Holy, you're spending the most amount of money. We pay for our kids' college.
If you say like, well, give yourselves more money and don't give money to the kids, that feels selfish.
Growing up in the Midwest, you just save money, then you die, and you give it to your kids.
My anxiety increases because a budget has always been really hard for me. There's always this tension of, you know, we can't even go out to dinner this week.
I feel like this pressure just like I'm like, gosh, here we go.
You are now spending more than you make every month.
That explains the savings.
Scary.
That's why we're here. I just want someone to put their arm around me and say, 'Son, this is what you're supposed to do.'
That person doesn't exist. What if instead of following that feeling, I followed the numbers by connection, by conversation, and by a rich life vision.
In 20 years, I don't want them flying to California to have your kid tell them about money.
You know, in America, we do some pretty funny things with our money in the name of the kids. Extracurriculars, huge birthday parties, SUV when they are 2 months old, and college of course has to be fully funded. Now, I don't have a problem with any of those things as long as they are intentional and as long as you ran the numbers. The problem, of course, is almost nobody does that. Most parents simply follow a script and that script often costs them their own financial future. Today I'm talking to Mia and Jake. She's 40, he's 38. They've been married for 4 years. They have a blended family with three children, two from Mia's previous relationship and one child that they share together. And this idea of paying for their kids' college is causing resentment between them. Mia applied and here's what she wrote. I don't think either of us realized how difficult it was going to be to create a step family. Money is a real sticking point because my ex-husband does not contribute very much and I want to provide my kids with what I can because we're able to. Okay, pretty complex situation. How would you reconcile this if you were sitting in my chair? Let me show you the numbers so you have a little bit more information. Assets 443,000. Investments zero. That's interesting. Savings 13,900. Uh, low with three kids. Debt $176,410. Total net worth $280,490. Okay. Fixed costs at 50%. Very nice. Investments at 22%. I'm confused because their investments above are at zero. Not sure what to make of that. Savings at 25% which is quite high. Guilt-free spending at 3%. I don't believe that. Honestly, I'm kind of confused by their numbers. They're very perplexing. So, I need to talk to them to figure out what's going on and I have a lot of questions. Let's get started with Mia and Jake. Mia, you wrote the application and in the application you wrote something I wanted to ask you about. You said, 'Our values are mostly aligned and we have a plan with our money, but when it comes to implementing it, I feel resentment from my husband that a big chunk of our money goes to support my two kids who are not his biological kids.'
Yeah. Is that an accurate reason for why you're here today? I think that Jake and I really do agree on our values like like this is what we want to do, but in the implementation of it, the reality is that a big chunk of our money is going to make up for the fact that I didn't plan and save earlier. Um, when my two biological kids, our oldest kids, um, were younger, there's always this tension of like, well, I just, you know, we can't even go out to dinner this week, right? And I'm like, ooh, that's true. No, we can't. And then there's some guilt that I feel. And I don't think that there's any resentment about me or like our values because like we've agreed to it, but there's this like underlying tension that I'm afraid will get worse if we don't sort of come to a place where it does, where that underlying resentment is gone.
Yeah. I mean, I think that it's not resentment. I think it's just frustration would probably be the better term for it. Um, you know, I'm making more money than I ever have. I've gotten my job that I've really been trying to get that's given us a lot more money. You know, my ideal life would be, you know, being able to go out to eat without thinking about it. You know, like that's kind of like my rich rich life is like being able to buy a few things here and there without being very stressed about things and not thinking about money, which I know is not a realistic thing. Um, but I mean, just even walking around here, you know, just yesterday, I was like, 'Wow, these are the things we could buy with, you know, all the money that we're putting into school.' But um, I don't resent Mia or anything in the kids or what they were doing. That's where they were at their time. And um...
When you say walking around here yesterday, these are the things we could buy. What's an example of that?
I'm noticing a lot of my rich life revolves around our house. And our idea of like making it a really great spot for us and the kids and it's our forever home hopefully. Um, and that's ideas of maybe getting a hot tub or getting landscaping done. And we put a fire pit in and I was like, 'Oh, you know, if we just put like one of the kids' tuitions, you know, we'll be able to do it in a couple months.' So, it's like that kind of thinking.
