s not forever. And I think if we make all these changes and then we see let\u2019s say we have $500 after all of this every month, that\u2019s it. And then we want to go to a comedy show. Well, maybe we can because we haven\u2019t eaten out all month and we can do that or whatever.<\/p>\n<p>[00:50:27]\u00a0And then that debt\u2019s going to come down and we\u2019re going to feel empowered and we\u2019re going to feel good. And not to make an excuse, but I am going to be working full-time eventually and bringing in more income. And then we can head back in the gym and add back in the things, but we just have to do it now, both us.<\/p>\n<p>[00:50:46]\u00a0<strong>Ramit:<\/strong>\u00a0Kathleen, you\u2019re totally bought in here. I love it. I\u2019m pleasantly surprised. I think it\u2019s amazing. And what\u2019s interesting to me is that Forest, you have been taking on the financial load, the mental and emotional load of money for a long time, but now I\u2019m finding this dynamic is so interesting because Kathleen is totally bought in. She\u2019s now encouraging you and you are resisting. Why do you think that is?<\/p>\n<p>[00:51:16]\u00a0<strong>Forest:<\/strong>\u00a0I think, and Kathleen, I think I\u2019m being a little resistant because I\u2019m worried that you\u2019re saying that we\u2019re going to do these things, but then fall back into old habits. And that\u2019s giving me anxiety, I think.<\/p>\n<p>[00:51:33]\u00a0<strong>Kathleen:<\/strong>\u00a0I hear you. And of course that\u2019s something we have to be really careful of and hold ourselves accountable and hold each other accountable. If we can\u2019t make these decisions now, we\u2019re definitely not going to be able to hold ourselves to them.<\/p>\n<p>[00:51:44]\u00a0<strong>Forest:<\/strong>\u00a0Thank you for saying that. I\u2019m sorry. I\u2019ve been resistant. I\u2019m sorry I\u2019m having anxiety around it. I love that you\u2019re saying what you\u2019re saying.<\/p>\n<p>[00:51:56]\u00a0<strong>Kathleen:<\/strong>\u00a0Thanks. Me too.<\/p>\n<p>[00:51:59]\u00a0<strong>Ramit:<\/strong>\u00a0All right. So let\u2019s get excited about just a slightly different plan. The vacations, using your new vision, what do you think about these vacations?<\/p>\n<p>[00:52:09]\u00a0<strong>Forest:<\/strong>\u00a0In 2025, Kathleen has been planning a trip to go to Napa for one of her best friend\u2019s 40th birthdays. Kathleen, can you say no to going on the trip?<\/p>\n<p>[00:52:24]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, that\u2019s going to be hard for me, but if I have to, I have to because I feel like we said we\u2019re not going to spend money we don\u2019t have, and that is hard for me because to me it\u2019s not about me going and having a great time. It\u2019s me disappointing a friend.<\/p>\n<p>[00:52:39]\u00a0<strong>Ramit:<\/strong>\u00a0If we\u2019re looking at the numbers, what is the answer?<\/p>\n<p>[00:52:43]\u00a0<strong>Kathleen:<\/strong>\u00a0No.<\/p>\n<p>[00:52:43]\u00a0<strong>Ramit:<\/strong>\u00a0If it\u2019s me, from now on, I have one religion and that religion is my Rich Life vision. And that religion guides me on my decisions. At least this version of the Rich Life vision that will change over time. Once you\u2019re debt-free, you\u2019re going to change it. Of course, of course. But for now I need to live it and I need to show my partner that I\u2019m living it. And sometimes that involves some sacrifice.\u00a0So 810 a month for a vacations. Can I just summarily just tell you guys, like, can we just shortcut this and cut it to 0?<\/p>\n<p>[00:53:23]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, yeah. Let\u2019s do it. Okay.<\/p>\n<p>[00:53:26]\u00a0<strong>Ramit:<\/strong>\u00a0Gifts at 300 bucks. Give yourself the gift of being debt-free. No more gifts.\u00a0Long term emergency fund. Yeah, we\u2019re going to increase that because right now it terrifies me that you have one income, virtually no savings, and you have two kids. That is a very risky place to be. It\u2019s like way, way, way too risky.