0:00

Do you want me to analyze your spending? I

0:02

recently did this for a couple in their mid-50s. On

0:04

my newsletter, I took their conscious spending

0:06

plan numbers and I analyzed it. I

0:09

showed people what I saw, the

0:11

things that were red flags to me, and also the

0:13

things they were doing really well. I'm

0:16

going to try something new. You're going to have a chance

0:18

for me to analyze your conscious

0:20

spending plan, and I can keep you anonymous

0:22

if you like. So here's what you do. Download

0:25

the conscious spending plan for

0:27

free at iwt.com/csp. Fill

0:30

it out and email it

0:32

to csp at iwt.com. You

0:35

may be anonymously selected to have your

0:37

income and spending analyzed by me in

0:39

an upcoming newsletter. I'll tell you what I

0:41

see and I'll give you some personal recommendations on what

0:43

I would do if I were in your situation. Of

0:46

course, you can read my thoughts

0:49

if you're signed up for my

0:51

newsletter at iwt.com/podcast newsletter. So

0:53

again, here are the steps. Download the

0:55

csp for free at iwt.com/csp.

0:59

Fill it out and email it

1:01

to csp at iwt.com and

1:03

make sure you're signed up for

1:05

the newsletter at iwt.com/podcast newsletter, because

1:08

I'm going to be breaking down the most

1:10

interesting examples that I get. For

1:16

me, I felt like he wasn't doing his job. Because

1:18

his job was to earn money. Yes. Sometimes

1:21

I just say, well, I

1:23

don't know what else to do. Like I'm working as

1:25

hard as I can. I guess that we're just

1:27

going to be in the red. I can't do anything about

1:29

it. I guess we're just going to be broke. That's

1:32

where my empathy ends. I

1:34

get very frustrated with that same conversation over

1:36

and over and over again. Whether we've got

1:38

a lot of money in the bank account

1:41

or whether we've got very little money in

1:43

the bank account, I feel

1:45

like we're playing a very, very opposite

1:47

game. On paper, we're not broke,

1:49

but it just feels like we are. I've

1:52

supported the family for the last 25 years.

1:56

And then she reminds me about that one year where we

1:58

had to sign up for... or discounted school

2:01

lunches. And yeah, it

2:03

can be pretty nasty. Cause

2:05

like I can't ever hit the number. And

2:08

I feel like we try really, really hard. I

2:11

just don't think it's even possible. Meet

2:17

Sandra and Brad. Sandra's 46, Brad is 48.

2:20

They have four children and they

2:23

are living a pretty high lifestyle. Private

2:26

school, ballet, sports camps. They have a bedroom

2:28

set that costs $25,000. In

2:31

the past, they have had a

2:34

very high income, but things

2:36

have changed. When their income

2:38

went down, they started

2:40

to get a lot more stressed out

2:42

about money. And now

2:44

they are both resentful for

2:46

different reasons. She resents him

2:49

and his income. He resents

2:51

her and her anxiety around

2:53

money. Well, I will

2:55

tell you that this conversation had a ton

2:57

of surprising turns. So I want you to

2:59

pay close attention today. I'm gonna

3:01

make sure that throughout the episode, I share what

3:04

I'm thinking and a little bit of the psychology

3:06

that I am observing. Now

3:08

in their application, Sandra mentioned that

3:10

Brad has had to ask for

3:12

money in the past to buy

3:14

a Slurpee. And I wanna

3:17

start there because that origin of the story

3:19

has affected the way that they both think

3:21

about money for a long time. Listen

3:23

in. When

3:27

we were first married, we made

3:29

like $11,000 the first year that we were married

3:32

and we were in school, very poor. And

3:34

I managed the budget

3:37

from the very beginning and

3:41

there was no room for anything extra, like literally

3:43

nothing extra. So in the beginning, it

3:45

was very contentious when he would want to

3:47

go and get something. And I didn't grow up in a

3:49

house where he'd go to get Slurpees. That

3:51

was like a luxury kind of to get sodas and

3:53

things like that. But for him,

3:55

that was like something he just wanted to

3:57

enjoy and so it became something where

4:01

he would say that very thing that I

4:04

have to get permission to go and get a Slurpee. And

4:07

eventually we tried to make it into a positive thing and

4:09

have it be our Slurpee fund. So each of us had

4:11

a Slurpee fund and you could spend it

4:13

on whatever you wanted. But in the beginning,

4:15

it was really negative. And it is something that's so

4:17

brought up, I don't think in a very positive way. That's

4:21

interesting. Do you still have a

4:24

Slurpee fund? No. What

4:27

happened to it? Our money has gone

4:29

so up and down over the years that if

4:31

we have extra, then the Slurpee fund is massive

4:34

and you can buy anything you want

4:36

and come home with ATVs and whatever.

4:39

And I just go, Oh, you bought another

4:41

ATV. But when money is tight, I'm

4:43

watching every single thing and texting

4:45

him and saying, What was this for? And what was this $12

4:47

for? And when I'm

4:50

balancing the budget. So it dies

4:52

when there's not excess. When there's

4:54

excess, we have Slurpee funds. For

4:56

me, it was was comic relief. It

4:58

was a way for me to joke

5:02

around about this new environment that

5:04

I was experiencing as a newlywored.

5:07

I didn't grow up in a wealthy home,

5:10

but I never felt like I was an

5:12

extravagant spinner. But when we first got married,

5:15

and this whole idea of a budget was

5:17

a new concept to me. And

5:19

I felt like it was pretty harsh and it was

5:21

pretty severe. We canceled

5:23

our telephone for 25 bucks a month.

5:25

So like we were living the

5:29

likes of a nomad. Like

5:31

you know, no cell phones, right? You had no

5:33

phone. Yeah, this was back in 1998. And there

5:35

was no cell phones. So like we were saving

5:38

25 bucks a month, but we

5:40

didn't have a phone. It was a shtick

5:42

that that I use to just try to

5:44

find some lightheartedness in the whole situation. It

5:47

was difficult dealing

5:49

with this budget into that extreme. I think

5:51

we had like $100 per month set aside

5:53

for food when we were first starting to

5:56

figure it out. How

5:58

many years? How long have you been married for? Okay,

6:01

congratulations. Thank you. 25 this

6:03

year? 25 will be 26 in 2024. Oh my God. So

6:06

yeah, 25 this year. Congratulations. That's a big deal.

6:09

Thank you. Okay. All

6:11

right. So I have a question about

6:14

money and being married for 25 years. So

6:18

I completely understand that

6:21

when a lot of couples get married, coming

6:24

together is hard enough. And

6:26

oftentimes if you're getting married pretty young, it's

6:29

doubly hard because you're not making a lot of money. Okay.

6:32

So I get that. Has

6:34

it changed over time? Which

6:40

aspect as far as did money

6:42

ever become easy? Yes,

6:44

but it doesn't stay easy. It

6:47

became easy when we were making a lot

6:50

of money. Okay. And

6:52

when you say easy, describe that for me. What does easy mean

6:54

to you? We didn't

6:56

worry about budgeting things. I always

6:58

knew there was plenty and then some

7:00

to work with. I didn't

7:03

have to ask permission. He didn't ask

7:05

permission. We just bought what we wanted

7:07

to. Okay, that's easy. Okay. Yeah,

7:09

it was so easy. Okay. And just

7:11

so I understand, when you say there was plenty, you mean there

7:14

was plenty of money in your checking account, right? And

7:17

we were putting money into like 401k

7:19

and we had self-directed IRAs and things

7:21

like that because there was so much

7:23

money. We needed something to

7:25

do with it, but mostly we just, there was plenty in

7:27

checking. I never had to worry that a bill was going

7:29

to come out and it was going to overdraft. I

7:31

could plan an extra day on our trip and

7:34

stop at Disney World on the way home and

7:36

take the 4k to not worry about it. And

7:39

then what about when it was

7:41

not easy? That's

7:45

like been, I feel like more of the time that it's

7:47

not been easy in that way. When

7:50

it's not easy, it's watching everything and

7:52

being meticulous with where the money's

7:54

going and keeping track of it

7:56

and being stressed, being

7:58

stressed about it. Yeah, just like you

8:00

used to do when you made $11,000. Yeah. Yeah.

