Podcasts > I Will Teach You To Be Rich > 145. “Am I a bad mom if we can’t do a $7k Disney trip?”

145. “Am I a bad mom if we can’t do a $7k Disney trip?”

By Ramit Sethi

In this episode of "I Will Teach You To Be Rich," Ramit Sethi enters an insightful discussion with callers, tackling the complexities of family financial planning and the consequences of inadequate budgeting. The episode unfolds with a revealing narrative from David, a father whose family's Disneyland odyssey turned into a fiscal fiasco. Revealing the challenges of managing expectations and expenses, this candid sharing shines a light on the bigger issue of a family's unprepared encounter with escalated costs and the common trap of poor financial preparation.

The conversation then gracefully shifts to broader themes of financial boundaries, debt management, and the psychological underpinnings of money attitudes. Sethi, along with Caller #1 and Caller #2, delve into the emotional struggles parents face when dealing with financial decisions, such as the daunting venture of buying a new house amidst suffocating debt. This episode goes beyond simple budgeting tips, probing into the deep-seated beliefs and habits passed down through generations, and the importance of creating a shared financial vision to secure not only one's present monetary health but also to pave the way for the financial literacy of future generations.

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

1-Page Summary

Couple's spending issues at Disneyland trip

David, a father, detailed his family's Disneyland spending issues, highlighting the importance of budgeting before such trips. Although initially planned for five people and estimated at $3,500, the group increased to seven and expenses shot up to about $6,000 to $7,000, double the estimation. The family stayed in a two-room suite costing around $700 and spent about $300 daily on food, exacerbating their financial strain. The lack of a predefined budget led to disagreements and unexpected costs such as higher food expenses, reflecting a total lack of preparation for the financial demands of the trip.

Inability of parents to set financial boundaries with kids

Parents often fail to set financial boundaries with their children, according to discussions by Ramit Sethi and callers. Mothers, like one caller, feel guilt when saying no to their kids, often resulting from a divorce context. Fathers claim to hold strict boundaries, but many are self-professed pushovers in reality. An example was given where parents planned a Disneyland trip for two children but ended up taking five, illustrating how children’s persuasiveness can override financial disciplines and exacerbate spending.

Debt levels for the couple vs. their income

The couple's debt-to-income contrast is alarming; they rack up over $700,000 in debt, with $57,000 in credit card debt alone, against an annual household income exceeding $200,000. They are carrying high debts in contrast to their anticipated $7,000 monthly income from a pension and disability benefits. This imbalance between their earnings and their high level of indebtedness suggests unsustainable financial management.

Buying a new house while having debt and little savings

The couple faces the dilemma of purchasing a new house valued at $630,000 with a mortgage payment of approximately $4,100 per month, while still wrestling with significant credit card debt. Despite using a spreadsheet to plan their finances, their minimal savings raise concerns about their ability to maintain a stable financial footing. The potential loss of a $4,000 down payment in escrow stands against the risk of adding mortgage stress to their high debt load.

Lack of shared financial vision and communication

Christine and David demonstrate the pitfalls of lacking a unified financial vision. They fail to consult each other when making financial plans, with Christine preferring credit-based spending against David’s savvier tendencies. The absence of a joint budget, as seen in their Disneyland trip planning, has caused issues, with Christine optimistic about credit card coverage and David left desiring a budget discussion. They have taken initial steps to collaborate on finances, but still lack a commitment to a joint approach for management and expenditures.

Perpetuating money attitudes across generations

Callers discussed the generational impact of money attitudes inherited from their upbringing. Both discussants conceded their personal financial habits stem from family ideologies learned in childhood. Caller #1, whose reluctance to set financial boundaries led to Disneyland overspending, may pass these behaviors to her children, thus continuing her family's financial cycle. Caller #2 struggles between strictness and leniency, influenced by his past, attempting to break from inherited financial attitudes. The conversation underscores the role of parental influence in financial habits and the risk of propagating unsustainable practices to the next generation.

