Jk but I will do some sort of re-cap, humor pending
Sounds like this will be an emotional one. The theme of this show is irregular income. My boobs are slightly different sizes so I already relate. Vince’s income is variable, some months he earns $2k and some $25k. Vince’s income has been dropping over many months.
We’re starting with Casey. She gets stressed about how variable his income is even though he has big months. Says she can’t handle it in a way that allows for budgeting. Ramit asks how her stress manifests. She says Vince would say she becomes v tight with money. Feels they can’t go on vacation or see family. Ramit’s like, you have hundreds of thousands in savings. She says it’s the fear that in a few months they’ll be in trouble that stresses her the F out.
Vince says it’s frustrating but says Casey is fab at the family accounting, like he doesn’t even know what bills cost. That’s her job and he thinks she likes it. He thinks she likes to be in control and he doesn’t really curr. But when she says they don’t have money he’s all, “how?” because he knows he made a lot in the last year. He should be able to enjoy money he makes.
She says they’ve had this convo. Yah he works hard, she says, and sometimes he makes a lot but sometimes he doesn’t.
Ramit asks if they’ve ever worked with an irregular income before. She says he’s had this jerb since 2017. But she says it’s gotten more irregular in the last 6 months. Ramit’s like, what’s the difference now versus before? She says they can’t put money aside for future wants like vacations, but she feels like they need that savings as a buffer for bad months so she can’t allocate money for travel or early retirement. She wants to be more serious about RE. Ramit asks if she likes being money manager, she says “when we make a lot of it, yeah”. For those only reading this and not listening, the guy sounds a little frustrated and the woman sounds very down. Like, her tone is what you might expect if the guy had been out of work for a year or something. Ok back to the show.
She feels like she’s shuffling things around when there is less money, and like she is watching their e-fund dwindle. Like, last month they went over budget because the guy’s grandma was sick, and that made her super negative (her words). She says it “feels” like they’re in debt even though they’re not. Yeah, you’re not in debt, says Ramit. A baby literally cries out at this point in the recording. I don’t think it’s Ramit doing an impression tho, I think it’s an actual baby, or maybe it’s my psyche, hard to tell.
Ramit asks what she thinks savings is for, I was wondering too bc sick grandma seems like exactly what it’s for. She says savings is for emergencies, like losing a job. Ramit’s like where did you pull the emergency travel money from? She says “in my mind, the emergency fund” this is getting real meta. She said it’s all one bucket. Ramit is not on board.
Ramit’s talking to us now, bc we’re all girlfriends here. He tells us they have $42k in savings, and more in retirement funds. Of the savings $30k is e-fund. They mentally bucketed the remaining $12k, so when they had to “find” $4k in flights to see grandma they were “over” their budget. Ramit says this is how someone can have tens of thousands in the bank but not feel they have enough. He says lots of peeps have this reaction with moolah, but not with other stuff, like ziplock bags. Yes, really. Uh, hahahaha, we have confirmation that Ramit has never used a ziplock bag. I present to you the actual sentence this man just said:
“Let’s say you’ve mentally planned to use 5 ziplock bags for your kids’ project, but then you had to use those bags to store some takeout,”
He keeps going and you can see where (i.e. you wouldn’t be panicked about running out of bags) but I was too busy hysterically laughing at these fucking weird examples. Dadaist AllHat is v pleased with the image of general tso’s sloshing around in a ziplock. He finishes this masterpiece with:
“To many of us, money is not as real as a ziplock bag.” I feel like Ramit missed his calling as an inscrutable fortune cookie writer.
Anyway this is why Ramit talks about fee fees and not just #s. He asks Casey how she grew up with money. Her dad listened to Dave Ramsey cassette tapes. She says it made her responsible compared to her peers but now it makes her anxious. When she was in high school her dad last his job and they were broke. She’s crying. They had to go to a food bank. It was embarrassing and scary that they were selling their vacation cabin, snowmobiles, the corvette. “All those things got taken from us,” she says. Ramit says, “wow, I’m sorry you had to go through that.” He mentions she still sounds very emotional even though it was years ago. She says she’s afraid it will happen again.
She says she doesn’t know how to enjoy spending the money they earn without categorizing everything and always feeling like she needs to save more or they won’t eat. She knows logically that’s not the case but it feels that way.
Ramit asks what she would need to feel safe. She says stability. The man interjects that when he was making a lot every month they didn’t take advantage of it or maybe they took too much advantage of it. Now here we are. This guy is confusing. He says they feel broke in their minds.