<\/p>\n<p>[00:53:46]\u00a0So what I did was I put your emergency fund at $3,000 a month.\u00a0In six months, you\u2019re going to have 20,000 bucks in your savings account. Really good. Okay. Now looking at your guilt-free spending, you have 15%, which of a large number, is $2,144.<\/p>\n<p>[00:54:04]\u00a0<strong>Kathleen:<\/strong>\u00a0I don\u2019t want to give up my rowing machine, but I could also join Anytime Fitness for $20 a month, so that could be $1,000 right there.<\/p>\n<p>[00:54:15]\u00a0<strong>Forest:<\/strong>\u00a0I could sell both of my bicycles. Let\u2019s say conservatively, I could get $6,000 total for selling both of them. I would want to probably buy the 1,500-dollar bike to replace them.<\/p>\n<p>[00:54:31]\u00a0<strong>Ramit:<\/strong>\u00a0Sorry, not when you have 150,000 of high-interest debt. No\u00a0fucking\u00a0way. Guys, come on.<\/p>\n<p>[Narration]<\/p>\n<p>[00:54:37]\u00a0<strong>Ramit:<\/strong>\u00a0This is extremely fascinating to me. Notice how hard it is to change your lifestyle.\u00a0Forest\u00a0is here trying to do little micro negotiations with me, like telling me he really needs a 1,500-dollar bike. What\u2019s even more interesting is that\u00a0Forest\u00a0is the one who\u2019s been taking on a lot of the mental load of the family\u2019s finances.<\/p>\n<p>[00:54:57]\u00a0That\u2019s why Kathleen avoids it. But now that we\u2019re making changes, he\u2019s the one resisting and he says he\u2019s worried Kathleen won\u2019t actually follow through. It\u2019s like he\u2019s preemptively trying to make this plan fail. This is what we call self-sabotage in psychology. To me, the real reveal here is that just because one person handles the finances in a relationship, that doesn\u2019t make them skilled at it.<\/p>\n<p>[00:55:24]\u00a0If we\u2019re being candid, Forest\u2019s spreadsheet and tracking have not stopped them from getting into six figures of high-interest debt. And we have to acknowledge that Kathleen has played her part by avoiding money for a long time.<\/p>\n<p>[Interview]<\/p>\n<p>[00:55:39]\u00a0<strong>Kathleen:<\/strong>\u00a0We\u2019re making this commitment to each other where we\u2019re not going to spend money that we don\u2019t have. And right now we have negative money. And you have the trainer downstairs that for indoor cycling and we can go to Anytime Fitness and use their bikes. Can\u2019t you ride a 300-dollar bike, a 500?<\/p>\n<p>[00:55:56]\u00a0<strong>Forest:<\/strong>\u00a0Yeah, you\u2019re right. Okay, let\u2019s get rid of them all.<\/p>\n<p>[00:56:00]\u00a0<strong>Ramit:<\/strong>\u00a0That was awesome. Kathleen, amazing work. I really appreciated you stepping up there and communicating in a way that reached Forest. Forest, I appreciate you taking a step back and going, you\u2019re right. I am creating this thing in my head.<\/p>\n<p>[00:56:13]\u00a0Let\u2019s actually look at a debt payoff calculator. Okay. So let\u2019s take a look here. I have your home equity line of credit, which is, I believe, $97,000, and you\u2019re currently paying approximately $1,000 a month towards that.<\/p>\n<p>[00:56:25]\u00a0<strong>Forest:<\/strong>\u00a0Yeah.<\/p>\n<p>[00:56:26]\u00a0<strong>Ramit:<\/strong>\u00a0Your credit card is at 65,000. How much are you paying towards that?<\/p>\n<p>[00:56:29]\u00a0<strong>Forest:<\/strong>\u00a0$728 a month right now.<\/p>\n<p>[00:56:32]\u00a0<strong>Ramit:<\/strong>\u00a0Nine years is your base case for paying this off. So the good news is you have a lot of fat that we found from eating out and Amazon and all that stuff. So there\u2019s easily an extra thousand. There\u2019s actually more than that, that you can use to pay off every month. That\u2019s the good news. The tough news is that it\u2019s going to feel really difficult to you.<\/p>\n<p>[00:57:04]\u00a0You can do it, but you got to be committed to it, and you have to have clear rules. And one of those rules has got to be like no gimmicks.<\/p>\n<p>[00:57:11]\u00a0<strong>Forest:<\/strong>\u00a0I know why you\u2019re saying remove all of the gimmicks.