Tim FerrissHow to Play Offense with Money — Ramit Sethi, Author of "I Will Teach You to Be Rich"
EVERY SPOKEN WORD
80 min read · 16,120 words- 0:00 – 0:15
Intro
- TFTim Ferriss
[upbeat music]
- 0:15 – 5:56
Why money fights persist: debt, guilt, and the myth of “it’ll change later”
- TFTim Ferriss
Hello, boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show. I'm speaking quickly because we're gonna cover a lot of ground. We have Ramit Sethi, Ramit Sethi if you wanna get it right. But that's confusing 'cause it's R-A-M-I-T space, last name S-E-T-H-I. You can find him on Twitter and Instagram @ramit, R-A-M-I-T. He's author of the New York Times bestseller, I Will Teach You to Be Rich, has helped tens of millions of people live a rich life with their monies, [laughs] with their monies, careers, [laughs] businesses, and psychology. He hosts more than a million readers on his site, iwillteachyoutoberich.com, newsletter, and social media. His new podcast, I Will Teach You to Be Rich by Ramit Sethi, reveals real stories about love and money from behind closed doors. You can find him on Instagram @ramit, on Twitter @ramit, and you can find podcast episodes at iwt.com/podcast. Ramit, you sexy son of a bitch, welcome back to the podcast.
- RSRamit Sethi
Oh man, it's good to be here.
- TFTim Ferriss
And I must say, we were talking about this while we were doing a little bit of pregame, but the expectations are gonna be very high. You have been on the podcast several times. Some of your episodes are the most downloaded of all time across 600 or so episodes now. Uh, so we will need to get to a lot of tactical, practical, and we're gonna discuss a lot of, I think, sensitive topics. We're gonna get into some juicy territory for folks, talking about couples, money, all things in betwixt and in between. And, uh... or maybe it's in bet- is it betwixt and between? I can't remember. I'm trying to get too old-timey. But let's just jump right into it because you and I have had many conversations offline, we've had many conversations publicly, and there's a lot more to explore. So as a starter, what are some of the most memorable money conversations that you have had in the last few years? Because it's been a bit since we had our last conversation on the podcast, so a lot has transpired.
- RSRamit Sethi
The last time we talked, we talked about prenups-
- TFTim Ferriss
We did
- RSRamit Sethi
... and what that was like walking in. And I remember giving you a call and I said, "You know, hey, we could talk about this on your podcast." And you said, "Wait, you'll actually share the details?" I said, "Yeah." And that was very juicy because nobody talks about this kinda stuff publicly.
- TFTim Ferriss
Right.
- RSRamit Sethi
So after getting married and going through that process with my wife, I thought, "Okay, great. Done deal," you know? Kind of wiping my hands together, "Oh, we're, we're all good." And then I started speaking to other couples about their money. And, you know, I remember speaking to a number of couples. The first one that I spoke to was a couple where one person had over $500,000 of debt. He was a vet.
- TFTim Ferriss
Mm.
- RSRamit Sethi
By the way, interestingly, the people who I speak to who are in the most severe debt are veterinarians.
- TFTim Ferriss
Mm.
- RSRamit Sethi
It's very interesting. And he was very nonchalant about it. "Ah, no big deal," like, "We'll find a way. No problem." His wife felt totally constrained and constricted. There's nothing they could do. They were putting off moving because there was this huge looming ghost in the middle of their relationship. I got interested, and I started speaking to more and more couples. And I remember talking to another couple where there was a young woman and she had paid off something like $50,000 of debt, which was very impressive. But whenever her, uh, husband said, "Let's go on a trip," the first thing she would say is, "Oh, we can't do that. We can't do that because my debt." And so I said to her, "When you finally pay off your debt, do you think you're gonna magically change the way you think about money?" And she was silent. And she said, "Yeah," with a question mark at the end. "Yeah," which means no.
- TFTim Ferriss
Right.
- RSRamit Sethi
People tend to have this... It's a false belief that one day when they pay off their debt or one day when they make a certain amount of money, they're gonna magically change the way they think and act about money, and the fact of the matter is that doesn't happen. And so that is why I got interested in speaking to couples, and they let me in to their conversations, their private conversations about love and money.
- TFTim Ferriss
[laughs] Can I just share a quick personal side note? And I'm, I'm not drunk, I'm not over-caffeinated, people, if you're wondering why I'm such a loose cannon already today. Uh, but I thought you would appreciate this because we've had a lot of conversations like this. Uh, so I, I'm in a house right now with a brand-new washer and dryer. But a few weeks ago, I was, I was agonizing over whether or not to get a washer-dryer because I'd been doing wash and fold and paying kind of by the load to get clothing washed and folded. Uh, it was, it was pretty inconvenient. And I was talking to someone about it, and I was spending a lot of time considering whether I should continue using wash and, and fold or getting a washer-dryer. And, uh, I, I [laughs] mentioned the cost of the washer-dryer and so on and so forth, and I said, "You know, for that, I could do this number of wash and fold sessions, and that I expect would take X number of weeks or months, and really I'm only here for a certain period of time." And at the end they were like, "Tim, I think you can just spring for the washer-dryer." [laughs]
- RSRamit Sethi
[laughs]
- TFTim Ferriss
But the amount of time that I spent, like, running this calculus and weighing the pros and cons was a great illustration of, uh, terrible investment of resources and time.
- 5:56 – 8:04
The $8M net worth “deal-hunting” story and what it reveals about money psychology
- RSRamit Sethi
Well, it's deep in you, and I think... you know, when you, when you think back to 4-Hour Workweek and some of the analyses you did- Right? You can tell you love the spreadsheet and you love comparing certain things. It's in you. And for, you know, I think a lot of sort of tech-oriented guys in particular, it's in them. It's not painful to us to sit there and compare things. We'll do it forever. I'll give you an example from one of the people I spoke to. This one really blew my mind. So he goes, "Ramit, I love to get a good deal." I said, "Okay." I could already tell where this is going, by the way, and it's not good, but I said, "Okay." He said, "Whenever I order groceries online, I hate the idea of overpaying." I said, "Really?" He said, "So I open up two tabs. I have Whole Foods on one side, and I have whatever competitor on the other. Ramit, you're not gonna believe it. Sometimes they charge $15 for organic groceries, but over here I can get it for $7." I said, "Wow. By the way, what's your net worth?" Tim, you wanna guess?
- TFTim Ferriss
[laughs] You know, I don't, I, I don't wanna even hazard a guess. Uh-
- RSRamit Sethi
I'll tell you
- TFTim Ferriss
... what, what was the-
- RSRamit Sethi
$8 million of net worth.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
Now, it's very easy for us to laugh, and even he laughed as I just sat there silently staring at him, you know? But what, what is revealed there is that it's not a certain number that's gonna change the way we feel about money. And if you're listening to this right now, maybe you have a partner, maybe you've had a couple arguments about money, or you just don't see eye to eye on certain things, the easiest way that we rationalize it is to say, "Well, if we just get that promotion or if we just save this much, then everything will be perfect." But my friend who I spoke to [laughs] who has an $8 million net worth, listening to him you know it's not about the dollar value. It's not. And nothing will change that feeling unless he personally works on it along with his partner.
- 8:04 – 12:19
Why Ramit finally started a podcast: ordinary people, real numbers, and behavior gaps
- TFTim Ferriss
All right. So I, I wanna plant a seed. We're gonna come back to specific questions. I wanna ask you what sort of the prying bar looks like, [laughs] what tools you use when talking to couples that you've found illuminating and helpful, right? Questions that people then who are listening might use. Before we get to that, my question is, and we don't have to spend a ton of time on it, but why did it take you so goddamn long to start a podcast?
