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The Truth About Money and Why We Have It All Wrong | The Mel Robbins Podcast

Registration for Launch 2023 is now CLOSED 🌟 https://bit.ly/launch2024 👈 Get on the waitlist for the 2024 Launch with Mel Robbins! 🚀 — You can be #rich. Don’t roll your eyes. This is not what you think. This episode today is so digestible. So counterintuitive. And one of the most enlightening conversations I’ve had with anybody. Most of us have been thinking about money all wrong. It turns out that the amount of money you have in the bank (or don’t) is only a small part of your relationship with money. Ramit Sethi (@ramitsethi is a NYT best-selling author and #finance advisor with a brand new, top-ranked Netflix series called How to Be Rich, where he coaches real people about how to take control of their financial lives. He says you’ve been thinking about #money all wrong. If you were told that you need to create a budget and stick to it, Ramit calls BS. Instead, you’ll learn about your money dials, the only four numbers that matter, the 85% Rule, why the 10 Year Bucket List is so important, the one thing you should NEVER say about yourself, and best of all, what it means to live a Rich Life. Today’s episode is going to change the way you SEE money, because when you see it differently, you’ll treat it differently. And if you’re looking for another zero-cost resource to help you change your mindset around finances, sign up for my free training called Take Control with Mel Robbins - https://www.melrobbins.com/takecontrol And if you're ready to start living your rich life with more confidence and no regrets, sign up for my exclusive signature course, Launch with Mel Robbins. Learn all the exciting details here: https://www.melrobbins.com/launch Xo Mel In this episode, you'll learn: 00:00 Intro 07:44 Just like me, Ramit has his own story of big-time money loss. 11:20 Assignment #1: Think back to your 20’s and ask yourself this question. 14:17 How do your childhood influences impact your beliefs around money? 22:23 If you want to live a rich life, you need to do two things. 26:23 Wondering what most people love to spend money on? 30:32 Why is it important to come up with a fun vision around money? 34:38 How do you define your “rich life”? 37:36 I think everyone listening needs to do this fun activity. 41:02 Especially if life is hard right now, THIS is what you have to do.. 45:27 Here’s how you step your way closer to your rich life. 47:00 How can you feel in control of something if you don’t understand the details? 50:18 The four numbers everyone should know to stop feeling overwhelmed by money. 58:12 NEVER say this about yourself because it will create your reality. 1:06:30 The two areas most people spend too much money on. 1:10:37 Ramit lays down the bottom line about changing your mindset around money. 1:12:23 Here’s your new money mantra to play on repeat. — Follow Mel: Instagram: https://www.instagram.com/melrobbins/ TikTok: http://tiktok.com/@melrobbins Facebook: https://www.facebook.com/melrobbins LinkedIn: https://www.linkedin.com/in/melrobbins Website: http://melrobbins.com​ — Sign up for Mel’s newsletter: https://melrob.co/sign-up-newsletter A note from Mel to you, twice a week, sharing simple, practical ways to build the life you want. — Subscribe to Mel’s channel here: https://www.youtube.com/melrobbins​?sub_confirmation=1 — Listen to The Mel Robbins Podcast 🎧 New episodes drop every Monday & Thursday! https://melrob.co/spotify https://melrob.co/applepodcasts https://melrob.co/amazonmusic — Looking for Mel’s books on Amazon? Find them here: The Let Them Theory: https://amzn.to/3IQ21Oe The Let Them Theory Audiobook: https://amzn.to/413SObp The High 5 Habit: https://amzn.to/3fMvfPQ The 5 Second Rule: https://amzn.to/4l54fah

Mel RobbinshostRamit Sethiguest
Apr 27, 20231h 30mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 7:44

    Intro

    1. MR

      I am just on pins and needles. I have somebody on the show that I have admired from afar for a very long time. Who am I talking about? I'm talking about none other than Ramit Sethi. He has a simple step-by-step process that he's gonna walk us through at zero cost today, for how you can change the way you think about money, and the four simple things that you need to pay attention to in order to make it a reality. I've got sweaty palms, I'm so excited to talk to this guy. So let's just jump into it. Hey, it's your friend Mel, and today's episode of the Mel Robbins Podcast is rich with tools and strategies to help you make more money. Let's do this thing. Okay, I am just on pins and needles. I have been counting down the days for this particular episode, because today, I have somebody on the show that I have admired from afar for a very long time. I don't know if they're people that you follow online that you're just like, "Gosh, I would just love to meet this person in real life one day." Well, today is that day for you and for me to meet one of the most inspiring experts and human beings out there when it comes to being rich. And not just rich with money, but rich with experiences and happiness, and building a life that you just love. This is a guy that is a New York Times best-selling author. Millions of people come to him to help them change the way they think about money, to get out of debt, to start businesses, to retire early, and most importantly, to imagine, design and create a rich life. He has a brand new Netflix series, How to Get Rich. It has just released, it is so popular, where he is coaching six people just like you and me on these exact things. Who am I talking about? I'm talking about none other than Ramit Sethi, and he's here because he has a simple step-by-step process that he's gonna walk us through at zero cost today, for how you can change the way you think about money, how you can design a completely different type of life, and the four simple things that you need to pay attention to in order to make it a reality. I am, I've got sweaty palms, I'm so excited to talk to this guy. So let's just jump into it. Do we have him here? Oh, he's here? Okay, let's let him in. Okay, Rami- let's get Ramit. Ramit, I'm so excited that you're here. Ramit, thank you for being here.

    2. RS

      Thanks for having me.

    3. MR

      It is so exciting to meet you. I have been a fan of your work for so long. I have stalked your website because it is amazing. I can't believe we haven't met until now.

    4. RS

      Why is it? I'm trying to figure it out myself-

    5. MR

      (laughs)

    6. RS

      ... but regardless, I'm excited that we get a chance to do it today.

    7. MR

      Me too. Me too. And I'm really excited for everybody to hear what you're about to teach us, because when I think about somebody who could fundamentally change the way that a person thinks about money, and the way that they use money to live and experience what you call a rich life, you're the one person on the planet that can do it. I mean, they're not just passing out Netflix shows to everybody.

    8. RS

      (laughs) Well, thank you. I love, I love talking about this. It's kind of weird, you know, usually you don't think about someone actually loving talking about money. And it's actually, you know, okay, listen, I've written a book about Roth IRAs and automation and all that stuff-

    9. MR

      Oh my God, I'm already asleep. Do we, we're not talking about that.

    10. RS

      Exactly. E- e- Hey, me too-

    11. MR

      (laughs)

    12. RS

      ... and I'm the one who wrote the book on it. So, what I'm much more excited to talk about now is how to actually apply that money so you can live your rich life. And to me, there's that beautiful tapestry of life of, "I love eating out," or, "I love travel," and to be able to go deeper on that, and to use money to do it, ugh, what could be more exciting?

    13. MR

      Oh my gosh. And you know what else I love about you? I love that you come at this after fucking things up with money.

    14. RS

      (laughs)

    15. MR

      And I love, 'cause you know, look, let's face it, there's a lot of experts out there that kind of talk down to the rest of us-

    16. RS

      Right.

    17. MR

      ... that aren't, you know, at the pinnacle that they've reached yet.

    18. RS

      Yeah.