Got it. Did you have this conversation today or yesterday?
Yesterday. Yeah. Yeah. Just walking around.
I think the exact comment was, man, if we just took the money that we were spending on college, in 8 months, we could do a hot tub and probably start on the landscaping.
And I literally don't know what we were walking by.
Probably a landscaping hot tub store.
So yeah. Yeah, there's one right outside.
Yeah. And what was your reaction to that when you heard that?
I think my general reaction is just to be quiet. Like I think internal like I don't even think I said anything. I think I maybe laughed and was like, 'Yeah.'
How long have the two of you been married?
Four years. Okay. Four years. And how many children total?
That's two from my previous marriage. And then we have a daughter together.
How old is your daughter?
And we're spending a fortune on her preschool right now, too.
Oh, okay. And how about the two other children? How old are they?
Ah, okay. That's good to know.
And can I just clarify one thing, too? It's one of these weird things. It's like I know what's best for the kids in our family and in investing in their school. And it's like I think it's the right thing to do, but I'm not sure. And that's kind of why we're here. It just like we want to, you know, figure out the balance. It feels off. Yeah. It's like the balance of what? The money we're putting towards the kids versus the money we're putting towards the things that... and like our savings is probably not where we want it either. We want more money in our savings, too.
Okay, hold on. What's off with the balance?
We're really emphasizing as much money as possible towards the kids between saving for college and our youngest preschool. And so like our daily spending or like sort of like our guilt-free spending is like really minimal and that doesn't feel sustainable. But also like if you say like, well, give yourselves more money and don't give money to the kids, that feels like selfish.
Yeah. I would agree with that. Yeah.
Okay. That's interesting. Do the two of you make decisions about money?
Well, that kind of answers my question, right? No. Yeah, let's start with together. Do you make decisions together about money?
I would say big picture, yes. Although I'm not sure that we've always been doing that. It's not something we think about a lot.
Okay. You agree, Jake, or disagree?
Yeah, I would agree that it's been something that we haven't talked a bunch about. I've always enjoyed just like we're just we save a bunch of money, you die with a bunch of money. That's all. That's what happens.
Oh. Um, did you grow up in the Midwest?
Yes. Yes. Yes. Like I said, growing up in the Midwest, you just save money, then you die, and you give it to your kids.
Yeah. How do the conversations about money and kids typically go?
I usually say something like, 'We have to do the budget.'
Okay. And what is your reaction to that, Jake?
Just anxiety and anger. Anger, probably.
I feel anger, too, when I hear that word.
Yes. Yes. I probably my anxiety increases because to be completely honest like a budget has always been really hard for me. Like it's hard for me to like wrap my head around like what are the right buckets to think about. And so I'm trying to explain thinking like, here's my thinking, Jake, here's what I think we should do, but it's probably not making a lot of sense because I barely like understand it. I just know like money is going out and it's probably more than we should have going out. Um, and then Jake's like, 'Well, but what about this?' And then which is usually a super reasonable question and I'm like, 'I don't know.' You know, and so then I get stressed and then he gets stressed and then...
Where do the kids come into this? Like the primary question today is are we sending too much towards our kids and this is a source of potential conflict. Where the kids come in.
I would say my default is to treat that money as if it doesn't exist. Maybe like where the kids come in is if we it's like, well, what if we spent a little more money here? And then my response to that is like, we don't have that.
Got it. So the kids' money is sacred, like it does not exist. It's a non-negotiable. Got it.
Are you open to changing that?
Just imagine if Jake had said, 'I don't want to send a single cent to your kids.' That would be incredibly complicated to unravel. But fortunately, they do seem to have similar values. So now the question becomes, with a blended family, how do we decide the right amount of help to give? And I'm starting to suspect they have only thought about help in terms of how big of a check they can write, but there are a lot of other ways you can help kids, too. And Jake, what about you? Like when you mentioned like, 'Hey, can we spend a little bit more eating out or doing XYZ?' And she says, 'Well, we can't.' What's your reaction?