<\/p>\n<p>[00:57:16]\u00a0<strong>Ramit:<\/strong>\u00a0Oh God, what are we going to do now?<\/p>\n<p>[00:57:18]\u00a0<strong>Forest:<\/strong>\u00a0It just seems like leaving a lot also on the table by not doing a much smaller degree of the credit card shuffle.<\/p>\n<p>[00:57:35]\u00a0<strong>Ramit:<\/strong>\u00a0I want you two to live your life the way you want to live it. Right now you have a struggle because you have debt, and we\u2019ve spent a lot of time today talking about how you got there, which I think is very important. But I want you to start understanding the mindset of somebody who has a high income like you do, and has managed to save and invest a lot, which you have not done.<\/p>\n<p>[00:58:01]\u00a0I am allergic to gimmicks. I don\u2019t want them. I leave money on the table because I prioritize simplicity over everything else. Most of the suggestions were spending how much time looking two steps backwards about gimmicks rather than moving forward on a plan. This call is going to end at some point. You two are going to be on your own. I\u2019m trying to equip you with the tools to stop leaning on the crutch of a gimmick and instead start looking at deep foundational strategy.<\/p>\n<p>[00:58:33]\u00a0<strong>Forest:<\/strong>\u00a0Yeah. Okay. Yeah. No, you\u2019re right.<\/p>\n<p>[00:58:35]\u00a0<strong>Kathleen:<\/strong>\u00a0I know it\u2019s hard. You can do it.<\/p>\n<p>[00:58:37]\u00a0<strong>Forest:<\/strong>\u00a0Let\u2019s do it, and let\u2019s follow it.<\/p>\n<p>[Narration]<\/p>\n<p>[00:58:40]\u00a0<strong>Ramit:<\/strong>\u00a0I spent a lot of time with\u00a0Forest\u00a0and Kathleen working through these issues. They were able to reallocate money towards their emergency fund, and they found $13,000 worth of stuff to get rid of. Now, if we used this money to pay down some of their credit card debt, it would actually make a big difference.\u00a0Listen in.<\/p>\n<p>[Interview]<\/p>\n<p>[00:59:00]\u00a0<strong>Ramit:<\/strong>\u00a0All right, fine. So instead of 65,000, we will make it 52. Did y\u2019all see the change? It shows that instead of basically 10 years, it\u2019s seven years and five months. That\u2019s a massive change. What that shows me is every single thing you have that you can sell that is not mission critical to your Rich Life vision and your family, sell it because even $1,000 more towards debt is a huge difference when it comes to big amounts of high-interest debt. An extra $1,000 is actually a massive deal, which is also why going to Napa for three grand is financially devastating at this point.<\/p>\n<p>[00:59:46]\u00a0<strong>Kathleen:<\/strong>\u00a0Mm-hmm. Right.<\/p>\n<p>[00:59:47]\u00a0<strong>Ramit:<\/strong>\u00a0Do you see that?<\/p>\n<p>[00:59:48]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah, I do. Because it\u2019s not just three grand. It\u2019s the interest that would save by using that three grand to pay off it.<\/p>\n<p>[00:59:56]\u00a0<strong>Ramit:<\/strong>\u00a0Exactly. Now, I want to talk about what to do with your additional income. Let\u2019s see here. You had told me, Kathleen, that you\u2019re going to make 1,299 per month additional, correct?<\/p>\n<p>[01:00:12]\u00a0<strong>Kathleen:<\/strong>\u00a0Mm-hmm. Correct.<\/p>\n<p>[01:00:13]\u00a0<strong>Ramit:<\/strong>\u00a0All right. Awesome. Amazing. Hey, what are you going to do with that money?<\/p>\n<p>[01:00:16]\u00a0<strong>Kathleen:<\/strong>\u00a0Pay off our for credit cards.<\/p>\n<p>[01:00:18]\u00a0<strong>Ramit:<\/strong>\u00a0So let\u2019s put an extra. 1, 099\u00a0per month towards your debt. Watch what happens.\u00a0Are you ready?<\/p>\n<p>[01:00:28]<strong>\u00a0<\/strong><strong>Kathleen:<\/strong>\u00a0Mm-hmm.<br \/>\n[01:00:31]\u00a0<strong>Ramit:<\/strong><strong>\u00a0<\/strong>Four years and three months.<\/p>\n<p>[01:00:32]\u00a0<strong>Kathleen:<\/strong>\u00a0Wow, that\u2019s amazing.<\/p>\n<p>[01:00:34]\u00a0<strong>Ramit:<\/strong>\u00a0That\u2019s actually incredible, right?