Mark Divine 1:01

Yeah, likewise. So you’ve been busy, you’ve been bouncing around the country, you moved from San Francisco out of state now you’re back in LA?

Ramit Sethi  1:10  

Yeah, back on the West Coast.

Mark Divine  1:12  

What’s new in your life, like what major movements both emotionally and relationally have been going on since we last spoke, which is pre pandemic.

Ramit Sethi  1:21  

I know, I always love your questions. I always love talking to you. So I’ve been thinking about this conversation all day today, what’s new in my life is being on the West Coast. And really thinking about using money to live a rich life, in a different way, than what we’ve talked about in the past, really more on the psychology part of it and the relationship part of it. And also just being grateful that I can see people in person again.

Mark Divine  1:46  

I love that I’m with you on that too. And I think a lot of people have been forced to notice or just kind of, are starting to become aware that the pandemic had a huge, positive underbelly to it. Which is that has slowed everyone down and got them to take a look at some of the things that maybe they’ve been ignoring, or been, you know, overly distracted about. And that is their relationships, and their well being, and also their commitment to like growing and being more authentic and being more heart centered and connecting with other humans. Because if anything, we got slapped down into a disconnection mode during the pandemic, and it’s really painful. And a lot of people suffered as a result of that. 

Ramit Sethi 2:24

Yeah, yeah. 

Mark Divine 2:25

So great work. And I love where you’re going with this, because I’ve always looked at money is basically a relationship. But it’s a relationship with yourself first, right? Because you know what I’ve noticed about, like, I don’t know about you, but the billionaires that I met, the ones who made their own money, they really had a lot of self worth a lot of self love that their confidence was not arrogant, it was from a high degree of self love, really. And those who kind of were given their money or inherited it and didn’t have to like cultivate the emotional awareness and the relational strength that I think we’re going to talk about a little bit more, they had a little bit of arrogance about it. And their confidence didn’t come off as like that deep seated humility type confidence is more like almost a sense of insecurity around it. 

And I think one more thing, because I want this to frame our discussion. The difference in for me, and the relationship to money is, those who had the high degree of self love self care, they were all about service, and so that the money came to them and float through them as a result of serving, whereas those who kind of got the hand of the money and assistant, you know, I don’t want to cast, you know, a complete blanket, because I know, there’s a lot of really good people who are navigating that, you know, that kind of inherited wealth stuff. So it’s not an absolute, but there’s a risk there that you don’t feel like you’ve earned it, and you don’t feel like you’re worthy. And then there’s also this fear of not growing it, or losing it, you know, and then the money energy gets stuck. 

Ramit Sethi 3:53

Yep. 

 

Mark Divine 3:53

Because it’s not flowing, right. It’s, it’s kind of stuck. And it becomes like a stagnant pond instead of a flowing river. Anyways, just some thoughts to kind of frame up a discussion to this is where my head has been at about my relationship to money is like, I want to be on that former category where it’s, it’s an energetic flow in my life.

 

Ramit Sethi  4:10  

And I completely agree that our relationship with money is something that’s not talked about, we talk about our relationship with food, we talk about our relationship with other people, even our relationship with physical fitness. But rarely do we spend even one hour per week building our relationship with money. If I ask the average person, what are the words that come to mind for you, when you think of money, they always say the same thing. Guilt, stress, overwhelm anxiety. Is it too late for me? And so you see this coming out in very peculiar and interesting ways. It’s one of the reasons I love money. I don’t wake up in the morning excited to type into a spreadsheet. That’s not me, but I’ll get somebody, typically they’re around the age of 40, and they’ll message me on Instagram or you Email, let’s say we meet, I have a two year old son, can you tell me what account I should use to save for his college retirement? It’s a very classic, and I can already see where it’s going, but I go, I go, tell me about your money first. Tell me about your own portfolio.