    19. MR

      And even though you have gone from somebody who, and I'm gonna have you tell everybody this story 'cause it's awesome, um, even though you're somebody that has made millions and millions and millions of dollars, and you are super smart about money, that wasn't always the case. And so, I would love to have you take us all the way back to 2004 where you are-

    20. RS

      Yeah.

    21. MR

      ... back as a student at Stanford. You cannot afford to go to Stanford unless you pay your way, and you figure out how to apply to 60 scholarships, and you self-fund your education, but when you get your first scholarship check, you do something fucking stupid with it.

    22. RS

      (laughs) Well, I didn't think it was stupid at the time. I thought it was a genius. Uh, so here I am in high school, it's like late '99, 2000, and um, I grew up the son of Indian immigrant parents. And they came from India, built their life here. My dad worked, my mom stayed home with us, and, uh, when it came time for college, they told us, you know, "Of course you're going to college, but we don't have money, so you've gotta find scholarships for it." They just told us point blank. And they had raised us, you know, we may not have had a lot of money. For us, eating out was a thing we did once every six to eight weeks, always with a coupon.

    23. MR

      (laughs)

    24. RS

      We would never buy enough drinks for the whole family. We'd have two and we would share it. But, they taught us how to work.... and they taught us this idea that if you work hard enough, usually the money stuff will take care of itself. So culturally, we grew up knowing education's important.

    25. MR

      Mm-hmm.

    26. RS

      And s-, and personally, I love systems. I love building a system and doing the work once so I don't have to do it again.

    27. MR

      Ooh.

    28. RS

      That's why I don't like budgets. I don't have a budget. I don't think anybody should have a budget, for that matter, and we can talk about that. Uh, 'cause who wants to track the price of apples for the rest of your life? It sounds like hell.

    29. MR

      Does anybody-

    30. RS

      That's-

  2. 7:44 – 11:20

    Just like me, Ramit has his own story of big-time money loss.

    1. RS

      Sethi, high school kid in 1999-

    2. MR

      (laughs) .

    3. RS

      ... when all I was reading was these thick magazines about tech stocks. I go, "Cool, I'm gonna invest this scholarship money 'cause I'm a genius."

    4. MR

      Oh, 1999?

    5. RS

      Yeah. Yeah, it was the height of the tech boom.

    6. MR

      Oh, wasn't that the year that everything crashed?

    7. RS

      Well, it hadn't crashed when I invested.

    8. MR

      (laughs)

    9. RS

      It crashed right after I invested. (laughs) Okay, so I learned some really valuable lessons. First of all, I lost half my money immediately, and that humbled me. And I think when these things happen, it gives us a chance to choose with pat, which path we wanna take. For me, I could've been like, "Investing is a scam, and I'm never doing it again." A lot of us feel that way.

    10. MR

      Mm-hmm.

    11. RS

      Um, luckily, I, I will say I was so fortunate that my parents, especially my dad, really encouraged me, "Hey, try to figure out what happened. Look, learn." And also in the grand scheme, losing that money, while a lot of money at the time, ended up being a little bit of money in the grand scheme. So here I was at Stanford now. I'm studying psych, social psychology, uh, hu- human behavior, persuasion, and I'm l- reading all the books about personal finance, investing, compound interest, asset allocation, and I'm looking around and I'm going, "The emperor has no clothes."

    12. MR

      What does that mean?

    13. RS

      All the, all the advice that we get about money, tell me if this sounds familiar to anybody listening. Uh, "Don't spend money on lattes. Don't buy new jeans. Don't go on vacation. In fact, hoard your money in a little cave, and then one day when you're 93 years old, maybe, just maybe, society will give you permission to go enjoy it." What kind of horrible life is that? And here I am, y- you know, young guy in college, I wanna go out with my friends. My dream at the time was to be able to buy a round of drinks for my friends.

    14. MR

      Hmm.

    15. RS

      And not worry about it. That was original to me.

    16. MR

      Without a coupon.

    17. RS

      Not a coupon! Exactly. And so just, w- I love, I love that you said that because as I got a little older and I graduated, you know what my rich life was in my early 20s?

    18. MR

      No.

    19. RS

      It was literally to be able to go to a restaurant and order an appetizer without worrying about the price, because when we were a kid we couldn't afford to do it. And what is that, ten bucks? Maybe 15 bucks? And it felt incredible. So in fact, let me ask you, when you think about your early formative 20s, what was a thing for you that you were just like, "That feels almost irrationally amazing to be able to do?"

    20. MR

      Um... I guess to go on a vacation somewhere warm...

    21. RS

      Mm-hmm.

    22. MR

      ... that I could pay for with my friends. Like I saw, not f- not pay for them.

    23. RS

      Oh.

    24. MR

      Meaning, like you see all these kids go to spring break-

    25. RS

      Yeah.

    26. MR

      ... and I always needed, like, I, I worked during college but I needed my parents to spot me the money-

    27. RS

      Mm-hmm.

    28. MR

      ... or I needed the invitation from another person's friend's parents-

    29. RS

      Oh.

    30. MR

      ... who were gonna, you know, take their daughter somewhere and she got to bring a friend. And so for me, I think a, quote, "rich life," which we're gonna unpack for everybody so they understand what you're talking about, was like, wow, it would be pretty incredible if I could have my own money, not for textbooks-

  3. 11:20 – 14:17

    Assignment #1: Think back to your 20’s and ask yourself this question.

    1. RS

      a taxi in New York, and back then, you know, those taxi ticker things used to tick up every quarter mile-

    2. MR

      Hmm.

    3. RS

      ... eighth of a mile, and s- sometimes you're just going, "Oh my God," like, "how high is this gonna go before I get there?" And of course, I don't think about that now, but back then part of a rich life for me was to be able to not have to worry about taking a taxi, especially on a hot August day, walking out of the subway going to a meeting and dripping in sweat, okay? So I kind of love this, this idea of where we all start from. It's, it's usually something modest and ultra-specific, and we can smell it, we can remember exactly what the people around us look like and were saying, and that really informs where we came from, which is, can also inform what our rich life is today and possibly even tomorrow.

    4. MR

      I would love for you to...... talk to the person listening-

    5. RS

      Ah.

    6. MR

      ... and guide them through the process of locating this core memory, so that they have that with them as we move forward, and you help us define this philosophy that you've created called "a rich life".

    7. RS

      I love it. Let's do it.

    8. MR

      Okay.

    9. RS

      So let's start, we're going to start in your early 20s.

    10. MR

      Okay.

    11. RS

      And we're gonna zigzag throughout our conversation today. We're gonna s- go back to childhood, and we're gonna go to the future. We'll do it all, 'cause that's what money is about. It's about understanding the seasons of life and how money interacts.

    12. MR

      Ooh, I fucking love this. Okay.

    13. RS

      So, so in my, you know, in my 20s, again, that irrational joy came from being able to buy appetizers. And for everybody here, I want you to think about, you may have been in college, you may have been working at your first job. What was the thing where you said to yourself, "I wish I could do that?" Or, "Am I ever going to be able to do that?" And remember, it's not usually a big thing. It's not, "I want to take a round-the-world trip and stay in all these fancy places." It's often an appetizer, it's, uh, being able to pay for your own vacation. It might be, you know, a lot of people joke about just getting the guac at Chipotle. It might actually be that. There's nothing shameful about a small, vivid aspiration that you had. A- how do you think everyone listening is, is going along with this journey so far, Mel?