8:05

Actually, that probably felt less stressful because I knew we

8:07

were so dirt broke that nothing was an option. And

8:10

I didn't have any kids that needed anything.

8:12

And I was very good at self sacrificing.

8:14

And so it wasn't a big deal to

8:16

me. It was, I've thought about this a

8:18

lot. I think it was like a badge of honor, like

8:20

how much I can do with so little, right?

8:23

And who taught you that your mom? Definitely.

8:25

Yeah. Okay. Brad,

8:30

has money gotten easier since the

8:33

Slurpee stuff? Harder or both? It's

8:37

been a roller coaster. Good

8:39

years and bad years. So

8:42

for better or worse, I'm

8:45

an entrepreneur in my guts. So

8:47

we had an opportunity to make some entrepreneurial

8:50

moves, a commission type

8:52

moves, a hundred percent opportunity-based.

8:56

And for the most part, it's been

8:58

steady. In some years, they've been like out of control. You know,

9:01

like we're bringing in $70,000 to $100,000 a month. And those are

9:03

like some of the best times

9:09

of our marriage when we are

9:11

having that level of friction or

9:13

stress that's pressing

9:16

down on the marriage. But there have been some

9:18

lean months too. What

9:20

made it the best years of your marriage? The

9:23

financial considerations weren't like the

9:25

top considerations. What was?

9:29

Where we were going to travel, where we were going to go

9:31

to, what opportunities we

9:33

could provide to our kids. Okay.

9:35

Not having to worry about that

9:38

dreadful end of months coming to

9:40

God moment when we have to

9:42

reconcile the budget. How many

9:44

times do you remember over the course of

9:46

a 25 year marriage, you've had

9:49

that coming to God conversation?

9:51

25 times

9:54

12. Minus

10:01

a couple of years. It's pretty much

10:03

monthly. Minus a couple of

10:05

years. So Sandra, when

10:08

you're doing these end of the month calculations,

10:11

walk me through what you're calculating. I

10:15

feel like you're going to make fun of me,

10:17

but I have a lot of spreadsheets and

10:19

lots of categories, too many, I'm

10:22

sure. Can we just hear what

10:24

some of those categories are? I know they're on

10:26

your computer right now. They are. Of course, one

10:28

click away. They're never closed. They're

10:30

never closed. You're so right. The table, I was just

10:32

working on it, so I will blame some of it

10:34

on that. Shocking. We'll just read some

10:36

of those categories. Love for the whole world to hear

10:38

it. Okay, we have auto repairs,

10:41

auto registration, ballet camp,

10:43

basketball camp, books, birthdays,

10:46

Ryan Cancun trip. I don't know how to take

10:48

them off once I put a trip on there.

10:50

I don't lump them all together. Every trip is

10:52

separate. You break out by trip. Not

10:54

just travel, but by trip. Yeah,

10:57

because you have to budget for each trip. Dog

10:59

food, cinema. Dog

11:02

food wet, dog food dry, dog food

11:04

organic. I

11:06

only have one line for that. I

11:09

put Costco annual fee because it surprised me and

11:11

I was like, I would put that in there.

11:13

How much is the Costco annual fee? It

11:16

was $193. Let's

11:18

talk about this for a second. $193 and you have a line item for

11:20

it. I

11:23

know. It only comes up once a year. I didn't know what to do

11:25

with it. Okay, so talk

11:27

me through your thinking because I want to understand this

11:30

meeting and part of this meeting is like the

11:32

intense amount of categories. So you have a Costco

11:35

renewal, $193. Yeah.

11:38

You didn't know where to do it, so you added a

11:40

category, right? Yeah, I just put a category. How

11:42

many categories approximately? Like to the closest 50,

11:45

how many categories do

11:47

you have? Oh,

11:49

that's not, it's not that bad. I have, okay,

11:51

I have 82. Okay.

11:55

Um, when you look, this is, this is

11:57

going to be good. When

12:00

you look at this spreadsheet, when you look at

12:02

it, what do you feel? First

12:06

word. Sick. So walk me through

12:08

what happens around the 25th of the month. What

12:12

do you do? Well, lately

12:14

I've been doing it every week. But

12:16

just because things are pretty tight, it feels

12:18

like to me they're really tight. And

12:21

normally I'll go through all of our credit cards

12:23

and our checking and everything and put all of

12:26

the charges in. How do you do that?

12:28

I always advise those super manually.

12:31

So you log into whatever credit card you have and there's

12:33

a thing that says $13.64 and you copy

12:36

that and paste it in the spreadsheet. Oh

12:39

my gosh, I feel like you're laughing. Okay, yes, that is

12:41

what I do. And then I have

12:43

to take all of those numbers and put them into the

12:45

budget spreadsheet because I don't really know how to make them

12:48

talk to each other. So there's two

12:50

different spreadsheets, one that's the charges

12:52

and one that's the budget. So

12:54

I literally am manually putting them over, which is why

12:56

I started doing it once a week because once a

12:58

month it was really big and took forever and

13:00

overwhelmed. Yeah, I mean if you do something

13:03

that's stressful and makes you feel sick and

13:05

then your husband hates it, you definitely want

13:07

to do it four times as much. I

13:10

got you. Okay, so stick with

13:12

me. Stick with me. So you're

13:14

doing all this and as

13:17

you are doing it, what do you feel?

13:21

Guilty. Why? Because

13:24

I can't ever hit the number. The

13:28

numbers that you set up for yourself. Yeah.

13:31

And I feel like we try really, really hard. Yeah.

13:34

But it's not, I just don't think it's even

13:36

public. And if it is good,

13:38

I don't know, it's nice. I'm like, oh, we did

13:40

really good. But usually by the first week in the

13:42

month, I already know that all that money is allocated.

13:44

And so the whole rest

13:46

of the month, it's super stressful to buy anything,

13:48

even if it's stuff that we need, because

13:51

I know that we're already at our capacity.

13:54

It's like you're

13:56

failing a test. Like you're back in school, you're

13:59

failing a test. every single

14:01

week. Yeah, I'm a

14:03

straight A student. Very frustrating. Yeah,

14:06

yeah. Well, that can't

14:08

feel good. No,

14:11

and I'm always the one that's done it. Like, it's

14:13

always been me doing it. And so it, it's just

14:16

been a lot of years of being stressed by it.

14:19

You do this alone, like in your office.

14:21

Mm hmm. Okay. So

14:24

you're taking the numbers from the credit card, you're

14:26

putting it into this spreadsheet, you're looking at these

14:28

numbers, most of the time not really adding up.

14:30

So you end up with in the

14:32

red. Well, sometimes

14:34

I just say, well, I don't

14:36

know what else to do. Like I'm working as hard

14:39

as I can. I guess that we're just going to

14:41

be in the red. Because I don't know what else to do

14:43

with it. I sometimes

14:46

ambush him at inappropriate moments

14:48

and tell him about how

14:50

bad our money looks for the month, like

14:52

before we're going to bed. And it's late

14:54

and we're tired. And what do you say?

14:57

Oh, we have no more money left this month. And it was

14:59

probably like the eighth of the month. Okay,

15:02

is that true? You have no more money by the

15:04

eighth of the month? No,

15:06

it's just that it's been it's

15:08

all allocated. Like something will be charged

15:11

on the 25th of the month on our account,

15:13

but I allocate it at the beginning. So I

15:15

know it's going to be coming out. When you bring up

15:17

something like that at night before you're going to sleep, what

15:19

happens? Well, usually

15:21

Brad doesn't want to talk about it. Shocker. So

15:25

I'm not really good at letting things go. I

15:28

feel like I need resolution. And so I will

15:30

press it. And then it usually ends

15:32

up with a little bit of stonewalling and a little bit

15:34

of a fight. And then

15:36

it just it's, it's, it's really incredibly like

15:38

it just stays with me. And I

15:41

don't know how to like, let that go. So it

15:43

affects a lot of things. Does

15:45

it change the financial

15:48

reality? No,

15:51

even these last couple of months, like I'm driving 66 miles

15:53

down the freeway so

15:55

that we can hit our gas budget.

