0:00 Please remember: These are real people who had the courage to come on my podcast and ask for help. Would you be willing to come on this podcast and share every detail of your financial life? Feel free to leave comments based on what you think, but remember that we are here to help in a supportive way, not to demean and criticize.
Ramit is so wonderful and gentle in his approach, no judgment , no shaming. People feel enough shame they don’t need more but many financial counselors hurt the people they say their trying to help.
@@bobbyheath2474 exactly. most ppl won't change without some sort of sting. They haven't changed this entire time because there hasn't been any sting. Doesn't mean that you automatically be rude, but there has to be some sort of wakeup call.
I am 33 years old and I moved from Algeria to Europe with only 100 euros in my pocket. Currently, I work as a developer and I am fighting to build a good life for myself. I want to express my gratitude to Ramit for his advice because it has had a big impact on my life.
Judging from your profile picture, it is Estonia. awesome. I know as a digitalisation forerunner in Europe. From an exchange program, I still have a small Estonia flag, that an Estonian girl gifted to me. It is placed on my desk lamp.
@@antman7673 Exactly Tallinn, it's a small country but provides many opportunities for digital nomad and online businesses owners, maybe one day I will be one of them 🤔
I soooo appreciate Ramit being patient and kind with people, but sometimes I just want to hear, “Please face reality here. Grow up, and move to a smaller home.” You decided to have three children instead of two, so if you want them each to have their own space, you might need to have a foldout couch instead of an entire spare guest room. Or just give one of them a bunk and have two of them share when family visit a small sacrifice to possibly fix every problem you have here.
just like most folks. they can repeat phrases that they have misinterpreted or actually understood but was repurposed. like watching couples run the numbers but they only run them to justify a purchase instead of doing it with diligence
He did a good job of trying to get them to see they need to sell their house without screaming it at them. Their largest fixed expenses is their house, which they clearly can't afford. But they don't seem to want to accept that. They are the perfect example of house rich, cash poor.
His parents were exactly like mine financially. I grew up in the Midwest too. We took vacations every year and went camping pretty often. They were very frugal. My dad could fix anything, they bought their cars cash, kept them mint. Then drove them for 10-12 years. They sent me to private school. They had a financial planner as well. We rarely went out to eat unless it was on vacation. Money was a secret in my house. They wouldn't tell me anything. My father died in '19. Helping my mother was the first time I got a look at their finances. I'm 47 now. I don't think my parents ever made 100k together. Maybe the last few years. But they were very good at keeping things like new so they never really had to buy large things. My mom didn't get new furniture for the house or new kitchen counters until I was 35. My father's ability to build, fix or remodel anything was also of great use.
This is why it's such a crime that schools stopped teaching functional skills like home economics and woodshop. Those practical skills are so essential to living well but frugally and large swaths of the population no longer have them.
@@Aquaria2291 If fixing stuff is part of your rich life then good on you, but I would rather focus on having a great job that allows me to pay someone else to do this.
@@bmorehead it's not mutually exclusive. Having practical life skills gives you options. You may find yourself in a pinch where there's nobody around to pay, or their asking price is extortionate. Or maybe you lose that great job and have to tide yourself over until the next job. And then what? It is never a bad thing to have skills.
@@Aquaria2291 I make repairs around house and hate doing because it wastes so much of my time, I would rather pay someone then waste time. And it not hard to hire a handyman to most things.
I loved this episode but found that there was a cognitive dissonance between what the couple claimed were the "important things" and where their money decisions were leading them. For example, she values the kids having the opportunity to do extra curriculars but one of the first things out the budget was Gymnastics and Swimming (?) lessons. They both claim to love their children as a #1 but would not change the house or their jobs for them. A sad (but needed) example of when we feel we "deserve" the things we own, but in reality the things we own own us. Hoping to see a (good) update on them.