It's like confusion because I'm making more money than I've ever made in my life. A little backstory. When we first got together, we bought a huge house that was great. It hit everything on our It's like 10 out of 10 wish list. Perfect. Um, I had a big truck trying to act really tough. You know, that tough guy, you know, that's what I need at 35.
Yeah. So, this is when you got married. Yes. It was like So, we're both This is both of our second marriage. And I think we were both like so happy to have happiness. We were just like, let's just like spend, let's have everything that we've ever... I don't know how we survived.
So you bought a How big is the house?
It was like almost 4,000 ft.
That's for two of you and a little baby.
Yes. Well, half the time.
4,000 square foot. Okay. So, then you bought the truck. What kind of truck?
Uh, Toyota Tundra. And I didn't stop there. I got uh I spent $3,000 on rims because that's what you need at 35.
Totally. How much is a Tundra?
Uh, like 50,000, something like that. It was great.
Okay. So, then what else did you get?
I mean like new furniture.
New furniture. So, you had the house, the truck, etc.
It sounds like this is...
And then Yeah. And then we kind of started talking about finances and that's what kind of got us into it and then through conversations we decided that, you know, the house is a money pit and we didn't I mean not a money it was just we're probably house broke at that point.
So, we sold the house. Um, $200,000 house, cheaper. Um, same neighborhood. It feels so much more like us. It's fantastic. We sold my truck. We have one car that we had two cars paid off. Um, we had to get a bigger car just recently because the 14-year-old kids are huge now.
But like, how long to make the decision to sell the house? That's a huge decision.
It was a big decision, but I feel like we just looked at each other and we were like we were so house broke and it just seemed like why are we doing this? Because it wasn't like neither of us were attached to it. We were like if there is something that we can change, like what can we change? And to be like credit to our parents, both of us were taught from a young age like do not go into debt other than for a house. So like we didn't have other debt. So it was sort of like okay, if we have money to play with, this is it. It's like the house.
What was a sign that you were house poor?
I mean, this was probably we were thinking about every penny.
That's when I was doing like the spreadsheet and it wasn't just like it wasn't big idea numbers. It was like we spent $12.37 getting donuts for the kids. Like we cannot spend that.
How would you describe money felt at that time?
It was horrible. It just felt like being strangled, right?
And like we've even like we had a big house gym that we worked out in. It was lots of expensive things that I've been collecting during COVID. Sold all that. Like Planet Fitness is a bunch of weirdos, but it's still pretty good.
How did it feel to just sell all that stuff?
It felt good. Again, we got married, we were so happy to have happiness, spent all the money, and then it was like feeling like, okay, now we're making smart decisions. Yeah, it was almost like we had an entire relationship in like 3 years.
Well, what I appreciate about this is I don't mind people making decisions about money, even mistakes about money. We all make mistakes. I make them. We all make them. What I really appreciate is that you caught it and you took a dispassionate look at the numbers and you were like, 'This does not work. We got to make a change.' If you actually build that skill of course correcting, you can actually go through life making a lot of mistakes because you're like, 'Let me move fast knowing that if something goes wrong, I will correct it, learn from it, and I won't make that mistake again.' So, I'm willing to bet the two of you will never be house poor again.
Yeah. Yeah. And that's what I love about Mia is how reflective and honest. And I think those conversations are what brought us together. Both very reflective and honest. When we make a mistake, we need to fix it.
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You mentioned that when you had the house and you were house poor, it felt like you were being strangled. It felt horrible. Is it different now? Because you mentioned like you can't really go out to eat.
I think we took all the extra money and put it towards college.
Yeah, it's like that like yanking the steering wheel this way and now I'm like weren't saving any like we're not saving enough for the kid is like to some extent maybe an overcorrection. Um, but again there's that whole tension about like, well, isn't that the right thing to be saving for?
Well, isn't a house the right thing to be buying?