- RSRamit Sethi
[laughs] Um, yeah, all of my podcast friends, including you, are like, "Are you stupid?" Y- they keep telling me this for, you know, "You should've done this 10 years ago." I'm just slow, you know? I'm just slow.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
I don't know. I don't know what else to say. I have no good excuse really. [laughs]
- TFTim Ferriss
I don't beli- I don't buy that bullshit excuse. So you... There has to be some calculus involved here-
- RSRamit Sethi
Well, I asked you-
- TFTim Ferriss
... that suddenly led to you doing the podcast. Yes
- RSRamit Sethi
Okay, so I asked you a lot over the course of many years. I was like, "Hey, I'm thinking about it," and you had some great advice for me, you know, record this many episodes, et cetera. The thing that I love about your podcast is you really love interviewing all these different people from across the spectrum. I don't. My nightmare is waking up-
- TFTim Ferriss
[laughs]
- RSRamit Sethi
... and talking to a bunch of people who wrote some book. I'm like, "Eh, I don't really. All right. Let's cut this short. I gotta go." But what I do love is talking to ordinary people about psychology and money, and in particular the difference between what we claim we wanna do and what we actually do. You know, "Hey, I know I should be eating healthier, but I don't." Why not? Let's get into that. No judgment, but let's try to peel the onion and try to figure that out. A- and part of that is just myself, you know? I, I had a lot of things I claimed I wanted to do but I didn't really follow through, and when I finally figured out that I could just talk to people and ask them about their money and they would trust me enough to share real numbers, then I started to be like, "Wait a minute, this could actually work." And after trying it a couple times, I realized I could do this for four hours a day every day and I would love it. That's why I decided to try it out.
- TFTim Ferriss
[laughs] You also... There are certain things that you'd be willing to do four hours a day that are utterly puzzling and hilarious to me.
- RSRamit Sethi
[laughs]
- TFTim Ferriss
Just for people who are like, "That sounds like a politician's answer. I don't buy it. I don't buy it, Ramit," I will tell you this is also someone who has done very well in business and in life, that's Ramit, who loves to feed the trolls.
- RSRamit Sethi
[laughs]
- TFTim Ferriss
You will send me extensive threads of just toying with trolls [laughs] from email.
- RSRamit Sethi
Because Tim, when do you get a chance to meet someone who walks up to you, in this case on Instagram, and the first thing they say is, "Fuck you!" And I go, "Are you having a bad hair day? Let's discuss."
- TFTim Ferriss
[laughs]
- RSRamit Sethi
"What do you, what kind of burrito do you like?"
- TFTim Ferriss
[laughs]
- RSRamit Sethi
And then the responses are just truly unbelievable. You know, 50% of them right off the bat, they go, "Oh, I, I didn't even know someone actually reads this account." Which leads to another question, why on earth would you write into the ether if you didn't expect anyone to write back? I don't know. Do you not find that fascinating?
- TFTim Ferriss
[laughs] I do find it interesting, and this is just to lend credibility to your answer.
- RSRamit Sethi
[laughs]
- TFTim Ferriss
You choose your sports in a unique way.
- RSRamit Sethi
Uh, just so everyone listening, let, let's make sure we, we capture that. He just said Ramit is credible because he spends hours a day interacting with trolls on Instagram. Tim, I don't know if that's helping me out here, man.
- TFTim Ferriss
That was a bit of a journalist reframe.
- RSRamit Sethi
[laughs]
- TFTim Ferriss
So what you're saying is... By the way, pro tip to anyone who's ever interviewed, if someone says, "Oh, so I guess what you're kind of saying is A, B, and C," do not just say yes quickly to that because they will take that and they will quote you as saying whatever they just said. They are trying to write their piece in advance by paraphrasing you. Be very careful. So those are your words, Mr. Sethi, not mine. However-
- RSRamit Sethi
[laughs]
- TFTim Ferriss
... let's come to the questions. So what types of questions, what are some specific questions You like to ask or that people can ask each other or in the context of a therapy session that they might use that you found useful?
- 12:19 – 15:01
The opening questions Ramit asks couples: recent misalignment and defining a “rich life”
- RSRamit Sethi
First question I always start with is, "In the last 30 days, can you think of a specific situation where you were not on the same page financially with your partner?" And this is a great question for a couple of reasons. Number one, 30 days limits you. Otherwise, people often feel like they have to give you their whole life history, and I don't need their whole life history, truthfully. I only need a little bit just to advance to the next question. That's number one. And then being on the same page is pretty gentle. You know, some people get in fights, and some people, they just disagree about, you know, who should pay for the check at dinner. And so it doesn't have to be this massive 10 out of 10 argument, but I do wanna hear where they were not aligned. From there, it just kind of flows because people instantly can remember something from the last 30 days, and they love to talk about it. Then the next question I ask, as I get into it, I'll ask them, "What is your rich life?" Now, this is a concept that I've been talking about for about 15, 20 years on my site, and that is the idea that you don't have to cut back on lattes. Life isn't about competing who can be more frugal. You know, there's more to life than optimizing cell C3 of your spreadsheet. But I, I wanna hear people talk about what their rich life is. I had a, a young woman whose rich life was, "I wanna shop at Whole Foods without counting the prices of whatever I buy." Uh, now, okay, that's fine if you're just starting out. Maybe you're in $25,000 of debt. She was professionally extremely successful. So with that, I kind of push her. I say, "Okay, let's say you could do that tomorrow. How much would your shopping cart cost?" She said, "Uh, like 100?" I said, "Push it. Get something really nice." "150?" I said, "You know, you make X hundred thousand dollars a year. Let's dream a little bigger." And this is a huge topic that unfolds because, again, another interesting insight about couples, most people have never thought about what their rich life is individually, much less what their rich life is together.
- TFTim Ferriss
So question about this woman. So if she's making hundreds of thousands of dollars per year, in fact, maybe I'm missing something obvious, but she could very easily afford to spend $150 at Whole Foods. So did she just feel as though she could not, or she wouldn't allow herself to do that, or did she feel like she needed tens of millions of dollars in order to, without guilt, spend $150 at Whole Foods? How did that conversation unfold?
- 15:01 – 18:37
Money feelings vs. reality: benchmarking, comparison, and the missing “celebration”
- RSRamit Sethi
People's feelings about how they are doing financially are highly uncorrelated with their actual financial status.
- TFTim Ferriss
Hmm.
- RSRamit Sethi
I spoke to a couple, uh, on the Lower East Side in Manhattan, and they were living in a one-bedroom, and they were saving a lot of money. The, uh, their income was $330,000 a year. And [chuckles] I said to them, "How do y'all feel you're doing?" And they said, "We don't know. We have no idea. Are we doing well? Are we doing horrible? We don't know." And that's one of the problems, which is no one talks about money. You have no idea how to benchmark yourself, particularly if you live in a city like Manhattan where spending is different than living in Chicago, for example. And so they had no idea, and when you take a couple look at some basic metrics, what's your savings rate, what's your expenses, you know, what is your housing costs? And I said to them, "You guys are doing really well. You should give yourself a pat on the back." And they go, "Okay. Yeah, yeah, yeah. So anyway, we got this question about our accounts." I said, "Hold on a second. Let's celebrate for just a second. You've done really well." And I think there's a lack of celebration with couples-
- TFTim Ferriss
Yeah
- RSRamit Sethi
... because there's just so much uncertainty around it.
- TFTim Ferriss
I would imagine there's a lot of positional economics also, right, in a place like Manhattan, where it's like if, if you have three friends who are doing or appear to be doing substantially better than you are, then you will evaluate yourself very differently than if you are, in your peer group, doing the best, even if in absolute dollar amounts you are making less in the latter instance, right? I have to imagine that's also a big part of it. So if you live in a place that is highly competitive with many successful people, like Manhattan, your reference point is going to make celebrating, in some respects, more difficult.
- RSRamit Sethi
I think that's true, and I think that Americans love to compare themselves to their neighbors. Love it. Well, Americans love to do a few things that are completely irrational. They love to think that if they do certain things, it'll make them happy, and then they do the exact thing that will make them unhappy. We love it.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
And, and, and we can go into all this, but think about the typical couple living in some suburban city. Think about the conversations that are happening about money regarding their neighbors. "Well, how did Leah and John go on vacation for the third time this year? You know, maybe we should be going on vacation for a third time this year." And it doesn't have to be living in Manhattan. You can be living anywhere. What's going on there? The answer is that money is opaque. Money is unclear because you might have a different savings goal than I do, and also there's a lot of secret sources of where money comes from. Oftentimes you'll find that parents are funding certain things. Oftentimes you'll find that people are in debt. Oftentimes you'll find someone's actually just really wealthy, and they make a lot more money than you think they make.