We used to be in this position with three kids under five. With three , they will eventually have to make choices about their extra activities based on time as well. It helps to have them all doing the same things. And develop friendships and community around those things. From what I’ve seen, some of the most expensive activities are gymnastics, dance, and cheerleading. Swim can be to a certain extent, but only as they get more advanced competitively. Our three have been swimming since toddlers. Competitively since a young age as well. It’s a safe sport and a life skill that builds endurance and that’s why we like it for our kids. When they were preschool age they did classes through the parks department learning about nature and biology. It was basically free. Once a month. Plus free literacy classes for little children at the library. All of that was plenty for them. Our public elementary offers chess club, av club, choir, orchestra and a robotics team all for free. I just donate snacks and buy a tshirt. We’ve taken advantage of all of this. They have very busy schedules, make excellent grades, and we pay for one or two activities for each of them. But they’re each in three or more activities.It’s doable. If you’re looking for an inexpensive sport, I suggest basketball or soccer, but you don’t need special shoes to start basketball, so that’s probably the cheapest.
Towards the end of the session, they mention having done Dave Ramsey steps and it didn’t work. The reason it didn’t work was because they weren’t willing to make changes to their money behaviors and lifestyle, as evidenced by this session. It really is sad to see that people get stuck in their ways and can’t even see it. I hope they get to the point of being so sick and tired that they finally make the changes they need to make to actually make progress in their finances.
They really don’t need and can’t afford that house. Apart from the mortgage and maintenance, he said “yeah our utilities are really high”.. well of course it is! It’s a 3000 sq ft house!
@@user-cr1iz8fw6h I make double what they do and have a similar cost mortgage. Sometimes I think why did I buy this big expensive house, but part of my rich life is having an amazing house for my kids and their children to want to visit.
@@IMBLESSED-oe6dl But he could afford them, he just chose to take a job with less money and less stress. This is a valid choice, but you don't get everything you want with this choice.
It’s so profound how psychology and finances go hand in hand. How we perceive money and our experiences growing up around it. Great insights and information here.
This was a fantastic episode. My husband overheard bits and pieces of it and like Thomas, he hates to talk about finances, and it really opened him up to the point where he was able to sit down with me together to identify what our fixed cost percentages are overall. We were pleasantly surprised as we honestly have never calculated it in percentages format. I have always been into frugality in terms of spending and not always looking at the big picture in that manner which is crazy to realize. Fortunately, we are not living beyond our means which this exercise demonstrated well. I too was guilty of getting suckered into an RESP fund for my son when he was a baby that involved rather high percentage in advisor fees overall so that really struck a chord for me as one of my big financial mistakes. The conversation we had as a couple left us feeling like we could more easily talk about finances together. Thank you Kristine and Thomas for your openness and transparency.
Maybe. It also depends on how much equity they have currently, and difference in property taxes. Rates do make the math more difficult for them, though.
Loved this episode. Especially appreciated the restraint Ramit showed to not jump into his opinion and waiting on the couple to make the realizations themselves. As a young couple listening in, my wife and I can relate with the choices this couple made and the mindset they might have had while justifying them. Thank you to both of them for sharing their story with us ❤️
Ramit was so restrained in not calling out their lifestyle creep quickly and blatantly. That so much of their problem. 3 kids is a lot. But their income is a lot as well. Especially for the vast majority of the midwest. It’s the giant home, expensive private schooling, new car and probably some other expenses that are responsible for them having 98% of their money going to fixed costs. They could probably cutback on everything but the home and make it work. 25% of income going to the home and utility costs is a bargain for a lot of places. Not that 3,200 square feet isn’t enormous and probably expensive to maintain. The home honestly might not be a good thing to sell now for a replacement because they’d very likely be trading a good interest rate for an awful one. They could sell and rent for a while, cut back a bunch on everything else, or somehow make a lot more money without spending more of that increased income. And that last option seems like the least likely. Especially given that they said that they like their current jobs.
People who grew up in small houses always wants a big house. If only they knew how high maintenance a big house is. The house takes your money, time and privacy if you hire people to clean it. Those who grew up in big houses dreams of a smaller house and often purchase smaller home.
Literalllly! Grew up in a 4000+ sq ft house and now in a 700 sq ft apartment and it’s a dream. So cozy, easy to clean, I know where everything is. Blessed
Just finished reading your book the day before yesterday , decided to take action and read Ramits book, finished last night and set up a budget. Now at a coffee break watching this video and was about to comment when I saw your comment 🤯 Guess I am now on the path of feel good productive and feel good finances 🥳 Thanks Ali!!
It would have been interesting to see the calculation of current mortgage vs a mortgage for a smaller house vs rent in that area and how that would impact the fixed costs.
