281. "We have 4 kids and nearly $1M in debt. Are we screwed?”

Rebecca (0:00)

So many years, it was like, well, don't spend that. Well, don't spend that.

Ramit Sethi (0:06)

Your debt is between $633,000 and a million dollars. Wow. How do you feel about your numbers?

Rebecca (0:13)

It's fair.

Matthew (0:14)

Embarrassed. It's heavy. It's like a burden that you carry around.

Rebecca (0:18)

I don't feel like I have a lot of control because I just am waiting on him to give us paychecks all the time.

Matthew (0:23)

It feels like you're putting all the burden on me to come up with a plan.

Rebecca (0:26)

I need communication of a person that thrives knowing what's going on.

Ramit Sethi (0:30)

Do you resolve your money conversations or do they just get swept under the rug?

Rebecca (0:34)

They just move to a new day.

Ramit Sethi (0:36)

What does that feel like?

Rebecca (0:37)

Overwhelming, hopeless.

Ramit Sethi (0:39)

What's going to happen if you get hit by an emergency expense?

Rebecca (0:42)

We'll lose our house. Yes. We'll always be broke.

Ramit Sethi (0:46)

Now, it's one thing if it's just the two of you, but you have four kids. I'm not okay with it. You have to change and probably change radically.

Today, I'm talking to Rebecca and Matthew, 43 and 42 years old. They have four children and they live in an expensive area. And every single month, they spend more than they make. They're in a pretty difficult financial situation. And to figure out what's going on, I realized I needed to go deeper with their numbers. So today, we're doing something new. I'm going to be able to go deeper into the details of our guests spending, how much they actually spend on eating out and vacations, and even random Amazon purchases. I can now see it all. And so will you. And sometimes what we see is not going to equal what they tell me. We found a great partner to help with these financial drill downs. Monarch, which is a private personal finance app that brings all of a household's accounts into one clean dashboard, including checking, credit cards, loans, and investments. You can now try it for free and get 50% off your first year off of Monarch's core tier using code Ramit at monarch.com/ramit.

So let's take a peek in their Monarch account to see what jumps out. Credit cards, $13,000.

I kind of want to see what's getting spent on their credit cards. Let's take a look. I see a lot of assorted spending at Amazon and Target. As recently as a couple of months ago, they spent $214 on interest charges. And then just a few days prior to that, $40 on a past due fee. So they're probably spending thousands of dollars a year on just fees. Let's take a look at their transactions. Carmel Valley Lodge for $526. And that's just a few days ago. So we have a couple that's in hundreds of thousands of dollars of debt spending $500 at a hotel. I'm definitely curious about that. Church Giving $550 a month. I have questions. You know what? Now that I'm looking at it, there's a lot of frequent shopping here. All right, I have a lot of questions. Let's go meet Rebecca and Matthew.

In your application, Rebecca, you wrote something that caught my eye. I want to read it. You wrote, we are midlife in our 40s. We are basically no savings and hardly anything in our retirement.

My husband has taken from that retirement to make ends meet at different times. I don't see how we will sustain our relationship and family long term without a major shift. It's feeling hopeless to me a lot of the time. Do you still feel that way?

Rebecca (3:36)

Yes, I do.

Ramit Sethi (3:38)

Where were you when you wrote that and what was going on in your life?

Rebecca (3:44)

Ironically enough, we were on a road trip and we were actually listening to your podcast in the front of the car while our kids were on their headphones in the back.

I just said, I'm tired of this. We need help.

Ramit Sethi (3:59)

How long have you felt tired of your financial situation?

Rebecca (4:03)

Probably most of our marriage, but particularly in the last maybe five or six years has been hard.

Ramit Sethi (4:12)

Got it. How long have you been married?

Rebecca (4:14)

We've been married 16 years in a couple of weeks.

Ramit Sethi (4:16)

Wow. Congratulations.

Rebecca (4:18)

Thank you.

Ramit Sethi (4:18)

Okay. How many children?

Rebecca (4:21)

Four.

Ramit Sethi (4:21)

Four kids. What are their ages?

Rebecca (4:25)

12, 10, 8, and 5

Ramit Sethi (4:27)

Great. Okay, great. Married 16 years, four children, and you mentioned that in the last five or six years, money has become more challenging. What happened five or six years ago?