“We’re 37 and just started investing — is it too late for us?”

They make $144,000/year but have a ton of debt — and hardly any investments. Can't view this email properly? [View in Browser]() [Podcast Newsletter Header Final.png]() {NAME}, This week, I received a Conscious Spending Plan from a couple in their late 30’s. They make $144,000/year but have a ton of debt — and hardly any investments. Can they turn this around? Let’s find out below. --------------------------------------------------------------- If you love coffee… One of my favorite daily indulgences is having two French Presses for my morning coffee. If one is dirty, I always have a clean one ready to go. It saves me so much time! Another daily indulgence is having great coffee at home. This newsletter’s sponsor, [Trade](), delivers roasted-to-order coffee from over 55 independent roasters right to your door, personalized to your tastes. One of the coffees I really like on Trade is Verve coffee, especially their beans from South America. I try new coffees every month. IWT readers get up to [$15 off select plans — and your first bag of coffee free](). --------------------------------------------------------------- Check out this couple’s spending Now let’s get to another real couple who sent in their [Conscious Spending Plan](). A few details about them: - Ages 37 and 35 - 1 young child - Live in Tampa, Florida They also sent me this: “We bought a timeshare…then a week later I saw your "We're in $30k of debt...and just bought a timeshare" video. That night I researched our state laws, read the contract, and realized the cancellation deadline was THAT NIGHT. I was able to get the timeshare fully canceled, saving a minimum of $35,000. Thank you so much!!” Alright, let’s see what their CSP tells us… NET WORTH $ Assets (current value of car, home, property, business) $296,800 Investments (include 401K, non retirement — all investments) $71,000 Savings $1,600 Debt (student loans, credit card debt, mortgage) $285,550 TOTAL NET WORTH $83,850 INCOME Gross monthly income (all income before taxes added up) $12,333 Net monthly income (how much you take home after taxes) $10,000 FIXED COSTS (50-60% of take home) 69% Rent / Mortgage $1,550 Utilities (gas, water, electric, internet, cable, etc.) $1,056 Insurance (medical, auto, home / renters, etc.) $330 Car Payment / Transportation $500 Debt Payments $1,670 Groceries $600 Clothes $100 Phone $70 Subscriptions (Netflix, gym membership, meal services, Amazon, etc.) $96 Miscellaneous (automatically adds 15% for things you forgot) $896 FIXED COSTS TOTAL $6,868 INVESTMENTS (10% of take home) Post-Tax Retirement Savings Stocks Add your own here $0 INVESTMENTS TOTAL $0 SAVINGS GOALS (5-10% of take home) 25% Vacations Gifts Long Term Emergency Fund Debt Snowball $2,500 SAVINGS TOTAL $2,500 GUILT-FREE SPENDING (20-35% of take home) 6% GUILT-FREE SPENDING TOTAL (Dining out, movies, anything you want!) $632 My thoughts Net worth - Assets are $296,000, I assume it’s a house. - Investments are $71,000. Okay, that's an interesting number. Just from looking at it in isolation, it could be that they just started making a lot of money and they started investing like a year ago, or it could be that they've been consistently investing at a lower income for a few years. Who knows? - Oh I see now. They sent my team a note along with their CSP: “We’re reading [your book]()and...I’m investing for the first time in my life.” I LOVE it. I’m also going to take that into account in my analysis. - Savings are only $1,600. That's way too low. Most people couldn't last a couple of weeks on that if they go laid off. - Finally, debt's $285,000, which is probably a house, but maybe more. Let’s take a look… Income - Income is $12,000/month — that’s $144,000 a year or so. That’s a pretty high income! Based on their net income, I can tell that they're not investing, so that's a tip-off. - Now I'm guessing that some of their debt is credit card debt. Fixed Costs - Okay, 69%. It's higher than I want, but it's fixable. - Rent is $1,550 plus $1,056 on utilities, so $2,606 on housing. Divide that by their gross income and they’re spending 21% on housing. Not bad, I usually want to see this under 28%. So where is all the money going? - They have a $500 car payment. Okay, fine. - Oh! They have debt payments of $1,670. That's a lot. Almost certainly credit card debt. That's a huge amount. That's pushing them up over 60% Fixed Costs. - Most people can cut something off their groceries just because almost nobody tracks it, though I have to say $600 a month for groceries for a family of 3 is quite good. - Clothes at $100. It's difficult for me to say this, but if I had a $1,670 a month debt payment, I wouldn't be buying new clothes. That's it. I'd be getting them from anywhere else I could, which is hard to say making $144,000. They must have a lot of credit card debt. - Subscriptions at $96. I would cut those in half and redirect that to the debt because even $50 makes a big difference! - Then finally, the miscellaneous 15% that the [CSP]() automatically adds. I would really dial that in. Maybe the 15% is overstating it. Maybe they have a few extra $100 per month. If they do, I would put that towards the debt. Investments - Investments are at zero. That's not good. - The fact that they're making $144,000 and they have a huge amount of monthly debt to pay off and they're not investing tells me that they have probably made one, more likely multiple bad decisions around money… - For example, they mentioned a timeshare. People who buy timeshares tend to make multiple other bad financial decisions. It's a really big red flag. - This is a couple where if they simply made more money, they're still not necessarily going to be able to get ahead. They need to really change the way they behave with money. That's why I would cut those subscriptions. Say goodbye to the new clothes. For another couple, I wouldn't necessarily recommend that, but here I would. Savings - Savings, okay. It says savings are $2,500 for a debt snowball, but that doesn't really make sense because they're already paying $1,670 towards debt payments. I don't really know what this savings is. - It’s okay that a lot of people's first crack at their CSP is sloppy, but you shouldn't put a debt snowball in your savings. That doesn't make any sense. Debt belongs on Fixed Costs for whatever monthly number you calculate. Honestly, I don't know what to make of that. It could throw their numbers way off. Very likely it brings their fixed costs up to over 80%, but it’s not clear. Guilt-free spending - Finally, their guilt-free spending says 6%. I really doubt that. I mean, how did they get into all this credit card debt? That came from guilt-free spending. I would say it's time to really rethink what you've got. Overall thoughts - Your housing is okay, but the only way you really get out of this is to pay that debt off as aggressively as possible by cutting everything else to the bone and not incurring any other expenses. Good luck to this family. I love that you recently read the [IWT book]() and you’re working to improve your finances. Now I want to hear from you: what was your biggest takeaway from this CSP? [Signature] P.S. Join me in NYC live on April 10th! Over the last few years, I’ve talked to hundreds of couples about their money. Now, for the first time, I’m sharing what I’ve learned with you, live on stage. Join me in NYC on April 10 for “Love And Money: An Evening With Ramit Sethi.” [Get tickets here](). P.P.S. New podcast: “I'm jealous when I see friends' vacations on Instagram” Andrea wishes Erik would get a second job so they can go on more trips, like their friends. Check out this fascinating conversation [here](). 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