I was thinking they could possibly rent out the house and go rent something smaller, plus put more towards the mortgage as they would charge more in rent. Then move back in 5 years
And taxes. The nicer houses in the nicer areas come with that hidden cost that no one seems to account for. A decent house in a lower tax area can save a lot of money year by year.
I just heard them mention too that they had their house built. That's like driving a brand new car off the lot. They still need to build fences, landscaping, and all the extra things that an older home comes with for less money.
and what not have money for the repairs have her even more stressed about cover expenses as they barely make more over the cost of the mortgage I don't think it be worth the anxiosity for her
I have listened to nearly every one of your podcasts, and always wonder whether these couples followed through on initial ideas -- was that woman able to manifest another $5K for their wedding? Did the doctor go to a new practice to increase her income? Did that guy stop worrying about the cost of organic strawberries and take his wife on a trip? In this one, the fact they followed up *twice* and gave us a second update on their ACTIONS after the first post-podcast update on INTENTIONS was fantastic. Look forward to the next episode and would love to hear "one year later" follow ups from past couples
It’s telling that after all was said and done, her first take away was that they need to prioritize their investments. Strange that they can’t see they have NOTHING to invest!! Blind to the fact they live in a house they can’t afford. Another couple with children that can’t see they’re broke and a couple paychecks away from being bankrupt.
Besides "the dream" I think they are under the impression that kids need their own room. It's not a big deal for two girls/boys to share a room for a while. Plus, if they get a house with a basement, a kid can get a basement room. They usually like that because it makes them feel grown up.
When they get older, they will need private rooms, at least the boys together, girls together. If they are over a certain age, the opposite genders cannot legally share rooms.
@@Mama2CDHsurvivor What??? Yes they can 😭😭 Stop spreading misinformation. Siblings, regardless of gender, can share rooms together. A boy and girl sibling would be fine. I used to always share beds with my brothers growing up. It's not weird and 100% legal
@@Mama2CDHsurvivor If you're in a country where it's illegal for boys and girls to share a room, I fear for your freedoms. My guess is that you're from the United States, Canada, UK, Australia, etc based on the fact that you're speaking English, and in the US, there are 0 laws against them sharing a room (google it please). I didn't check the other countries, but im 99% sure there aren't any there either, and you can check as well
Why does no one ever talk about having more kids than you can afford? Three kids under five and spending 98% of what they make, stressed with no real moves made, unwilling to really move to a cheaper place....all these people have idealized the childhoods they want to give their own kids with no real life ability to finance that life... slaves to the family mantra...I just don't understand the lack of financial literacy. Why not have one kid with tons of opportunities instead of three you can't really afford? The stress and disconnect from reality tears families apart and it's the norm, not an exception.
That's a sore subject these days as abortion is illegal in many places now, while childcare/medical expenses are at an all time high Maybe this country shouldn't force women to have kids and then treat them like a luxury that only the rich can afford
In 2021 my husband and I realized we were living above our means and we would never save for a house. We broke our lease and moved into a fifth wheel. Two years later we make twice what we did in 2021, we are debt free and moving into a townhome guilt free and excited knowing money is not a stressor and soon we will be able to buy a house once rates go down. The sacrifices are worth it.
I thought about that too, but their kid is in preschool. In preschool, all of the schools are private because our country does not allow free childcare at that age until they’re in kindergarten and sometimes pre-kindergarten. But honestly, I don’t think education matters as much at that age than if the kid was older.
It fascinating to watch then reduce all their quality of life type expenses to keep the house! Also wild to me they would prioritize direct TV over their kids activities
The kids are little right now those events will matter later. My kids don’t remember that they did tap in karate when they were that young. Also he could get sling or RU-vid tv for a lot less money. she said that the five-year-old goes to private school that’s just dumb. This man has the patience of a saint.
Thank you so much for not taking a shame-based approach! Thank you for respecting the backgrounds people come from and helping guide through a mindset shift. And staying in the awkwardness until they connect to the answer folks dont want to say out loud.
I think everyone needs to decide before they have kids how many kids they can comfortably support. Children are expensive, money isn’t going to appear out of thin air to pay for them. Instead of three, maybe have one? Two? 😅
This a good one. It speaks to society these days as a whole. How it has caused us to have these visions and dreams of what our life will (and should) be and what our hard work should get us. And it's so hard to not let that lifestyle creep take us over, resulting in living above our means instead of not looking the rich part but actually being financially very well off and having the freedom that invested and saved money gives us.