15:57

So when when when she's measuring and

15:59

managing the budget like I'm all

16:01

in doing everything that I can so that we can hit

16:03

those numbers but the numbers are difficult to me. Which

16:07

is like some months I just say well I can't do

16:09

anything about it I guess we're just gonna be broke. So

16:13

okay well you're not broke and

16:15

I can see Brad's eyes. Okay

16:17

Brad all right Brad come on

16:19

in I know Brad's eyes just

16:22

went extremely wide like like uh

16:24

some type of cartoon character. Brad

16:26

would you care to chime in here are you broke yes

16:28

or no? No all right

16:31

I agree you're not broke. Sandra

16:33

are you broke yes or no? On

16:36

paper we're not broke but it just feels like

16:38

we are. When I

16:41

hear Sandra I go

16:43

through this process in her room alone and

16:45

I see the tears it makes my heart

16:47

hurt. And

16:50

there is turmoil at

16:55

the end of the month when we have those late

16:57

night conversations. But

16:59

that's where my empathy ends. I

17:04

get very frustrated with that same

17:06

conversation over and over and over

17:09

again. Whether we've got

17:11

a lot of money in the bank account or whether we've

17:13

got very little money in the bank account. I

17:16

feel like we're playing a very very

17:18

opposite game. Just

17:20

notice this set of highly detailed

17:22

rituals that Sandra has created for

17:24

herself with her financial system. All

17:28

for what? Why create

17:30

82 categories and manually

17:32

copy and paste in

17:34

tiny expenses every

17:36

single month? Well the

17:38

answer is control. Most people

17:41

genuinely believe that this process

17:43

of tracking every last cent

17:46

puts them in control of their money. And

17:49

in fact this is what they saw their parents doing.

17:51

Usually their mom. People even

17:53

describe this process as managing

17:55

money. But it's not. The

17:58

reality is that most of this is is

18:00

pointless. Manually copying in

18:02

values from a website to a

18:04

spreadsheet is not high value

18:06

work, nor does it change

18:09

your financial reality. Sandra

18:11

can do this for the rest of her

18:13

life, and it won't change a thing.

18:17

And we know that's true because she's been doing

18:19

it forever, and she still

18:21

feels awful about her money. In

18:24

my opinion, managing money is

18:26

focusing on high value areas, like

18:28

deciding what your rich life is,

18:31

setting up appropriate categories, and

18:34

discussing what kind of monitoring you want for

18:36

those categories. Managing money

18:38

is deciding on critical questions, like

18:40

your savings rate and your debt

18:43

payoff date. Those decisions

18:45

are worth hundreds of thousands of dollars.

18:48

Driving 66 miles an hour

18:50

to conserve gas might feel like it's

18:52

giving you control, but it's

18:55

ultimately pointless. And

18:57

I suspect that this might be the central issue

18:59

between Sandra and Brad, but I was

19:01

wrong. We'll be right back. If

19:04

you ever watch someone play a video game and they

19:06

don't know how to do it, it's like the most

19:09

frustrating thing in the world. It would be

19:11

like watching someone from the Stone Age trying

19:13

to drive a Tesla while changing their Spotify

19:15

station and using voice control. It's like, what

19:17

the hell is happening right now? Well,

19:20

that's how I feel when I watch someone use

19:22

Gmail or Outlook, literally like we

19:24

are in the Stone Age. Because for years,

19:26

I've been using this amazing tool for my

19:28

email, Superhuman, to go through my inbox incredibly

19:30

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19:32

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19:35

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19:37

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19:39

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19:42

for I will teach you to be rich emails. Those always get

19:44

right in the inbox. And it

19:46

is fast. I have a keyboard

19:48

shortcut for everything. If I'm done with email, I

19:50

hit E, it archives it. If I need to

19:52

respond to something later, I hit H and type

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20:26

What's

20:33

something you want to do differently in 2024? My

20:37

wife and I were sitting down, we were doing

20:39

our annual Rich Life Review and we were talking

20:41

about some of the categories that we want in

20:44

our rich life. And one of the things that

20:46

emerged from this organic discussion was beauty. We

20:49

both want to surround ourselves with beauty

20:51

and we came up with a few different ways that we can

20:53

do that. And I found myself about

20:55

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masterclass.com/Ramit. Let's

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get back to the show. I

22:26

feel like Sandra is playing

22:28

a fixed income

22:30

must be greater than fixed

22:33

expenses on a monthly basis

22:35

and that's where the A comes into play.

22:37

So the F depending on how we're doing

22:39

in a particular month. I've

22:43

always played the net

22:46

worth game and even more than

22:48

that I played the I trust

22:50

myself to generate income

22:52

gain. During

22:55

those late night conversations and she

22:57

expresses we're failing this month because

22:59

the fixed expenses were higher than

23:01

our fixed income. And

23:03

I say something along the lines of listen,

23:06

I've supported the family for the last 25 years.

23:10

And then she reminds me about that one year where

23:12

we had to sign up for discounted

23:14

school lunches because adjusted gross income

23:17

allowed us to participate in that.

23:19

It was a lean year. I

23:23

say something along the lines of

23:28

I've done good in the past and I believe that I'll be

23:30

able to do good in the future. That

23:32

has no weight or any credibility because the

23:34

only thing that's like on the table is

23:38

like September 20th of

23:41

that particular month. So it

23:44

does, it gets nasty. I mean, I think

23:46

she might have actually underestimated the the the

23:48

stone wall in the fighting there of the

23:50

nights where we have ended

23:52

in a scenario where we don't talk for the next

23:54

couple of days. And

23:57

yeah, it can be pretty nasty. And then you know.

24:01

Frankly speaking, when

24:03

we start looking at in the future, now I

24:05

love this woman in my guts. She is my

24:07

partner, she is my person. But there

24:09

have been times where I've thought to myself, I'm not gonna

24:11

do this for the next 25 years. I'm

24:15

48, she's a couple years

24:17

younger. I mean, we've still got many, many

24:19

years behind. If we had gotta do this

24:21

every single month and

24:23

go to a level of mental poverty, even

24:25

though we've got like $1.3 million worth of assets,

24:30

I have a hard time existing in that

24:32

space. Okay. Okay.

24:36

Thank you for being honest. Obviously,

24:39

this has been going on

24:41

for decades. Yeah.

24:45

Sounds pretty serious. Would you both agree?

24:48

Yeah, we had a conversation and it

24:51

just went south real fast. And

24:54

we didn't talk for a while afterwards. And that was when I

24:56

thought I need to, we need to see if

24:58

maybe we can get some help with this to see it the

25:01

same. And I don't need to have him see it

25:04

my way, just like when you did like, you

25:06

see it more commonly. That was

25:08

what I think led me to turn in the

25:10

application. It was

25:12

one of those days. At

25:14

this point, what percentage

25:16

of money conversations between the

25:18

two of you are positive

25:20

and what percentage are negative?

25:26

I'd say probably 20% positive and 80%

25:28

negative. Okay. Brett?

25:31

No, I'd agree with that. That makes me super sad.

25:34

Tell me. Because

25:36

I've always thought that we have

25:38

more potential than where we're at currently right

25:40

this minute. And I think there's

25:42

been times where we've definitely exceeded and done a really

25:44

good job with things. Not

25:47

growing up with a lot of like extra

25:49

money, I just have always thought eventually we could do it.

25:52

Eventually we'd like make it. And I don't really know

25:55

what make it means, but

25:57

we would like get where it was different

25:59

than I thought. felt growing up, but it

26:01

still feels the same. So I would not

26:03

want to feel this way always. And

26:06

then I'm ashamed to say it's very real

26:08

in my mind when I'm

26:10

in that space. And yeah, I

26:13

was there this last winter. I've peaked.

26:16

I've got no more ambition. I've got

26:18

no more energy. I've gone through all

26:20

this entrepreneurial stuff. It's time

26:22

to just settle down. Right, right.

26:24

Almost like you've lost the game.

26:27

Giving up. Yeah, you gave up. You hung

26:29

up your jersey. You go, I couldn't

26:32

cut it on the field. And

26:34

so now I'm, you

26:36

know, just I'm not even playing anymore.