- TFTim Ferriss
Or they're really in debt, and they have the picture of financial health, but they're funding it by sort of lighting their credit on fire.
- RSRamit Sethi
Yeah. That's also possible.
- TFTim Ferriss
Let's come back to rich life. So when you ask someone about their rich life, what their rich life looks like.
- RSRamit Sethi
Yeah.
- TFTim Ferriss
So you gave us an example of the disconnect, right? Between someone's sort of objective financial status, and then the Whole Foods shopping. What would be your answer?
- RSRamit Sethi
Okay.
- TFTim Ferriss
Just so we can have an idea, like, of models of what a more fleshed out answer might look like.
- 18:37 – 23:48
Ramit’s “Money Rules” and what a detailed rich life sounds like
- RSRamit Sethi
I would say that I wanna travel for six to eight weeks, six weeks consecutively at the end of the year. When I fly, I wanna fly in this exact airline seat, and when I travel, I wanna stay at these three different hotels, and I wanna bring one or more family members with me when I travel, and cost is not the first, second, or third issue when I take these trips. So that's an example. Another example would be I don't want to start working until 10:00 AM every day. That could be an example. And, and just so everybody knows, I finally boiled these down into what I call Ramit's Money Rules. So it's almost like a personal value statement. I'll give you a couple of them. Some of them are kinda boring, and some of them are super permissive, and I... Before I start, I just wanna remind everybody, these are my rules, not yours. They should sound kinda crazy if you're listening to them. So one of them is, you know, always have one year of emergency fund cash. Okay, fine. This, you could make it six months or a year, whatever. But here's another one. Never question spending money on books, appetizers, health, or donating to a friend's charity fundraiser. Now, each of those is very meaningful to me, 'cause I didn't grow up being able to afford appetizers. So now if I eat out with a friend or whoever, I say, "Look, whatever you like on the menu, just order it." And that feels amazing. What does it cost me? An extra 20 bucks, but it feels incredible. And then there's some really big ones like anytime I take a flight over four hours, business class, or be able to pay in full for large expenses, including a wedding, dream honeymoon, or even a house. Okay, those are really big rich life dreams and rules. Most people are listening like, "Hey, I'm not gonna pay all cash for a house." Totally fine. What I would challenge each person as they think about their rich life is I would love for them to say, "You know what? Every week I love fresh flowers. It feels a little indulgent to me, but it just makes me feel so good, and so I'm gonna buy fresh flowers for myself every week." Beautiful.
- TFTim Ferriss
I'm kinda smirking as you say that because I'm gonna tilt this. I'm not sure if you'll be able to see it, but, uh...
- RSRamit Sethi
Oh, look at that.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
Beautiful sunflower.
- TFTim Ferriss
Yeah. There's a bouquet of flowers right in front of me, and that was actually a recent decision. It's like flowers each week completely changes my experience of my home.
- RSRamit Sethi
Why?
- TFTim Ferriss
Just having a symbol of life and vibrancy, also of change, and having something to care for if you're changing the water, it really just fundamentally changes my experience of space and aesthetics in the home, and it's such a simple thing. So that's why I'm smiling.
- RSRamit Sethi
I love it. You know what? Every time I ask people their rich life, and I probe, their first answers are never what we ultimately settle on. But as we start talking about it, and we spend a lot of time really probing and pushing, "Why that? Well, what if you dreamed a little bigger?" And they also smile the whole time because no one has ever asked them, "What is your rich life?" And really asked them why. Never. So usually if it's something like a handbag, right, something tangible, most people start off by saying like this, "Well, I know. I mean, I guess I'd like a purse. It doesn't have to be, like, the fanciest purse, but you know, I'd like this handbag. And, like, maybe once every decade it could be, like, a nice one." And I go, "What if it was every year? And what if it was that brand, the, the most beautiful version of it?" And their eyes light up because no one has ever talked to them about the thing that deep down they love, what I call their money dial. Instead, it's kind of seen as frivolous, particularly things like handbags, which I don't agree with. I think you could buy a beautiful handbag for the craftsmanship, for the functionality, or just 'cause you want it.
- TFTim Ferriss
For those people who can't see Ramit right now, he's winking at me.
- RSRamit Sethi
[laughs]
- TFTim Ferriss
So I know what to get you for Christmas.
- RSRamit Sethi
Thank you very much. [laughs]
- TFTim Ferriss
Please continue. [laughs]
- RSRamit Sethi
And you know, I'm hoping as I'm asking these questions, that their partner is seeing and can model this because you'll usually find that when one partner is nervous because they think that it's frivolous, that there's a reason for that, that their partner has said something multiple times in the past like, "Well, why do you... You don't need a handbag like that. You don't need that kind of car." And yeah, you don't need it, but we're here talking about your rich life to start. We're gonna get to the spreadsheet stuff. We're gonna get to your spending plan, but let's just start off with your vision of what a rich life is. That is exciting.
- TFTim Ferriss
So if we rewind just back to the blueprint here, not so much a blueprint, but your series of questions. Within the last 30 days, where have you not been on the same page-
- RSRamit Sethi
Yep
- TFTim Ferriss
... right, financially? What does your rich life look like? What are some of the questions that follow or could follow after that?
- 23:48 – 26:09
Diagnosing deeper issues: boundaries, severity scaling, and how small fights become big crises
- RSRamit Sethi
Usually when I find that one person is an overspender, and they admit it themselves, I ask them, "Have you ever said no?" And what I mean by that is, have you ever said no to your family who's asking you for money, or have you ever said no to your partner when they ask for XYZ? Have you ever said no? And almost always they say, "No, I've never done that." So you realize at that very moment that there's a deeper issue than just money. It's being a people pleaser, it's not being able to set effective boundaries, things like that. W- we get into that. I also ask people, "How big of an issue is this on a scale of one to 10?" And this is a really interesting response I get.
- TFTim Ferriss
In this case, what is this?
- RSRamit Sethi
The thing that they disagreed on.
- TFTim Ferriss
Within the last 30 days?
- RSRamit Sethi
Yeah.
- TFTim Ferriss
Yeah. Okay. Got it.
- RSRamit Sethi
And almost always they will say, "Mm, it's like a five out of 10. It's not that bad." Now remember, they've gotten on a podcast with me where they're sharing real numbers, they're sharing fights and, and challenges they've had for years, and they're going, "Oh, it's a five out of 10?" So I know that there's something going on here. I say, "Okay. Five out of 10. What do you think happens if, you know, you both disagree about how much to spend, uh, at brunch on Saturdays? What do you think happens when you have kids, and then when you decide to move to a different city, and when you have 25 years of this going on? What happens?" And they go, "Oh, yeah, that's like a nine out of 10." I go, "Yeah. And what do you think happens at nine out of 10?" And they realize that when people say, "We got divorced because of money," it was not fighting over $7 at Target, but it started there-
- TFTim Ferriss
[laughs]
- RSRamit Sethi
... and it calcified over 25 years.
- TFTim Ferriss
[laughs] That could be the title of your next book. It could be $7 at Target [laughs] .
- RSRamit Sethi
[laughs] .
- TFTim Ferriss
Small disagreements and how they lead to big divorces.
- RSRamit Sethi
Oh, you are the best at titles, Tim.
- TFTim Ferriss
I'll take my customary 15%. It's very reasonable 'cause we're friends [laughs] . All right. Any other questions that you'd like to cover?
- RSRamit Sethi
N- no, that's where we start. That gives me a lay of the land, and I can kinda walk you through an exercise that I do with them, m- may be helpful if you think.
- TFTim Ferriss
Let's do it.
- RSRamit Sethi
All right.
- TFTim Ferriss
Yeah. Great.