Yup, the actual wealthiest person I know, you wouldn't know he had money. He buys all of his clothes at Goodwill and drives a 20-year-old car. The only clue is that he does eat all of his meals out, but not at fancy restaurants or anything.
I don't want to be mean, but this is painful to watch. These people make soooo much more money than I ever have. No one can have everything all the time. Everyone has to make hard choices.
They missed every chance that Ramit gave them to admit that they need to give up their house. They MUST drastically change their lifestyle to make investments! And that msg kept going right over their heads. Ramit was so gentle and patient, I was screaming at the screen 😡
In what world does a Kindergarter need to be in a private kindergarten? For what reason? I don’t understand this. That in and of itself means you could keep the house.
Idk if it’s the same but the only time I was in private school was kindergarten because mine was half day and my mom worked full time. A lot of towns moved to full day kindergarten but some are half day.
I was hoping this couple would realize that if this couple was able to move into a smaller house that one decision would allow them to keep all those other items in their life, but if the house is truly that important to them they should at least recognize the true cost. Having a big house vs direct tv, gymnastics, extra groceries, etc whats more important only they can answer that.
The term "forever home" is just extremely bizarre to me. Statistics say that a young family - almost guaranteed - will not stay in the house that they're in. And the sentimental attachment to one's residence has always seemed so trivial. Yet here we see a family unwilling to give up on this one single expense in any way to the detriment of every other facet of their life. The "American Dream" of home ownership can be so toxic sometimes.
@@factorfitness3713 not sure if I would call it toxic. As we see in a lot of these sessions with Ramit, a lot of these feelings of attachments comes from peoples past and how they grew up which is of no fault of their own. Everyone’s story is different and at the end of the day they are the only ones that can save themselves. Ramit can only provide different perspectives but he can’t make change years of emotional and psychological build up in a two hour session.
@@theChef1337 Fair. "Toxic" is a loaded term. But I think of anything that leads you to do things that are not in your best interest as at least a little toxic. Everyone has their stuff about money and we see a lot of those biases play out in unhealthy behavior on the podcast. My SO watches a lot of HGTV so I see it there, too, just not cast in as financially focused of a context.
It really wouldn't. They bought when interest rates were at the lowest so let's say 2021. That means their house has probably lost value. Plus there are tax implications for selling too soon, not to mention the costs of selling a home. Then they'd either have to rent or buy a new house. If they buy, they're in for super high interest rates. They'd probably end up in a smaller house at the same monthly mortgage. Should they have bought a larger home? Maybe not, but they're stuck now.
Wow what an episode, I had a knot in my throat towards the end when Ramit showed them the change once they got rid of the mortgage, I was hoping they would realize how much it would help but I can understand them not wanting to let go of their dream home. I wish them the best. Thank you for these videos Ramit!
If you find yourself in a similar situation an option would be to rent out a few rooms if your set on keeeping your house. We rent out our master bedroom, made a lock on its back door so it has its own entrance. It was a better sacrifice for me than buying a different house that I didn’t like.
I think most people today are to scared to have someone live with them especially with kids. Both security reasons and also personal like noise and not feeling like changing lifestyle around someone else. But maybe if they know the person or find right one to move in.
A 3,200 square foot home is giant. Especially with a 3 car garage and a basement. I have a 4 bedroom house with 1,580 square feet. No garage. No basement. It’s not as if you have a have a gigantic home in order to have a room for each of your 3 kids.
@Ramit, I love the podcast. I’ve read your book and listened to every single episode and I love the content. Here’s a thought I had on this episode. I'd like to see you approach it instead of cutting 98% down to 60%, starting from the ground up. Zero out absolutely everything in the fixed costs and BUILD a rich life with them by bringing in components of their fixed costs based on their priorities. They would start with the house, groceries, childcare, cars, etc, and build from there based on what is most important to them. Once they hit 60%, stop. Then they can look at all the things that are left out and ask themselves the question, "can I live without all of these things?" Then you hit them with the increased investments they'd be able to make with 60% fixed costs and what kind of money they'd have in retirement, the money they'd have for Guilt Free Spending, etc. This way it focuses on their priorities, makes them question what they can REALISTICALLY fit in their life, and most importantly, BUILDS their rich life with them.