26:39

Oh, just so my

26:41

wife can get an A in

26:43

this game that I think to you feels

26:46

meaningless. Is that accurate? Not

26:52

meaningless. Right. So for continuing

26:54

on the sports metaphor, it's like the

26:57

game of basketball is more than

26:59

just getting rebounds. You're going to have

27:01

to walk me through this because I'm on thin ice

27:03

right now understanding where we're going with this basketball. So

27:05

walk me through the analogy. Sandra

27:07

is playing a very small portion

27:09

of the overall game. She's

27:12

playing the monthly portion or the monthly

27:14

budget portion of the game, which I

27:16

would, as part of the analogy would

27:18

be just rebounds and basketball. Right.

27:20

And you're never going to win a basketball

27:22

game if you're only focusing on rebounds and

27:24

you're not playing offense and you're not playing

27:27

defense. But would you, would you agree that

27:29

it's important that you have to

27:31

get some number of rebounds? Yeah.

27:33

Well, that's, that's why I didn't want to

27:35

say that I felt like the game that

27:37

Sandra is playing is meaningless because it is

27:39

like a vital piece of the overall game.

27:41

But it's a small piece in your, it's

27:43

a small place. And for me that the

27:45

game is much bigger. Okay. Fair

27:47

enough. Sandra, let's stick

27:50

on this basketball analogy. Do

27:52

you agree that rebounding

27:55

or what you do with tracking the spending

27:57

is a small piece?

27:59

part or do you see it as the part

28:02

when it comes to money? I

28:04

think for me it's been the part, but a large

28:06

portion of that is because until a year and a

28:09

half ago, I didn't provide

28:11

much income to the family. And

28:14

so that was my version of contributing

28:16

was to manage the money that

28:18

came in. Managed means what? No,

28:21

you're going to laugh at me again. Just

28:24

watching how much for spending and paying the bills. I

28:27

realize it's not managing. I know a computer can

28:29

do that. But that is what

28:31

I did because that was, that was my

28:33

responsibility from the time that we were, you

28:35

know, very first married. And so it was

28:38

the whole game to me, because that

28:40

was the only position that the coach

28:42

gave me. By the

28:44

way, did you ever discuss this? Did you

28:47

ever discuss your roles formally and explicitly? I

28:50

don't really think so. We were so young. I was

28:53

only 20 and Brad was 23.

28:55

My mom had always managed the money. His

28:57

parents had separate accounts and each

29:00

paid for different things in the family and

29:02

didn't have combined finances. And I always thought

29:04

that was like a sign of a poor

29:06

marriage that you should do it together and

29:09

whatever. But you don't do it together. No,

29:12

we don't really. But my mom

29:14

was kind of like, where's pants in my house

29:16

growing up? And so my dad bring a stay

29:18

home, check home and just give it to her.

29:20

And then she would stretch it. Okay. Play

29:22

that analogy out for me. She wears the

29:24

pants means he went to work. Did your

29:26

mom work? She always did little

29:28

things to supplement, but she never worked full time

29:30

outside of the house until we were all grown.

29:34

So when you say your dad handed

29:36

the check over to her, what's the implication

29:38

when he hands the check over to her?

29:41

That she's now in charge of it. Okay. It's

29:43

her money to manage and it's his job to earn

29:45

it. Okay. And

29:48

if I were to ask them, are they both

29:50

alive? Yep, they are. Okay. Both

29:52

still married or no? Still married. 40 some

29:55

years. Wow. Cool. Congratulations

29:57

to that. It's amazing. I know.

30:00

If I were to ask them, do they

30:02

agree with your assessment like he makes the

30:04

money and her job is to manage it.

30:06

Would they both agree? 100% yes. All right.

30:10

And then what about decisions, uh,

30:12

like buying a house buying a car

30:14

investing? Who made those decisions?

30:19

I'm, not sure if they made them together. It was

30:21

always my mom that seemed to be the driver

30:23

of it But i'm

30:25

sure they talked about it. They didn't ever talk about

30:27

it in front of us like who was making a

30:29

decision They would just couldn't tell us we're moving or

30:32

we're selling the house or we're Going

30:34

somewhere different and we moved a lot. So

30:36

it was a conversation. We got to have

30:38

like 14 times growing up. We moved And

30:41

uh, you ever remember mom talking about money when

30:43

you're a kid? Only to say This

30:47

is all we have for the rest of the

30:49

month or you can't get new shoes for school

30:51

But we'll buy shoelaces and we'll wash your shoes

30:53

Right and that kind of stuff. How old were

30:55

you when you heard that? young

30:58

like Starting, you know eight

31:00

nine years old. We always bought everything

31:02

from thrift stores I had

31:04

one pair of shoes for track and cross country through

31:06

high school and I she told me you

31:08

have to make those last How do

31:10

you make them off when you're running 15 miles a day

31:13

in practice? How do you think your mom's? Comments

31:16

and behavior towards money shaped your

31:19

own Um

31:21

makes me scared that there's not going to be

31:23

enough and that It's all

31:25

in me too To make sure that

31:27

there will be enough like I have to be the

31:29

safe one Can

31:32

I ask the question again? Not sure you heard

31:34

me. How do you think that

31:36

your mom's? Comments

31:38

about money and her behavior

31:40

towards money shaped your views

31:42

of money Just want

31:44

to cut in here to point out what just happened. Did you catch it?

31:47

I asked how did your

31:49

mom's comments and behaviors towards money shape

31:51

your own and sandra? Just

31:53

launched right back into her own story. I'm scared.

31:55

There's not going to be enough. I have to

31:57

be the safe one didn't

32:00

even hear what I asked. This

32:03

is common with people who have

32:05

created narratives about themselves. People

32:08

with problems love to

32:10

talk about their problems and people

32:12

who live a story love

32:15

to talk about that story. But

32:18

the truth is those stories often aren't even true.

32:21

The stories are often something we just slid into.

32:24

I much prefer to create my own

32:26

story. It's empowering. I can be

32:28

funny, I can be fit, I can be

32:30

compassionate. I choose my story.

32:33

But to choose your own, you have to

32:35

first understand the story that you've been telling

32:37

yourself. How do you

32:39

think that your mom's comments

32:42

about money and her behavior

32:44

towards money shaped your views

32:46

of money? I

32:49

think I probably see it the same with her. Tell

32:52

me about that. Like

32:55

there's just not enough. There's just never

32:57

gonna be enough. And as soon as

32:59

you have some, something's gonna happen. And

33:03

then it's all gonna be gone again. So

33:07

you have to like hold on to it. But

33:10

even when you try, things outside of your

33:12

control are gonna occur and the

33:15

money's gonna have to be spent on some things. You're never gonna

33:17

get ahead. So

33:19

that's life? You try as hard as

33:21

you can and then you die? Pretty

33:23

much, yeah. Huh. Religious

33:27

family or no? Yes, very, very

33:29

religious Christian. What

33:32

if your family had started

33:34

making a lot of money? What

33:37

would have happened? I

33:40

honestly have, I don't think my mom would have acted

33:43

any different. She was very judgmental at people who had

33:45

a lot of money. Oh,

33:47

that's so shocking. I had no idea

33:50

that I was gonna get to that with

33:52

one question. She was

33:54

judgmental because? She

33:57

felt like they wanted it, that it

33:59

became... the thing that was most

34:01

important to them, that they didn't value

34:03

in service and other people that it was

34:05

all about the money. Where do

34:07

you think she got that message from? Like,

34:11

would she have got those ideas from religion? Is that

34:13

what you mean? Oh, yeah. Yeah. So

34:16

you have to be giving and generous and that it makes

34:18

other people feel bad about themselves if you show that you

34:20

have all this money. Right. And

34:23

are you two religious? Yes. Okay.

34:26

Has that shaped your views on money? Let

34:31

me actually, let me ask the question a different way because I already know

34:33

the answer to that. It definitely has. How

34:36

has your faith and

34:38

your religious background shaped your views

34:41

of money? Brad,

34:44

you answered that one first because I'm not sure. I'm

34:46

curious. Well, this is a mess. This is

34:48

something that I really struggle with. Tell me. So,

34:51

in our belief system, we

34:54

are taught that if you're

34:57

righteous, then you receive blessings.