    14. MR

      I think good. Amy?

    15. RS

      Okay.

    16. MR

      You think we're good? Okay, good. Yeah, uh, uh, my producer's like, "Mm-hmm, this is fantastic."

    17. RS

      Okay, good. Good.

    18. MR

      We got, like, I think we're all right there.

    19. RS

      Perfect.

    20. MR

      I have a question to ask you, to go a little deeper in this, because I was, I noticed that, you know, you've spent a lot of time studying psychology, and you, of course, help people change the way they think about money. And I would love to ask you about the way in which your formative years

  4. 14:17 – 22:23

    How do your childhood influences impact your beliefs around money?

    1. MR

      as a child and what you experienced as your parents' emotion or conversation around money, how that impacts your mindset around it. And, you know, I, I'm asking that because I feel like it must be somehow related to this core memory of, "I just wish I could go and take myself on vacation. I wish I could buy the guacamole. I wish I didn't have to worry about the needle on the tank of gas getting to empty and not being able to fill it up."

    2. RS

      Yes.

    3. MR

      And so for me personally, you know, it's interesting. My parents, my, my father, um, was the first person in his family to go to college, and-

    4. RS

      Hmm.

    5. MR

      ... he had to pay for it. And my mother also went to college and had to pay for it, and she ended up dropping out to have me. And then my dad got into medical school. And my mom worked nights for the IRS while she, and my dad took care of me at night, and then she took care of me during the day. And we lived in public housing while he was a medical student-

    6. RS

      Wow.

    7. MR

      ... and when he was a resident in Dayton, Ohio. And then my, I was in fourth grade when my parents were able to purchase their first home. And my dad did not pay off his medical school loans until late into his 30s. But here's the interesting thing about it. Even though we struggled, and I can relate to the, you know, we never went out to eat when I was a kid.

    8. RS

      Mm-hmm.

    9. MR

      Um, not until middle school, anyway. And I never remember my parents being stressed out about money.

    10. RS

      What do you remember them saying about money?

    11. MR

      Nothing. I, like I, I, I-

    12. RS

      They didn't talk about it?

    13. MR

      I don't, I don't remember them talking about it, and I just had this sense, because there was this, like, ease about it, that if you need something, you figure out how to get it.

    14. RS

      Hmm.

    15. MR

      That there wasn't a lot of griping or complaining. And I know they were trying to make the ends meet, and they come from very blue-collar, modest families, hard-working, they were very hard-working. And so I just kind of got this thing, like, money's there when you work for it, and you don't need to worry about it.

    16. RS

      Okay.

    17. MR

      And you know what I mean? Like, I, not, not like I was spoiled or anything. That was not it at all.

    18. RS

      Yeah.

    19. MR

      But they didn't pass on the stress to me. Now, Chris's family had plenty of money, but there was this huge dialogue. "You don't deserve that. We don't have it. You're not gonna be spoiled." And so his butt is so clenched when it comes to money. Like, the guy's like, "How much does the guacamole cost?"

    20. RS

      (laughs)

    21. MR

      I'm like, "Dude, have you seen our checking account? You can afford it."

    22. RS

      Yeah.

    23. MR

      Like, he literally adopted this, this kind of gripping mentality.

    24. RS

      Hmm.

    25. MR

      How does your, what wa- like, how does that impact the mindset that you have? Your early childhood years.

    26. RS

      Okay. So this is, you just gave us a fantastic, uh, journey into your childhood. And if you don't mind-

    27. MR

      Please.

    28. RS

      Uh, I'm gon- I'm gonna dive a little bit deep and kind of-

    29. MR

      Go, go, go.

    30. RS

      ... uh, shine a light on what you just told me.

  5. 22:23 – 26:23

    If you want to live a rich life, you need to do two things.

    1. MR

      ago, starting with changing your psychology around money changes absolutely everything. And that's what we're gonna focus on today, because that is something that we all need to do. Even if you've made a ton of money grinding it out, putting your head down, you probably haven't enjoyed it. And there is a way for you to change the way that you think and relate to, and the psychology of money, so that you have greater freedom, so that you have possibility, so that you're more present, so that you can be more confident, uh, and effective in your decision-making. And that's exactly what Ramit is teaching millions of people to do. And it's available to all of us, regardless of where we've come from, what class we're in right now, what we've experienced in our lives. We can all just have a zero on the balance sheet, and we're gonna go up from here, because Ramit's gonna teach us how to change our psychology. So, where exactly do we start, knowing that, that, you know, everybody comes to this conversation dragging-

    2. RS

      Yeah.

    3. MR

      ... historical baggage that they might not even be aware of about their relationship to just money and what it means.

    4. RS

      Yeah. Let's imagine that it's the first day and you've decided to join the soccer team.

    5. MR

      Okay.

    6. RS

      People come with, some people have fancy shoes, some people have no shoes. Some people are really physically fit, others haven't run at all in years. And for this metaphor, I'll be the coach.

    7. MR

      Okay.

    8. RS

      And what I'm gonna say is, "We're all in this together, and we're all gonna start on the same page."

    9. MR

      Okay.

    10. RS

      Okay? So-I like to start from a place of, we're gonna have fun with this.

    11. MR

      (laughs) Okay.

    12. RS

      So I'll tell you what we're not gonna do. I'm not gonna say, "Uh, pull out this 46-part spreadsheet, and let's, uh, go through all your spending." Nah, everyone's gonna leave. I, and I don't even want to... no one, it's irrelevant. Instead, I want to do something, an exercise together, with you, me, and everybody listening-

    13. MR

      Okay.

    14. RS

      ... about what I call your money dials. So I'm gonna ask you, let's do this together.

    15. MR

      Okay.

    16. RS

      And everybody listening, I want you to follow along. So Mel, if I asked you, what is something you love to spend money on? Not like, but truly love. Look at that smile. What would it be?

    17. MR

      Oh, I love buying dessert. I, I, like, now that I've, I've, I've started, you know, I've gotten out of debt, I-

    18. RS

      Yeah.

    19. MR

      ... make a lot of money, my favorite thing, and I always joke that this is my version of a Lamborghini.

    20. RS

      Uh-huh.

    21. MR

      When I go out with a group of people, I order every dessert on the menu.

    22. RS

      Okay.

    23. MR

      (laughs)

    24. RS

      What does that get you? Tell me about that. Why?

    25. MR

      Um, it feels really decadent and fun, and it allows me to sample things without committing.

    26. RS

      Yeah.

    27. MR

      And it's a way to, um, uh, take care of everybody at the table-

    28. RS

      Mm-hmm.

    29. MR

      ... because everybody kind of secretly wished that, you know-

    30. RS

      (laughs)

  6. 26:23 – 30:32

    Wondering what most people love to spend money on?

    1. RS

      or eating out, desserts.

    2. MR

      Yes.

    3. RS

      Would that be fair?

    4. MR

      Yeah.

    5. RS

      Okay, pick one. Which, which is the one that gets you really excited?

    6. MR

      Um, gosh, I don't know. Um-

    7. RS

      I, it's, I kind of think it's desserts, 'cause you spent like 10 minutes-

    8. MR

      Okay, desserts.

    9. RS

      ... talking about desserts.