Yeah, we don't. Fair point. Yeah, we don't know what the right answer is. I think that, you know, I keep having someone I just want them to put their arm around me and say, 'Son, this is what you're supposed to do.' You know, it's like, 'Feel free to put your arm around me and tell me.'
That's actually quite interesting. What if I told you that person doesn't exist?
That's what I expected. Yeah. Otherwise, otherwise Yeah.
It's not your dad. It's nobody is going to be that person for you except you, right? How would that strike you?
I know I say I want somebody to come and put their arm over me and tell me what to do, but um I want to be confident in the decisions that we're making. Okay. Um, it'll make it easier to not spend that money or do this or make that decision knowing it's in the right spots and our money's work. You know that term money working for us.
Um, I hear people say that all the time too. I don't know what that means though.
Yeah. I'm serious. I don't know.
What do you think it means?
Putting it into stock market. I don't know. I've just Yeah. I mean, my Midwest is probably showing right now. Just you save money and you put it away and hand it off to the next group.
I wonder if part of it is that we get a pension and so we've never had to think about like a 401k or like where does the 401k money go? Like there was never any conversation about that. I want to understand the idea of a pension. Like I get it conceptually, but on a day-to-day basis like should I be investing more? I don't know like...
Who have you asked about this?
Okay, that's a fair answer.
And like with the pension, what we do or little that we know about it is that you get retirement is the top three years so an average...
An average. So I've got two master's degrees. I'm now I'm going to be a principal next year and that's I just keep wanting to add income so that that top three years is as high as possible.
Okay. When it comes to the money in your relationship, the tension is around how much, Mia, that you are sending towards your kids. Jake, what would you do with the money if you had more of it? No judgment.
I don't know. My mind's going a lot of different ways. Like, I'd probably save it. I'd put it into savings somehow, try to collect interest, that kind of thing. Put some money into our house, uh, you know, the landscaping idea that we wanted to do. Um, our family really liked we inherited a hot tub and that broke. Um, that would be something I'd probably put it into. Those are kind of my ideas. Okay. Um, and maybe a food service. We talked about like possibly something that, you know, health is really important to both of us. We both exercise regularly and I think to have healthy food options consistently and not add it as a stress because when we come home from work just everybody's dumping their problems on us. Um...
Have you all talked about these three things? Saving, house, food?
We do want to save for the house stuff. That's probably like the most conclusion. I agree that having some sort of like a food pro. I think we probably agree on that. Like if we could have like healthy food prepped and delivered to us, that would be amazing. But any food service is just like so much more than what we spend on groceries. It just doesn't seem to make sense.
Are you two aligned about money?
Probably. I would say most of the things the only thing I think that would cause any conflict on us would be vacation I think is something that Mia wants to travel and I'm not I I feel like if we're putting all that money into school it's like we I'd love to I'd like to go sometimes but it's not a need of mine.
This couple is very likable. I like talking to them but I am noticing that because they are so compassionate with each other, it's difficult to get a straight answer out of them. I'm not even sure if they agree or disagree. And so much of what's happening here is being polite to each other. Polite's good, but sometimes I need somebody to say, 'I don't like that. No, this is what I want.' That is what I'm pushing for here. It is now my personal mission to show Mia and Jake that they can be direct with each other and be polite. Do you all like feeling anxious about money?
No. Let's try that question again. Do you like feeling anxious about money?
Both are saying no. Like yes. Very affirmatively no.
And yet the dynamic you've built allows you to both constantly feel anxious. Okay. Let's find out what the numbers say and then we'll talk about them. All right. What was it like putting the CSP together?
It was actually really nice um because it gave me a concrete way to think about our big picture, which is nothing that I've ever been able to do before. Like I had no idea like if somebody asked like what's your net worth? I don't I don't even know how to calculate that.
And consider how many years you kept a budget. Yeah.
Like we're tracking this, we're And like you mentioned like should we be tracking the price of groceries or the price of soda? It's unclear.
Why do you think looking back for the many years that you kept a budget, why do you think you were keeping that budget?
Because that was the number one thing I was taught about money is you balance your checkbook, right?