- 26:09 – 31:46
A joint bucket list exercise: putting dollar values on dreams and aligning contributions
- RSRamit Sethi
So this is one that I actually started with my wife, and we were talking about our rich life. And it's hard when you start talking about your rich life because you don't even know where to start. Many of us have spent our entire lives being told what we can't do with our money. So when you ask people what they wanna do, the answers are fairly facile. You know, the Whole Foods is an example. So what I did was I said, "Okay, let's take separate pieces of paper and let's write down in the next 10 years what's on our bucket list. And let's just write it down." And we took 10, 15 minutes, and the way that I thought of this was I was inspired by Stephen King's National Book Club speech. Now, he was living in a trailer with his wife, and he was running out of money, and he got a job offer to be a teacher, and his wife said to him, "Will you be able to write?" And he said, "No, I won't. But at least it'll allow us to pay the bills." And she instantly said, "Well, then you can't do it."
- TFTim Ferriss
Wow.
- RSRamit Sethi
And so that chilling moment, and then fast-forward just a little bit in the future, he signs a massive deal for his first book, a massive deal. He gets the check, brings it home to his wife in their trailer, and he said, "We sat there, we looked at the check, we talked about what we were going to do with the money, and we cried." He said it was one of the most beautiful conversations of his life. And I love that. I love the idea that money can be this thing that lets us do more, not less. It lets us dream bigger, it lets us be more adventurous, more generous. So I started off with my wife, I said, "Let's just write down our bucket list items." Okay. So we come back after 15 minutes. She had some interesting ones. She wanted to learn another language. That was just individually for herself. Together, you know, we wanted to... I think I wrote down, "I wanna design a house with you," because she's very creative and we're both into design. And we wanted to have a beautiful 10-year wedding anniversary in India. We know the exact place. We know all the people that we want to bring with us. Great. We're talking about this. We're loving it. We're having a blast, and I said, "Let's pick a couple of these and let's put a dollar value to them." So we picked the 10-year wedding anniversary, and I said, "Okay, pick a number. There's no way to know the right number. Just pick a number what you think it'll cost." So she kinda takes a second, I take a second, and the numbers [laughs] that we picked were hilariously different. My number was something like five to 10 times bigger than the number my wife picked, and she looked uncomfortable, like visibly uncomfortable.
- TFTim Ferriss
Yeah. I was gonna ask you, if there's an asymmetry of wealth, I would imagine the person who has fewer resources may be very nervous about actually speaking honestly or adding big items or offering big numbers.
- RSRamit Sethi
Well, you're totally right. Most people are afraid of dreaming about their rich life at all because they feel that once they write it down or tell someone, if they don't achieve it, then they're a failure. But in my opinion, that's just going through life playing defense, and I'd rather play offense. So what I said to my wife is like, "Look, neither of us know what this is actually gonna cost. We just made these numbers up. But if we're going to choose a number, let's go with the bigger one. Why? Because we have a lot of time. We have eight-plus years to save and invest for this. Two, I think we can do it. I know what we can accomplish together. We can do it. And three, wouldn't it be magical to be able to take all of our friends and family? The people who can't afford it just go to the airport and the ticket will be there for you. Wouldn't that be amazing?" And so really coming back to that vision instead of, "Well, it's actually gonna be 7% return and I don't know if da, da, da." No. This is a vision exercise. So she begrudgingly said, "Okay."
- TFTim Ferriss
[laughs]
- RSRamit Sethi
I, I will say that one year later- My wife has done an amazing job working on her money psychology, and we kind of revisited this. And she said, [laughs] "Oh yeah, like now I know without a doubt we can hit that number easily." And that's when you're really aligned with your partner where the two of you are rowing in the same direction. It's not one person saying, "Come on," but it's both of us saying, "Oh yeah, we could do this."
- TFTim Ferriss
So let me ask... May I ask you a very personal, uncomfortable, possibly-
- RSRamit Sethi
[laughs]
- TFTim Ferriss
... uncomfortable question, and then you can tell me.
- RSRamit Sethi
Okay.
- TFTim Ferriss
So you said we can hit the number. Right? W- was there a discussion with some of these items of how each party sort of contributes to that big goal, right? Even though you're not getting into immediately the nitty-gritty, I understand it's a vision exercise, but since you're using the example I figured I might as well ask-
- RSRamit Sethi
Yeah
- TFTim Ferriss
... because I bet this is something that is going to be an inevitable topic that people have to navigate.
- RSRamit Sethi
Okay. I'm glad you asked, and I'll definitely share how we did it. So I think that the reason that we came up with these joint goals, like a 10-year wedding anniversary, is that we both wanna contribute to it. Okay? We wanna contribute proportionally based on income, but we both wanna contribute to it. The thing about, you know, my wife wants to learn a certain language, I'm not contributing to that. She makes-
- TFTim Ferriss
What language? Just out of curiosity.
- RSRamit Sethi
Spanish.
- TFTim Ferriss
Okay, cool.
- RSRamit Sethi
Yeah, she's taking a class. She's doing a great job.
- TFTim Ferriss
Nice.
- 31:46 – 38:59
Monthly money meetings: five-minute expenses, rich-life progress bars, and making it positive
- RSRamit Sethi
And she decided to get her own tutor, and that's her thing, and she's covering that on her own, and I'm thrilled. I have my own stuff that I pay for. Again, we have our joint accounts and our separate accounts. But I will say that the reason that I wanted to have this exercise is that when we meet once a month to talk about our finances, we have something to look forward to. We have an exact number that we are saving and investing together for, and we look at it. It's almost like one of those progress bars. "Okay, we're 4% of the way there. Oh my gosh, we're now 8% of the way there." And we can see that this goal, which was so big originally, we're actually just chipping away at it day by day. That's magic.
- TFTim Ferriss
So the, the once monthly meeting to discuss finances, I wanna hear more about this.
- RSRamit Sethi
Yeah.
- TFTim Ferriss
What's the format?
- RSRamit Sethi
Okay. The for- so you and I talked on our last podcast about checking in, and you had some great suggestions for some questions, and, um, we've used those and adapted those for our own relationship. It's one thing to do a relationship check-in.
- TFTim Ferriss
Yep.
- RSRamit Sethi
I also think another really valuable check-in is a financial check-in. And so the way that we do it is we have a spreadsheet that we've built. It's custom for us based on what we- what's important to us. So we have our expenses that are in there. In the course of a 30-minute call, we will look over our expenses, and the call by the way, is with a third party who kind of walks us through some of the, the numbers. The expenses take five minutes because really most of our expenses are planned for. Okay, I'll give you an example.
- TFTim Ferriss
Except for your handbags.
- RSRamit Sethi
Except for the handbags. [laughs]
- TFTim Ferriss
[laughs]
- RSRamit Sethi
That's right. Well, those are gonna be a incoming gift from Tim Ferriss soon enough.
- TFTim Ferriss
[laughs] My, my, my private labeled handbag line.
- RSRamit Sethi
[laughs]
- TFTim Ferriss
I can't believe you've told the world.
- RSRamit Sethi
That's right. [laughs] So here's the thing I, I think about expenses. I think most people, they spend time, all their time looking at expenses, and it's really depressing.
- TFTim Ferriss
Yeah.
- RSRamit Sethi
This is the wrong place to spend a lot of time. What we did instead was we said, "Okay, our groceries are basically the same every single month. Our, whatever, rent is basically the same every single month." There's a couple areas that are variable. So we actually sat down at the end of the year and we planned out how many trips do we wanna take, how much is each of those trips, and we kinda got, we got pretty granular about it. We also know that some surprise expenses come up with things like gifts, so we planned it out appropriately ahead of time. "This is how many people we're gonna give gifts to. This is the amount we're gonna gift." Charity, same thing. And so those are baked in. So on a given month, yeah, we might be a little bit over on food, we might be a little bit under on gas, but it's basically within parameters. Okay? After five minutes of that, we spend way more time looking at our rich life goals. So we have about five rich life goals that are actively being saved for. That would be like the 10-year wedding anniversary. And so each quarter, each month or quarter, we have money going into those goals, and then we have s- a backlog. You can never have too many rich life goals 'cause at some point we're gonna hit one of those goals. What's next? Guess what? We got our backlog ready to go. And so that backlog could be, you know, hiring somebody to do XYZ for us. It could be taking this special trip, buying a new car, this type of specific car and model. It's all there.