    10. MR

      Okay, desserts.

    11. RS

      Yeah. It's, it's usually very obvious. Like, it, people light up when they talk about their number one money dial.

    12. MR

      Well, 'cause I also feel like it is a gift, 'cause nobody does it for themselves.

    13. RS

      It is, it is a gift.

    14. MR

      And it's ridiculous.

    15. RS

      Okay.

    16. MR

      Like, why would you order all the desserts knowing everyone's going to take one bite? Because we can.

    17. RS

      Yeah.

    18. MR

      And because it's fun. And-

    19. RS

      It's very abundant.

    20. MR

      Yeah, and it's very, it's about abundance and play and, like, that kind of, it makes me feel like a kid almost.

    21. RS

      Okay, I love it. So here we have Mel in like a Willy Wonka chocolate factory.

    22. MR

      (laughs)

    23. RS

      Just like, "We get to get it all!" And it's very abundant. So for everybody listening, the most common money dial, or thing you love to spend money on, is eating out. Number two most common is travel. Number three is health and wellness. Number four is convenience, which happens to be my money dial. And there's a variety of others, you know, you can search online. Okay, so that's great. For everybody listening, you should identify the thing you love, and go into that detail. If you're doing it with a partner, notice how I asked her, "Why? Tell me what, what does it mean to you?" Get curious. And then the second question I have for you, Mel, is, if you were able to quadruple your spend on your money dial, what would that look like and feel like for you?

    24. MR

      I'd send those desserts to everybody in the restaurant.

    25. RS

      Whoa. Tell me more.

    26. MR

      Um, just kind of spreading that exuberance and joy-

    27. RS

      Mm-hmm.

    28. MR

      ... and this kind of psychologically, it's not financially extravagant-

    29. RS

      Hmm.

    30. MR

      ... if you can afford to do it. Like, it's not like you went out and spent $200,000 on a car.

  7. 30:32 – 34:38

    Why is it important to come up with a fun vision around money?

    1. RS

      thinking. The fact that you eat out once, so you're gonna quadruple it, you're just gonna eat out four times. That's linear. Like, okay, you could eat out four times a week, but are you gonna eat at the same place?" And, and people pause. They start thinking, "Oh, wait a minute. Okay, so if it's, like, Chipotle or, or whatever it is that you eat at, wow, okay." And I remember this, um, young man in DC, I was speaking there, and he said the same joke, and I had the same unamused response. And I go, "Where would you eat?" And he thought for a second, and he goes, "You know what? I have a list of every Michelin-starred restaurant in DC." Young guy. I go, "Wow, okay, cool. You like food." He goes, "Yeah, I love it." I go, "Who would you take with you?" And he got really quiet. The entire audience, pin drop silence. And he goes, "I would take my family." "Why?" "Because they could never afford to eat at places like that." Now, that is a money dial.

    2. MR

      Hmm.

    3. RS

      That is a vision of what you love today. And it could be modest, right? Buying dessert for your friends, that's very generous, but also pretty modest. But when you understand, "Hey, where could I go with this? Could I turn my dial up 2X, 4X, 10X, what would it look like?" It wouldn't just be more of the same. I might change the quality. I might change the frequency. If I love clothes, as a young woman in Pasadena did, I asked her, "You gonna still shop at the same place, H&M?" She goes, "No." And when we really explored and played, we came up with this idea that one day, she could fly to Italy with her mom, and they could get something custom-made together in Italy. Now, she can't do that today. She can't do it tomorrow. But now she has a vision of what excites her with money. That's how we get started.

    4. MR

      Why is it important to start with a vision that's exciting?

    5. RS

      Because money is such a drag for most of us. Wh- when you think of money, what are the first words that come to mind?

    6. MR

      Debt. (laughs)

    7. RS

      Yep, yep. R- restriction, overwhelming.

    8. MR

      Mistakes.

    9. RS

      "Am I too late?" Mistake. It sucks. So are we surprised that Americans have terrible financial behavior? Well, I'm not really surprised when everything around us basically tells us, "Don't pay attention to this until it's too late." I mean, it's more exciting to talk about flossing than it is to talk about money. It sucks. But if we start talking about, "Oh my God, I love to eat. I'm unapologetic about spending extravagantly on the things I love, as long as I cut costs mercilessly on the things I don't," well, suddenly it's a lot more fun to talk about.

    10. MR

      It really is. Because I think there's so much shame that we carry about money, because there's all these expectations that you have about how much you should have, how much you should have by now, what you should've done with it. "If only had I invested back, uh, uh, in the day in Apple."

    11. RS

      Yeah.

    12. MR

      Like, "I missed these opportunities. I should've done this. I should've done that." And that sort of negative story that you keep reinforcing to yourself that then has you go, "Oh, I can't buy the guacamole. I better not get a latte. Fuck, fuck, fuck," it keeps you stuck in that story.

    13. RS

      Yeah.

    14. MR

      But when you allow somebody to play and dream again, because money, it's not only psychology, it's sort of a vehicle to do those things.

    15. RS

      Exactly. Yeah. And you... I love what you said about the, the guacamole example, is that because we feel shame, because we feel like it's too late, we... Our, our field of vision narrows. Almost like if you've ever felt like you're about to faint-

    16. MR

      Mm-hmm.

    17. RS

      ... everything shrinks. And we shrink our own desires. So I'll often ask people, "What is your rich life?" And you know what they always say to me? They always go, "I want to do what I want when I want." I go, "Oh, okay, okay."

    18. MR

      There we go.

    19. RS

      Uh, and then I go, "Wow, that's so interesting. I never heard that one," except for the eight million times I heard it. I go, "So what do you want?" And they are stumped, because we never actually thought about what our rich life is. And so then I... You know, I, I'm gentle. I want them to come to it, but I also want to have a little

  8. 34:38 – 37:36

    How do you define your “rich life”?

    1. RS

      fun with them.

    2. MR

      Yep.

    3. RS

      And so they'll say something like, "Well, I guess, like, you know, it would be cool if I had a beach house one day, but it doesn't have to be a big beach house. It could be small. It could be a shack. It could be dilapidated. I don't even need anything..." I go, "What the hell? We're talking about your rich life, and you already shrunk your desires in five seconds? Uh-uh, I don't allow that." I go, "Dream bigger, and then let's figure out, if your finances support it, what investments you'd need to make. And hey, maybe you're not gonna get a nine-bedroom place in the Hamptons, but maybe you could get a beautiful place, rent it for a week, or buy it in 10 years, et cetera, et cetera, et cetera." So we minimize ourselves unnecessarily.

    4. MR

      And then that cuts off our access to authentic inspiration.

    5. RS

      Yeah. A- nobody's inspired by a tiny vision. Nobody's inspired by the idea, like, "Ooh, I could save 5% on coffee." Who cares?

    6. MR

      (laughs)

    7. RS

      That's not exciting.

    8. MR

      It's so true. I want to ask you a question on behalf of anyone that's listening that is up to their eyeballs in debt-

    9. RS

      Hm.

    10. MR

      ... and is having trouble dreaming-

    11. RS

      Yeah.

    12. MR

      ... and is trying to make ends meet, or maybe they're not even... it's not even the debt, it's that, with two kids in college and bills to pay and a mortgage, they're just in those crunch years of just grinding it out.

    13. RS

      Yeah.