1-Page Summary

Additional Materials

Clarifications

  • The couple's income sources include a pension and disability benefits, totaling an anticipated $7,000 monthly. They face significant credit card debt amounting to $57,000, alongside a total debt exceeding $700,000. Their financial dilemma involves considering purchasing a new house valued at $630,000 with a monthly mortgage payment of around $4,100, while balancing their existing debts and limited savings.
  • Christine and David face significant financial challenges due to their high levels of debt, including substantial credit card debt, compared to their income. They are considering buying a new house while still dealing with existing debts and minimal savings, raising concerns about their financial stability. Their differing financial attitudes and lack of shared budgeting exacerbate their financial strain, highlighting the need for a unified approach to managing their finances.
  • The text discusses how the callers' personal financial habits are influenced by their upbringing, highlighting the impact of family ideologies on their money attitudes. Caller #1's reluctance to set financial boundaries and overspending at Disneyland may be linked to behaviors learned from her family. Caller #2's struggle between strictness and leniency in financial matters is influenced by his past experiences and attempts to break away from inherited financial attitudes. The conversation emphasizes the role of parental influence in shaping financial habits and the potential for these habits to be passed down to future generations.
  • The perpetuation of money attitudes across generations can lead to the continuation of unhealthy financial habits within families. Children often model their financial behaviors after their parents, potentially inheriting patterns of overspending or poor financial management. This cycle can result in a lack of financial stability and perpetuate a cycle of debt and financial stress from one generation to the next. Understanding and addressing these inherited attitudes is crucial to breaking the cycle and promoting healthier financial practices for future generations.

Counterarguments

  • While budgeting is important, unexpected costs can arise even with the best planning, and it's possible that some of the overspending was due to unforeseen circumstances rather than a total lack of preparation.
  • Parents may sometimes exceed their planned spending due to a desire to create memorable experiences for their children, which can be seen as an investment in family happiness rather than simply a lack of financial discipline.
  • A high debt-to-income ratio is concerning, but if the couple has a solid plan for debt repayment and their debts are tied to appreciating assets or investments, the situation might not be as dire as it seems.
  • The decision to buy a new house while having significant debt could be part of a long-term financial strategy, such as investing in property as a way to build equity, which might not be immediately apparent from the information given.
  • Lack of shared financial vision can be problematic, but it's also possible that Christine and David have different but complementary financial strengths that could benefit their overall financial planning if managed correctly.
  • While money attitudes can be inherited, individuals also have the capacity to learn and adopt new financial behaviors that are more sustainable, suggesting that past financial habits do not necessarily dictate future ones.

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

Couple's spending issues at Disneyland trip

A couple facing unexpected high costs during a Disneyland trip shares their spending woes and highlights the importance of budgeting.

Dad's concern over cost, lack of budget in advance

The caller, referred to as David, raises concerns about the lack of a budget set before the family embarked on the Disneyland trip. The actual spending during the trip was at approximately $250 a day, which exceeded their initial suggestion of $100 a day. The total estimated cost of the tickets for Disneyland was around $1,500. David initially planned to take five people, including his daughter, her friend, and his youngest child, for his daughter's 16th birthday, estimating the trip would cost about $3,500. However, the group size eventually grew to seven, increasing the costs beyond his initial estimate.

David mentions that they need to have a discussion about spending limits due to budget concerns. Additionally, David expresses distress over the unforeseen expenses related to bringing more children, like heightened food costs that he estimates could reach about $500 or $600 for the four-day visit.

Hotel and food expenditures

The family chose to stay in a suite with two rooms, which cost approximately $700, including taxes. Food costs escalated to about $300 a day for the group, totalin ...

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Couple's spending issues at Disneyland trip

Additional Materials

Clarifications

  • David is a caller in the text discussing a couple's spending issues during a Disneyland trip. He expresses concerns about the lack of budgeting before the trip and the unexpected high costs incurred. David's initial plans for the trip expanded beyond his expectations, leading to financial stress during the vacation.
  • David initially planned to take five people, including his daughter, her friend, and his youngest child, for the Disneyland trip. However, the group size eventually grew to seven, exceeding his original plan. This increase in group size contributed to higher costs during the trip, as more individuals needed accommodation, food, and other expenses.
  • David and Christine had a disagreement about the number of children they intended to take to Disneyland. Initially, the plan was to include only Christine's daughter and her friend. However, the group size eventually grew to seven, which increased the costs beyond David's initial estimate. This disagreement over the number of children to include in the trip likely contributed to the overall increase in expenses.
  • "Unplanned or misjudged expenses" in the context of the Disneyland trip story refer to costs that were not accounted for or were underestimated before the trip. These expenses could include additional food costs, unexpected purchases, or any other financial outlays that were not part of the initial budgeting plan. The term highlights the unforeseen financial burdens that arose during the trip due to factors like an increase in the number of participants or higher-than-expected daily spending.
  • Ballooning costs typically refer to expenses that rapidly increase beyond initial estimates or expectations, leading to a significant rise in overall spending. In the context of the text, ...