<\/p>\n<p>[01:00:36]\u00a0<strong>Kathleen:<\/strong>\u00a0Mm-hmm.<\/p>\n<p>[01:00:37]\u00a0<strong>Ramit:<\/strong>\u00a0Forest, do you see that?<\/p>\n<p>[01:00:39]\u00a0<strong>Forest:<\/strong>\u00a0Yeah. That now it feels doable.<\/p>\n<p>[01:00:45]\u00a0<strong>Ramit:<\/strong>\u00a0Forest, these are the things that actually move the needle. They don\u2019t require any kinds of complicated\u2013 none of that. It\u2019s just like, get the big things right, and then be patient and let the process work. All right. Is there any additional income that might come in?<\/p>\n<p>[01:01:05]\u00a0<strong>Kathleen:<\/strong>\u00a0Possibly for me, but I\u2019m hesitant because I don\u2019t know how it\u2019s going to work out. I\u2019m going to be teaching a few classes, and I think if things go the way I hope they go, that would be about 10k before taxes. But it\u2019s hard for me to put that down because it\u2019s very new.<\/p>\n<p>[01:01:27]\u00a0<strong>Ramit:<\/strong>\u00a0Okay. Can we just simulate it so you can see the effect of it?<\/p>\n<p>[01:01:31]\u00a0<strong>Kathleen:<\/strong>\u00a0Sure.<\/p>\n<p>[01:01:31]\u00a0<strong>Ramit:<\/strong>\u00a0Let\u2019s be conservative here. Let\u2019s say 4,000 per year. Take out your taxes. Plus maybe you save, I don\u2019t know, 10% of it for family stuff. I\u2019m being very conservative here. 4,000 per year. Remember right now you\u2019re at to pay off your debt four years and three months. Watch what happens when we add in your $4,000 per year.<\/p>\n<p>[01:01:52]\u00a0<strong>Forest:<\/strong>\u00a0It\u2019s just a 4,000 like one-time extra payment, right?<\/p>\n<p>[01:01:56]\u00a0<strong>Ramit:<\/strong>\u00a0Yes. Watch what happens. Three years, nine months.<\/p>\n<p>[01:02:00]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah. That\u2019s great.<\/p>\n<p>[01:02:01]\u00a0<strong>Ramit:<\/strong>\u00a0This is why when you\u2019re facing a decision like, oh my god, I love my bike, should I sell it? It\u2019s like, sell that\u00a0fucking\u00a0thing right away, and put it towards the debt as quickly as possible. It pays off so fast. Next. It is about additional income, meaning additional money put to it consistently.<\/p>\n<p>[01:02:19]\u00a0You nailed that as well. You put over $1,000 a month towards that. Fantastic. And then the third thing is automating the process and leaving it alone. Don\u2019t mess with it. It\u2019s like a Thanksgiving turkey. You put it in the oven, leave it alone, and you will know the exact month and year your debt will be paid off. How good will that feel?<\/p>\n<p>[01:02:44]\u00a0<strong>Kathleen:<\/strong>\u00a0Amazing. And yeah, that\u2019s how I look at it. I know it\u2019s not my bike and truck that I\u2019ve given up, but for three years, let\u2019s call it four years, we\u2019re going to suck it up and we can do this. And I also feel really empowered because we have a great family and we have fun watching Netflix and eating ramen. It\u2019s okay. We\u2019re still going to have all of those great, valuable experiences together with our kids.<\/p>\n<p>[01:03:11]\u00a0We\u2019re going to be less bougie. And in a few years, we can be smart and I\u2019ll be working more and we can start adding things back in. And hopefully in that time we\u2019ll also have figured out how to not make the same mistakes again. So I just feel like we can do it, babe.<\/p>\n<p>[01:03:27]\u00a0<strong>Forest:<\/strong>\u00a0I love hearing you say that you have this vision.<\/p>\n<p>[01:03:31]\u00a0<strong>Kathleen:<\/strong>\u00a0Yeah.<\/p>\n<p>[01:03:31]\u00a0<strong>Ramit:<\/strong>\u00a0All right. Beautiful. I\u2019m really pleased to see where this conversation has gone. I really am. I want to offer a couple of pieces of just pretty direct feedback. Take it as you will. Again, I always tell my guests, it\u2019s your money. It\u2019s your Rich Life. It\u2019s your decision. I can\u2019t tell you what to do. I can simply tell you what I would do.