    14. MR

      What is the concept of a rich life? And can you walk us through, regardless of where we are financially, how we start to define it for ourselves? 'Cause we've covered the money dials, but I want to just get a flat definition from you of what a rich life is. And what are the steps-

    15. RS

      Yeah.

    16. MR

      ... you walk somebody through, regardless of where they are-

    17. RS

      Yeah.

    18. MR

      ... to creating one?

    19. RS

      A rich life is when you look at your life and you go, "Wow, this feels amazing." Now, you can have a rich life and still be in debt. That's okay. You can have a rich life and not be exactly where you want to be ultimately. But a rich life can be traveling two months a year, it can be buying a beautiful cashmere coat. A rich life can be picking up your kids from school every afternoon. The key is that your rich life is yours. It's not mine, it's not your friend's, not your parent's. It's yours. And in fact, the more you carefully define your rich life and really turn those dials up and down, the more bewildering your rich life will be to other people. I'll give you an example from my own life. My rich life is really weird to other people, and that's exactly what it should be. I love spending extravagantly on travel. I'm a hotel guy. I love... I have a list of hotels in all parts of the world. I know the exact room I wanna stay in.

    20. MR

      (laughs)

    21. RS

      Like, I love it.

  9. 37:36 – 41:02

    I think everyone listening needs to do this fun activity.

    1. RS

      I'm obsessed. I'm... That's my thing. I also love clothes. I love 'em. I spend a lot on it. And so those things are things I spend extravagantly on. On the other hand, uh, my car is not that important to me. And to give you a point of comparison, I've spent more in one year on travel than I spent in 20 years on all of my car expenses added together.

    2. MR

      Wow.

    3. RS

      So that's crazy. That's bewi... It makes no sense to somebody listening. And that's exactly how it should be. If you love camping, maybe you turn that dial up. You find a way to have a smaller cost for your rent or mortgage, and instead, you, you're going camping, I don't know, X weeks per year. You've got some behind... You've got some place you go that nobody else knows about, some equipment that's amazing. You, you take friends with you. Amazing. Not my thing. I've got a, a reader of mine who told me he retired in his 30s with his wife. They travel around the wor- the country in an RV. I go, "That sounds like hell-"

    4. MR

      Yeah, me too.

    5. RS

      "...to me."

    6. MR

      No way.

    7. RS

      But-

    8. MR

      To them?

    9. RS

      I love that it's their rich life.

    10. MR

      Yes. So are there particular questions, other than the money dial, that you would want us to ask ourselves or answer in order to start to really define it? Because I agree with you, most people when you ask them for real, "What do you want?" It's like, "Uh..."

    11. RS

      It's hard. It's a really big question.

    12. MR

      Yes.

    13. RS

      So we... What we can do is we can zoom in and out-

    14. MR

      Okay.

    15. RS

      ... to help people create some context around it.

    16. MR

      Okay.

    17. RS

      So you know, I have this journal, which you can do solo or with your partner, and I'm gonna give you a few exercises, um, that are really helpful. Let's start big picture, and then we'll zoom really tight down to day-to-day.

    18. MR

      Okay.

    19. RS

      So this is a fun exercise. I did this one with my wife. We sat down and we said, "Let's create a ten-year bucket list. So in our, in the next 10 years, what do we wanna do that would make this an amazing and rich 10 years?"

    20. MR

      Whoa.

    21. RS

      Okay? So we took two separate pieces of paper. We spent a few minutes, we wrote it down, and then we came back and compared it. And this is a really cool opportunity to recalibrate the way you talk about money, 'cause it's dreamy, it's fun. You don't have to commit to anything. So you wanna get curious, you know? One of us is like, "Oh, I wanna learn Spanish." And the other one goes, "Oh, cool. Do you wanna do that online, or like, would you wanna go to Mexico City and do an immersion?" The other one, you know... For... One of my things was, "I wanna write a book at a hotel." Makes perfect sense. I... Well, I don't necessarily love writing, but if I'm gonna write a book, I'm gonna write it in a amazing luxury hotel that I love.

    22. MR

      Which one?

    23. RS

      Okay, cool. Oh, uh, so there was one in Kyoto that I love, and in fact recently went there on a writing project. Uh, I achieved one of my ten-year goals.

    24. MR

      Check. (laughs)

    25. RS

      Yeah. And you know the funniest part? Um-

    26. MR

      Tell me.

    27. RS

      My wife was going to Japan anyway with some friends. She goes, "Hey, why don't you go and work on your writing project? You know, I know you love that hotel and you've got the time. Why don't you..." And I was like, "Oh yeah, it didn't even occur to me." So sometimes you need somebody to remind you about your rich life.

    28. MR

      Now, if you're single, or you're-

    29. RS

      Yeah.

    30. MR

      ... newly divorced, or you've just graduated from college, do you recommend that you grab a friend or a sibling or somebody, or is this something best done-

  10. 41:02 – 45:27

    Especially if life is hard right now, THIS is what you have to do..

    1. RS

      look back on and be like, "Wow, that was a really cool 10 years. I, I remember that. It's memorable." Okay. Then... So the two of you have... If you're in a partnership, you've asked each other. If you're solo, you're looking at 'em. And you're picking one that really jumps out at you. Don't overthink it. It's the one that you go, "I want to do that above all others."

    2. MR

      In the next 10 years-

    3. RS

      Yep.

    4. MR

      ... I gotta go to Australia for a month.

    5. RS

      Perfect.

    6. MR

      In the next 10 years.

    7. RS

      Yeah.

    8. MR

      I, I, I'm not saying that's mine, but I'm just saying-

    9. RS

      Yeah.

    10. MR

      ... like what are some of the things you've seen from the millions of people that you've helped?

    11. RS

      Um, "We wanna take a family trip to Italy."

    12. MR

      Hmm.

    13. RS

      Super common. Everybody wants to go to Italy. Like, it's like... And I, I just... I love hearing it, 'cause, um, I then get to help them dimensionalize it. Like, Italy alone is just a word. I wanna know what seat on the airplane are you flying? What season are you going? What are you wearing? Where are you eating? I wanna know every detail to the point where we can almost smell it, because then it becomes vivid and aspirational.

    14. MR

      Okay.

    15. RS

      Okay? So, um, that's what we're doing in this first process. This is actually really fun. "Oh, oh my God, we get to go on a pizza tour," whatever. Then, you pick that one, and solo or together, you go, "All right, let's actually make it happen. When do I want to do this?" In our case, we wanted... We decided we wanna have an amazing 10-year wedding anniversary. We were inspired by some friends of ours who did it, and we were like, "What? People actually do that?" And then we're like, "Well, who cares if people do it? We wanna do it."And so, we said, "That's it." We happened to know the exact date we wanted to do it and the location. If you want to go to Italy or wherever, you gotta pick a specific month and year. It's got to now start getting specific. And then, you got two more steps and then you're good to go. The next step is-

    16. MR

      Hold on, let me, let me just clarify something.

    17. RS

      Yeah.