35:00

Righteous means what? Living the commandments.

35:03

Okay. For lack of a better term. To a high

35:05

degree. Okay. And if

35:07

you're unrighteous, then those blessings

35:09

are taken away from you. Oh.

35:13

And so that puts us in a

35:15

situation where when things are

35:17

going good, you're scratching your head thinking,

35:19

boy, I must be really doing good.

35:22

I must really be living by this

35:24

belief system. Or

35:26

when things are going bad, you

35:28

and or your spouse might feel like

35:31

part of the problem is that you're

35:33

not living righteously enough. And

35:36

so that's something that I

35:38

struggle with. And frankly, I've

35:41

been doing my best to separate that

35:44

belief system and just try to

35:47

just be a little bit

35:49

more dollars and cents with them. I do know

35:51

that when we had more influence, we

35:53

were more liberal with our donations to

35:55

our church, like tithes.

35:58

And since things had been tighter. that's

36:00

not happening as much. And so yes,

36:02

in my mind, there's some belief correlation

36:05

that we should be paying tithes

36:07

even when things are hard, because that's where

36:09

you sacrifice and get blessings.

36:12

Right. Whether they're financial or not.

36:14

Okay. Okay. All right.

36:17

Well, thank you for walking me through that. So

36:21

you manage the money, as you put it,

36:23

which means you pay the bills. And

36:26

in that way, Brad's responsibility

36:28

has been what? To

36:31

earn the money. Okay. Just like my parents. So

36:34

I think a common thread through the

36:36

beginning of our talk until now is

36:38

that we really don't have specific conversations

36:40

about finances other than to

36:42

just argue right and wrong and

36:44

take our positions. Right. No, we

36:46

don't have those conversations. How I

36:48

would describe it is, you know,

36:50

there's there's jabs that are

36:53

taken that, hey, maybe we'd be in a

36:55

better position. What I

36:57

just learned is that Sandra and Brad

36:59

are repeating several money stories, stories

37:02

of their parents, of their religion.

37:05

And that alone is fine. Most of us

37:07

have stories that we repeat from those who

37:09

came before us. That's okay. But

37:12

I also learned that they don't talk

37:14

about these stories. They never do. In

37:17

fact, when they talk about money, it's

37:19

almost always negative. And it's filled with

37:21

jabs to the point that Brad has

37:23

mentioned, he's considered divorce. And

37:25

the longer you go without acknowledging

37:27

your stories and talking about them,

37:30

the more entrenched they become.

37:33

Soon you start to believe your stories, and

37:36

you and your stories become

37:38

inextricably intertwined. But they're not

37:40

you are not your stories. And I hope

37:42

that as you hear this, it

37:44

empowers you to question the beliefs that you grew up

37:46

with the beliefs that you have now. And

37:49

also the beliefs about who you want

37:51

to be in the next chapter of your life. It

37:54

might be that I wasn't good

37:56

with money growing up. But now

37:58

I'm changing that. It

38:00

might be, nobody taught me

38:02

how to connect with

38:04

my emotions growing up, but I'm

38:06

learning the skills to be able to do that with

38:09

my spouse. Whatever your story

38:11

was, interrogate

38:13

it and ask yourself, do I want to change

38:15

that story for the next chapter of my life? Because

38:18

you have more control over your

38:20

story and your money than you

38:22

can possibly imagine. Let's

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now turn to Brad to ask him about

41:49

his career. You were

41:51

in the mortgage industry. I think you were doing very well.

41:54

Mortgage industry came to a standstill.

41:57

How much were you making at the peak?

42:00

in that industry? So

42:02

there were two mortgage eras. The

42:05

most recent mortgage era was 2020 through 2022.

42:09

And we were at like 25 or 30,000. Okay.

42:13

And that's just you? Yeah, that was

42:15

just- All right, cool. What about before that? So

42:18

back in the 2013 era, it

42:21

was the peak, there was about two years

42:23

where we were hitting between 70 and 60,000

42:25

per month. For

42:29

two years? Close

42:31

to, well, there was also an

42:34

event business that was built into that. So we

42:36

hit two home runs at the same time. And

42:38

I would say that, yeah, for those two year

42:40

period, we made a lot of money. That's

42:43

a lot of money. So what'd you do with all that money? We

42:49

had some lead years. It

42:51

got, yes, it got cannibalized when we

42:54

didn't have money. And we spent

42:56

a lot. Hold on, hold on. Let's

42:58

get into this. 70,000 a month. So

43:01

you're making like 800,000 a year, which

43:04

is a tremendous amount of money. Is that about

43:06

ballpark, right? I think it was

43:09

about that. Cause when you were doing the event

43:11

some weekends, you'd make a hundred thousand dollars on

43:13

a weekend. Yeah.

43:16

Like gross. So it was probably about 800,000.

43:19

All right, so you made a couple of million bucks or 1.5 to $2 million over

43:21

two years. And

43:24

what'd you do with the money? We

43:27

bought a house. How much?

43:30

At the time it was only 550 and

43:33

we put down a pretty big down payment.

43:35

So we were only. How much? How much?

43:37

About 300,000. So you put 300K into a

43:39

house. What else? We paid a lot

43:42

of taxes. ATVs. Let's

43:45

say you paid half. All right. So

43:48

that's like a 700,000 has gone to taxes. So now you have

43:50

700,000 left. 300 went to

43:52

the house. You got 400 left. What'd you

43:54

do? Yeah, and so then we paid living expenses

43:56

for those two years. We

43:58

bought ATVs. about furniture

44:00

sets. And

44:03

even after the income dried

44:05

up, we had a good

44:07

nest day, but then we had lean years moving into

44:09

16, 17 and 18. So

44:13

we still had some event income coming

44:15

in, but we bridged the

44:17

Delta with the

44:20

savings from the previous years. How

44:22

long did it take you to cut

44:25

your spending down after

44:28

the high income dried up? We

44:31

never did. Exactly. We

44:33

never did. Our kids had no idea

44:35

that we weren't making the same amount of money.

44:38

You never told them. Now

44:40

it was never really a conversation and

44:43

we just kept going off of the savings

44:45

because we aren't huge

44:47

spenders as far as like big lavish things. I

44:49

mean, I bought a bedroom set. What are you talking

44:51

about? What did you spend the last three minutes talking

44:53

about? Those are his ATV

44:55

toys. I just bought a bedroom

44:58

set. Okay, it was a lot. It was restoration hardware. It was like

45:00

$25,000. So,

45:02

all right. So just like a cruise

45:04

liner is very difficult

45:06

to stop. It can't stop on a

45:08

dime. People spending, particularly

45:10

when they're making a lot of

45:12

money is incredibly difficult to slow

45:14

down. It's like an NFL player,

45:16

they finally get cut. They

45:19

don't stop spending. This is really common. All

45:21

right. So that brings us to about 2020,

45:23

right? When you started making

45:25

a bunch of money again. When

45:27

we first started making

45:29

some money with the last

45:32

refund, it

45:34

was just like an opportunity to breathe. It was

45:36

so nice to have some money that was coming

45:38

in again. But there was still kind of this

45:40

thought looming in the back of our head that

45:43

this opportunity is going to dry

45:45

up. At least it was in my mind.

45:48

So we- It could be in everyone who

45:50

works in any mortgage industry. It's boom and bust.