Counterarguments

  • While David is concerned about the lack of a budget, it could be argued that the responsibility for budgeting falls on both partners, and Christine may also share in the oversight.
  • The increase in daily spending from $100 to $250 could be seen as a lack of research on current prices and expenses at Disneyland, which are often higher than many anticipate.
  • The initial trip cost estimate of $3,500 for five people may have been unrealistic, considering the known high costs associated with theme parks like Disneyland.
  • The need for a discussion about spending limits suggests that there may have been a lack of communication between David and Christine regarding financial expectations and constraints before the trip.
  • The distress over unforeseen expenses could be mitigated by better planning and contingency budgeting for unexpected costs, especially with a larger group.
  • Staying in a suite with two rooms is a more expensive option, and the family could have considered more budget-friendly accommodations to reduce costs.
  • The food costs of $300 a day might be reduced by planning meals ahead, bringing snacks, or c ...

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

Inability of parents to set financial boundaries with kids

Parents often grapple with the challenge of setting financial boundaries with their children. The dynamics of such struggles play out differently between mothers and fathers, affecting family finances and teaching children about money management.

Mom feels guilt about saying no to kid requests

Ramit Sethi observes that mothers frequently experience guilt when they deny their children’s requests. One caller expresses her difficulties with this, especially in the context of her divorce. She admits feeling responsible for her children's happiness when they are with her, which often leads to her caving into their wants to avoid negative feelings. She mentions stepping back from this mindset, trying instead to view saying no as providing valuable financial lessons.

Dad avoids setting strict spending rules to keep the peace

Fathers, on the other hand, often claim they can maintain firm boundaries. However, Sethi notes that this is not always the case, and children are often good at pushing limits with their fathers. A father, identified as Caller #2, confesses his tendency to be a "complete pushover" for his family, especially his wife. He concedes to avoid setting strict spending rules to preserve harmony within the family, highlighting a common struggle to enforce financial discipline.

Example of kids convincing dad to take 5 instead of 2 to Disneyland for birthday

The deliberations and decisions that come into play when parents plan family activities such as birthday trips can illustrate the challenge of setting financial boundaries. While n ...

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Inability of parents to set financial boundaries with kids

Additional Materials

Clarifications

  • An "enabler" in this context typically refers to someone who allows or supports another person's behavior, often to their detriment or the detriment of others. In this case, the father may be enabling his partner's desire for spending by not setting stric ...

Counterarguments

  • While mothers may often feel guilty about denying their children's requests, it's not universally true for all mothers, and some may have no issue setting and enforcing financial boundaries.
  • The idea that fathers avoid setting strict spending rules to maintain family harmony could be an overgeneralization, as there are fathers who are very strict about financial discipline.
  • The assertion that children are skilled at pushing limits with their fathers might not acknowledge the full complexity of parent-child relationships, where children may also respect and understand set boundaries.
  • The example of taking more kids to Disneyland could be seen as a choice for creating memorable experiences rather than a failure to set financial boundaries, with the value of the experience outweighing the cost.
  • The recognition of the importance of providing financial lessons to children doesn't necessarily conflict with the desire to make them happy; both can be achieved with thoughtful planning and communication.
  • The struggles with financial discipline may not always stem from guilt, identity, and a desire for familial peace; they could also be influenced by external factors such as societal pressure, marketing tactics targeting children, or a lack of financial education ...

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

Debt levels for the couple vs. their income

Caller #2 shares their financial situation, revealing a contrast between their debt levels and income. The couple has amassed over $700,000 in debt, including their mortgage, despite earning a substantial household income of over $200,000 annually.

They currently earn $8,000 a month and anticipate additional income from a pension, which would yield $2,700 a month, and a 100% disability expected to contribute approximately $4,200 a month, bringing their total anticip ...

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Debt levels for the couple vs. their income

Additional Materials

Clarifications

  • The total anticipated monthly income of $7,000 includes additional income from a pension and disability benefits, in addition to their current monthly income of $8,000. This additional income is expected to supplement their current earnings, bringing their total monthly income to $7,000.
  • The debt levels of over $700,000 are substantial compared to their annual income of over $200,000, indicating a potentially high debt-to-income ratio. This ratio is a key financial metric used to assess an individual or household's ability to manage debt payments relative to their income. High debt levels relative ...