This is a terrible idea. It was very clear in this episode that they were trying to have all the things people work towards.. at the very beginning of their journey and then hope it works out later. It was also clear without ramit stating it that they needed to sell the house. They never should have bought it in the first place. The kids are young enough they won’t even remember their time in the house at that age. They need to sell , get a new house that has just what they need, then in 5 years when their oldest is 10 and their youngest is 5, they will no longer have daycare expenses, their income will be higher and then they will be in a better position to afford their dream house. Keeping the house guarantees for next 5-10 years they can’t do anything, no vacations, no kids activities, no shopping, no retirement, no streaming, and still stressed and depressed about money . It will cause more tension and the kids will grow up in that while missing out on all the things other kids get to experience so mom and dad can have their dream home. This was a sad episode and I’ve listened to so many of these and people want change but are never willing to do what it takes to see it happen.
@@daves_medialife9677 Thank you for your critique, I’m just not sure about something you’ve taken away from the episode. What about their situation makes it clear that their house is too much? I don’t think it is. In the episode their mortgage payment was 28% of their TAKE HOME income. That means that their mortgage is likely closer to 20-22% of their GROSS income, which is well under Ramit’s recommended 28% of Gross for housing expenses. Yes there’s utilities and phantom costs, but I don’t think 28% of take home pay is too much for a mortgage. The real question is what is taking up the other 70% of their take home income that isn’t their mortgage? $400/mo for the Jeep sure isn’t it. 70% of their take home is somewhere in the ballpark of $5000 per month. Where is all that going if it isn’t housing or a car, which is typically a household’s biggest expense? That’s what I wish was addressed, and I still stand by my original approach. Even if the house truly is too much, in my approach they could have a discussion about “what if you lived in a home where your mortgage/rent was only 18% of your take home income? Are there places in your area that would cost that much? What would you do with that extra 10% you just freed up in your fixed costs?” And it gets them a lot more onboard with the whole process. It’s an easier pill to swallow for them and can get people who are resistant to change to really see the value in doing so.
@@trumpetdude510I’m sure they said they’re spending 2k a month on childcare and have one child in private childcare at 5 years old come on you just can’t have it all.
He probably has PTSD from buying 3 houses so now that’s the ONE thing he doesn’t want to change. I don’t even think it’s about the actual house. It’s more so he doesn’t want to deal with selling and buying a house again. 😅
They are all about image and looking good to others. Typical really. They need to stop worrying about what anyone thinks about their life. Lose that anchor. Do whatever you need to make those numbers work. It will feel like sacrifice, but in the end, it is not.
This kills me to say this and I’m not trying to be mean but this is the second episode that I have watched where the couple REFUSES to admit that the “BIG” house has to go - you ppl say that you will do anything for your children and it sickens me to watch that this is what AMERICA has become let’s keep up with the JONESES even tho we will probably go bankrupt. I don’t know how he keeps his composure with these couples - I think he needs to be more direct that they will LOSE EVERYTHING. I appreciate that these couples come on but what I don’t understand is why come on if you aren’t going to do the work? It reminds me of a couple that wants to go to therapy but doesn’t actually want to do the work. I wish they would come to realize that you are not putting your children’s needs “FIRST” your putting your “ luxuries” first. America is stuck on this idea of bigger house better car and then you go to these “big” houses and all it’s filled with is a bunch of SHIT that they barely even know about. It’s very sad 😞 like Biggie said “More money more problems”
Hey Ramit, just passing by to say that I really appreciated this episode. I found a ton of value and it's a good wake up call as well as a great call to action. Looking forward to joining the Money Coaching program soon. And I sincerely thank you for taking the time to prepare this podcast and share it. I think the format is great in order to extract the lessons from every other segment. Also found especially helpful the pauses to clarify common misconceptions (i.e. such as the fact that 401k is also an investment since I may or may not have been in that group that often forgot to include that in the investments category 😅). Thank you sincerely! 🙏
I’m glad you addressed the burden of childcare expenses! They are outrageous and unavoidable to maintain the parents’ earning power (if you want children, that is). I’d love to hear how more couples dealing with this cost.
Most of the couples I know either make sure they have access to an elder who has retired, or dial back their schedules to divide the childcare by doing it (and often home schooling) themselves.