45:53

Yeah. All right. What was the first

45:55

thing you bought when the income started coming back in? I

45:59

don't think we- I didn't know we saw anything. We

46:01

moved to help my son, our

46:04

son. And we moved

46:06

somewhere. So that's fast forwarding to 2021, the

46:09

summer of 2021. I

46:12

don't remember going and buying anything. I mean,

46:15

we saved most of it. Yeah, we did. Because

46:17

it had been so lean. It was really kind

46:19

of stressful. And I was still driving the same

46:21

Honda Odyssey I'd had forever and drove

46:24

it until I had 250,000 miles on

46:26

it. Okay. I have to say I'm

46:28

impressed. I'm impressed. I feel like finding

46:30

water in the desert for the second

46:33

time. And you just kind

46:35

of gored yourself. No,

46:37

just wait. It's coming. Wait,

46:39

at least let me appreciate it before I didn't even

46:42

know what's coming. It's a

46:44

raj. So that was 2020. And so

46:46

a year later, my son was finishing his sophomore

46:48

year in high school and was really,

46:50

really struggling. Brad is from Jackson. That's

46:53

where he grew up. And it's

46:55

one of the most expensive counties in the entire

46:58

nation to live in. And his

47:00

family is still there. His parents are there. And

47:02

we love it there. And we went

47:04

up to visit and it was the summer of

47:06

2021. And my son had

47:08

a fantastic experience up there and was like a

47:10

new kid and kind of came back to

47:13

life. We had been so worried about

47:15

him that I just saw that as a good opportunity

47:17

to maybe help him. So within

47:19

a month, we moved the entire family.

47:22

It was a huge shift. We rented out our house

47:24

that we'd been living in that was like our dream

47:26

house or whatever. And rents

47:28

up there were close to $10,000 a month for

47:30

just a house. It

47:33

was the only house we could even find to rent.

47:36

And so all that great income that

47:38

we were being careful to preserve really

47:41

quickly went away because cost of living

47:43

there was probably about 30% more

47:45

than it was where we were living. Honestly,

47:48

I would do it again because it really did

47:50

save my son and he's in college now. And

47:52

I don't think he would have, he

47:54

had no ambition and ambition or intention to do

47:56

anything like that. And it, the

47:58

environment was perfect for him. So

48:01

yeah, but that's where all of it went and it was

48:03

really hard to have this great income coming in

48:05

and it was all being spent and Knowing

48:08

that it would have been totally different had we

48:10

not moved. So who's rough? I Get

48:13

you. I mean who can say who can

48:15

tell a parent? Oh, you

48:17

shouldn't spend money Knowing

48:21

that you're as you put it your son came back

48:23

to life Who can ever

48:25

tell any two parents that not me? Not

48:28

my money and it's not my right and honestly the way

48:30

you talk about it I respect that you said look I

48:32

would do it again. Mm-hmm. It was the right

48:34

move I love that part

48:36

where Sandra and Brad spent several minutes telling me how

48:39

they made $800,000

48:41

a year and bought a new

48:43

house and ATVs and a $25,000

48:46

bedroom set and then Sandra casually goes we

48:49

aren't spenders as far as big lavish things

48:52

Do you understand what I'm talking about

48:55

when I say that money is at

48:57

least as much about psychology

48:59

as It is about

49:01

numbers Sandra loves

49:03

her money stories. This story is

49:05

we're not lavish spenders. We're

49:08

just simple people even

49:10

though the numbers clearly say the

49:12

opposite and The truth is all

49:14

of us do this in one way or another we'll say

49:17

I'm not good at money But we never

49:19

bought a single book about personal finance such as

49:21

the best-selling book. I will teach you to be

49:23

rich one last thing I Comment

49:27

about spending a ton of money for

49:29

their son might surprise you How

49:32

can I be okay with people spending

49:34

or even overspending on their kids?

49:37

Well, sometimes you have to make decisions that aren't

49:39

in the spreadsheet and if that

49:41

comes to your kids mental health And

49:44

maybe that's one of those times I'll tell

49:46

you what when I talk to people and

49:48

they tell me what they care about deep

49:50

down It is rarely an ATV or a

49:52

couch. It's their family. It's their time together.

49:54

It's creating memories and experiences So sometimes you

49:57

have to take that carefully manicured spreadsheet and

50:00

throw it away for the love of the people

50:02

around you. It was the right

50:04

move, but it wasn't the right move forever. So we are not

50:06

living there anymore. He graduated and

50:09

then you all decided, okay, it's too

50:11

expensive here. We're gonna go somewhere

50:13

else. Yeah. What'd you do then?

50:16

So we moved kind of suddenly as

50:18

well, but in the meantime, we had

50:20

sold our home. So currently

50:23

we don't own a house and we're renting a house. How

50:25

much did you sell it for? How

50:30

much did you take like after all this stuff? We

50:33

took about eight. Close to 850. Good.

50:38

How much had you bought that house for? Just so I know. Yeah,

50:41

about 565. And then by the time we

50:43

landscaped it, it was about 650 for the whole

50:45

thing. 650 and you sold it for 1.2

50:47

minus all that stuff. Okay. So

50:50

you walked away with some amount of money.

50:52

Good. And that money, I

50:54

understand you've kept it. It's sitting in

50:57

your accounts. And did

50:59

you feel different when you made $80,000 in a month? Do

51:04

you know what? Actually it was really nice. I don't feel

51:07

like I stressed. I know it's supposed to

51:09

not make a difference really, but I

51:11

think it was enough over the threshold that

51:13

it was like, this is so great.

51:15

I mean, it was such a contrast to what we'd

51:17

had. So I was very much more relaxed,

51:19

but I found other things to be unhappy about.

51:21

Oh really? Like what? Oh

51:24

yeah. Whiny stuff. I had kids at

51:27

home. I just complained about the kids and

51:29

my schedule and I wasn't even working. Looking back,

51:31

I have no idea why I was complaining. Like

51:33

I had a bougie life. Hold

51:35

on, zoom in on that. Looking

51:38

back, why do you think you found something else

51:41

to be unhappy about? Why?

51:44

Partly, because I feel

51:46

like you're always supposed to be growing and getting better.

51:50

Partly because I wasn't doing a lot of

51:52

self growth at that time. Everything was

51:55

focused on my kids and I wasn't really doing

51:57

a lot for myself at the time. And

51:59

so. I think I

52:01

just got really whiny about that but I

52:04

did it by expressing discontent in a lot

52:06

of areas in life Okay,

52:10

but what happened when Brad Stopped

52:12

earning eighty thousand a month Sandra what

52:15

happened in terms of the dynamics in

52:17

the relationship? On

52:19

a way for me. I felt like he wasn't doing

52:22

his job anymore Because

52:24

his job was to earn money Yes, his

52:27

job was to earn money and I did all the other

52:29

things I took care of the kids in the house and

52:31

all the things so Until

52:34

we started the event together and

52:37

until that point I hadn't done anything

52:40

Once my youngest like our kids got a little bit

52:42

older. I hadn't done anything outside the home to contribute

52:44

Financially and then once we did

52:47

that it felt like we'd opened up a

52:49

stopgap where then my contribution for

52:51

everything I was doing before that time wasn't

52:53

as valuable because Now I

52:55

had shown that I could actually take care of

52:58

the home and the kids and

53:00

do something that earned money And so I

53:02

felt like after we did that I was in like 2011

53:05

But then there was an expectation that I

53:07

would always do something that would help to

53:09

earn more money as well And I didn't

53:11

like that either. I felt like I Didn't

53:15

sign up for that like I I signed up to

53:17

be a mom and take care of my kids and

53:20

Until they were grown. So I think

53:22

there was just a lot of role changing and Confusion

53:25

and not talking a lot about it

53:27

directly It

53:30

feels like a full-blown midlife

53:32

crisis from from where I stand

53:35

tell me you know why that

53:37

last winter I remember having a

53:39

striking thought that I've

53:42

peaked And then you

53:44

start looking at examples of individuals in

53:46

your life that are you know a

53:49

little long in the tooth and then

53:51

you know imagining that that's And

53:54

they're never they're never positive examples. They're

53:56

always negative examples, and you know bringing

53:58

up any names, but you know you

54:00

look at those people and we actually

54:03

use those individuals as kind of ammunition

54:05

against each other. Well,

54:07

we're gonna end up just like such and

54:09

such with Sandra and I will lob those

54:11

back and forth. I don't want to end

54:13

up like so and so. Wow. And

54:16

so it's pretty heavy and it's pretty

54:18

deep and you know, it only adds

54:20

to the stress and the pressure of

54:23

the monthly budgeting

54:26

conversations. I

54:28

think the darkest thought is you just

54:30

wasted all that potential and all those

54:33

dreams that you have when you were

54:35

a kid, you never

54:37

fulfilled on turning to nightmares. There's

54:39

a lot to notice from that last

54:41

exchange. Did you catch the clues? Even

54:45

during $60,000 months,

54:47

Sandra was unhappy. Now that

54:49

she's working, she feels resentful.