And so since nobody balances their checkbook anymore or basically uses one, you adapted that for today and we're using Excel or some tool using Excel.
Yeah. Do you want to know what I was doing because it's pretty crazy.
So, I would again, we spend on the credit cards because I get points for that, but we never don't pay them off.
So, I would copy everything that was spent in the credit card statement, put it into an Excel spreadsheet. So, I'm just copying and pasting it. And then line by line, one, make sure everything looked like there wasn't anything there that shouldn't be there. And then I would try to sort them into categories. Mhm. Categories. I don't know why I came up with those categories. I just did. And then I would try over multiple months to track to see like are we spending on clothes what we said we should spend? Are we spending on going out to eat what we should spend? But it was like dup like I knew I was duplicating work like it's already there. But that's what So I...
Keep going. Why do you think you were doing all this? What did it get you?
I think I felt like I was controlling our money.
Exactly. Exactly. This is a classic example. I'm actually really thankful that you're sharing this with everybody because there's so many people who go through the motions of playing money. They are playing money. They are moving things from here to there. Why? You know, like the concept of a paper pusher. Let me pick this piece of paper up, push it over there. Like we all know that's useless, but we do it. And nobody forced you to, right? No one sat you down and said like you got to do this. No. If anything was echoes from your parents, maybe grandparents, it doesn't work. Like if we actually took an honest look at it, we'd be like, 'What the hell am I getting out of this?' But we get a sense of control. And we like to feel like motion is productivity. Another great example of you correcting that and being like, 'Hey, made a mistake. Went down the wrong rabbit hole of a budget. We're going to stop that.' And you did. Amazing. Okay, let's take a look at the numbers. Mia, can you read the word in bold and the number next to it for this entire box, please?
Assets 443,000. Investments 0. Savings 13,900. Debt 176,410. Total net worth $280,490.
Cool. What do you think of these numbers?
I feel like our net worth is low considering how much we both make. I don't understand the investments line. Okay. Um, again, like we've got the pension, so I don't know if that should be higher. Okay. I feel amazing about the debt. I think that that's something it's our house. That's all we have.
That's all mortgage debt. Yep. What's the interest rate?
It's also a 15-year mortgage. So, we're proud of that.
Yeah. So, we sold from a 30-year to a 15-year. That was something else that were actually paid off.
Nice. Yeah. Net worth. I don't know what I just don't know enough about net worth.
Obviously, I want it to be higher, but I don't know like why.
Yeah. So, that's a good answer. That's honest. That's actually common. I would say most people feel that way. Do looking at these numbers make you feel anything?
I think the only thing I would feel would be guilt and I think it'd be debt. Like, wait.
I think I could show you this glass of water and you'd feel guilt.
That's a default baseline. Okay, so you feel guilt because...
I don't feel guilt. I said if debt was way higher, I would feel guilt. That's the only feeling that I would have.
That's quite an interesting response though. Yes. Mia, how do you feel if at all looking at these numbers?
I'm proud that our net worth is something, right? Like I'm proud that there's something there. Yeah. I'm proud of the decisions that we've made that have gotten us to have that. And I also feel I do think guilt is a default, but guilty that it's like not more. Like I wish I would have made some different decisions earlier in my life.
Cool. I appreciate that. Let's look at the income. Uh, Jake, what's the gross combined monthly income, please?
Cool. That means that your household income is $226,000 a year. Did you know that number?
I had never made that calculation of our gross. I knew our net.
Uh-huh. So, you didn't know your What do you think that you made as a household ballpark?
Um, I probably would have said like 200,000.
Okay. What do you think about that income?
And that's why it stresses me out. I don't know why we're like, why are we counting pennies? jammed up. Like...
This is funny. Like people don't make enough money, they go, 'I'm stressed out.' Then people make a ton of money, they go, 'I'm stressed out because why don't I feel better about money?' Yeah. How much do you need to make to not be stressed out, Jake?
Well, I know that it'd just be better problems. You know, I've Yeah, I've read The Subtle Art where it's just you want to have good problems. So, these are pretty good problems to have. But...