    18. MR

      What Ramit is teaching you to do, is to dream again, and to attach very positive and aligned emotion with what a rich life would feel like. And I think so many of you are going to have trouble even getting past this part and giving yourself permission to do it because of the amount of mistakes that you made. And, uh, you know, I'll just say, Ramit, when Chris's, um, restaurant business was really struggling and we had liens on the house and could, couldn't pay for groceries, uh, at times, and I had lost my job, dreaming seemed impossible. But it was actually a lifeline because it made me feel like this was gonna be temporary, that we would figure out a way through this. And so, I just want to underscore that per- that if you're, like, got crushing student debt right now, if you've gone through a divorce and you're in financial ruin, this is actually exactly what you need to do. Because if you continue to stare at the debt, you're gonna feel disempowered, which means your actions will be disempowered. If we can give you a beacon out on the distance to raise your gaze and get you feeling inspired again, something to work toward, that we know, based on the research, that's your big why when it comes to a goal. And so, I love what you're doing here because it's the exact opposite of what a financial advisor would tell you.

    19. RS

      Yeah.

    20. MR

      Which is you'd sit down, you'd go through the numbers, you'd feel like an imbecile.

    21. RS

      Yeah.

    22. MR

      You'd basically get somebody politely telling you, "You're fucked." And, "You shouldn't buy coffee out and you shouldn't enjoy yourself until you get your debt under control and you pay this off." And that can come, but let's first get the conversation fun and exciting again, because when you're in that kind of mood, you're gonna be more motivated to do the tedious bullshit that any financial advisor can tell you. Correct?

    23. RS

      Correct, 100%. And thank you for slowing us down and really providing the context behind why we are doing it this way. I don't want us to shrink our world to a spreadsheet. That's not gonna help you.

    24. MR

      Hmm.

    25. RS

      That's not gonna help anybody. Instead, what I want to do is expand our vision, even if it feels impossible to dream. And to say, "Look, just in this moment, on this piece of paper, let's dream for a second." And it's

  11. 45:27 – 47:00

    Here’s how you step your way closer to your rich life.

    1. RS

      having a conversation with yourself or your partner and saying, "We may not be able to even see how we can get there today, but we've got time. And if we put the intention behind it and we marshal our resources, I think we can do this."

    2. MR

      Yeah. That's beautiful.

    3. RS

      Okay.

    4. MR

      Absolutely beautiful.

    5. RS

      So you've got one powerful vision of what you want to accomplish in the next 10 years. I say powerful because it's not like eating at a restaurant. That's not powerful enough.

    6. MR

      (laughs)

    7. RS

      I had a guy once tell me his rich life is coffee. And I just sat there and then I said, "That's boring." I just told him point blank, and he was shocked. "Oh, somebody's telling me my rich life is b-" I was like, "Yeah, that's boring. You can't just say coffee." Like, this guy had a lot of money. I go, "Okay, if you love coffee, then tell me you want to go to Guatemala and take a behind the scenes tour of a farm. Tell me you want to go to the National Barista Competition and bring somebody. Tell me something beyond, 'I wanna order a, an extra Dunkin' Donuts coffee shipped to my house.'" No, that's not acceptable. So, sometimes I have to challenge people to think bigger. You got something big, it could be skydiving, it could be a trip, whatever. All right. You know the date.

    8. MR

      Okay.

    9. RS

      Specifically the month and year.

    10. MR

      So, in the next 10 years-

    11. RS

      Yep.

    12. MR

      ... you gotta pick a date. The month and the year.

    13. RS

      Yep, you gotta be specific. Then this is the hardest part, but it should take no more than five minutes.

    14. MR

      Okay.

    15. RS

      Approximate the cost. So, if you're going to Italy, people, they start to freak out

  12. 47:00 – 50:18

    How can you feel in control of something if you don’t understand the details?

    1. RS

      'cause they, e- anytime you start talking-

    2. MR

      I just freaked out.

    3. RS

      Yeah. It's, it's like we revert back to seventh grade math and we're like, "Oh, gotta do the quadratic equation and get it perfect." I go, "Listen, you don't need any decimal points, okay? In fact, you could approximate on the back of a napkin." How much is a flight gonna cost approximately? You know, add 15% 'cause you forgot about tax and all that stuff. What's a hotel gonna cost? I don't know, Google Hotel Italy, Rome, whatever. Okay, let's double the price 'cause maybe we want to stay at a nice hotel. All right, fine. That's the level that we're talking about here.

    4. MR

      Okay.

    5. RS

      And if you have two different n- Like, my wife and I had two completely different numbers. Mine was way bigger. And my rule is if you got two numbers, go with the bigger one.

    6. MR

      Got it. Okay.

    7. RS

      Okay? Go with the bigger one. And so now you've got a beautiful vision, you've got a month and year, you've got the approximate amount it's gonna cost. The last step is to make it a reality. How do you do that? Let's say that it's 10 years away, it's gonna cost, uh, $10,000. I'm just making it up.

    8. MR

      Mm-hmm.

    9. RS

      That means you need to be saving $1,000 a year, or roughly, you know, 100 bucks a month.

    10. MR

      Okay.

    11. RS

      Roughly. Okay, we could do that. Suddenly you start to understand a little concept of like time and money. And you set up an automatic savings from your checking account to your savings account for $100 a month and you call it Dream Trip 2030. Boom. Every month that you are talking about money in what I call a rich life review, it's like a video game. You see we're getting three percent closer and that is a joy.

    12. MR

      I love this, and I know that you... Is that what you call a conscious spending plan? Is that what that-

    13. RS

      Conscious spending plan's a little different.

    14. MR

      Okay.

    15. RS

      It, uh, but it would incorporate that, yes.

    16. MR

      Okay. So can I just ask one more question about this? And I know-

    17. RS

      Of course.

    18. MR

      ... I'm beating a dead horse, but having been somebody that was in a scary place financially just over a decade ago-

    19. RS

      Mm-hmm.

    20. MR

      ... I want you to explain what will happen to somebody with crushing student debt, or who's having trouble just making the ends meet right now-

    21. RS

      Yeah.

    22. MR

      ... and they don't have a lot of savings, how will doing this exercise change their psychology about money starting today?

    23. RS

      Yes, thank you for asking this, because if you are in large amounts of debt, whether student loan, credit card, even mortgage for, for some people, some of this can sound really airy-fairy, and I, um, I'm the last guy to get accused of us all sitting around the campfire singing Kumbaya. I'm like, look, I'll talk about psychology, but we're also going to talk about the numbers. And so what I want to emphasize to people is that we often have this belief that we're overwhelmed with money.

    24. MR

      Mm-hmm.

    25. RS

      Okay? It's easy to feel that way. But when I ask people, "Show me your spending. What percentage of your income is going to housing or investments?" I would say 99% of people do not know. Okay? So how can we-

    26. MR

      I don't know.

    27. RS

      Yeah. And, and so-

    28. MR

      (laughs) I, I, I literally don't know.

    29. RS

      Yeah, totally. It's very common. And so how can we feel in control

  13. 50:18 – 58:12

    The four numbers everyone should know to stop feeling overwhelmed by money.

    1. RS

      of something if we don't understand the basic mechanics of it? Even when we drive a car, we gotta know how to turn the ignition on, or-

    2. MR

      True.

    3. RS

      ... you know, reverse. So we go through life in this very, uh, arbitrary transactional way of like, "Okay, this bill came in, I'm gonna pay it. This bill came in. That feels really bad." It's transactional, it's reactive. And what I'm encouraging you to do is to go from defense to offense with your money. That means once you set the intention of-

    4. MR

      Hmm.