- TFTim Ferriss
What would be your true but most embarrassing-
- RSRamit Sethi
[laughs]
- TFTim Ferriss
... backlog rich life goal to share on this podcast right now? [laughs]
- RSRamit Sethi
Oh my God. Um, this is horrifying.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
Let me think. Okay, well my... Okay, so once I sat down and I asked my friends, I was like, "What is, what is the next level for you, the rich life next level?" And so one, one of them was like, "I want a jet." And one of them was like, "I wanna take a trip to Tahiti," or something like that. And mine was, uh, "I never wanna have to pack a suitcase again in my life."
- TFTim Ferriss
[laughs]
- RSRamit Sethi
And they were like, "Are you stupid? That's like 50 bucks." But okay, I'll tell you what it is. Now, the suitcase part, I don't wanna have to carry luggage when I travel.
- TFTim Ferriss
Okay.
- RSRamit Sethi
That, and that's relatively inexpensive. You can ship it for like 100 bucks. I don't, I just don't want to. I want to walk out of an airplane free and not sweating 'cause I have a, like a bag that I'm carrying around with me. That was a very... I don't know, it feels a little indulgent to me, but it's like 100 bucks.
- TFTim Ferriss
Okay. So, so shipping luggage as opposed to transporting luggage.
- RSRamit Sethi
Correct.
- TFTim Ferriss
Yeah. I know, I know a few people who have, who have done that for many, many years.
- 38:59 – 44:35
When one partner overspends: opening the conversation with curiosity (not spreadsheets)
- TFTim Ferriss
So let's say that you both want that to be the case. Let's just assume. And this is not from my, my personal experience, just to be clear. But I would imagine there are cases where you have a couple, and one person is an overspender. Maybe it extends further than that. Like you said, maybe they're a people pleaser or they don't have clear boundaries with other folks. But nonetheless, like the, the hemorrhaging is coming predominantly from one side. What's, what type of conversation would you recommend for people in that type of situation?
- RSRamit Sethi
Ugh, this is really hard, but this is the most common of all. Uh, to have these conversations, i- it's usually one person effectively dragging the other person to the meeting. All right? So that's not [laughs] a good place to start, and I'll tell you what the typical approach is and then what a better approach is. The typical approach is to say, "Hey, we really need to get a handle on your spending. This is not working. So let's talk about money." Okay, that's never gonna work, so just stop that right now. Another approach would be to say, "Okay, I built this spreadsheet model. Look at tab 16. It'll show you all the math, and right now we're compounding..." Uh, don't do that. Nobody cares about compounding. You're, you haven't earned the right to talk about math at this first conversation.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
The third, and I think much better approach, is to say, "You know what, babe? I've been listening to this podcast episode, and they were talking about money, they were talking about a rich life, and you know, I, I guess I never thought about it this way. You know, there was one woman who said she wanted to be able to go to Whole Foods and just spend without looking at the prices. I mean, you've mentioned that, right? What would that feel like to you? You know, for me, a rich life would be to be able to get in the car and drive, and if we see a place we like, we can just stop there and we can order whatever we want without looking at how much it costs. Like, I would love to do that with you. So w- what would it be for you? You know, I'd love to know." Let's just pause right there. Notice that in that conversation that we just had, a couple things I did and a couple things I didn't do. First, I set the context. Why am I bringing this up? Feel free to throw The Tim Ferriss Show under the bus. "Oh, I was listening to this weird show."
- TFTim Ferriss
[laughs]
- RSRamit Sethi
"Some guy came on, Ramit Sethi, I don't know." Uh, okay, do that. Give, give them a reason. Number two, I was genuinely curious. You know, "Hey, I know you've mentioned Whole Foods. What would that be like for you?" I find in couples that have trouble, they have rarely asked the other partner a question, a single question, in months if not years. Okay, so that's number two. Notice what I didn't do. I did not talk about-
- TFTim Ferriss
You mean questions about money or just questions-
- RSRamit Sethi
No, anything. Anything.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
When I talk to them... I, I'll give you one, one of the, one of the young women in my, um, episodes, she revealed that she had an alcoholic father, and she had, she and her family had had to walk around on eggshells because of him. She said, "If we're really getting real, that's, that's how I was raised." And you know what happened? Her husband started talking over her. "Well, yeah, you know, that's why I really wanted to have the courage to be an entrepreneur." I said, "Man, are you listening right now? Did you know about that?" He goes, "No." I go, "Would you like to maybe ask her any type of question about this bombshell she just dropped?" Which by the way, reveals everything about the trouble they were having, and he struggled to ask the question. His question to her was, "How do I help you achieve my goals?"
- TFTim Ferriss
[laughs] God.
- RSRamit Sethi
I was like-
- TFTim Ferriss
Wow
- RSRamit Sethi
... "Okay, we're gonna start at ground z-" And so-
- TFTim Ferriss
Tough case. Tough case.
- RSRamit Sethi
Very tough case.
- TFTim Ferriss
Dr. Sethi. [laughs]
- RSRamit Sethi
But you know, you know what? I think, um, sometimes people in relationships, they do want it to be successful, but they need a little modeling. They need to see what it looks like to actually ask a single curiosity-based question. And so we worked through it, and eventually he said... This is the question he asked, which I was so happy about. He said, "What do you mean?" That's all it was. It was as simple as that, "What do you mean?" I said, "We've been talking for an hour and a half. That was the first time you've asked a single question of your wife, and I loved it." So th- this curiosity thing is another thing that happens, and as you kind of get into these conversations with people, you realize, boy, we have these patterns that we've been repeating for months, oftentimes years. And if we need a third party to help us or if we can just switch locations, let's go to a nice dinner and talk about it, listen to this podcast, suddenly you can kind of turn the leaf and start that process of building a new relationship with money.
- TFTim Ferriss
Okay, so couldn't agree more. I've had to train myself to be better at this. If at some point, though, you need to get to the ER to triage and stop the financial hemorrhaging, you, you can go, like, directly through the worst neighborhood yelling and screaming to the ER. You can also take a detour through, like, the amusement park and make the entry a little easier, but eventually you get to the ER, and the, the fact remains that one person is spending a lot more than the other. When they get to that crux or at the point that the, that that is to be the topic of conversation, how have you seen people do that successfully in the past?
- 44:35 – 49:17
What actually changes behavior: shared desire, ‘why now,’ and systems that match psychology
- RSRamit Sethi
You are right that-
- TFTim Ferriss
Or actually, actually, let me, let me ask a better question, 'cause that, that implies a bunch of things need to happen, and maybe they don't. How do you see people successfully solve that situation? That's a better question.
- RSRamit Sethi
Ultimately, if they're gonna solve it together, they both have to want to create a vision, a North Star together. It is extremely unlikely. Basically, I've never seen it where one person drags their partner and makes it happen. It does not happen. It can work for a while, but the rest of your life fighting about everything from the cost of Starbucks and a candle to the cost of who's paying for our kids' college, it's just a-
- TFTim Ferriss
Yeah
- RSRamit Sethi
... dreadful life. And, um, and that's exactly why people end up getting divorced, among many other reasons when it comes to money. What I find is that of the people who change successfully, one, there is a desire to change, and that's why I ask them, "Why now?" Right? It's never about the dishwasher. It's them realizing that, oh, we don't have the tools to do this, or oftentimes it's them with their son or daughter who will make a comment, and they realize that their toxic money behavior is actually being picked up by their kids. That's a really common one. Okay?
- TFTim Ferriss
And any examples?
