282. "We spend 154% of what we make. Will we ever stop drowning?"

Ramit Sethi (0:00)

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Addison (0:47)

The spending is out of control. We have no savings. We are living way beyond our means.

Ramit Sethi (0:52)

Fixed cost, 154%. That is one of the highest numbers I've ever seen.

Addison (0:57)

Shocking to see the numbers. And a little painful in that I was finding out the debt that James has is just way more than I could have ever anticipated.

James (1:06)

It was very foolish. You can't plan a life on vibes.

Ramit Sethi (1:10)

I never met a couple in $400,000 a debt that went to a beer garden once a week with tacos.

James (1:14)

We overvalue the almighty convenience.

Ramit Sethi (1:17)

You said, we will likely divorce if things continue on as they have.

Addison (1:22)

I am supporting his career. I am the safety net and I am taking care of everything. I'm just done with the defensiveness and the excuses and the reasons why. I can't literally keep doing this anymore.

Ramit Sethi (1:33)

Guys, we can't get any further if you're not honest about what's going on. 154% it's not about cutting your phone bill down by $20 a month. If you want to make radical change, you have to admit some deep things about yourself that might be quite uncomfortable.

You ever feel a little nosy? I do. And recently I started having couples on my podcast connect all of their accounts to Monarch so that I could see every transaction. Monarch is a platform that puts all of your accounts, your income, even those individual transactions in one place. Today I'm speaking to Addison and James. They're 39 and 43, newly married, and Addison says they will likely divorce if things continue as they have. Listen to this line from the application. I've had to actually take on more work and student loan debt to subsidize his career growth and financial stability at the literal expense of my own. If we don't nip this in the bud now, we will retire homeless. From their application, you can see that the stakes are as high as they come. Okay, let's take a look here. We have, whoa, $2,690 earned, but $7,889 spent. Where's the savings?

Where's the investments? What's going on here? All right, I'm starting to develop some suspicions. You know what? Let's go back a month and see what happened the month before. I'm back here in July. Fixed cost now at $14,659, whoa! That's 154% of take-home pay.

Well, that's the ball game right there. You are spending more than you make every single month just in fixed costs and not even at 100%, 154%.

I mean, take a look here. I can see pets that month at $2,667.

Notice another thing, they're groceries. The amount they planned to spend in one month $3,363 for two people. The fact that they are planning to have that much money spent on groceries in a month tells me that they're probably not looking at the big picture, nor are they particularly in touch with where their money should go. Also notice that the amount they have planned to spend on debt every month, is $1,798. If you're spending almost $2,000 a month to pay off debt, you probably have a huge amount of debt. The question is, where does it show up here? I'm not seeing any particular debt. I'm seeing $4,882 on credit cards, which is a somewhat reasonable amount, but there's got to be a large amount, tens of thousands of dollars of debt somewhere that's not showing up here. I want to find out where it is. We have a lot of work to do. Let's talk to Addison and James.

Addison, when you applied to speak to me, you wrote something in your application. I'd like to read it back to you. You said, one of the first things James said to me when we first started seeing each other six years ago was I'm not good with finances. I now know what he meant, and I didn't know it was this bad. We will likely divorce if things continue on as they have. Where were you and what was happening when you wrote this application?