But you're still stressed out, right?
Maybe if you make 500K, will you still be stressed?
If we kept our current assets, no, I wouldn't be stressed. But...
Oh, really? 500 is all you need to make.
I feel like you're leading the witness.
I definitely I'm sure I'd be stressed always.
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Okay, let's look at the fixed costs. What's that number?
Okay, quite good. Mhm. That's on the lower end of the 50 to 60%. That's exactly what I would expect to see for a high-income couple. When your income goes up, like disproportionately up, this number should come down because you know, you can only spend so much on toothpaste, right? So, I think you're all doing a very nice job. I mean, look at that mortgage. $1,776. That's crazy. 9% of gross. Well done.
Especially considering you had a McMansion before, and this is amazing.
I'm very proud of that. The other mortgage was like $2,000 more. Yeah.
I think that's probably one of our proudest money decisions, that we made that.
I love that. That's so cool. Do you all ever celebrate that you made that tough decision?
I think we do, actually. We look at each other, I would say, pretty regularly. I'm like, 'Oh my god, I'm so happy we did this.'
And it feels better. It feels like home, too. It's like that added bonus. It feels more like us, too.
Yes. So, this is great energy. Now that I see that you can do this and that you do celebrate, in my head I'm going, 'Cool, they can do that.' So now I just need to transfer that over to other parts of your money.
I would love that. I'm in.
This is very good. Okay, let's keep going. We have investments. What's that number?
Okay, so that is your pension, which is about $3,000 a month going to your pension. Okay. And I can see there's a little bit of confusion on your part about what's happening with this pension, what does it mean? But overall, great savings. What's that number?
Okay. The bulk of this is kids' 529s. And then you have an emergency fund. Okay. Personally, I would have put the 529s under investments. But it's fine either way. It shows me where your priorities are. And then, finally, let's go down to guilt-free spending. What's that number?
Do you only spend $364 a month?
Okay. How much do you spend? Like, you don't know.
I bet that's just like what was left, probably.
So, do you think that you are spending more than $364? That would be extremely lean.
How much do you think that you are spending every month on discretionary items, including eating out, coffee, vacations spread out over 12 months, etc.?
I bet it's closer to like $1,500. And even that probably is us being really strapped.
Let's not do that. Let's be realistic. How much are you realistically spending?
No. No. I think we're realistically spending probably $1,500 to $2,000 a month.
Let's say $2,000. When I do these numbers, I always want to be conservative because I never want to be surprised owing more money. If anything, I want extra money at the end of the year. Right. Cool. So, at $2,000, then the question is, where's that money coming from?
I have a question. Your long-term emergency fund says $700 a month, but you have only $14,000 in savings. You're pulling money out of your savings occasionally.
Yes, we have been, which we want to stop doing.
Well, that all makes sense. So, you're spending more than the CSP is reporting. It's not planned for, and then you pull out of savings. Okay. You know, your savings is about two months of expenses. Were you aware of that?
Okay. How's that feel to you?
That is why we're here. All right.
I think us being here gives us hope, right? Like, I think if we had that, all kind of answers that. Because I would be more mad if I didn't feel like I'm going to talk with Ramit. He's going to help me figure this out.
I think that with me, it kind of reminds me of how I treated girls before, like when I was going through puberty. It scared me. I didn't understand it, so I just avoided it. And I want... I can't be mad. I don't understand it well enough. I think that that's kind of where I'm at.
This is a great analogy. But wait, wait, what's the conclusion? Because now you're married. Actually, you've been married twice.
Yeah. So, I'm not afraid of girls anymore. Sort of.
Yeah. I think I'm confused by it. And I think there's a deep-seated fear of seeming dumb, and it's seeming like asking questions, you know. And I joke about, you know, not knowing what people say, making their money work for them. I think that this is just like a knowledge gap, and I want to get it fixed. So that's kind of where I'm at. So it's... I can't be mad that I don't, you know, it's like learning a new sport. You're not mad the first day. It's like I'm just trying to drink it in as much as I can right now. And I think I'm just more scared than mad. The fear is bigger than the anger for me.
