3 examples of REAL couples’ spending

Time for some real numbers!! Anyone can easily give you generic tips on how To view this email as a web page, [click here]() {NAME}, Time for some real numbers!! Anyone can easily give you generic tips on how much to spend on groceries or rent. You and I don’t need more tips. We need to see real numbers. So today, I’m going to show you 3 examples of REAL couple’s spending—the real numbers of how much they make, their debt, and what they’re spending it on. Then I’m going to tell you what I would do if I were these couples. Read on to see the spending of 3 real couples! --------------------------------------------------------------- Today’s newsletter is brought to you by: [MasterClass]() [MasterClass]() With MasterClass, you can learn from the best anytime, anywhere. There are over 180 classes to pick from in 11 categories, with classes from world-class instructors like Gordon Ramsay, Malcolm Gladwell, Mariah Carey, Bobbie Brown, and more. Get unlimited access to every class and [15% off an annual membership]() Find special deals from [all of our sponsors]() --------------------------------------------------------------- Now let’s get to some real spending examples… I don’t know who these people are or any other details besides the numbers I see. My colleague just dropped them in a doc and here are my off-the-cuff reactions. Couple 1: Mid 30s, no kids [Spending plan]() [Spending plan]() - Their rent is insanely low at 9% of gross (I like to see less than 28% of gross for total housing costs). Great work!! Don’t move! - So how are their fixed costs above the recommended 50-60%? Oh, a boat. Get rid of that fucking thing immediately. Sell it tomorrow. - Cut $100/mo off groceries (most people worry about groceries, they complain about inflation, but in reality, they do not track their groceries. Do this for a week.) - Redirect that money to debt and investments (how much depends on the interest rate of the debt. If lower, shift more to investments). - Why are they saving 19% of net but investing 0? Shift some savings to investments. Personally, I’d split it evenly but that depends on risk, time frame, etc. - There’s something weird about their net pay. I bet they recently got a raise and they’re maxing out 401k contributions. If that’s the case, it’s not as urgent to invest — pay down debt (depending on interest rate). This is just a guess. Couple 2: Early 30s, 2 kids [Spending plan]() [Spending plan]() - Income is $84,000 with 2 kids. - Housing is 22%, which is fine - Yet they’re at 70% on Fixed Costs, which I guarantee is causing them stress on a weekly basis. I’m guessing they’re feeling tight, stressed, and possibly even fighting about random expenses, but the problem is in this category. - The reasons are a little bit of everything: Groceries are $800. They have $120/mo for pets. $240/mo for medical. Debt at $215/mo. And a car payment at just over $500/mo. - Individually, those are all fine, but collectively -- on their income -- they’re spending too much. - If I had to make a change, I would cut groceries to $600. (I don’t say this for everyone, but looking at their income and other expenses, their groceries are disproportionately high.) - Also, if their kids are young, parents should give themselves a little grace. For the first couple years, your savings rate will probably take a hit -- that’s fine. Just know it’s going to happen and make a specific plan for when you’ll get back to your normal contributions. - Their savings are fine, but 0 investments is not okay. I’d cut some of the guilt-free spending and put it in investments. It’s important to get in the habit of automatically saving every month. Even if you can’t invest a lot, just getting the machine working is critical. - I’d start ([use my Earnable program)]() earning more. That money could be set up to flow as follows: 40% to taxes, 40% to investments, 20% to guilt-free spending. Beautiful. If they’re earning $1,000/month on the side (not too hard), that’s $400/month to investments and $200/month to guilt-free spending. Couple 3: Late 30s, 3 kids [Spending plan]() [Spending plan]() - Salary almost 280K - 15% on housing — nice - Spending looks fine — less than 60% — but I notice something: How can they only be spending 15% on housing and still spending nearly 60% of net pay on fixed costs? Something is off. - Ah, the answer: They’re spending $2,145 on cars/month. If this is truly their Rich Life, fine — they can afford it. I doubt it is. Very, very few people name “Cars” as their [Money Dial](). - Subscriptions are almost $2,000/month. Something is wrong here. Now I think I remember this couple. She was counting her business revenue as part of the subscriptions. Don’t do this! Fight for simplicity and don’t commingle funds. You can’t count business expenses with your personal CSP. - Investments and savings are 0. This is catastrophic. Need to change this immediately. - Guilt-free Spending is 41%, another major problem. I actually suspect it’s much higher than this since nobody correctly tracks their GFS. This couple is in trouble. - Just from looking at the numbers, I would sell the house, downsize, cut spending on cars/kids, start saving and investing aggressively, and get used to a smaller lifestyle for 2 years. You’d be shocked how much you can get used to living a simpler life—all while you’re paying off debt and accumulating a sizable savings/portfolio. Then I would start slowly, gradually spending more on the things that matter. Basically, I would wipe this clean. Please note, my bullet points were done quickly and only based on my initial reactions. Numbers alone don’t tell the whole story, which is why I love talking to couples on my podcast to understand what’s really going on. After reading this, what’s one thing you notice about your own spending? Reply to this email and let me know. [Signature] P.S. This week on the podcast: “He earned $17,000 last month—but it’s not enough” Check out Part 1 of this fascinating conversation with Kara and Drake [here](). [Podcast]()   You may be new to IWT. Here's all the stuff we offer [Programs]() [Podcast]() [Netflix show]() [Books]() [Check out our website for more]() Follow Ramit [ig]() [fb]() [tw]() [yt]() [pc]() Was this forwarded to you? Sign up [here](). This email was sent to [{EMAIL}](). If you no longer wish to receive these emails you may [unsubscribe]( at any time. 548 Market St #89946 San Francisco, CA 94104-5401