- RSRamit Sethi
One young woman said to me that her son came up to mom and said, "Don't tell daddy about buying this." And there was a lot of hiding money and spending in their relationship, just like there had been with mom's parents. So it's passed down generationally. And when I pointed it out to them, I said, "You know, you two could probably make it work over the course of your life. You know, you're both very resourceful. You're high earners. But how do you think your children are responding to this?" And their faces went completely white, and they looked at each other, and they knew. They knew. They said, "Oh, yeah, my son already knows about this. He told me the other day, 'Don't tell daddy about spending.'" And so that was the thing that got them to make the change. So by the way, it's not enough to just want to change. Like, everybody wants to have this smooth relationship with money where we can be, you know, abundant and, and live our rich life. But I also find that there's a combination of wanting to change psychology and use tools and systems. So psychology. A lot of us think that it's weird to have a meeting about money once a month or once a quarter. It's weird. You know what? You know the way that most people are raised is you don't talk about money until there's a fight. That's the predominant worldview on money and couples in this country. And so when you shift it and you say, "Yeah, you're gonna have a standing agenda. You two are actually gonna have a Google Doc," one of the most common reactions I get is, "That sounds like a job. Sounds like work." I go, "Yeah. That's because at work you're measured on certain things. You're trying to bring some of that into your relationship." You can still love your partner and sleep next to them, but you can still have a running agenda. So that's one, changing that psychology. The second is using these systems. You know, usually when I find that, um, people are... I'm speaking to these couples who have some type of big, major money problem. They are not aligned on basic financial principles, and they're not using, like, basic systems, things like they don't understand compounding. So one of them goes, "Well, hey, let's just, like, spend our money 'cause we don't know how long we're gonna be here for," or, "We'll never make enough." And I point out, "If you guys started saving and investing properly today, you'd have like $6 million." They go, "What?" So that's number one. Two is just, you know, using things like do we have a shared spreadsheet, things like that. I, I had another couple that was extremely financially sophisticated. They were in the realm of being CPAs, and I asked them, "How much money do you think you make? What's your net worth?" And the answer between the two of them was off by millions of dollars.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
Remember, these are highly sophisticated people. So I said, I said, "Why is that?" And, um, the answer is that they are so sophisticated they had all these exceptions. "Well, this one is here, but this is liquid, and this is not." I said, "Guys, you gotta go back to first grade. Create a one-page Google Doc. Like, basically write on it with crayon this is how much we have, this is how much we owe, this is how much, you know, we've invested." And they had to kind of accept that even though they're super advanced at work, in their personal life they need to start back at ground zero.
- 49:17 – 52:34
A ‘simple’ fix that reveals the real problem: the $100 fight hiding a housing crisis
- TFTim Ferriss
Can you think of an example of a serious fight, doesn't have to be from your personal experience, but in your experience with all the readers and various couples and so on, something that was a nine out of 10 in severity that had a really simple solution that worked?
- RSRamit Sethi
Yes. Yeah.
- TFTim Ferriss
Does that make sense? Like something, something that's, that, that had been intractable, right? This couple had been smashing their head against a brick wall or against, you know, they'd been smashing each other's heads together and at an impasse, and then lo and behold there was a simple solution.
- RSRamit Sethi
There's a couple who lives on the Upper East Side of New York.
- TFTim Ferriss
All right.
- RSRamit Sethi
The complaint was he has been starting a business. I need him to contribute $100 a month to the household for food, things like that. They have two children, okay? And he said, "Look, I'm putting everything I've got into this business." So she was very upset because she's like, "Look, we're going in the red every month." Now, I asked him a couple questions. I said, "How much does your apartment cost?" The rent was $3,800 a month. They were making $70,000 per year.
- TFTim Ferriss
Oh, wow.
- RSRamit Sethi
Yeah.
- TFTim Ferriss
Okay.
- RSRamit Sethi
So-
- TFTim Ferriss
All right.
- RSRamit Sethi
So what's going on here?
- TFTim Ferriss
That's a problem. [laughs]
- RSRamit Sethi
They have been f-
- TFTim Ferriss
That's pre-tax. That's pre-tax
- RSRamit Sethi
Yeah, correct. They have been fighting about $100 per month. That has been a debate in their household for something like nine month. And there were a lot of tears. There were a lot of real agonizing conversations. But you know what the real problem was? They were bankrupt in two months, and they didn't even know it.
- TFTim Ferriss
Oh, wow.
- RSRamit Sethi
So this is a really difficult conversation we had, and the solution was very, very tough, which was she had a conception of how she was going to live. Her family lived very close to her. She could visit them every day. But the truth was they needed to move out of the city and likely move out of the state and go to a much lower cost of living. Now, imagine how it feels to have your entire world that you've constructed and the plan for you, your husband, your children, and then on this call you realize that is not going to happen. It's devastating. It's very tough. And so, you know, they put me in a position of trust to be able to talk to them, and one of the things I told them was, "Look, it doesn't mean that you have to move away forever. There are lots of things you could do with this company, make it successful, increase your income. But you can't ignore that this is the real problem in the relationship. Ignoring it will not make it go away. It'll just get way worse." And so it really goes to show that there are things that we can agonize over for weeks or months or even years in our relationship, but sometimes the true problem is way out there in left field.
- TFTim Ferriss
Hmm. What did they do? Do you have any idea?
- RSRamit Sethi
I will follow up with them soon, and I hope to do follow-up episodes where we find out what actually happened.
- TFTim Ferriss
Postmortem. Could be, could be the second podcast.
- RSRamit Sethi
[laughs]
- TFTim Ferriss
[laughs]
- 52:34 – 55:09
Prenups: shifting perceptions and when it’s worth discussing
- TFTim Ferriss
What are some of the other situations that you've run into? And actually, I'd be curious after our last conversation related to prenups, although we covered many topics, not just prenups, was there any feedback or subsequent learnings from people who heard it or people who read your writing that you found interesting, puzzling, thought-provoking, or otherwise?
- RSRamit Sethi
Well, the first and most important reaction that I got was people recognizing that prenups are not just some rich asshole trying to screw their partner, and I was, I was really happy about that. And I wanna thank you for letting me come on and kinda share my own personal experience 'cause the only way most people hear about prenups is from TV, and it's super [laughs] untrue and dramatic the way that it's portrayed. And so I saw a lot of comments on Reddit, on my Instagram DMs, people saying like, "Hey, I had no idea that's how it actually works." So that was very gratifying. Again, as I said in the episode, most people don't need a prenup, okay? But if you do, if you're coming in with a preexisting business or a disproportionate amount of wealth, then it's worth talking about it, and a prenup is something you agree on.
- TFTim Ferriss
Or side note, if you may inherit any asset from your family-
- RSRamit Sethi
Yep
- TFTim Ferriss
... also.
- RSRamit Sethi
Totally.
- TFTim Ferriss
Right? So it could be real estate, could be a house, could be anything.
- RSRamit Sethi
Yeah.
- TFTim Ferriss
Also, also a consideration.
- RSRamit Sethi
You know, sometimes, uh, I read a lot of Reddit, and sometimes I see these conversations where, um, one person goes, "My partner wants me to sign a prenup, and I think that they're an asshole. I'm gonna break up with them." And then of course there are, like, hundreds and hundreds of comments. And once in a while I will see someone reference that episode, and that makes me really happy. Whether it's that episode or another place that someone's really talking about this stuff, I think there's slowly being a shift where people are starting to recognize, "Hey, this isn't just assholes."
- TFTim Ferriss
[laughs] Uh, so a- and for people who, uh, I'm sure it's easy enough to find, but we'll create a short link. [laughs] It's not legal advice, folks, but it is a fun conversation and very, very detailed. Tim.blog/prenup. We will just make a short link for people who are interested, uh, so that'll go straight to that episode. What other tools, questions, exercises, resources, anything that, uh, you think might be beneficial to listeners of this episode, the broad topic being couples and finance-
- RSRamit Sethi
Yeah
- TFTim Ferriss
... couples and money. What other ground might we cover?