I love Jake's analogy about being afraid to talk to women when he was growing up. I think a lot of men can really connect with that memory. But I also think that at a certain point, you have to face your fears. There is no way but straight through those fears to go and talk to somebody or apply for a job if you've been nervous about your career. You've got to face your fears with money and realize nobody else is coming to save me. And I was put on this earth not simply to save money in a savings account, but to live a rich life. Therefore, I'm going to start facing my fears. I'm going to learn how money works, and I'm going to start feeling good about it.
For me, I always naturally understood money, but things like fitness, I felt like I was the odd man out. Like, everybody else learned it, and I just don't get it. And so, when I talk to people and they don't understand money, I have a lot of compassion. It's kind of complicated. You get a million different people telling you a million different things. And as long as you've got a roof over your head, it kind of seems like it's fine. So, I appreciate you being so honest about it.
Mia, you said you feel fear. What's the fear of?
The fear is that if something happened, if there was a catastrophic event, we don't have money to deal with it.
If you had a fear of that, like let's say I had a fear of slipping in the shower. Okay, I might get one of those plastic mats. You have a fear of if something happened, you won't have enough money, but your savings account is still $13,900. What's the difference?
I think in the moment that I want to go on a trip or I want to buy something, I'm just like, 'I'll deal with it later.'
Yeah. How often does that happen?
Oh, probably all the time, right? Because if I was really afraid, I wouldn't be doing that.
Yeah. How much do you think your relationship with money is problem-oriented, where you talk about the problems, you agonize over the problems, you discuss the problems, versus solution-oriented, where you say, 'Okay, that's the problem. Here's what we are doing about it.'
Common. Really common. Just imagine with me for a second if we flipped it. Just flipped it. 95% solution-oriented, 5% problem-oriented. What would that look and feel like to you?
That would feel like when you said that you liked that we celebrated the decision that we made about the house. To me, it would feel like having that 95% of the time, which sounds amazing.
So, you'd celebrate more. What else would you do?
I would worry less. And I could spend that energy doing something I enjoy.
Hanging out with Jake, spending time with the kids. Like, I wouldn't be trapped to the spreadsheet.
Yeah. I watch it all the time. It still doesn't make sense to me. And again, I'm just like paper pushing.
Okay. I have a couple more questions about this. So, you have preschool at $1,266 a month. How long will that last for?
Yeah. One more school year.
One more school year. Yeah. Okay. And then after that?
Got it. Cool. We have a deposit into an account. What's that for?
That is a joint account that my ex-husband and I each put that much money in, and it's like savings for when the kids need clothes, like for the sort of bigger expenses.
Got it. Got it. So, that's kind of day-to-day versus the 529s that you are saving for. Okay, great. I mean, I love seeing this car payment at $398 a month. Amazing. Debt at $459. That's sweet.
That is a treadmill that is done in three months. What's the interest rate on a treadmill? It was 0%? Oh, okay. All right. By the way, I noticed something interesting. Your preschool amount is not being accounted for in the total. So, let's go ahead and adjust that right now.
Wow. What just happened to your fixed cost number?
It's a big jump. 10% jump.
Yeah. Jumped 10%. So, let's recognize a couple of things. Number one, child care and preschool, very expensive. Number two, suddenly having that really high income and the low fixed cost, which was something I was like, 'Great job.'
Right. Now preschool is temporary, and as you mentioned, public school after. So this number will go down. But things are not so loose all of a sudden. What does it tell you?
It reinforces that we don't really know kind of what's going on.
Agree. That is true. And what does it imply for the rest of your money? If you just jump from 50 to 60%, what does it imply for the rest of how you're spending your money?
That it's shrinking.
I'm like feeling my hands get hot right now. Like, I feel like this pressure just like I'm like, 'Oh, here we go.'
Okay. Here's how I think about it. I appreciate that. That's real for me. I'm still like, we got a puzzle here. And we're going to figure it out. Certainly, you do not have a lack of money. You all make a lot of money. So, we got a puzzle. We just need to figure out which way the pieces all fit. So, I'm not feeling hot hands at all right now. Okay.
