223. “We make $81k/yr in our 30s. Is that enough?”

Ramit discusses how Becca and Nikki, coming from different family financial backgrounds, approach their spending and saving habits in distinct ways.

Becca's Frugal Upbringing Influences Her Spending Approach

Becca has a financial history that instills a sense of safety in meticulously tracking her expenditures. She enjoys the tangible feel of money, which began when she played poker in high school and carefully tracked her winnings. Checking her accounts frequently, Becca takes comfort from physically seeing her money and from knowing where each dollar goes.

Becca's Family Had an Upper-Middle-Class Background, With Entrepreneurial Parents

Becca grew up in what she describes as a relatively less affluent segment of an upper-middle-class family. Her father was an entrepreneur, resulting in financial highs and lows. This fluctuating financial environment led Becca to develop frugality, often seeking out sales and saving for items she desired, including during her childhood when she couldn't buy a toy unless she had saved enough money. Becca's careful approach to spending often conflicts with her partner's more relaxed style, causing tension over purchases like lip glosses or unplanned grocery items.

Nikki's Working-Class Upbringing Fostered a Cautious and Independent Spending Attitude

Nikki grew up with separated working-class parents. She recalls the dual feeling of scarcity and the joy of surprise splurges for special occasions. She describes her mother working her way up from a gas station clerk to a dental administrator, gradually building her career.

Nikki's Separated Parents and Financial Constraints Instilled Scarcity and a Desire to Break the Cycle

Nikki's expression of a frugal lifestyle is evident as she rarely buys clothing—even second-hand—and often abandons her online shopping carts. Despite living frugally for most of the year, she has moments of overspending, such as on cosmetics, that make her question the necessity of th ...

The complexities of managing personal finances emerge as Ramit Sethi engages with a couple, Becca and Nikki, who grapple with the realities of a six-figure income that feels inadequate due to high costs of living and their less-than-ideal approach to financial planning and management.

$100,000 Income Feels Insufficient Due to High Cost Of Living

Caller #1 (Nikki) and Caller #2 (Becca) both acknowledge that their combined income of approximately $109,000 gross ($81,000 net) doesn’t go as far as one might expect, especially considering their living situation and its associated costs. While this may look like a comfortable income on paper, they explain that the inconsistency of contractor work (1099 income) means it isn't as secure as it seems, and significant portions are diverted to taxes and expenses. Nikki estimates their take-home income to be closer to $80,000, which forces a lifestyle of frugality more fitting for lower income levels.

Assets and Debt Summary

The couple’s total net worth amounts to $62,993, with assets totaling $13,650 and savings at $13,500. Their investment portfolio is valued at $53,843. However, they also carry $18,000 in debt, primarily from student loans which are currently deferred. Despite their relatively healthy financial status, Nikki expresses surprise at the realization of their net worth and the fact that they have debt. Nikki's avoidance of being fully aware of what constitutes net worth and hesitation to face financial issues indicates a disparity between the couple's perception and reality of their financial health.

Fixed Costs at 69% of Budget, Over Recommended 50-60%, Limit Investment and Spending

Their fixed costs consume 69% of the budget, which is above the recommended 50-60%, leaving smaller portions for investments and guilt-free spending. Ramit Sethi suggests adjustments to their expenses, aiming to bring down fixed costs and offering more breathing room for investment and discretionary spending. The couple's fixed costs initially account for 69% of the budget, but they manage to bring it down to 65% by curtailing expenses on groceries and clothing, allowing a slight increase in guilt-free spending to 20%. Nikki mentions a possibility of paying off their de ...

Nikki and Becca share their vision for a rich life, which encompasses both financial freedom and fulfilling personal goals, such as owning a beautiful home with a garden, traveling regularly, and being actively involved in their community.

Becca and Nikki's Aspirations: Home With Garden, Yearly Trips, Community Involvement

Nikki and Becca both have aspirations that intertwine with nature, adventure, and community.

Rich Life Vision: Collaborating On Entrepreneurial Endeavors Leveraging Complementary Skills and Passions

Together, Becca and Nikki work on wellness tech start-up projects and are excited about combining their individual entrepreneurial endeavors, which suggests a collaborative aspect to their vision. While it is not explicitly stated in the provided transcript chunk, Becca's background in international trip planning and Nikki's postpartum doula work imply that there is a complementarity in their skills and passions that could propel their entrepreneurial collaboration.

Becca and Nikki Need to Increase Income to Support Desired Lifestyle

In order to achieve their envisioned lifestyle, Nikki and Becca acknowledge the need to increase their income.

Ramit Suggests Exploring Earnable to Grow Businesses and Boost Income

Ramit Sethi has addressed their financial struggles by offering them access to his Earnable ...