Podcasts > I Will Teach You To Be Rich > 183. “I saved $5k for an engagement ring, but she secretly took the money”

183. “I saved $5k for an engagement ring, but she secretly took the money”

By Ramit Sethi

In this episode of the I Will Teach You To Be Rich podcast, host Ramit Sethi explores a listener's struggle with overwhelming debt and its impact on her relationship. Michelle, burdened by $263,000 in loans and credit card debt, has avoided open communication about finances with her partner Matt for years, straining their plans to marry and start a family.

Sethi delves into the origins of Michelle's troubled "money mindset," tracing it back to her parents' dynamics around finances. He provides practical guidance on rebuilding transparency, creating a debt repayment plan, and aligning financial goals as a couple through improved communication and, if needed, counseling. The episode offers insights into addressing deep-seated money issues impeding financial and relationship progress.

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183. “I saved $5k for an engagement ring, but she secretly took the money”

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183. “I saved $5k for an engagement ring, but she secretly took the money”

1-Page Summary

Michelle's Financial Burden

Michelle faces a staggering $263,000 debt from student loans, credit cards, and personal loans. Her monthly debt payment of $2,542 consumes 99% of her fixed costs, leaving her in a precarious situation despite having a career and decent income. As Ramit Sethi notes, this massive "mountain" of debt has left Michelle feeling overwhelmed and undervalued for her hard work.

Debt's Impact on Relationships

Michelle's debt strains her relationship with her partner Matt, delaying their plans to marry and start a family. Matt has expressed unwillingness to marry someone with over $230,000 debt and no plan to pay it off, though Michelle sees the debt as solely hers.

Communication About Finances

For 7 years, Michelle and Matt have failed to openly discuss finances. Michelle often avoids or hides debt information from Matt, who only recently learned the full extent through their Conscious Spending Plan. Matt tries not to push discussions to avoid arguments, while Michelle struggles in silence.

Sethi points out that Matt's tendency to be a "safe space" has inadvertently enabled Michelle's problematic financial behaviors. Matt acknowledges his mistake in not confronting her issues sooner.

Money Mindset Origins

Michelle's troubled relationship with money stems from her upbringing. Her father was the sole provider and exerted control through money, instilling feelings of unworthiness in Michelle. Her mother remained passive about finances.

Sethi notes Michelle has internalized negative beliefs like feeling unworthy and avoiding consequences, behaviors mirroring her parents'. Her avoidance of financial talks parallels the lack of open money discussions in her family.

Ramit's Guidance

To improve their financial partnership, Ramit advises:

  • Michelle: Take ownership by creating a detailed debt repayment plan to share with Matt, including spending cuts and savings strategies.
  • Matt: Communicate expectations and concerns directly rather than avoiding confrontation to preserve "safe space."
  • Couples therapy: To address underlying issues, rebuild transparency, and align on joint financial goals.

1-Page Summary

Additional Materials

Counterarguments

  • Michelle's debt may not solely be a personal issue but could also reflect broader systemic issues, such as the high cost of education and the ease of accruing credit card and personal loan debt.
  • The idea that Matt has enabled Michelle's problematic financial behaviors by being a "safe space" could be seen as unfairly placing some responsibility on him for her financial situation.
  • The delay in marriage and starting a family may not only be due to Michelle's debt but could also involve other personal or relationship factors not discussed in the text.
  • The notion that Michelle's financial behaviors are a direct result of her upbringing could be oversimplified, as individuals can develop financial habits from a variety of influences beyond their parents.
  • The suggestion for couples therapy assumes that the couple is willing and able to invest time and resources into this process, which may not be feasible or desired by both parties.
  • The advice for Michelle to create a detailed debt repayment plan and for Matt to communicate more directly does not consider that they may have already attempted these strategies without success, or that there may be other underlying issues not addressed by these actions.
  • The focus on individual and relationship factors in Michelle's financial situation may overlook the potential role of professional financial advice or assistance in helping her manage her debt.

Actionables

  • You can start a "debt diary" to track your emotions and spending habits, helping you understand the psychological triggers behind your financial decisions. Write down how you feel before and after making a purchase or when facing a financial decision. This can reveal patterns in emotional spending or avoidance and help you develop healthier financial behaviors.
  • Create a "financial transparency pact" with your partner, where both of you commit to regular, judgment-free financial check-ins. Schedule a bi-weekly "money date" to discuss your financial status, goals, and concerns. This can foster open communication and shared responsibility, preventing financial secrets that strain relationships.
  • Develop a "money affirmation routine" to counteract negative beliefs about finances. Each morning, recite positive affirmations related to money and self-worth, such as "I am capable of managing my finances" or "I deserve financial freedom." This practice can help rewire negative thought patterns and build a healthier relationship with money.