I also want to know. Honestly having our first kid in a HCOL area pushed me out of the workforce for a while, and us into poverty. I took that time to get a higher paying job and move somewhere cheaper. Now that she can go to public school, we had our second and will try to divert the cost of infant care by watching her ourselves and occasionally relying on a grandparent. We could not do this without wfh jobs and are terrified that our companies will reverse their policies. We are able to save for the future now, but it would destroy that ability for the next 5 or so years
We moved into a neighborhood adjacent to a million dollar neighborhood. Bought a 160k “starter home “ and made it our home home. It will be paid off in a few years. Remember that the wealthy get lots of deals and free stuff, so living here we have an elementary school that we can walk to in the neighborhood with the highest rating. That’s the first thing that gave us and the kids a leg up. The second thing is I chose to stay home and be the family caregiver. I didn’t start out dreaming of either of these things. We were going to build a dream house too etc. etc. But this ended being our smartest move. The kids are thriving, the family is thriving, and our finances are stable. We live a good, happy middle class life and I’ll never have to worry about an emergency or a job loss or the death of my partner taking our home because we’ve been able to build a cushion that’s substantial while giving our kids a lot of wonderful experiences and an excellent education. My opinion is that child care is done best by the parents when they’re very young. I know this isn’t possible for everyone, but in this economy, it’s also an option that might make more financial sense. Before you do anything, decide how important it is to you to have a child. If it means everything, then something will always have to give no matter what. You’ll be making those types of decisions for the rest of your life with kids.
It was rough until the kids hit school age. We were paying around $1500 per month for daycare. Now we only pay around $600 per month for ymca after care.
I’m late in watching this episode but I keep seeing a lot of people mention that 25% of gross income for housing costs is not a lot. I think you are forgetting that your gross income doesn’t hit your bank account, your net does. They still have 401k, insurance and taxes coming out of their checks before they receive their money to pay bills and live. They don’t have room for error, all they need is for 1 small thing to happen and they are completely in the hole especially with young kids. I hope they really evaluate and make some changes.
I just want to share that I have moved many times as an adult, even between countries and moving to a smaller space and having less stuff has always been good memories. It is freeing in terms of time and material items. I will always choose a smaller space because of these experiences.
1:10:00 is the reason why I love Ramit's style so much more than Dave Ramsey's. He's always calling people stupid and tells them they're just not committed if they don't want to sell everything they own and move into their mom's basement for 3 years to pay off debt. I love that you don't do that. You give realistic solutions
This one was hard to listen to. They talk about this lifestyle, only to cut back on everything that actually provided an experience they claim to want. Just so they can have an extra bedroom and a three garage. They’re missing the forest for the trees big time on this one! Wish them lots of luck and all the best.
This was eye opening...I handle ALL of our finances and my husband just wants me to "report" to him once a month. He responds somewhat harshly if he isn't clear or doesn't agree with the numbers. I've expressed this so things have gotten better. It's best if we're not at home when we do our meetings. I'm 68 and bought my first new car at age 63. My last car, a Volvo station wagon, was purchased used. I had for 22 years. They are house poor...living 'the American dream". My first home was 850 square feet and I had it for 9 years. After a divorce I had to sell the home we built (we ACTUALLY spent 4 years building it ourselves while living in a tailer on the property and both working and commuting full time). I kept the house chipping away at the equity to keep a stable environment for our son for 6 years. I then had to take a hard look at the future and finances. So, at 50 I sold my home and for the first time in 28 years rented. You can continue lying to yourself and suffer the consequences or get real. It's interesting how young people view "sacrifice". TOPIC: I would LOVE to know the brand of your sweater Ramit - very sharp! I admire all of your clothing and would love a link added if you would consider posting. 💜
Dude, my dream too. It’s taken month after month of financial chats to get my boyfriend to relax into talking about money and understand that when we talk about it we’re working on having more freedom.(this was before I ever heard your podcast)
Something to help the viewing audience would be to give basic information about their finances at the beginning. Some of these early conversations don't add up without understanding what they make and their debt...for example
Income, expenses, assets (equity), debts (edu, auto, cards, mortgage), expected inheritance. Some of this comes out during the session, sometimes - usually in fragments. Just state it clearly so we've got the broad strokes.
This is our main big dollar debate. We have a paid off house, but 2 daughters that share a room (9 and 3). We could build onto our house and add 6 figures of debt, which would improve their comfort, but what's the value as opposed to investments, etc. Does the extra space really improve our life enough to offset the stress of debt.