    5. RS

      ... an Italy trip, if you're in crushing debt, you may go, "Hey, Ramit, I actually cannot afford to put $100 a month away." I go, "Okay. Well, why don't we write that down? $100 a month towards Italy, but you can't do that today, that's totally fine. Next, we're gonna go through your four key numbers in the conscious spending plan. Let's make sure you understand your numbers." And you'll be quite surprised that a lot of people discover they have more money than they actually realized once they go on offense with their personal finances.

    6. MR

      Oh, wow. Okay. So l- what are the four t- things that e- we all need to go through?

    7. RS

      Everybody needs these four numbers. This is what I use instead of a budget. I don't keep a budget. You think I'm gonna sit around tracking the price of asparagus for the rest of my life? Hell no. Okay? I don't want-

    8. MR

      Oh, my God, I love you.

    9. RS

      ... to live that kind of life.

    10. MR

      I don't want to live that kind of life either.

    11. RS

      So there's four numbers.

    12. MR

      Okay.

    13. RS

      Yeah. All right, so four numbers that you should know. These are all part of my conscious spending plan. The first is your fixed costs.

    14. MR

      Okay.

    15. RS

      So that would include your rent or mortgage-

    16. MR

      Yep.

    17. RS

      ... your utilities, car payment, gas, insurance. Anything that's fixed, even groceries, every month, that goes there. And your fixed-

    18. MR

      And what about the minimum debt payment? Or is that part of another category?

    19. RS

      Yeah, yeah. That's-

    20. MR

      Okay.

    21. RS

      That counts there. Exactly. Thank you.

    22. MR

      Okay.

    23. RS

      And that number, you should try to get it between 50 to 60% of your take-home pay.

    24. MR

      Okay.

    25. RS

      Okay? Let me, let me run through these all, and then I'll tell you what they mean. 50 to 60% of your take-home pay for fixed costs. Next up, your savings. How much money are you saving every month? This should be roughly 5 to 10% of your take-home. And savings would be an emergency fund or money you don't need for at least one to five years, things like a down payment for a house, et cetera. Next up would be investments. Roughly 5 to 10% of take-home, although I like to see it higher, because investing early in life pays well, it pays dividends later.

    26. MR

      Okay.

    27. RS

      And then finally-

    28. MR

      Little shame for Mel Robbins, did not invest early in life. I'm just gonna like-

    29. RS

      (laughs)

    30. MR

      ... let that one go and focus on my dream list, okay? Just wanted to acknowledge-

  14. 58:12 – 1:06:30

    NEVER say this about yourself because it will create your reality.

    1. RS

      identity.

    2. MR

      Hmm.

    3. RS

      And, you know, if, if any of us say something like, "I'm bad with money"-

    4. MR

      Oh.

    5. RS

      ... I would gently encourage you to not say that. Maybe reframe it and say, "Gosh, I haven't learned the skills of money yet, but I'm changing that now."

    6. MR

      I want to stop-

    7. RS

      It's so much more gentle.

    8. MR

      ... right there. Hold on a sec. I, I apologize for interrupting you, but this is so important.

    9. RS

      Yeah.

    10. MR

      If you just heard Ramit say, "I'm bad with money," I want you to pay attention loud and clear, because he's absolutely right. Or, if you say something like, "I, I don't under- That's overwhelming."

    11. RS

      Yeah. "I'm not good with math."

    12. MR

      "I'm not good with math." What are other things that your students say, Ramit, that really crystallize a terrible psychology around money?

    13. RS

      Uh, "My family's never been good with money. We're all bad." Um, "I'm never gonna get out of this debt." Um, "We always fight about money," and, "I'm just an over-spender."

    14. MR

      Or, "My husband"-

    15. RS

      Yeah.

    16. MR

      ... "took care of the finances."

    17. RS

      Oh, classic. Oh, that drives me insane. (sighs) Hold on, I'm getting mad, but I got- I am getting mad at multiple things right now, so let me take them each in turn. Okay, first off, um, what you said about not opening envelopes, and then now as you've become much more financially successful, it's almost swung the other way. It's totally common. In my experience, once people start earning around $150,000, they stop really paying attention to the numbers, because they basically make enough to not have to really pay attention. And actually, I'm a little okay with that. I don't want people agonizing over the price of groceries if they're making 150K, but what I do want, and what I do for myself, is I spend one hour per month on my finances. That's it, just one hour. I review the CSP. My wife and I talk about money. Uh-

    18. MR

      Hold on. The CSP was that conscious spending plan of the four things.

    19. RS

      Correct, correct.

    20. MR

      Fixed cost, uh, what's your automatic sa- savings, your investments, and then the, the category I love the most, guilt-free fucking spending, people. Let's go.

    21. RS

      There you go. Wow.

    22. MR

      Okay?

    23. RS

      I love it. You added the F word. That's so good.

    24. MR

      (laughs)

    25. RS

      I got to add that. That's beautiful. It, it is exciting. Okay, so all those things, when you have money carved out for guilt-free spending, it is literally defined so that if you want to eat and get an extra cheesecake, or you want to go to the movies, like, you don't have to feel guilty because you know, "My debt is being paid off. My rent or mortgage is being covered. I'm even saving money. I'm not trying to save money, just like I don't try to brush my teeth. It is happening."... automatically. It's even better than brushing. So that is, if you're listening, I hope that's a sense of relief that you don't have to feel bad about having debt. You do not have to track a gajillion numbers that you don't even care about. You do, and I would highly encourage you to, focus on four key numbers that will totally transform your life.

    26. MR

      I love this. I love how easy you're making this. Thank you for that.

    27. RS

      It's absolutely my pleasure. I, I, I don't want to spend time doing that either. I don't want anyone else to waste their time on it.

    28. MR

      So may I just... I, I want to clarify one thing.

    29. RS

      Hmm?

    30. MR

      So these four pillars of the conscious spending plan, and again, I come from the lived experience of crushing debt-

  15. 1:06:30 – 1:10:37

    The two areas most people spend too much money on.

    1. RS

      which I find hilarious. And so I said, "Okay." Uh, and they go, "Well, you know, I don't really, I haven't really read a lot." I said, "Okay, you're a new parent." She was a mom. I think her baby was about like six months old. I said, um, "When you first had your baby, did you know how to hold her?"

    2. MR

      Hmm.

    3. RS

      She goes, "No." "Did you know how to feed her?" "No.""Did you just wing it? Did, did you just- tried your best," you know? "No, I got help. The nurses, my mom. I read a bunch of books," and on and on and on. And that is so normal. There are things in life we don't know. That's okay. But we do have to say, "Hey, this is important to me. My rich life is important. I deserve to dream bigger than a box of pickles."

    4. MR

      (laughs)

    5. RS

      "And therefore-

    6. MR

      (laughs)

    7. RS

      "...I'm going to prioritize learning and also improving my psychology."

    8. MR

      Um, I'm gonna read your book. I've never read a financial book in my life.

    9. RS

      Oh, okay. I love it. You know there's an audio version too.

    10. MR

      I'm just admitting it. I'm just admitting it. I have never-

    11. RS

      I love your honesty. It's so good.

    12. MR

      ...read a financial book in my entire life.

    13. RS

      Right.