And they almost always say the same thing. Well, you know, I’m 40, I don’t have too much saved up maybe $5000-10,000 bucks. I didn’t really get into this until last couple of years. But you know, I want to know what to do for my son. And what they’re really saying is in code, they’re saying, I believe I’ve failed at the game of money for myself, but I’m not going to fail for my son, or my daughter. And, of course, that is not the right way to think about money. Money, like fitness, food, spirituality, relationships is a skill that can be learned. And sure, you may not have learned it until you’re 40, or even 50, or whatever the age is. But it is a skill that you have to prioritize first with yourself before you can help other people. 

 

Mark Divine  6:05  

Right. I agree with that. 100%. And again, it’s a relational skill. I mean, I think you first approach this, like when we spoke a few years ago, from the tactical, practical material perspective, right? 

 

Ramit Sethi 6:19

Yes. 

 

Mark Divine 6:20

And there are very, very practical things that you can do to begin early, leverage the power of compounding, avoid all the fees that you know, the excessive fees, you know, and those are all really, really good advice, and just keep on, you know, automatically investing X percent. And then just don’t touch it. Right. So one of the first rules of making money is don’t lose it. 

 

Ramit Sethi  6:43

Yep. 

 

Mark Divine 6:43

Warren Buffett who said that? 

 

Ramit Sethi  6:46  

Yeah, and do not unnecessarily interrupt compounding.

 

Mark Divine  6:49  

Yeah, don’t interrupt the compounding Exactly. Don’t try to time the market, because that’s what interrupts the compounding. All those are awesome. 

 

Ramit Sethi 6:55

Yep. 

 

Mark Divine 6:55

But just like the person who wins  hundreds of millions of dollars in a lottery, and is pretty much said, it can be broke within two years. Even if you do all this stuff. If your relationship with yourself and the understanding of money isn’t right, then none of that matters, right. Because a) either you’re going to get it all, and you’re not going to spend it and you’re going to sit on it, and it’s going to ruin your life, because you’re going to be fearful about losing it, which happens a lot. And I see this all the time people like they save money, and they got several million dollars, my parents are in this category. They’re great people, they’ve got tons to go around, but they won’t buy a plane ticket to come out and visit their grandkids on the West Coast. They won’t fly first class and they’re in their 80s. I’m like, come on guys. Your sitting on money. So spend it. So I don’t know, my point is that it’s not about the digits in your bank account. Ultimately, it’s about love, I think, right? It’s about your relationship to yourself and the world.

 

Ramit Sethi  7:53  

This is why I love our conversations, because we operate in different worlds. But some of the ways that we talked about are so similar. I know people come to you, they go, I’m going to go into BUDS training. How many pushups do I need to be able to do? T

 

Mark Divine 8:08

That’s right.

 

Ramit Sethi 8:09

And you go, okay? Yes, you should be able to do a lot of push ups. But it’s not really about that it’s so much deeper. And so they’ll come to me…

 

Mark Divine 8:17

That’s a great analogy, by the way, I love that. 

 

Ramit Sethi 8:19

Thank you. What credit card should I use? Or should I do this? Or that? I go? Okay, I’ll tell you that. But really, the bigger questions are the things that are going to help sustain you over the next 30-40 years. And so I always tell people, we spend our entire lives agonizing over $3 questions, what we really need to be focusing on our $30,000 questions. And some of those are larger ones, like asset allocation, compounding. But here’s what most people don’t get about money. At the entry level of personal finance, the questions are always about what. What can I buy, what credit card should I have, et cetera. And those are fine, you have to learn those tactics to get you going. But at the highest level of personal finance, it’s always about who, who can I take with me? Who can I show gratitude to? Who can I be generous to? But it’s hard for me to start with somebody and talk about generosity, when they’re just like, what kind of credit card rewards card should I get? 

 

Mark Divine 9:20

Right

 

Ramit Sethi 9:20

So there’s a little of both that we can do at the same time and guide people along to I think, a more meaningful plane of talking about money.