Because you have that confidence and like you understand, and that's where it's like I want that feeling where it's like where most of in life, there's a problem, we'll fix it.
Exactly. All right. We got to make some other adjustments. We have this deposit for your kids that was also not reflected. Look at the number now on your fixed costs. We're at 64%. So the financial picture has actually dramatically changed.
Now I'm going to be a little more directive on my questions because at 50% I really don't care what you're doing. You do whatever you want. But at 64% I have questions. Utilities are $409. Why? That's a lot.
I would assume that our electric and gas are high because I basically run the washing machine 100% of the time, and then the hot tub also.
How much does a hot tub cost? I truly do not know.
Well, just the electricity to run it to heat the water.
How often do you get in the hot tub?
Well, it's... well, now it's broken.
It was so old they had a CD player on it.
But can I ask you, like, when it broke, did you notice your utility bills going down?
I have not figured out how to... we have not figured out how to stop it.
Basically, we're still paying for a broken hot tub to run.
Fix that. Yes. All right. This number is unusually high, and at 64% we don't have room for that. Debt payments at $459 in three months. Oh, okay. Let's zero it out then just to see. Okay. So, watch. So, this we zeroed it out, and it brings us down to 60%. Okay, nice. Okay, I'm going to leave it at zero.
Groceries and gas are... First of all, why'd you combine those two? It's a little odd combination.
Because it's what we put on the credit card. Like, it all goes on the credit card.
You should change that. Gas should go with your car. Car is everything related to the car. Okay. So, gas, parking tickets, parking, all of it should go there. Okay, that way you just have a good sense. A lot of times people don't realize, oh, my car payment is $350, which mine used to be. And then when I netted out everything else, I added it all together, it was over $1,000 a month, including parking and gas and everything. So, we got to know these numbers. Know your numbers.
So, move the gas up to the car.
Exactly. How much are you spending on groceries per month?
I do think we probably spend about $1,200 on groceries per month.
Okay. What are you buying for $1,200? I'm not the grocery police. I'm just curious.
I think that's an area where we could really cut back. And I think that it's so cyclical, too, because when you add two grown children, like the meals change. And we're trying to be proactive, and when the older kids are not with us, then we try and do leftovers or things like that, and then it's just trying to save money. But I definitely think that that's a spot.
That we could save. I agree that we probably could cut back on that a little.
If you could bring this number down, your groceries instead of $1,200, what would you bring it to?
I think we could realistically do $800. I think we do $200 a week.
I agree. That's pretty good. Okay.
How do we do that, though? Like, what's the action steps? Like, do you just pull out $800 and every time you go, and then that's it?
Excellent question. When you start, most people in America do not shop to a number. They go to the grocery store and they're just like, 'That looks good.' And when you are building the skill of sticking to a number, you can do that. You can literally pull out $200 a week in cash. Or a simpler way is to simply know your number. Every week we're going to spend $200. Now, lifestyle is lifestyle. If you go in twice a week, fine. It's a hundred bucks each time. But you got to keep a note on your phone somewhere where you are tracking it.
Over time, what I have found is that people who are effective at hitting their grocery number, they basically eat the same thing a lot. Like people who are hitting a number, especially when they need to hit a strict number, they basically come up with a meal plan, and that's it. So that's number one. The second thing I've learned about patterns of successful people hitting a grocery number is one person is doing the shopping because they just know the numbers. They're connected. If another person goes and buys it, sometimes they have to, but they may not have that tacit knowledge that the primary person does. Right? So that's what I would do.
Okay, that's really helpful. Thanks.
Cool. I'm going to take this down to $1,100. Still leaving your gas in here, which you can move later. Okay. And that brings you down to 57%. Honestly, you're in great territory. Great territory. It's a little higher than I would like considering your income, but 57% is within parameters. Subscriptions at $315. What's this for?
So, that would be all of the different TV services. So, like every single one, which I think we could totally...
I don't care about that very much.
How much can you take it down to?
