273. "We Spend 139% of our Income and still fund our adult kids"
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What is the main topic discussed in this episode?
He said, I need to talk to you. I thought, oh, he's having an affair. He told me he had $50,000 in debt. It got us into a bigger hole. Fixed costs are at 139%. Unacceptable. We are spending more than we make. It is a grave danger. I worked really hard to get where I'm at. Then I made stupid decisions about helping my kids out. I've put us in debt. I should have said there and then, we cannot afford it. We cannot do it. I wasn't brave enough. I get a text. I have to go pick up my daughter. Can you give me some gas money? We pay for a decorator to come around and paint the house. How old is this person? 36. What the? I just want to help my kids.
What about helping yourself? I don't know. These boundaries are the things that allow you to retire. It's not just about saying no to your kids, it's actually about saying yes to your life. What is going to happen if nothing changes? Destitute, homeless, we will end up with nothing. What would you do if you got to your 50s or 60s and you didn't have enough money saved? Today, I'm speaking with Mary and Harry. They are 57 and 62 years old. They spend more than they make every single month and they continue to subsidize their adult children. Just listen to their numbers. I'm going to take a look at their conscious spending plan. Assets, $476,000. Investments, $499,000. Savings, $3,009, very low. Debt, $435,000. Total net worth, $542,000. Fixed costs, 139%. That's the ballgame. Completely untenable. And with savings of only $3,000,
They are essentially hours away from running out of money. What you are seeing here is an extremely dangerous situation. Consider, not only is this couple spending more than they make, not only does this couple have less than $5,000 in savings, this couple is in their 50s and 60s. So time is beyond of the essence. We've got to make huge changes and we've got to make them right now. I will say I am thankful that they came to talk to me because burying your head in the sand is not a strategy. And I hope that we can make some huge changes together and do it quickly. Now, let's meet Mary and Harry. Mary, you wrote something in your application to me that I would like to read. You wrote, the biggest challenge in our relationship is a combination of adult children, broken financial trust, and a severe income imbalance.
Most of the financial strain related to the adult children comes from my children, though his children have also contributed at times. Their ongoing crises and financial dependence are draining our resources and putting us at serious financial risk. Is that accurate? That's very accurate. And he has not read the application. Is that right? So he doesn't know what I wrote.
Harry, what's your reaction to that, hearing it for the first time? Total agreement. We've helped them. Now we really need to help ourselves. Okay. What was behind when you wrote that? Where were you and what was happening?
Why did Mary initially think Harry was about to confess to an affair?
I was incredibly overwhelmed. We have given one of my children quite a bit of money. How much? Probably $20,000, $30,000. And the problem is it was out of our HELOC, so it... contributed to a huge chunk of debt. And Harry's income is inconsistent. So it's hard to manage the finances every month. And it's a huge burden, a burden that I bought on us, a burden that Harry's contributed to. And I do the finances. It was, I was just overwhelmed. I was probably done at that point, you know, ready to do, to escape. How often do you feel overwhelmed with money? Most of the time, almost every day. It is always on my mind. Yeah. You wake up, you think about it. Go to work, you think about it. At night, you think about it? Mm-hmm. What do you feel when you, money is on your mind?
I'm angry at myself for contributing to our financial difficulties, the debt that we're in. And I keep trying to maneuver figures around to see if we can do something better. We don't live... Outside of our means, we hardly go out to eat. We don't buy a lot of clothes. Harry drives, what, 2007 Subaru that's held together with duct tape and zip ties, you know? So I don't know what else to cut. If you don't live above your means, what do you think is going on here?
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–3:27
2
Why did Mary initially think Harry was about to confess to an affair?
3:27–7:47
3
How did Harry accumulate $43,000 in secret credit‑card debt?
7:47–16:02
4
What caused Mary and Harry’s fixed costs to reach an alarming 139%?
16:02–19:26
5
Why do Mary and Harry have only $3,000 in savings despite $476K in assets?
19:26–24:51
6
How does supporting their adult children contribute to their debt spiral?
24:51–55:38
7
What would be the impact of selling their house and renting instead?
55:38–1:20:04
8
How can setting financial boundaries improve their retirement outlook?
1:20:04–1:59:58
Speakers
1 identifiedMore from Money For Couples with Ramit Sethi
276. "I resent carrying our finances. Can we fix this?"
275. "We escaped debt so why are we still spending like this?"
274. "We have a newborn and 89% of our income is already spent...Now what?"
272. "We own two houses, but can’t afford dinner out"
271. "He hid $30K of debt a month before our wedding"
270. “We’re sacrificing our retirement to pay for our kids’ college”