Agreed, especially when they are young . If more space is needed, a better option is to plan it out and do what you have to in order to pay for the cost instead of taking out more debt to do it .
man maybe because I'm a structural engineer and I know how the sausage is made, but "upper middle classes" obsession over these 2700 sq foot McMansions is ruining them. good marketing I guess..."forever home" it's just some wall studs, OSB, insulation, copper piping, wiring, HDPE and some paint..that's all a house is.
That and by the time all of the kids are out of the house and they are actually retired, they'll realize that they'll have to downgrade because in retirement the house is going to be a money suck for taxes and repairs, plus all the extra unneeded space and the cost to heat and electric for the whole thing for just two people.
I'm really shocked that these 2 people didn't sit down and have a discussion and ask themselves "where are we going to get the money for childcare, a house, a Jeep, private school, retirement, etc". They probably let their realtor tell them what size house they can afford. I have an idea for them though, start renting out rooms in that big ass house of yours so you can get someone to help pay the mortgage.
It says something (really good) about you that you preface the comments with the reminder that these are real, brave people. My own worst instincts sometimes kick in and I might silently judge, but when I think about it, I also get it. I grew up in a tiny house, am in a small condo now, but in between I owned/lived in some lush houses (the pinnacle had 5 bathrooms, was on 7 levels)... and that change upward in circumstances, at first, became a big part of my self-image. Now I'm at my happiest in my modest space, but at the time if I'd been told to lose the fancy house(s), it would have been a body blow.
If you're spending money on day care for 3 kids under 5 while living in a 3K plus square footage house....you're wasting money TWICE. Someone needs to stay home for 5 years and take care of the little ones and utilize this huge generational home. Justifying your decisions can save you money.
OMG - 53 min. in. I was avoiding looking at my advisors 1% fee for "managing" our Traditional IRA & Roth IRA. For the last 2 years, I paid $19k in fees on my investments. I call Charles Schwab and unlinked him on our accounts, then switched the accounts over to Vanguard. I'm concerned if they do sell their large home - with a great rate, for a smaller home at today's rates. Might end up with the same payment in a smaller home.
One of the few good things about working in the government is the TSP retirement account, the lowest(almost non existent) management fees. My advice on general investments is to use a directed account and do it yourself, just in safer asseets.
Just discovered your channel and I am loving it. I have consumed a lot of personal finance information over the last couple of years, probably too much as I am a bit wrapped up in the small details. I like how you see the bigger picture and I will look to automate more of finances and not sweat the small stuff. Thanks for being a positive influence. I should buy your book right? 😊
What hasn’t been said (and yes…it’s moot…but) is that they had ZERO foresight when choosing to have multiple children. Literally not even a single thought as to “we never thought about the tremendous burden all these kids would bring.”
SO many couples are like this. The financial and time expense that comes with children is unbelievable - especially in the US. It’s one of the many reasons my wife and I chose to not have kids.
Yeahhhhh they seem a bit impulsive especially the husband with the car. And what's the numerous mixed in a short time span. They seem to have a "I want what I want" without thinking about the ramifications or planning to obtain AKA impulsive.
Sometimes it's hard listening to people work through their issues.But we and the audience should remember that that was probably all of us at one point or another.
My heart goes out to this couple. They are so brave to share their story but their fairytale will turn into a nightmare if they don’t wake up! They can’t sell their home because they have a great rate and will not be able to find anything even remotely comparable in terms of space for their family!
It’s not the number of kids that is the problem. They make 11k per month! The problem is that their standard of living is too high. The sizes of our houses have doubled since 50 years ago. Another aspect of this discussion is looking at childcare. She has 3 kids in daycare. That’s a huge cost (2k per month)! When both parents are working outside the home, more expenses come with that (eating out more, new clothes, gas, 2 cars, new clothes for the kids, ect.). It might actually make more sense for her to stay home with her kids. If it isn’t obvious research also shows it’s developmentally and emotionally better for kids to be with their mom from 0-3 years old. The author Suzanne Venker has a great podcast diving into these issues!
One thing to keep in mind is that many daily purchases add up to one of those bit ticket monthly line items. I think that this is where Caleb hammer shines. He lists out every single transaction people make over a month and it adds up to hundreds and hundreds of dollars a month.