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183. “I saved $5k for an engagement ring, but she secretly took the money”

Michelle's financial situation and debt

Michelle is grappling with a significant financial burden that includes student loans, credit cards, and personal loans, which in total amounts to approximately $263,000.

Michelle's overwhelming debt

Michelle's debt payments are a major financial burden, consuming 99% of her monthly fixed costs, leaving her in a precarious financial position.

Michelle’s monthly debt payment of $2,542 has become a massive expenditure, consuming most of her monthly fixed costs and leaving her in an unsustainable financial situation. Her overwhelming debt, which she describes as a "mountain," has left her feeling overwhelmed and without confidence, struggling to see a way to address or surmount her massive financial obligations. Despite having a professional career and making decent money, Michelle sees her large student loan debt—around $250,000 upon graduation—as something that has left her with nothing to show for her hard work.

The impact of debt on personal relationships

Michelle's debt has strained her relationship with Matt and is delaying their plans to get married and start a family.

The reality of Michelle’s debt not only impacts her sense of self-worth but also her relationship with her partner, Matt. It's a potential obstacle to their marriage, as Ramit Sethi points out that Matt h ...

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Michelle's financial situation and debt

Additional Materials

Counterarguments

  • Michelle's perception of her debt as a "mountain" could be reframed to a challenge that can be overcome with a strategic approach to debt management.
  • The statement that Michelle's debt payments consume 99% of her monthly fixed costs might be an opportunity to review and possibly adjust her budget to find areas where expenses can be reduced.
  • While Michelle feels overwhelmed by her debt, seeking professional financial advice or counseling could provide her with support and strategies to manage her debt more effectively.
  • The strain on Michelle's relationship with Matt could be mitigated by open communication and collaborative financial planning, which might strengthen their partnership.
  • Delaying marriage and starting a family due to debt is a significant decision; however, there are many ways to approach life milestones that don't necessarily require complete financial freedom beforehand. Michelle and Matt could explore these options.
  • It's important to consider t ...

Actionables

  • Create a visual debt tracker to monitor your progress and stay motivated. Use a large poster or a digital spreadsheet where you can color in or mark off the amounts as you pay down your debt. This visual representation can make the process feel more tangible and rewarding as you see the colors fill in or the numbers decrease.
  • Start a "debt diary" to document your feelings and strategies as you tackle your financial obligations. Write down your emotions, successes, and setbacks. This can help you manage the psychological impact of debt by providing an outlet for stress and a record of your journey to look back on for motivation.
  • Engage in weekly financial planning sessions with your partne ...

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183. “I saved $5k for an engagement ring, but she secretly took the money”

Michelle and Matt's communication and relationship regarding money

Michelle and Matt’s relationship faces significant challenges due to a lack of communication and transparency about finances, leading to discomfort, avoidance, and potential mistrust as they consider a future together.

Michelle and Matt have not had candid conversations about their finances, with Michelle often avoiding or hiding information about her debts from Matt.

Ramit Sethi observes that in their seven years together, Michelle and Matt have failed to have a real conversation about money. Michelle's inclination to hide her financial situation has resulted in Matt being unaware of the full extent of her debt. When trying to discuss finances or sneak a peek at Michelle's financial planner, Matt is told "Don't look," indicating a distinct lack of transparency.

Matt was unaware of the full extent of Michelle's debt until they completed the Conscious Spending Plan, which revealed the significant financial challenges they face.

Michelle, who is embarrassed by her finances, has not been forthcoming about her debts, despite the couple being together for so long. Consequently, Matt trusted Michelle to manage a consolidation loan responsibly but was never shown how the money was used. His shock at learning Michelle's debts and monthly expenses was evident when they filled out the Conscious Spending Plan together. This forced acknowledgment has brought the financial issues they face into stark relief.

The lack of open communication and transparency around money has created a dynamic where Matt is hesitant to push for change, fearing it will lead to arguments, while Michelle continues to struggle in silence.

Matt refrains from pressing financial discussions, aware that Michelle is uncomfortable with the topic, and seeks to maintain peace in their relationship. He admits to being an avoider and wanting to be a "safe space" for Michelle, which inadvertently has contributed to the stagnation of their financial handling. Michelle's avoidance of tough conversations, demonstrated by her not disclosing her withdrawal from Matt's safe, highlights their difficulties in addressing financial issues openly.