Ramit is telling us, they saved up $20k to buy a new deck when times are good. He wants us to listen to how they talk about it. She says the next month after they had a bad month and she was stressed, Vince was stressed because of her stress. They didn’t have the money he wanted for his hobbies. Tension in the household. He says, “again, multiple great months, $25k three months in a row,” I get the feeling he wants her to acknowledge that he’s an excellent earner because he keeps interjecting about his good months and she seems to exclusively point out his bad months.
Ramit is saying, “cluttered desk cluttered mind,” in this guy’s case he says it’s more like, “inexact language, inexact mind.” I’m doing the best I can here, lol. Ramit points out how loosely the guy uses words like, “we put that money away,” and “the savings was poof!” Ramit is like, you CHOSE to spend it it didn’t disappear. He also criticizes the guy using the word “broke” when they are not broke. But he’s telling all of this to us, not to him.
Ramit asks how they decide on financial stuff. She says she states what she wants and makes it happen and he’s usually on board. He’s laid back and goes with it.
OMG they have a Porsche. Vince says it wasn’t his decision, but it’s his dream car, lol. They also both keep saying “this one” as if they had a different Porsche before this one. My sympathy for these two is waning. She said he could get it so he got it, I guess? IDK. She says the monthly payment was the same for this bigger SUV Porsche as the old I assume smaller Porsche. Ramit’s like, tell me what you think I’ll say. She says, “you don’t buy a car based on the monthly payments.” Oh also, they make $300k a year, she just dropped that in. The Porsche is $762 a month. FUCKING HELL. They think the payment is for 6 YEARS. I’m dead. Please throw a 1989 Porsche 911 Carrera in my grave. I’m flexible on color but prefer red.
They owe $75k on their cars overall. She says she feels fine about that on good months and doesn’t care. She says she puts extra onto the cars. On “bad months” she spirals and freaks out. Vince says growing up his parents split up, his mom made like $90k and his dad made like $30k and lived in a trailer. His dad instilled in him that they can always figure it out, he said he never felt poor even when they were living in a basement. It was a weird upbringing going from upper middle class to working class partway through the week. He thinks his carefree attitude is from his dad being such a “we can always figure it out” kind of dude.
Guy says interest rates will impact his job because they’re going up. Ramit asks how that will affect his pay. Yikes, he says he has “faith” that the company will take care of them, they make adjustments to pay based on what the market does. Won’t have the same goals as when rates are lower, he says it’s more of an adjustment period. He says he can sell people who currently have 2.7% interest rates on a 5% interest rate. Ramit says that seems unlikely, Vince says there’s times where it works because a lot of people have debt.
Ramit is telling us he thinks Vince is being naive; he works in the mortgage industry. Ramit says when interest rates go up people in that industry get laid off. Ramit says contraction in the industry has already started. Perhaps financial lamaze will help. Ramit asks what they would do if his pay was drastically cut or he lost his job. He says they could cut back on a lot of things, like the person who TAKES CARE OF THE POOL. Casey is crying at the mention of Vince losing a job or getting his income cut. She hates to think about it, she says it would mean she would have to start working again and put the kids in daycare and not be with them. She would hate that. Ramit asks if they’ve talked about the possibility of this happening and Vince says no. Vince says he’s confident it wouldn’t happen.
Vince says it sucks to work harder for less money but is citing how he’s already been through so much up and down in the last 5 years and thus can totes make it. Ramit points out that it’s been a record bull market straight through the last 5 years, i.e. he’s had it super easy. Vince seems pretty out of touch with reality. Ramit asks what amount of gross income they save and invest. Casey says not enough but Vince says they are maxing out 401(k) and have a stock purchase program he puts 10% in, but he agrees they could have invested more but he says something always comes up. Casey says stuff doesn’t come up, it’s not emergencies that make them spend it’s stuff like a Porsche or deck. Ramit asks them to rephrase. Vince admits they spent it. Casey admits it too.
Ramit says losing his high income would challenge their identity and that’s the real issue here, not being able to eat, etc. He says we should be careful about what we use to define us. Dressed in Head-to-Toe Baby Phat AllHat agrees. Ramit says their cars are super expensive, and if they had more in savings and investments and made $300k every year it would be fine. But he says if their income keeps dropping like it has been those cars are going to be a real pain in the old brown starfish. Ramit wants them to plan for variable income and have a plan B in case his income goes downhill. YES. Also in case he doesn’t actually cover it- having had variable income for many years in the past: one way to do it is to plan based on worst years or worst 6-month periods and to treat everything else as a bonus.