I disagree with the advice to sell the house. If they sold it and got a new mortgage at today's rates, they are going WAY down in price. to save any money--and then will pay the closing costs etc again when they upgrade (which they will). They have a nice nest egg and are in what are probably the most expensive years of their lives. The big drain for them isn't the house, its the cars. Get rid of them and use the investment account and anything you make on the cars to pay cash for two $10,000 cars. Now you have no car payments. Also pay off the credit card. Your cash flow just got a whole lot easier. Is the long-term plan public schools or private? If public, hunker down, watch the pennies, use the "car payment" to build cash reserves and figure it will get better each year as the kids get into school. If you want private schools then the house may have to go, but price that move out before you make it.
One obvious thing that would help them is to give up the idea of retiring in their mid 50s, as they seem to be aiming for. I mean sure we'd all like to retire early, but if the choice is between leaving the home they love and working until a more standard retirement age, the choice seems obvious. Also he left a job that paid more so obviously has skills to earn more than he is currently. They are not moving no matter what, that much seems obvious... so those steps make a bigger difference than cancelling gymnastics lessons imo. Not judging at all, an emotional attachment to a home you love is perfectly reasonable so they need to look at other things... more income and working longer are 2 obvious ones.
I don’t know why they don’t prioritize their spending and then when they hit the 65-70% mark then they just have to cut everything else out of the budget. It forces you to make hard choices. Don’t cut from 98% down to 65%. Build your budget by most important to least important and when you hit 65% that’s it. The money is gone.
Hey I'm a woman and I can see that the husband probably feels bad that he doesn't make more because his wife isn't content with the very good salary that he actually makes because she is too concerned with her perceived status and keeping up with the Jones's. She's too concerned with what all her friends have. I'm surprised I haven't found any other comments yet let's talk about this.
I can resonate with this episode a lot, however we have very little fixed costs- no mortgage, minimal children’s education (we homeschool), and I can relate to her so much. Every month is so stressful just trying to figure out how we’re going to pay our bills. I’m trying to grow a business, but that is going very slow and often adds a lot of stress and takes away from my “rich life.” Anyway, thank you for the podcast! Trying to learn how to do this better!
What about opportunity cost? You haven't factored in what you might be earning outside the home, if you were to enroll your kids in public school. There is a cost associated with that decision (and I am not going into any religious discussion with anyone).
Wow ! That was amazing. I’m a new subscriber who’s learning from you and these wonderful couples. I’ve taken in every word and I’m applying it to my own life. I’ll be sharing with our children and purchasing your book. Thank You.
14:40 I definitely say that about food. It will be a dream to not think about food or cooking again. I hate it. And I dread meal prepping and cooking so much
This video is so eye opening for me! It’s really good! Thank you to both of these people for opening up and sharing their money lives! So good! So very helpful to us all watching THANK YOU THANK YOU!💚💚💚 god bless your money journey!💚
Why did I not find @Ramit years ago???😢 I have been needing put on all the podcasts and just bought your book. My husband and I both grew up without any financial guidance other than start a savings account. Probably would be considered lower middle class to middle class in general. I feel we have been successful in life so far but I think what could we have done to live a rich life if we had had this advice earlier in our lives?
Marriage benefits women. Given the wage gaps (and the pension gap that forms), it’s insurance in the event of separation. If unmarried, you leave with nothing.
This was really hard to watch. Them prioritizing the children’s extra curriculum activities over the house just felt bad. Hopefully they will watch this and see that their “need” for a big house will cause them unhappiness and stress in all other areas if their lives.
Daaang, this is literally the 'American Dream' of buying a big house and feeling an anxious need to fill said big house with 2 dogs and 3 kids under 5yrs 🤯 This episode solidifies Ramit's success because of his mantras of MASTER YOUR MONEY PSYCHOLOGY and understanding our INVISIBLE SCRIPTS. Making more money is NOT the answer. It just magnifies what you already are 🤔
It’s so hard to watch people realize that this amazing life they have built for themselves is premature- they can’t afford ANY of this. And their most expensive mistake is so permanent- their house!!!
Agree with a lot of comments that Ramit was much too focused on the housing cost. At a point, they deleted the housing cost to find the fixed expenses go from 83% to 55%. That's still a lot of fixed costs! Plus, they would have to rent or buy a smaller home, so it would not make that big of a dent in their expenses anyway.