Matt's tendency to avoid confrontation and his desire to be a "safe space" for Michelle has inadvertently enabled her financial behaviors, contributing to the sta ...

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Michelle and Matt's communication and relationship regarding money

Additional Materials

Counterarguments

  • While Michelle has been avoiding conversations about her debts, it's possible that she has been doing so out of shame or fear of judgment, rather than an intent to deceive.
  • Matt's lack of awareness about Michelle's debt could be partly due to his own avoidance of the subject, suggesting a shared responsibility for the lack of financial transparency.
  • The completion of the Conscious Spending Plan, although revealing uncomfortable truths, could be seen as a positive step towards addressing their financial issues together.
  • Matt's hesitancy to push for financial discussions might stem from a compassionate place, prioritizing Michelle's emotional well-being over financial confrontation.
  • Michelle's silence on financial issues could be a result of not having the right tools or support to manage her finances, rather than a willful neglect of the problem.
  • Matt's non-confrontational approach could be a sign of patience and understanding, qualities that are valuable in a ...

Actionables

  • You can create a "no-surprises" financial date night where you and your partner regularly discuss your finances in a relaxed setting. Choose a comfortable environment, perhaps over a favorite meal, and make it a judgment-free zone where both of you can openly share your financial situations, including debts and spending habits. This regular check-in can help prevent financial secrets and foster a culture of transparency.
  • Develop a shared financial vision board to align your goals and expectations. Sit down together and create a visual representation of your shared financial goals, such as saving for a house, retirement, or a vacation. This activity not only makes the abstract concept of financial planning more tangible but also serves as a constant reminder of what you're working towards together, encouraging open dialogue about money matters.
  • Introduce a "financial buddy system" where you p ...

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183. “I saved $5k for an engagement ring, but she secretly took the money”

The impact of Michelle's family background on her money mindset

Michelle’s approach to money, which includes feelings of unworthiness and avoidant behavior, is deeply rooted in her family background and upbringing.

Michelle's upbringing, where her father was the sole provider and exerted control over the family's finances, has shaped her own relationship with money

From the caller, Michelle learned the dynamics of financial control early on. Her father, the family's sole provider, wielded power over family finances, working long hours and using his role to demean his children by calling them “brokey” and highlighting their dependence on his money. He managed to instill a sentiment that his children would never appreciate his efforts towards achieving the "American dream," despite starting with very little. Her mother remained silent, perhaps out of her own sense of financial powerlessness. This form of control extended to Michelle’s father not discussing money or financial challenges openly, which is reflected in Michelle’s current reluctance to discuss financial matters with her partner, Matt.

Michelle has internalized negative beliefs and behaviors around money, such as feeling unworthy, people-pleasing, and avoiding consequences, which she has carried into her adult life

Michelle’s father’s behavior had a significant impact, with her feeling stupid for not being more involved financially and letting herself accrue debt. Ramit Sethi identifies parallels between Michelle's financial behavior and that of her father's—both lack planning and methodical approaches to finances. Michelle’s memory of her father accusing her of forging his signature on loans contributes to her negative association with money.

Her sense of unworthiness is also seen in her people-pleasing tendencies. When her father behaved inappropriately, he would attempt to mitigate the situation by buying gifts. This set a precedent for material compensation, shaping Michelle's understanding of money as tied to power dynamics and control.

The dynamics and communication patterns Michelle witnessed in her family have influenced her ability to have open and constructive conversations about money with Matt

Michelle’s avoidance of financial realit ...

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The impact of Michelle's family background on her money mindset

Additional Materials

Counterarguments

  • While family background can influence money mindset, it is not the sole determinant; individual choices and experiences also shape financial behaviors.
  • The control exerted by Michelle's father over finances is one aspect of her upbringing; other factors such as education, peer influence, and personal values could also play significant roles in her financial attitudes.
  • Internalized negative beliefs can be overcome through personal development, therapy, and financial education, suggesting that Michelle's current mindset is not fixed and can change.
  • People-pleasing tendencies may have multiple origins, not solely from parental behavior; they could also stem from personality traits, social conditioning, or other life experiences.
  • Communication patterns learned in childhood can be altered in adulthood through conscious effort and communication skills training, indicating that Michelle's struggles with financial conversations are not unc ...