54:52

She expects him to bring in an income. Brad

54:55

calls their situation a

54:58

full-blown midlife crisis. And

55:01

what's perhaps most disturbing is that they're

55:03

sniping and jabbing at each other using

55:06

other couples as negative examples.

55:09

Lots of clues here, mostly

55:11

negative ones. We'll

55:14

be back after this. Okay,

55:16

I remember moving to my apartment in New York many

55:19

years ago and it was a

55:21

nicer apartment than I had previously lived in

55:23

in San Francisco. And one

55:25

day I was walking from my apartment down the hallway

55:27

to the elevator and I saw a dollar bill sitting

55:29

on the floor. I looked around, there's nobody in

55:31

the hallway. So I went to pick it up. It

55:34

wasn't a $1 bill. It was a

55:36

$20 bill. And I was like, is

55:38

this New York City? People just dropped

55:40

$20 bills everywhere? That was

55:42

when I learned this was a different city than

55:44

I had grown up in. Now think

55:46

about what it feels like to put your hand in an

55:49

old pair of pants or a coat and

55:51

find a $1 or a $10 $20 bill. It

55:54

feels amazing. Hidden money

55:56

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55:59

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56:03

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57:05

rocketmoney.com/remit. Now

57:09

back to the show. And

57:11

so that brings us to today, correct? You're renting,

57:13

you've got some cash in the bank because of

57:15

the house sale and would

57:18

you say that that house sale represents the bulk

57:20

of your net worth? Yes.

57:23

Yes. There's a couple of other details

57:25

that I would add to this web

57:27

that we'll be making. Tell

57:29

me. The house sale was a

57:32

difficult decision to come to. We kind

57:35

of thought that that was always

57:37

a plan B and these

57:39

words coming out of my mouth are interesting

57:42

to hear. But

57:45

we've invested the majority

57:47

of the money from the house

57:50

into an oil

57:52

operation on a project

57:54

that I've been watching for the last

57:57

several years. What's

57:59

an oil operation? What is that? Yeah,

58:02

it's a fracking unit out

58:04

in the middle of a desert that's pulling oil out

58:07

of the ground. And the

58:09

entity that is managing the project is

58:11

looking for investors. Generally

58:13

speaking, it's a $200 million

58:16

project. I've got some buddies that are playing a

58:18

much bigger game than I am, but I had

58:20

an opportunity to go in with them. How

58:23

much did you invest? All of it. A

58:26

million. Is this a joke? No.

58:31

You invested one

58:33

million, which is basically

58:35

almost all of the investment

58:37

money into one fracking operation?

58:41

Mm-hmm. Several different

58:43

fracking operations. I'm

58:45

watching Sandra's face there as

58:47

we're coming to an unbiased

58:50

third party to hear our

58:52

story. Well,

58:54

what do you think I'm going to say? I

58:57

haven't listened to all of your podcasts, but

58:59

let me buckle in. I'm ready for it.

59:02

Before we go on, let me just

59:04

get this one thing out, which I've been wanting to ask

59:06

you about. So you have a part-time job right

59:08

now. Yes. Which is what? I

59:10

teach it. What do you teach? Personal

59:13

finance. Okay. We've

59:16

been playing the traditional game since day

59:18

one. So we graduated from college back

59:21

in early 2000. And

59:23

at that point, one of the reasons why we were

59:25

managing our budget as low as we could is so

59:27

that we could max out our 401Ks. Right.

59:31

So we could max out our IRAs. And

59:33

that was 25 years ago. And

59:35

so back in those days, we were living

59:38

under the same documentation that's found on the

59:40

textbook. Mm-hmm. 8% compound interest,

59:42

Einstein compound interest is the eighth wonder of the

59:44

world. And this is the way to do it.

59:47

We don't have much to show

59:49

for those initial investments, right? So

59:52

in 2000, Sandra and

59:54

Brad were making decisions for

59:56

future Sandra and Brad. investments

1:00:00

were going to grow significantly in a

1:00:02

straight line over time. And

1:00:04

at this point, after all of the eating

1:00:06

ramen and not having telephones and all these

1:00:08

other things that we were doing so that

1:00:11

we could invest while we were young, those

1:00:13

accounts suck right now. They

1:00:17

didn't pan out like the textbooks

1:00:19

say. So tell me, hold on, hold on, hold on, hold on.

1:00:21

Before we go on, tell me what you mean by

1:00:23

that. These accounts suck

1:00:25

right now. What does that mean? We

1:00:27

went back and did some analysis and they've averaged about

1:00:29

a 3% rate of return over the last

1:00:32

25 years. So we

1:00:34

thought that we could make those investments

1:00:36

and they were all diversified and we

1:00:38

had which we

1:00:41

fired a financial advisor of

1:00:43

guiding us along the way. How

1:00:46

long was your advisor with you charging you? 24

1:00:48

years. So

1:00:50

nice of them. So nominal. Anyway, so they

1:00:53

charge you and then what they put you in, that's

1:00:55

what I want to know because 3% per year is

1:00:57

horrible. Yeah, right? Horrible.

1:00:59

I bet you they didn't put you in growth

1:01:01

stuff. They go, we're going to make sure your

1:01:03

money's safe. We're going to keep you safe because

1:01:05

our aim is not to beat the market. It's

1:01:07

simply to provide a nice return for safety and

1:01:10

security. Some bullsh** like that. And it gets complicated

1:01:12

and they use these language along the lines of

1:01:15

when we were first starting you're young, we're

1:01:17

going to put you in growth caps and

1:01:19

international funds and we've got this allocation and

1:01:21

they come in to give us a yearly

1:01:23

review. And I'm

1:01:26

relatively educated. I've got an

1:01:28

MBA, but if you can't dazzle

1:01:30

with brilliance, baffle with bullsh**. Yeah,

1:01:32

you're right. You can't make sense of it.

1:01:35

If it's good, they tell you that. If it's bad,

1:01:37

they razzle dazzle you. I get it. And

1:01:40

I'm angry on behalf of you.

1:01:45

I'm not sure that I

1:01:48

agree with your

1:01:50

conclusion. And

1:01:53

I get that. And I

1:01:55

don't agree either with his

1:01:57

conclusion. What is your perspective? I'd

1:02:00

like to max out every Roth 401k

1:02:02

IRA. I

1:02:05

could open a Roth for my kids, I would. So

1:02:08

I'd like to have all of that going

1:02:10

so that we are diversified. Okay. And

1:02:12

when you don't, like the fact that you're not doing that,

1:02:14

how does that make you feel? Like

1:02:18

we're going to end up just like my parents on

1:02:20

herb or smorgas because they couldn't afford

1:02:23

to buy a house and stress

1:02:25

about money every single month with no

1:02:27

investment savings, no retirement. Like

1:02:29

that gives you a lot of fear. It

1:02:32

does because they tried so hard,

1:02:35

if that makes sense. And they tried

1:02:37

so hard and they're not a great spot. And

1:02:40

I worry that we're going to end up needing to take care

1:02:42

of them. And I love them and

1:02:44

I will if we need to. But I

1:02:46

tease with Brad about we're going to

1:02:48

need to build a compound and on one side build

1:02:50

an apartment for your parents, on one side build an

1:02:53

apartment for my parents. His parents are

1:02:55

probably going to be fine financially, but mine will

1:02:57

definitely need help. I

1:02:59

worry about that. Okay. Listen,

1:03:01

this is a bold move and I'm

1:03:06

super clear that it's a bold move

1:03:08

and I'm so grateful that. Bold?

1:03:11

Is that a word that you chose? Bold?

1:03:13

Yeah. What's another word for bold?

