“Technically, we’re successful. We’re making a lot more than we did when we first got married, but we’re not really successful,” Elizabeth said on the podcast. “We’re in the same situation we were in 13 years ago, but it’s actually worse, because we have a lot of debt.”
The couple has about $152,000 in combined debt, including mortgage, car loans, student loans, credit cards and medical bills.
It’s not the worst debt situation Sethi has seen on the show, but with a combined annual income of just under $89,000, Elizabeth and John would struggle to keep up with paying their debt on top of normal living expenses for themselves and their daughter.
Their fixed expenses, which include debt payments, groceries, gas, and other necessities, are equal to or greater than their monthly salary. In the month prior to recording the podcast, they estimated they spent $350 on clothes and $920 on groceries.
While clothes and groceries may be necessities, the couple admits that a lot of their spending is on impulse purchases, going to Walmart or Target to pick up a few essentials and then leaving with a cart full of things they want.
Sethi stressed that the causes of her spending problems had underlying emotional issues and encouraged Elizabeth to work with a therapist.
When it comes to shopping habits, here are three tips anyone can use to get their spending under control.
If you want your money to do something specific, like provide a safety net for emergencies or save for retirement, Sethi says you should choose how to spend it to achieve that goal.
He asked Elizabeth and John to think about how they would want to spend their money if they weren’t worried about bills and debt piling up.
Elizabeth quickly explained that she wants to increase her savings (which was $0 at the time of the podcast) and invest more in her future, but that means buying less.
“You guys are not in agreement,” Sethi said on the podcast.
Sethi told the couple that they wanted to be able to never have to worry about money, but their current spending habits wouldn’t allow them to do so: Impulse buys might make Elizabeth feel good in the short term, but they didn’t align with the larger vision she had for her family: financial security and the ability to afford the occasional splurge.
Automating financial tasks, like depositing money into retirement or savings accounts, makes it harder to spend money on impulse purchases. It’s easy to set up payroll deductions or automatic withdrawals from your bank account.
“If you want your money to go somewhere, you need to automate it,” Sethi said. “Whatever’s left over, you’re going to spend it.”
John and Elizabeth say they struggle to save money because something is always coming up: they save $100, then spend $100 on something they need or want, and that $100 is gone again.
But despite having no cash savings, the couple has about $38,000 invested for retirement, thanks to automatic contributions to after-tax accounts.
“That’s the only reason we invest,” Elizabeth said.
Canceling unused streaming services, memberships, and other contracts can help reduce your monthly costs, but another type of subscription can also lead to overspending: email lists.
Sethi asks Elizabeth to look at her email inbox and tell him who sent her the first five messages. She names several retailers.
“You’re basically saying to every company out there, ‘I’m going to let you send me loads of highly engineered materials in order to get me to buy their products,'” he said.
You might not buy something every time you see an ad, but if you allow the temptation to keep bothering you, you’re set to fail, Sethi said.
If every time you check your inbox or scroll through Instagram you see an ad or an influencer telling you that you need to buy a new gadget or outfit to keep up with the trends, there’s a good chance you’ll fall into the trap of overspending at some point.
“Unsubscribe. Do it now,” Sethi says. “Buying random products recommended to you by marketing managers is not a good life.”
listen Part 1 and two Check out the podcast here.
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