Actionables

  • You can explore your own money mindset by writing a financial autobiography, detailing your earliest memories of money, how your family discussed and handled finances, and the messages you received about money growing up. This exercise can help you identify patterns and beliefs that may be influencing your current financial behavior. For example, if you remember feeling anxious during family discussions about bills, you might realize that you now avoid looking at your own bills, which could be a behavior you want to change.
  • Start a 'money conversation club' with friends or family where you meet regularly to discuss financial topics in a safe and non-judgmental space. This can help break the taboo around money talks and improve your comfort level with financial discussions. You might bring a topic to each meeting, like budgeting strategies or investment basics, and share experiences and tips with each other.
  • Create a 'financial reactions journal' where you note your emotional r ...

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183. “I saved $5k for an engagement ring, but she secretly took the money”

Ramit's guidance and strategies to help Michelle and Matt improve their financial partnership

Ramit advises both Michelle and Matt to take proactive steps and engage in open communication to resolve their financial difficulties and build a stronger financial partnership.

Ramit encourages Michelle to take ownership of her financial situation and develop a specific plan to pay off her debt, rather than continuing to feel overwhelmed and ashamed.

Ramit suggests that Michelle create a detailed plan to pay off her debt, including specific spending cuts and strategies to increase her savings, which could then be shared with Matt.

Ramit emphasizes the need for Michelle to take control of her financial situation. He highlights that only she can make these changes for herself, and one of the first steps involves creating a concrete plan for paying off her debt. He discusses specific tangible actions she can take, such as eliminating unnecessary expenses, including dining out and Uber Eats, and suggests setting aside a budget for these activities. By making and executing a plan — rather than just thinking about it — she can move towards being debt-free.

Ramit also prompts Michelle to reflect on her self-descriptive language around money, noting the harshness of terms like "scarlet letter" and "worst enemy." He suggests that while Michelle judges herself negatively around finances, her partner Matt takes a more systematic approach devoid of emotional attachment.

Moreover, Ramit discusses the changes Michelle has already begun to implement, such as deleting food delivery apps and setting up auto-pay for her loans. She also has plans to allocate a portion of her paycheck to a future fund for her and Matt. These steps are part of her proactive approach to taking responsibility for her finances and planning for their collective future.

Ramit advises Matt to be more direct and assertive in communicating his expectations and concerns about their financial situation, rather than avoiding the topic to preserve the "safe space" in their relationship.

Ramit recommends that Michelle and Matt seek couples therapy to address the underlying issues and communication patterns that have contributed to their financial challenges, as well as to build a stronger, more transparent partnership.

Ramit acknowledges Matt's confusion about the future and how their finances will be managed together. He recognizes Matt's concern about po ...

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Ramit's guidance and strategies to help Michelle and Matt improve their financial partnership

Additional Materials

Counterarguments

  • While taking ownership of financial situations is important, it's also crucial to recognize that systemic issues and unforeseen circumstances can sometimes make debt repayment challenging, and individual actions may not always be sufficient.
  • Spending cuts and increased savings are helpful, but they may not be realistic for everyone, especially if their income barely covers essential living expenses.
  • Reflecting on negative self-descriptive language is beneficial, but it's also important to acknowledge that societal pressures and past experiences can heavily influence one's relationship with money, and changing self-perception may require more than just awareness.
  • Deleting food delivery apps and setting up auto-pay are positive steps, but they might not address the root causes of financial behavior, such as emotional spending or lack of financial literacy.
  • Being direct and assertive in communication is generally good advice, but it's important to balance assertiveness with empathy, especially when discussing sensitive topics like finances.
  • Couples therapy can be a powerful tool, but it may not be accessible or affordable for all couples, and other forms of support might be necessary.
  • Concerns about inheriting debt are valid, but it's also important to consider the legal as ...

Actionables

  • You can visualize your debt repayment journey by creating a vision board with milestones and rewards for each debt paid off. Start by gathering images and phrases that represent your financial goals and the lifestyle you aspire to once debt-free. Place the board somewhere you'll see it daily to keep motivated and track your progress visually, celebrating small victories along the way to maintain momentum.
  • Develop a habit of mindful spending by keeping a "why I buy" journal for a month. Every time you make a purchase, jot down the reason behind it, how it makes you feel, and whether it aligns with your financial goals. This practice can help you identify emotional triggers that lead to unnecessary spending and encourage more thoughtful consumption that supports your savings plan.
  • Engage in role-playing exercises with a trusted friend o ...

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