- 55:09 – 1:14:41
The ‘$100 Challenge’ and learning to spend: building a rich life through experimentation
- RSRamit Sethi
Let's talk about what I call the $100 Challenge, and this is for people who tend to struggle spending money on themselves. Now, I can help people with their investments. I can help them change their money psychology. I can often fix their businesses, but if there's one thing I cannot fix, it's cheap.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
I can't fix cheap people. If you're cheap, I can't help you. I'm sorry.
- TFTim Ferriss
Well, you can help them, but you can't fix them unless they want to be fixed.
- RSRamit Sethi
But here's the thing. Yeah, the... Here's the thing. They never want to change it. So cheap people, they write me. Tim, this is the one group of people I've just decided I cannot help them because they write me-
- TFTim Ferriss
Now, there are levels and there are levels, right?
- RSRamit Sethi
Uh, yeah, that's true.
- TFTim Ferriss
We're talking about, like, NBA All-Star cheap, meaning-
- RSRamit Sethi
[sighs] Yeah
- TFTim Ferriss
... maybe that's not the right metaphor to use, but you're, you're talking... Maybe you could just give some examples of what we're talking about.
- RSRamit Sethi
[laughs] I mean, the ex-
- TFTim Ferriss
Throw out the car deal because we didn't get the floor mats, that kind of cheap?
- RSRamit Sethi
No, no, no, not that. Not that.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
Although I don't think my dad thinks there's anything wrong with that.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
Uh, so I guess I'm proving my own point.
- TFTim Ferriss
That's a true, that's a true story. [laughs]
- RSRamit Sethi
That's... I'm proving my own point as I say this. Um, it is people who write and they say, "Hey, we've, you know, saved a bunch of money and, but I can't bring myself to spend it." Um, and I, and so, you know, I developed all these v- variety of techniques and I say, "You know, what will you do with the money?" Da da da da da. And they acknowledge that it's irrational, but when I give them something to do about it, they ultimately go, "Oh, actually it's fine." They don't think that it's that big of a problem. They minimize it. So I'm gonna give everybody a $100 challenge here to try to preempt this problem. Before you become a cheap ass, you take this challenge right now and you can take that fork in the road towards a rich life instead of whatever cheap place you're about to go to. So here's the, here's the challenge. In the next 48 hours, I want you to spend $100 on something you love. You cannot spend it on kids, you cannot spend it on pets, and you cannot spend it on charities. It has to be on you. Now, if you're a high earner, you can take that number and you can multiply it. So for example, if I'm going to Tim, I'm not giving Tim the $100 challenge. Tim's challenge has a lot more zeros on it, okay?
- TFTim Ferriss
[laughs]
- RSRamit Sethi
And so, so you, you can decide-
- TFTim Ferriss
Can finally get, can finally get that Botox I've been eyeing.
- RSRamit Sethi
[laughs] You can decide what the amount is, but the point is it should be meaningful, right? It should make you think and it should make you go, "Ooh, wow, what am I gonna spend that on?" And this is just one little way, one method to start shifting your life towards spending on the things that are important to you. You know a lot of people, they're 30, 40, 50, they go, "I don't actually know what I wanna spend on." And I find that to be a tragedy. I think it's a tragedy to live a smaller life than you have to. So here they are with hundreds of thousands, even millions of dollars in the bank, and almost as part of their identity, "Well, I don't... You know, I'm fine. I just eat at Taco Bell." Listen, I ate at Taco Bell a long time myself. It's great, okay? But what else can you do with your money and really dream into something bigger, more meaningful? It could be luxurious. It could be adventurous. Whatever the case may be, that's what I want for you doing this $100 challenge.
- TFTim Ferriss
So if, if that were posed to you, and I'm sure people have asked you this, right, what would or what have been some of your answers?
- RSRamit Sethi
Ooh, good question. Um-
- TFTim Ferriss
Besides, besides the luggage concierge, AKA FedEx. [laughs]
- RSRamit Sethi
Yeah. Great question. So, so my number would be bigger than $100. I would probably do 1000 to $5000. And in that price range, what I would do is I would... There's a few things that I have done. So one is I would take an, a last-minute trip wherever just to see a friend, right? G- I'm, I'm gonna get on a plane and go wherever they live in the world and just hang with them. It could be as short as two days. It could be five, 10 days. That's very abundant for me. Two is I love clothes, so I would go and buy the most beautiful coat or sweater that, that I've had my eye on. Boom. I always have a list of things that I'm like, "That's... I'll get that next." And three, I love convenience. So it would be, you know, for example, hiring a, a travel agent and saying, "Okay, this is the type of trip I want. Give me the entire itinerary laid out." That's what I would do. What about you?
- TFTim Ferriss
You know, I was gonna say I came across an amazing cashmere onesie that, that I think would look amazing on you.
- RSRamit Sethi
[laughs] Wait, wait, wait.
- TFTim Ferriss
So I'll, I'll send a little-
- 1:14:41 – 1:19:27
Patterns from couple sessions: ghosts, stories, minimizing, and treating money like a business
- TFTim Ferriss
Where should we go next?
- RSRamit Sethi
Let me share just a couple of my biggest fascinations that I've taken away from these couples. These are the patterns that I've noticed which, which really surprised me because I thought there would be a couple, but not these ones. The first pattern is that people will work for years and years and years, save their money, but never think about what they wanna do with it. One couple, they said that their rich life is that they wanna own four cottages eventually, and I said, "Cool. What do you wanna do with that?" They go, "I want it to throw off passive income so that eventually we can buy this beautiful RV and go camping with our family." I said, "Well, that sounds cool. How old will your kids be?" You know, from the sounds of it, their kids would be like 65 years old by the time they could do this. I said, "Can I make another suggestion? What if you rent an RV, you go for two and a half weeks, and you do it 18 months from now after you've saved the money to do it?" They had built up this vision of that they had to buy four cottages and then buy an RV to go camping with their kids. The kids would damn near be dead by the time they could do that.
- TFTim Ferriss
[laughs]
- RSRamit Sethi
Just go rent the RV and go and see if you like it. Okay, so that's one is-
- TFTim Ferriss
Sure
- RSRamit Sethi
... we save and save and don't think about it. The next is we often have a ghost in the relationship. Oftentimes, there's a third party in this relationship, and I encourage them to name the ghost. Um, one of the couples named their ghost Franny, and Franny is the one who's always concerned about debt 'cause they had-- she had debt. Always afraid of what can go wrong. And so not saying that you should try to smother Franny or ignore Franny, but rather acknowledge, "Hey, Franny, I hear you. I do have my debt payoff plan, but I've also decided I'm not gonna wait and spend nothing while I'm paying this debt off. I'm gonna be reasonable and have a balance." Another pattern is that people create a story for themselves, and then they live it. But this story can often be popped like a balloon with just a few questions. So somebody will say something like, "Well, I'm-- he's good with money. I'm not." And I'll go, "Is that true?" And then she will go, "Oh, yeah, yeah." I go, "Hey, out of curiosity, have you read my book?" "No." "Do you think if you were to read this book that you might be able to get pretty decent with money?" And that's a beautiful moment because suddenly that person realizes that story they've been telling themselves may not be true. I mentioned that people minimize the problem. You know, they'll say, "This is a 4 out of 10." But a 4 out of 10 left alone in a couple, especially when there's kids and a mortgage involved, turns into a 9 out of 10. So whether it's emptying the dishwasher or spending on Starbucks. This one really surprised me, which is stress is not correlated to the amount of debt. Stress is not correlated to the amount of debt. So there was a couple that had about $600,000 of debt, educational debt. They were two of the most capable, calm people I've met. Like, they were awesome. They had this huge amount of debt, but they had a plan, they were aligned, and they were clearly in love the way that they were talking about taking care of each other. That really showed that the amount is not necessarily correlated to the stress. And finally, people often don't treat finances in their relationship like a business, and they let it-- They think that it's weird to have an agenda or a plan. A-as I mentioned, there's nothing weird about it at all. I've always been a fan of just doing things that might seem weird, but if they work for you, they work for you. And so for any couple listening, hey, if you have some weird thing you wanna do but it works for the two of you, fantastic. Don't let anybody, including me, tell you not to do it. Just focus on what-- where you wanna get to together with your partner.