Ramit is telling us about his awesome growth. He says in his 20s he would have “verbally eviscerated” this couple. He would have told them how bad they are with money, told the guy he was going to lose his job, and calculated when they’d run out of money. He also claims he can predict exactly what the outcome would have been if he did this now, even down to their facial expressions. Ironically, this is meant to illustrate to us that he is less of a know it all than he once was. He says it makes him cringe to think about himself in the past. He realizes now that you can be right and still not connect with someone. This podcast works, he says, because now he is great at connecting and reaching people, because he understands that money is emotional! I have never heard someone beg for credit for being less of an asshole as consistently as this dude, lol. Imagine if a woman did that? Hahahahahahahahahaha.
Ramit asks how she allocates Vince’s paycheck. She goes to paying bills first, then what’s left over she says lately it goes to savings. The lower the paycheck the more she tries to save…which seems…like a bad strategy. We’re talking how to decide how much to pay yourself first. Ramit says use a percentage and go with that- he says like 10% for savings, 10% for investments. He asks what they’d have in a year if they did that. $30k in savings and $30k invested is the answer. Ramit asks what they save per year. Vince says they do a good job of maintaining the e-fund and the rest is spent. Ramit says because they make so much money it’s allowed them to not be very good planners and still get by. They need a better plan, basically.
We’re getting into their numbers. They have $225k in their 401(k) and $35k across two IRAs, plus the $30k emergency fund in cash. Ramit points out it could and should be higher but isn’t too bad. I feel like kind of a badass right now because our earning is wayyyy lower than theirs and we have close to that net worth! Plus I’m fucking my pool guy! But also it’s my husband. And my pool is a bathtub. Anyway…Ramit says they need to prioritize savings not only when pay is low.
Ramit says they should plan for in case he loses his job or his pay is permanently lowered, but he’s being very “whatever sounds good to you”. They need to be more proactive is the main takeaway. Now we’re talking saving for fun stuff. What do they want? She says Disney vacation and she doesn’t want to do a budget version. The oldest kid is 2. LOL. He points out they are proactive about Disney but not investments but he’s nice about it. Ramit encourages purpose-built savings accounts. He likes to have 6 at a time. Is this typical?!? I only have 1. Living like a fucking luddite over here.
They’re both 34 years old and Vince thinks they need $4-$5 million to retire. Ramit asks him what they need to contribute every year in investments to hit that number by 50. Vince says $40k. Ramit corrects him at $100k. This dude is so passive, lol. He just says, “eye opening”. Ramit asks about allll the stuff they’re spending on, and Vince admits it goes against their goals. Ramit is like, if retiring early is important let’s make a plan. Guy just says, “cuts. cut back.” She brings up cutting back on cars again. Ramit feels like there’s no vision with these two, I agree. They are practically monotone. Maybe they’re just super low energy people, IDK. Ramit is like, yeah just the cars ain’t gonna do it. They aren’t running numbers just randomly reacting, says Ramit. They aren’t proactive.
The guy says he thinks nothing bad will happen because he trusts the company he works for. This guy is why optimists get a bad name. Ramit is like, ok trust your company but STILL MAKE A PLAN just in case. Ramit’s literally explaining why people plan for the worst and he references a hilarious sign his mom apparently had in her house when he was a kid, which makes me love Mama Ramit more than anything. It was: “Trust in God, but lock your car.” Love. Her. Hahaha. Guy is finally agreeing that maybe planning is a good idea.
Ramit wants them to have 6 months e-fund instead of just 5 months. He says their investments are fine but should go up, he says they prob can’t afford to do much more with his income and their expenses as they are. He tells them they are not on track to retire early, not even close, but that’s a problem they can deal with later. He says their expenses are a massive risk to them. They spend on something super expensive basically every month, Ramit says. Ramit says minimize expenses. Get rid of cars and put that money in savings as a cushion. He says if they’re spending $500-$1k they need to check themselves on that purchase rather than just spending like they have been.
She sounds super fucking sad. She says it’ll be a change and mentions again how hard it’s been to already adjust to her husband’s lower income. I am getting complainey-pants vibes big time. I wonder how these opposites ended up together?! They’re both unrealistic in opposite directions, lol. Vince says he knows they need to change and realizes now they were spending like maniacs before and maybe shouldn’t have been doing that and had planned a bit more.
I have had times where I cried if someone helpfully threw out one of my ziplocks or used one unnecessarily because they were a splurge purchase. Same with garbage bags. This family is not in that position.