1:03:15

Do I need to open up the thesaurus? Well,

1:03:18

I'll go down my throat. Okay,

1:03:20

go ahead. Brave riverboat gambler. Okay,

1:03:22

very good. Listen, I feel like

1:03:25

the system is rigged, right? Yeah,

1:03:27

against you. Right. With

1:03:30

all the RRA's and 401ks and

1:03:32

musical funds and money advisors. No, no,

1:03:34

not that. The oil

1:03:36

game is rigged against you. No, I

1:03:38

don't see it though. I see it

1:03:40

like when the deck is

1:03:42

stacked against you and every now and again, you

1:03:45

get like a perfect hand and you go big

1:03:47

with it. And that's where I'm at. All

1:03:49

right. And I see you. I

1:03:51

see you, Grimace. And I'm sure that

1:03:54

people are listening or thinking that I'm

1:03:56

absolutely out of my mind. I'll

1:03:58

tell you what, when we do get to that. a full

1:04:00

payoff with those

1:04:02

dividends. It'll be a huge sigh of relief.

1:04:06

This is so messed up. They start investing

1:04:08

early in their marriage only to sign

1:04:10

with an unscrupulous salesman who calls himself

1:04:12

a financial advisor, bleeds them dry of

1:04:15

their money via fees and horrible funds.

1:04:17

Then they finally catch on like 20 years

1:04:20

later, only to

1:04:22

make the completely wrong conclusion.

1:04:25

Brad's conclusion is all

1:04:27

traditional investing routes suck and

1:04:30

I need to put our entire family

1:04:32

life savings into an oil well.

1:04:36

Ramit's conclusion is

1:04:40

we probably should have read a single book

1:04:42

about personal finance, not paid huge

1:04:45

fees. And when we were making $80,000 a month

1:04:47

for years, we probably should have

1:04:51

invested a huge amount of that money into low

1:04:53

cost index funds, which would have set us up

1:04:55

for the rest of our lives. Of

1:04:58

course, one of the primary reasons

1:05:00

for Brad's extremely risky approach with

1:05:03

money is that once people feel

1:05:05

behind, once people feel

1:05:07

like they have to catch up

1:05:09

or even that it's too late,

1:05:11

they start to make increasingly frantic

1:05:13

risky decisions, which of

1:05:15

course is a cycle. Just like you would

1:05:17

imagine a gambler in Vegas, that

1:05:21

leads to simply more poor

1:05:23

outcomes. Again, remember,

1:05:25

Brad teaches personal

1:05:28

finance. So this

1:05:30

is a single investment that

1:05:33

pays out, it pays you some monthly

1:05:35

dividend, correct? So there's

1:05:37

two projects, yes, it pays out monthly dividends.

1:05:40

All right. And how long

1:05:42

has this been going on for? So we

1:05:44

made the first investment of May 22, right

1:05:49

after the house sold. And we made

1:05:51

the second investment of January of 2023.

1:05:53

All right, so

1:05:56

you invested in two tranches. And how much

1:05:58

are you getting paid? from

1:06:00

a million dollars, how much are you getting

1:06:03

paid out per month? So the first project

1:06:05

has been paying since January. And

1:06:08

so we're pretty close to the end of the year. We're

1:06:11

at like 40% of the initial investment

1:06:13

has been paid back. So

1:06:17

you put in like 500k? Yeah, just

1:06:19

do easy math. We put in 500k

1:06:21

so far it's paid back like 200k.

1:06:25

200k, we've got another couple months they're coming

1:06:27

through. The second project

1:06:29

kicks in. Actually, the first

1:06:31

dividend should be coming here in this next week. How

1:06:34

much? The

1:06:36

first is I took a flight out to

1:06:39

the oil field and it was spectacular and

1:06:41

got to like touch the dirt and I

1:06:43

have some oil from the project. The

1:06:46

first one is gonna be about a percent and a half.

1:06:48

But then when we start getting into December, January, it should

1:06:50

start getting about 3.8 to 6% per month. For

1:06:55

how long? So

1:06:58

the oil dries up. The

1:07:00

percentage changes. Yeah, so

1:07:02

there's two variables. The percentage changes after

1:07:04

they have 100% payback, then

1:07:08

the investor portfolio goes for the

1:07:10

investor payback goes from 100% of

1:07:12

net income down to 70%

1:07:14

net income. The

1:07:17

traditional trajectory for the oil

1:07:19

projects in this particular area,

1:07:23

they peak at year three or year

1:07:25

four and then it's relatively steep decline. But there

1:07:27

will be oil that comes out of these projects

1:07:29

for like the next 20, 25 years. So

1:07:33

like I know you can't predict

1:07:36

it because it's one oil operation. It's

1:07:39

not like hundreds that you can average out, but what

1:07:42

percentage annual return can

1:07:44

you expect fall

1:07:46

park? So for

1:07:48

the first year, it will be pretty

1:07:50

close to 50%. There's

1:07:53

a lot of variables in play, but I would

1:07:55

anticipate after we peak and we start going down

1:07:57

into like years 6, 7, 8, and 10. or

1:08:00

nine, you know, maybe 15 to

1:08:03

20% per month. The other nice thing about

1:08:05

the product is it per month. Sorry, sorry,

1:08:07

I misspoke for your

1:08:09

15 20% per year.

1:08:12

The other super nice part

1:08:15

of this oil operation is that

1:08:17

it's domestic based. And so

1:08:19

we get a 70 cents per dollar tax deduction.

1:08:21

So, you know, for

1:08:23

every dollar that we invest in the project,

1:08:26

we get a 70% tax opportunity, right. You

1:08:29

have a huge deduction. All right. What

1:08:32

can go wrong with this? The

1:08:35

price of oil could drop below break even, which

1:08:38

is sitting about 30 cents or $30 per barrel.

1:08:42

They can miss the oil. Both

1:08:44

projects are currently on the oil. There's

1:08:47

regulation issues that could come up

1:08:50

with EPA. There's some presidential risk,

1:08:52

you know, but I'd say where

1:08:55

we're at now is about as

1:08:57

bad as it's going to be.

1:08:59

So there are significant risks and

1:09:02

I'm crystal clear on that. Okay.

1:09:04

All right. Well, listen, so far your answers

1:09:07

are good. I'm not sure if I agree

1:09:09

with your conclusion, but I like that you

1:09:11

have, you know

1:09:13

your numbers, you know the

1:09:15

projections, you know the risks. All right. So

1:09:18

for the short term, I do believe that there's

1:09:20

opportunities that can pay out. And I believe

1:09:22

that I found one. Can I ask you a

1:09:24

question? I understand why

1:09:28

you chose to go

1:09:30

into a highly risky

1:09:32

investment. You

1:09:35

looked at your investing for the last 25 years

1:09:37

and you said, this is

1:09:40

not good. Like the account's horrible.

1:09:42

We found out we were getting charged 1% after 24 years. And

1:09:47

our, even when we look at the returns,

1:09:49

it was horrible. I want no part of

1:09:51

this long-term investing stuff. And

1:09:54

every month I'm getting these text

1:09:56

messages and conversations from my wife

1:09:59

that I don't want to

1:10:01

have a part of anymore. So I'm going to

1:10:03

take this money from selling our house and I'm going

1:10:05

to put it in something that's going to pay off

1:10:07

big. I've done the risk evaluation, etc,

1:10:09

etc. And look, it's paying me

1:10:12

20 to $60,000 a month right now

1:10:14

here. Haven't

1:10:19

I earned some piece? Look

1:10:22

at what I've delivered to our family. Is

1:10:25

that accurate? Like more

1:10:28

than 100% perfect. This

1:10:30

was a project

1:10:34

that I've been watching for two years. I

1:10:37

had researched inside and out and I feel like

1:10:39

we've got the perfect hand with that. In

1:10:42

the way that it's structured, we get the tax

1:10:45

opportunity and

1:10:47

we're seeing a 50% return per year

1:10:49

on the first project that we're into.

1:10:52

The second one is tapping

1:10:54

into the same oil reserves. And I know

1:10:56

that it's getting tedious and into the details, but

1:10:59

it does feel like this is a

1:11:01

nice chance to crush it and to get

1:11:03

out of that rat race where we've been

1:11:05

stuck in the last 25 years. Okay,

1:11:09

based on what Brad just told you, do

1:11:11

you think this is a good idea? If

1:11:14

you're watching on YouTube, just leave your comment below. And

1:11:17

next week, we'll pick up on

1:11:19

our conversation with even more numbers,

1:11:22

which I promise will surprise

1:11:24

you. Thank

1:11:52

you.