Counterarguments

  • The anticipated monthly income figures seem inconsistent; if they currently earn $8,000 a month and expect additional income from a pension ($2,700) and disability ($4,200), the total would be $14,900, not $7,000.
  • The debt level, while high, may be manageable relative to the couple's high income, especially if the mortgage constitutes a large portion of the $700,000 and is on a property that is appreciating in value.
  • The credit card debt, although significant, could potentially be restructured or paid down more aggressively given the couple's substantial income.
  • The text does not provide information on the couple's expenses, which are critical to assessing the sustainability of their debt levels.
  • The text does not mention any assets or savings the couple may have, which could provide a more comprehensive picture of their financial health.
  • The unspecified balance on the second Ame ...

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

Buying a new house while having debt and little savings

Potential homebuyers are navigating the difficult decision to purchase a home while carrying existing debt and having limited savings.

Putting down $4K downpayment to buy $630K house while carrying high credit card debt

Callers are on the verge of finalizing the purchase of a new home valued at $630,000. The mortgage payment is estimated at approximately $4,100 monthly. Ramit Sethi, analyzing their situation, has calculated that with a 6.125% interest rate, the payment would approximate $3,828. To manage their budget, Caller #1 has utilized a spreadsheet to verify they can handle the house payment while still allocating funds for other essentials.

However, Caller #2 ...

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Buying a new house while having debt and little savings

Additional Materials

Clarifications

  • Ramit Sethi is a personal finance advisor and author known for his practical advice on managing money, investing, and achieving financial goals. He often provides insights on budgeting, saving, and making informed financial decisions through his books, blog, and courses. In this context, Ramit Sethi's analysis may offer expertise on evaluating the financial implications of purchasing a home while carrying debt and limited savings.
  • The 6.125% interest rate mentioned in the text is crucial because it directly impacts the amount of interest the buyers will pay on their mortgage. A higher interest rate means higher monthly payments and more interest paid over the life of the loan. It is a key factor in determining the affordability of the mortgage for the buyers.
  • Caller #1 has used a spreadsheet to ensure they can afford the mortgage payment while managing other expenses. Caller #2 is worried about losing the $4,000 escrow deposit if they back out of the home purchase. They are balancing the risk of losing the deposit against the financial strain of buying a home with existing high credit card debt and limited savings.
  • Placing $4,000 in escrow as a deposit means that the money is held by a neutral third party until the completion of a transaction, in this case, the purchase of the house. It serves as a sign of commitment from the buyer and can act as a form of security for the seller. If the buyer backs ou ...

Counterarguments

  • The mortgage payment estimate provided by Ramit Sethi may not include other costs associated with homeownership, such as property taxes, insurance, and maintenance, which could significantly increase the monthly financial burden.
  • Using a spreadsheet to budget is a good practice, but Caller #1 may be underestimating variable expenses or potential emergencies that could impact their ability to afford the mortgage.
  • Caller #2's concern about losing the $4,000 escrow deposit should be weighed against the long-term financial implications of taking on a mortgage with high debt and low savings, which could lead to more severe financial consequences than the loss of the deposit.
  • The decision to purchase a home should also consider the stability of the buyers' income, as a high mortgage payment relative to their income could become unsustainable if there is a job loss or reduction in earnings.
  • The high credit card debt suggests that the potential homebuyers may not have a strong handle on their finances, which could be exacerbated by the additional financial commitment of a mortgage.
  • Minimal savings indicate a lack of an emergency fund, which is crucial for unexpected expenses, especially when ownin ...

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

Lack of shared financial vision and communication

Each spouse makes own separate plans without consulting the other

The callers, Christine and David, illustrate the effects of having separate financial visions in a marriage. Christine has a comfortable attitude towards using credit cards and tends to make decisions based on feeling, while David prefers to save before spending. Christine admits to a lack of budgeting and planning. The couple often ends up doing what one spouse wants due to a lack of financial decision-making process.

No joint budget made in advance for trips and spending

The conversation highlights the absence of a joint budget, particularly evidenced by their planning for a trip to Disneyland. Christine assumes all expenses can be covered with their credit cards, and there’s a sense of optimism that things will work out without a concrete plan. Despite David expressing a desire to discuss and set a budget, ...

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Lack of shared financial vision and communication

Additional Materials

Clarifications

  • Ramit Sethi is a well-known personal finance advisor and author who emphasizes the importance of shared financial responsibility in relationships. He criticizes situations where one partner dominates financial decisions, advocating for collaborative budgeting and planning to ensure both spouses are involved in managing their finances effectively. Sethi's perspective underscores the significance of open communication and joint decision-making to achieve financial harmony within a relationship.
  • Christine tends to use credit cards freely and makes decisions based on emotions, while David prefers saving before spending. Christine admits to a lack of budgeting and planning, leading to a lack of shared financial vision in their marriage. They struggle with setting a joint budget, especially evident in their planning for a trip to Disneyland, where Christine relies on credit cards and optimism rather than a concrete plan. Despite David's desire to discuss and set a budget, Christine has been hesitant to adhere to it, causing friction in their financial decision-making process.
  • The callers, Christine and David, are a married couple facing challenges due to differing financial attitudes. Christine leans towards using credit cards freely, while David prefers saving before spending. Their lack of shared financial vision and communication leads to conflicts in decision-making and budgeting. The couple struggles to align their approaches t ...