<\/p>\n<p>[01:03:58]\u00a0So I have a couple things that I would do in your situation. One, I would do every single thing we talked about here, which is not only would I put the 13k together immediately, I would go looking around the house with freaking binoculars. And I would say, what else can we find?<\/p>\n<p>[01:04:14]\u00a0Let\u2019s just get it up to 15. That\u2019s our challenge. Can we get it up to 15? We got to find a way. I bet you could. I bet you could. And I would immediately put that towards whatever it is you decided. Credit card? Great. Next up, I would set up an appointment, a regular appointment with a therapist.<\/p>\n<p>[01:04:37]\u00a0I think that\u2019s going to be the glue that binds you together and keeps you focused on this vision. And just remember it\u2019s natural. I taught you some principles, and I taught you a Rich Life vision, but you will literally face thousands of financial decisions. And I don\u2019t expect you to get every single one right.<\/p>\n<p>[01:04:55]\u00a0There will be times you go backwards, you make a mistake. That\u2019s okay. More important is that you create a healthy culture of money so that whenever these things happen, you can recognize it and you can correct it. And you remember that you don\u2019t have to beat yourself up about it. I make mistakes with my money today, but I also trust myself to know that I will identify it and fix it each time getting a little bit better.<\/p>\n<p>[01:05:21]\u00a0Let\u2019s hear their follow-ups.<\/p>\n<p>[01:05:23]\u00a0<strong>Kathleen:<\/strong>\u00a0What I learned from this experience was just how far up Schitt\u2019s Creek we actually are. I think I had trouble really seeing that and accepting that previously. And more importantly, what I learned is what we can do about it. And now I feel empowered to tackle that debt and\u00a0start actually saving some money and reaching our future financial goals together.<\/p>\n<p>[01:05:48]\u00a0<strong>Ramit:<\/strong><strong>\u00a0<\/strong>And now\u00a0Forest\u2019s follow-up.<\/p>\n<p>[01:05:50]\u00a0<strong>Forest:<\/strong><strong>\u00a0<\/strong>Hi, Ramit. Thank you again so much for your time. What did I learn from this experience? Well, I learned that actually the challenge of making large changes in our life to fix some of our financial problems was more of a challenge than I thought it was going to be. I was more resistant to it than I thought it was going to be.\u00a0I think it scared me.<\/p>\n<p>[01:06:15]\u00a0But we are going to make some large changes. We\u2019ve already put some plans together. We started looking at what we could sell the truck for. I started figuring out what my bikes are worth and how we could sell those. And Kathleen is really motivating me and she\u2019s that partner that I need. It\u2019s the fire that we needed lit under our asses to build a financial future that we\u2019re proud of and build our Rich Life together. I am more excited than ever for the future, and I think we can do it. Thank you very much.<\/p>\n<p>[01:06:48]\u00a0<strong>Ramit:<\/strong>\u00a0Honestly, these updates are disappointing. I was looking for specific details from\u00a0Forest\u00a0and Kathleen, especially after I spent a ton of time working with them line by line. The fact is time is their enemy right now. What they really need to do is attack their debt with overwhelming force.\u00a0So my team and I went back to them and we asked them for another update weeks later so we can hear what, if anything, they have actually done. Let\u2019s listen to an update that came several weeks later<\/p>\n<p>[01:07:21]\u00a0<strong>Kathleen:<\/strong>\u00a0Hi, Ramit. Kathleen here.\u00a0Just wanted to give you an update a few weeks after our call on how things have been going with\u00a0Forest\u00a0and I. Things have been going really well. I think we have been helping each other get more comfortable with saying no to things, saying no to each other, and we\u2019re able to do that with the knowledge that we are working towards the future that we both want.