    14. MR

      I have read plenty of blogs and listened to podcasts. I've never read a book. And the truth is, I am intimidated-

    15. RS

      Hmm.

    16. MR

      ...by investing. And the irony of this is, that this is the one area of my life where I have goals, and I want to get more into investing, and also investing in, uh, startups as an angel investor.

    17. RS

      Hm.

    18. MR

      And I don't know the first fucking thing about it. And-

    19. RS

      Yeah.

    20. MR

      ...there is this, I don't know, like self-doubt or whatever, that's- I realize in talking to you, is keeping me from starting.

    21. RS

      Hm.

    22. MR

      And yet one of the things that, if I make that 10-year list-

    23. RS

      Yeah.

    24. MR

      ...that you're talking about, of dreams, it is to have advised, invested in, and nurtured a number of startup companies, particularly by, you know, underrepresented founders, in spaces and categories that I deeply care about.

    25. RS

      Hm.

    26. MR

      And it's almost like what I just realized is, doing that would help me fulfill, in a wi- in an amazing way, that ripple effect of sending desserts to people.

    27. RS

      There you go. That, that is the money dial. The desserts are beautiful, but they are such a small example. You are so much bigger than a table full of desserts.

    28. MR

      Yeah.

    29. RS

      That is it.

    30. MR

      Yeah, that like, that, I, I, it connected the dots between those two.

  16. 1:10:37 – 1:12:23

    Ramit lays down the bottom line about changing your mindset around money.

    1. MR

      this is so important, because this is how you start to reclaim your life and take control of the psychology around money. You get to dream. You deserve to dream. You deserve to have a big, beautiful, rich life. And without this bucket list, you haven't identified that. You've also given us this exercise of money dials, and thinking about, what is the thing that if you dial it up, and it's the thing that you smile big about, and you know, could be eating out, could be experiences, health and wellness, uh, convenience things, things that make your life easier, make you feel more supported. You also guided us through a short kind of reflection of those moments in life that really impacted your core beliefs right now about money. And so you've given us a starting point. You've given us the research and the why. You've given us a roadmap for what to do get, to get started. What else, Ramit, when it comes to having this be day one-

    2. RS

      Hm.

    3. MR

      ...of you having a different psychology and relationship to money, and somebody truly taking control of their life, is there something else that, that we haven't talked about?

    4. RS

      Um, I would love for people to have an answer to this question. I spend extravagantly on blank, and I cut costs mercilessly

  17. 1:12:23 – 1:21:59

    Here’s your new money mantra to play on repeat.

    1. RS

      on blank. And that really is the capstone of a lot of what we've talked about. You spend extravagantly on tipping, or on clothes, or on whatever it is. And to be able to write that down and be unapologetic about it, oh, you're really standing in who you are. And that's okay. Not everybody has to agree with it. And it also means you have to be honest about what you are willing to cut costs mercilessly on. You know, maybe I'm actually overspending on my house. Maybe I didn't know about the 28% rule, and maybe I didn't know about 28/36, and all these different things that you can learn over time.... but you have to be willing to also say, "If I want to live my rich life, then what am I willing to say, this is not part of my rich life?"

    2. MR

      Hmm. What are some of the things that you typically see with the people that you work with that are-

    3. RS

      Uh.

    4. MR

      ... costs that they mer merces... I can't even pronounce that word.

    5. RS

      They mercilessly cut?

    6. MR

      Yes.

    7. RS

      Uh, well, I'll tell you what they overspend on.

    8. MR

      Tell me.

    9. RS

      'Cause it's very, it's always the same.

    10. MR

      Okay.

    11. RS

      The number one area that people overspend on is housing costs. And so in their fixed costs, that is the first, there's a reason it's first. Uh, their housing costs, a good guideline is that your housing costs should roughly be 28% of your gross income. Now, I will tell you that that's really hard number, especially because housing has gotten so expensive.

    12. MR

      Yeah.

    13. RS

      If you, especially if you live in New York, LA, et cetera. So if people come and they go, "Well, hey, mine's like 31%." I go, "Okay, you know, we can approximate." It's like adding a little more salt to your dish. Fine. But sometimes they look at it and it's 42%. Now, I'm going to tell you what that means, because again, most of us do not have the full picture of our finances. We simply pay the bill that comes in, and they're wondering, "Why do we keep fighting about Target? Why doesn't my husband or my wife, uh, want to go out to dinner once a year? I'm so annoyed." I go, "Well, I can tell you right, right now. It has nothing to do with Target, nothing to do with dinner out. It's that your housing cost is 42% of gross. And because you're spending all your money up there, there's nothing left trickling down the waterfall. You can't save, you can't invest, you can't go out." And when they realize that, then suddenly, they have, they have the knowledge and they can go, "Okay, do we actually love this house? Do we need to live here? Fine, then what are we going to cut back on? Or do we actually need to live here? Could we downsize? Could we move? Do we have options? Could we rent out a ADU in the back if we've got it, et cetera, et cetera."

    14. MR

      Hmm.

    15. RS

      That's number one. Number two, overspending is cars. You know, you get somebody... I get this all the time, and I always get mad at them, and then everyone gets mad at me because in America we love trucks. So I've nothing against tru- Well, that's not true. I have a lot of things against trucks, uh, including safety and a variety of other things. But what I really have a problem with is somebody making 75,000 who buys an $80,000 truck because their buddy Chet at the dealer told them, "Oh, you can afford the monthly payment," and then they forget to factor in what I call TCO, total cost of ownership. That $80,000 truck actually costs you 120 grand once you factor in insurance, tax, gas, and on and on and on. They can't afford it. So I asked one guy, he comes on the show, you know, they're struggling with money. He goes, you know, they tell me... It comes out way late. They're like, "Oh, we tried everything. We buy generic, we buy generic macaroni and cheese." I go, "I don't care about macaroni. Tell me about your car." They go, "We have this big, nice truck." I go, "Oh, okay. That's so interesting. Uh, by the way, why do you have a truck?" And he looks at me like I'm crazy. He goes, "To pull the trailer."

    16. MR

      (laughs)

    17. RS

      I go, "What? You can't afford any of this." So, um, anyway, those are the two areas people overspend on. It's, uh, it's house and car. And if you can just avoid that, if you can just get your numbers in line and fit your fixed costs, the rest of your life will be so much easier.

    18. MR

      Wow. Wow.

    19. RS

      Do you have a truck, Mel?

    20. MR

      My husband drives a pickup truck. Yeah.

    21. RS

      What kind?

    22. MR

      Uh, I think it's a Chevy.

    23. RS

      Well, I don't, I don't really mind because I know you can afford it. But let's assume you and your husband made like one tenth of what you made now and you had that Chevy. What do you think about that?

    24. MR

      Uh, I, I, I would be sur- it costs $125,000. That's a lot of money. (laughs)

    25. RS

      Well, th- this is another thing. Um, everybody-

    26. MR

      And gas, and, but I also live in Vermont and I would not be able to get up my driveway that's a quarter mile long during mud season if we didn't have a pickup truck.

    27. RS

      Okay.

    28. MR

      We literally have to shuttle people up and down this driveway. I drive a nine-year-old car that just shit the bed, and now I-

    29. RS

      (laughs)

    30. MR

      ... I drove it in to get repaired and was told it needs to be towed out somewhere to be sold.

Episode duration: 1:30:16

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