Counterarguments

  • Individual financial autonomy can be empowering and may lead to personal growth and responsibility.
  • Separate financial plans might work if both partners have similar spending habits and financial goals.
  • Some couples may find that maintaining separate finances reduces conflict and allows for a clearer division of financial responsibilities.
  • Using credit cards isn't inherently negative; when managed well, they can offer benefits such as rewards and purchase protection.
  • Optimism about finances, like Christine's, can sometimes lead to positive outcomes through risk-taking and investment opportunities.
  • A reluctance to stick to a budget may stem from a need for more flexibility in spending, which can be important in certain situation ...

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145. “Am I a bad mom if we can’t do a $7k Disney trip?”

Perpetuating money attitudes across generations

Financial habits and attitudes towards money are often inherited from one's upbringing and can be passed down to subsequent generations, as evidenced by the experiences shared by callers on a radio show discussing personal finance.

Both spouses taking spending habits from own upbringings

The show's callers discuss how their upbringing has influenced their current financial behaviors. Caller #1 reflects on her childhood experiences and believes they may impact her attitude towards credit card debt. Although there's no mention of how the habits of both spouses from their upbringings could affect their shared finances, the individual experiences shared by the callers indicate that personal financial habits often originate from one's own family culture surrounding money.

Passing inability to set financial boundaries on to their kids

The discussions on the radio show reveal how family financial behaviors are transmitted to children. Caller #1 expresses her desire for her kids' happiness, which has led her to overspend at Disneyland. This behavior reflects her difficulty in setting financial boundaries, a trait she seems to have learnt from her parents. Caller #1 also acknowledges how taking care of others financially, including family and friends, may perpetuate her upbringing's approach to money within her own family, thereby possibly transferring these financial behaviors to her children.

Moreover, Caller #1 admits she was never denied anything as a child, suggesting she may bring this lack of financial boundaries into adulthood. These instances illustrate how financial philosophies and practices are pro ...

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Perpetuating money attitudes across generations

Additional Materials

Clarifications

  • Caller #1 overspending at Disneyland could mean that she is spending more money than planned or necessary while visiting the theme park. This behavior might stem from her desire to ensure her kids' happiness, leading her to exceed her budget or financial limits during the visit. It reflects a struggle with setting financial boundaries, possibly influenced by her upbringing and past experiences with money management. This behavior could perpetuate a cycle of financial habits that may impact her children's understanding of money and financial boundaries.
  • Caller #2 balancing strict control with financial leniency: Caller #2 is discussing his approach to managing finances, where he tries to find a middle ground between being overly controlling with money and being too lenient. This means he is attempting to strike a balance between being disciplined and allowing some flexibility in his financial decisions. By sharing his experiences on the radio show, Caller #2 is highlighting his conscious effort to navigate between these two extremes in his financial behavior. This demonstrates his awareness of the potential impact of his upbringing on his financial attitudes and his proactive steps to adjust his approach accordingly.
  • Conveying unsustainable financial practices to children mean ...

Counterarguments

  • While financial habits can be influenced by upbringing, individuals have the capacity for change and can develop new financial behaviors that differ from those of their parents.
  • Some people may consciously reject their family's financial culture and adopt opposite financial habits as a form of rebellion or self-improvement.
  • External factors such as education, peer influence, personal experiences, and societal norms also play a significant role in shaping one's financial attitudes and behaviors, not just family upbringing.
  • The ability to set financial boundaries is a skill that can be learned and improved upon at any stage in life, regardless of past experiences.
  • Financial behaviors are not always directly transmitted to children; kids can develop their own perspectives and habits based on a variety of influences.
  • The concept of financial leniency versus control is not binary, and there is a wide spectrum of healthy financial behaviors that can be modeled for children.
  • Some individuals may be more influenced by their own research and learning about personal finance than by their parents' attitudes and behaviors.
  • The assumption that all parental financial behaviors are unsustainable or negative may overlook the positive financial lessons that can be passed down.
  • The impact of financial upbringing can be mitigated by interventions such as finan ...

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