Like many young Americans, David, 33, and Halima, 37, early retirement. They say they are actively working towards this goal, but personal finance expert Ramit Sethi finds that their spending and borrowing habits don’t match their ambitions. . In fact, couples spend more than they earn each month.
“I was really shocked. Not just once, but many times,” Sethi later said. Dig into the couple’s household finances During an episode of his podcast “I Will Teach You To Be Rich.”
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“Weren’t you the one who called and said, ‘I want to retire early?'” he asked David.
Click here to see the couple sabotaged their chances About early retirement.
unrealistic about money
Financial independence, early retirement (FIRE) is a movement of people who seek to maximize their income, minimize their expenses, and exit the workforce years or even decades earlier than the average retiree.
This usually involves aggressively cutting back on expenses and saving a large portion of your income. But David and Halima seem to be doing neither.
Instead, the couple earns $11,776 a month after taxes, but regularly spends more than they earn. Sethi believes this is because both partners have an unhealthy relationship with their personal finances.
“I think there’s a theme of being unrealistic when it comes to money,” he says.
The couple also appears to be competing over who makes more money in their partnership. At the time of recording, both were earning high incomes, but Halima’s income was slightly higher.
“Somewhere in my heart I feel like I should make more money than her because it’s a cultural thing,” David said, referring to his Hispanic and Turkish background. “In both cultures, it’s usually the men who make more money.”
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David’s past also influences his financial decisions.
“I basically homeless “At some point,” he said. He says he’s living in an empty house, showering at the gym, and working multiple jobs to get out of this situation.
“I had two traffic accidents due to drowsy driving, and I was very tired from working at various jobs.”
He now believes he is susceptible to “get rich quick schemes” such as cryptocurrencies and multi-level marketing (MLM).Consumer Awareness Research Institute analyzed A study of over 350 MLM schemes found that less than 1% of participants walk away with a profit. David came to the same conclusion, saying, “Get rich quick doesn’t really work.”
Halima, on the other hand, avoids talk about money.
“Finance is not what I studied,” she said. “I don’t have much experience with it, so it’s like another language for me.”
What couples lack budgeting By Sethi’s calculations, the communications led to poor financial decisions, including signing up for a vacation timeshare program that could cost him $110,000 over the next 10 years.
“Every dollar you spend on this is a dollar that doesn’t go into retirement,” Sethi told David.
morning Call
“Unfortunately, they have to have a real wake-up call to find out what their future actually is,” Sethi said of the couple at the end of the episode. He wants them to take decisive action to change the trajectory.
in follow up, Sethi recommends seeing a therapist to improve your outlook on money. He believes David and Halima can break the cycle of bad spending habits if someone helps them separate their feelings about money from their past experiences. It also recommends talking more often and communicating openly about each financial decision. They want to work as a team instead of competing to earn a higher income.
David and Halima need to reduce their spending and gradually reduce their credit card debt. get rid of timesharecut your fixed expenses to 60% of your income and start investing towards your early retirement goals.
“If they take this seriously… they have an opportunity to completely change the trajectory of their lives and the lives of their children,” Sethi said.
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