- TFTim Ferriss
Hmm. Do you have any other recommendations for people listening who want to Further explore sort of developing the skill of financial comfort, right, which I do think is a skill. I think it's a, it has many different component parts. We've covered a decent amount already. Are there any other recommendations you might have, resources that you think would help people develop a higher degree of comfort having these conversations, right? There, you know, there are books like Crucial Conversations or Crucial Confrontations I think [laughs] is the follow-up to it, uh, that, that can help with these types of things. But any, any other thoughts, whether they be exercises, resources-
- RSRamit Sethi
Yeah
- TFTim Ferriss
... anything else?
- 1:19:27 – 1:24:25
Relationship support tools: Gottman resources, defining the couple you want to be, and generosity via tipping
- RSRamit Sethi
I'll give you two. One is I'm a big fan of the Gottman Institute, and, um, my wife and I took a class there for an entire weekend, and it was very time-consuming and energy-consuming, but it was really worth it just to put a stake in the ground that says, "Our relationship is important to us. We're setting time aside for this." So that's one. And two is I often ask couples to write down what kind of couple they want to be. What do they want people to think of them? And we all know this. We all have couple friends where when we think about them, you know, a few words come to mind, and I ask them. Oftentimes they'll say something like, "They're generous. They're fun." And then after they've written down this typically very glowing document of what they wanna be known as, I ask them, "How do you reconcile that with the conversation we've been having about spending money at Target or the pizza place?" And it becomes very clear that there's a discontinuity. That's okay. Now we say, "How can we rewrite our actions to match up? If you claim you wanna be generous, could we just tip an extra 15% and just start being known as generous because we are generous?" And suddenly they realize, "Oh my gosh, I created this thing, but I haven't been living up to it." And it only takes a tiny switch to completely change that.
- TFTim Ferriss
Yeah. Yeah, the tipping example is a great one, right? It's like, look, if the bill [laughs] even if the bill is small, if you just make the commitment to, like, always tip $5, it's incredible how far that'll go.
- RSRamit Sethi
I know.
- TFTim Ferriss
Right? Like, if you buy, like, a coffee and you tip $5, like, you just made someone's day, and it's, it, it really can change how you think about the positive power of money.
- RSRamit Sethi
Bingo.
- TFTim Ferriss
It's such a s- it's such a small thing.
- RSRamit Sethi
It's, uh, I, I'm so glad we talk about that. My wife and I added that to our line item of expenses. The same as gifts, charity, we added tipping, and we added a number that was big enough that we have to go out of our way to tip larger. Like, it actually is pulling us towards tipping more, not just reflecting what we normally tip. And the same as you, we recognize that a $20 tip to somebody else is incredibly meaningful. Incredibly. And we would rather just work harder and earn more and be able to easily do that. And so, you know, when we talk about being generous and charitable and adventurous, this is what money can do for you and can do for the people around you.
- TFTim Ferriss
Uh, just as a quick personal note, and I've, I've mentioned this before, which u- usually I hate when people say that on any podcast 'cause I'm like, "Well, I don't wanna be the Johnny come lately getting this for the 20th time," but it just goes to show the power of the experience. I have mentioned probably 15 times on this podcast that at some point when I was 14 or 15 working as a busboy, Billy Joel would come into this restaurant where I worked and he would have a coffee, read a newspaper, and he would tip $20 for his coffee, and that blew my mind. I mean, like, $20 was a big deal to me. And I remember that being... And he also took time to chat. I tr- I worked up the courage one shift, I haven't told this part, over, like, two hours, 'cause he would take his time, to walk up and ask him how he met Christie Brinkley because they were together at the time, and that, that was, that was incredible. For those who don't know, incredible power couple. I mean, and I wanted to ask him. So I worked up the courage, and he turned to me and he talked to me for a few minutes. And, you know, to this day, I remember that experience so vividly. I remember what I was wearing. I remember the table he was sitting at. I remember all of it. I remember which side of the table. And in that moment, I remember thinking, "Wow, one day if I could just be so rich and successful that I could tip $20 for coffee. That is the craziest thing I've ever seen in my life." Right? So you think about the effect that had on me, right? This, this, this really small thing, which I'm, I'm sure, you know, he's done 100 times, so he would have no memory of it, but this, like, chance encounter, small thing just really can make an impact.
- RSRamit Sethi
It's huge.
- TFTim Ferriss
So I'm, I'm glad you mentioned tipping.
- RSRamit Sethi
That's awesome. And now for everyone to be able to hear, all the millions of people listening to this to be able to hear that, yeah, you can tip 10%, 20%, 100%. Nobody's stopping you from tipping more. And many of us find it easier to tip or to spend money on others, but you can also do the same for yourself, and there's no shame-
- TFTim Ferriss
Yeah
- RSRamit Sethi
... in spending extravagantly on the things you love. That is the classic way to create your rich life.
- 1:24:25 – 1:27:29
Closing: invitations to try the first money conversation and share results
- TFTim Ferriss
Hear, hear. And if people go to tim.blog/prenup [laughs] which will be created by the time this airs, and people listen to our previous conversation, we talk about the levers, right, and 10X-ing on very specific things and how you can think through that. But for this episode, we're coming to a close. Ramit Sethi, Twitter, Instagram, @ramit, R-A-M-I-T. His new podcast, I Will Teach You to Be Rich. By Ramit Sethi. You can find it wherever fine podcasts are served [laughs] . And you can find it also at iwt.com/podcast. Uh, I'm glad, better late than never, you're finally in the audio game, and I've, uh, been looking forward to you entering the fray. So I have no doubt that it will be outstanding, and encourage people to check it out. Is there anything else you would like to share? Any closing comments, requests of people who are listening, anything you'd like to point folks to before we come to a close?
- RSRamit Sethi
Yeah, I would love to hear from all your listeners, Tim, whether they wanna do it through Twitter, Instagram, DMs, whatever. I'd love to hear how your first conversation goes with your partner. This is a real-
- TFTim Ferriss
Mm
- RSRamit Sethi
... beautiful crux of a moment. You get to start this conversation. It will last you years and years, and it's you and your partner creating your rich life together. So let me know how it goes. I would be so curious to hear from you.
- TFTim Ferriss
And if you are not in a couple, you could, I'm gonna volunteer you, Ramit [laughs] to also get feedback, 'cause I know you have means for contending with this, for people who test the $100 challenge.
- RSRamit Sethi
Yeah. Love that.
- TFTim Ferriss
In the next 48 hours after hearing this, then I will get, I will get the highlights and the lowlights via, via screenshots and text messages [laughs] from Ramit. And, uh, I'm gonna go order that, uh, cashmere onesie for you on Amazon Prime.
- RSRamit Sethi
Oh, can't wait.
- TFTim Ferriss
So [laughs] and then you c- you can wear the infant swaddling cloth on your head, and you might be able to fashion that into something, maybe a kerchief for your suit. And look forward to hanging again soon, man.
- RSRamit Sethi
Yeah, I can't wait to see you in person.
- TFTim Ferriss
Yeah, it'll be really fun to see you in person. And any- anything else you would like to add? Do you feel complete? [laughs]
- RSRamit Sethi
I, I do feel complete, and I wanna thank you for the warm welcome to podcasting land. You have been a fantastic mentor, and, you know, you've just been a good friend and been patient as I [laughs] spent the last seven years trying to find the concept that I was really excited about. But now that I've found it, it feels right, and I'm very, very excited about it.
- TFTim Ferriss
Yeah, I'm excited for you. I'm excited for your listeners as well. I Will Teach You to Be Rich by Ramit Sethi. Check it out, iwt.com/podcast, or you can just search Ramit Sethi on the interwebs and podcast, and I'm sure it'll come right up. Ramit, thank you as always for hanging. Great to see you.
- RSRamit Sethi
Thanks, Tim.
- TFTim Ferriss
And to everybody listening, we'll also have links to everything we discussed in the show notes as per usual at tim.blog/podcast. And until next time, thank you for tuning in.
Episode duration: 1:27:50
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