<\/p>\n<p>[01:07:49]\u00a0Where we\u2019re both in charge of our financial freedom. We\u2019re going to be able to take the vacation without stress one day. We\u2019re going to be able to retire and be there for our kids and grandkids without this stress of debt over us. And that\u2019s really motivating. Also, I\u2019ve scheduled our first counseling session to help us communicate better with each other.<\/p>\n<p>[01:08:13]\u00a0And starting to gather everything to sell to help us get out of debt.\u00a0Forest\u00a0is listing his truck for sale, my rowing machine. Cancel the housekeeper. Just really trying to aggressively get out of debt and get used to this new mindset of if we don\u2019t have the money for it, or a plan to pay it off, we don\u2019t do it.\u00a0And that\u2019s okay, because life is pretty sweet without all the fancy shit. So thank you for your help and guidance, and we\u2019re excited for the future.<\/p>\n<p>[01:08:46]\u00a0<strong>Ramit:<\/strong>\u00a0And now\u00a0Forest\u2019s\u00a0follow-up.<\/p>\n<p>[01:08:48]\u00a0<strong>Forest:<\/strong>\u00a0Hi, Ramit. Thanks again for your time. I think the biggest change that we\u2019ve made is that Kathleen is now fully engaged with our finances. Before meeting with you, I felt like it was all on my shoulders.\u00a0I knew we were spending too much and being irresponsible with our debt accumulation, not saving for the future. But I needed some help riding the ship, so to speak.<\/p>\n<p>[01:09:10]\u00a0After meeting with you, I now have that partner, Kathleen with me. We\u2019re starting to have more regular, productive meetings about our finances that we\u2019re both actively participating in. We\u2019ve gotten much more comfortable saying no to the things that in the past we would\u2019ve just done and worried about the costs later.<\/p>\n<p>[01:09:31]\u00a0I\u2019ve also committed myself to simplifying the management of our finances. Instead of kicking the can down the road doing balance transfers and things like that, we now have a pretty solid plan to just pay it off aggressively. With my job, I get paid large stock-based payouts about every six months or every six months.<\/p>\n<p>[01:09:55]\u00a0Over the course of about the next year, we\u2019ll be able to take those two payouts from my stock-based income, put it directly towards funding, at least a three-month emergency fund, and paying off at least two of our high balance credit cards.<\/p>\n<p>[01:10:14]\u00a0So I think that\u2019s a pretty solid plan. This is definitely going to be a journey for us that we\u2019re going to have to stick to moving forward. But I\u2019m confident in the plan that we have, and I\u2019m grateful that I now have Kathleen as my partner and\u00a0looking forward to our future together. So again, thanks for your time. Hope to talk to you again soon.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Meet Forest, 40, and Kathleen, 43, a couple living in California with two kids. Despite Forest\u2019s $300k salary, they\u2019ve racked up $150k in credit card debt. They want to maintain their adventurous lifestyle, but the reality of their finances is catching up. Can they change their mindset on money before it\u2019s too late? This episode [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","om_disable_all_campaigns":false,"_lmt_disableupdate":"no","_lmt_disable":"","_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[290],"class_list":["post-118867","post","type-post","status-publish","format-standard","hentry","category-podcast-episodes"],"acf":[],"aioseo_notices":[],"modified_by":"Nasrin","_links":{"self":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/posts\/118867","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/comments?post=118867"}],"version-history":[{"count":0,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/posts\/118867\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/media?parent=118867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.iwillteachyoutoberich.com\/wp-json\/wp\/v2\/categories?post=118867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}