 

Mark Divine  9:28  

Yeah, well, I love this new journal that you put together, your general brand catchy, as all can be, as I Will Teach You To Be Rich. But I love that in the journal. It’s a process. So you’re giving people a roadmap. And the roadmap is when I went through this thing. I was like, this is really cool. It’s such great, great questions, great processes to take you through. Most of it is really about redesigning your beliefs about money, developing new rules, you know, for for habituating behaviors around money, navigating relationships, and how money, you know, it’s like health, money and sex, you know, either make or break a relationship, right, those types of things. So, I want I’m curious, because you have eight chapters in this journal, which is really more of a workbook. How did you design the roadmap and why? And so like, walk us through kind of like the roadmap of like, why did you start here in the first chapter of designing your rich life and in end with the eighth chapter, making that even richer? Like, how did you come up with that roadmap? And what’s the logic behind it?

 

Ramit Sethi  10:27  

You know, I’ve written another book, just the I Will Teach You To Be Rich book, which has now been out over 10 years, over a million copies sold. And it’s very tactical, you know, if you want to know what to do with your money, that’s the book to get. And what I have realized is, there are some people who will simply never buy a book that has Roth IRAs in it, they’re just not going to do it. And that’s okay. That’s life. Some people …

 

Mark Divine  10:53  

That was like, when I when I got Tony Robbins book, Money, what was it called? 

 

Ramit Sethi 10:57

Yeah, the unshakable, yep. 

 

Mark Divine

Yeah, there was a lot of tactical stuff in there. And, you know, I kind of got lost in it. 

 

Ramit Sethi 11:03

Exactly. 

 

Mark Divine 11:04

I love Tony, but I got lost in it.

 

Ramit Sethi  11:06  

And if you got lost in that book, just imagine other people who may not have as strong of a Northstar. So what I realized is that there’s some people who simply want to dream with money, just dream, they want to have an easy conversation alone, maybe with their partner. And the perfect example is something that my wife and I did during COVID. We were there, we had a lot of time. And we pulled out two sheets of paper. And I said, let’s write down our bucket list. But for this bucket list, it’s what are the things we want to do in the next 10 years, that would make us have a meaningful and rich life. So we started sketching it out on our own individual piece of paper. 5-10 minutes later, we came together, and we compared notes. And it was a very joyful exercise. You know, it was like, Oh, you want to learn Spanish? That’s cool. Oh, you want to go skydiving, that’s crazy. You could do that on your own, I’m out. And just like back and forth. And what we did from that was we picked two or three that were meaningful to both of us. And in a relationship, what you realize is, your rich life doesn’t have to be exactly the same. That is totally fine. She has things she wants to do that I don’t want to and vice versa. But we picked one thing I remember that was very meaningful for us. We had been inspired by a friend of ours, who had a 10-year wedding anniversary in a different country. And it was beautiful and lavish, and they brought their friends and family. And we realized we want to do that for our 10-year anniversary. So we picked that. And then I love dreaming. But what I love even more than dreaming is making a plan, so that dream happens. And so we took a back of the napkin approach, how much would that cost us, both of us had numbers, we kind of shared it with each other. And my guideline for this exercise is whoever has the larger number, go with that. Because I want you to dream big. So now what we did was we put a plan in place. So every month we’re putting money aside. And we know that for our 10-year wedding anniversary, we know exactly where we’re going to be, who’s going to be with us what we’re going to have as an experience. That was where the journal began, which is to start by designing your rich life. 

 

Mark Divine 13:11

Right

 

Ramit Sethi 13:11

And once you do that, it becomes a lot more exciting to start to use money to live it.

 

Mark Divine  13:18  

That sounds the same, like a visioning process. So it’s a 10 year vision. But you’re including money in that vision, right? Your relationship to money, how it’s going to make you feel, what experiences and adventures you’re gonna be able to have with it. And then you can worry about the tactics of how to get there. 

 

Ramit Sethi 13:35

Yeah, yeah.

 

Mark Divine 13:35

That’s cool. It makes sense. Yeah, I mean, everything. Everything worthy really starts with a vision, whether you realize it or not. And it’s more powerful when you can write it down.

 

Ramit Sethi  13:44  

Exactly. When I ask people, What is your rich life? I almost always get the same answer. They go, I want to do what I want, when I want. And I play along. Oh, that’s really cool. So what do you want? Silence. Because most of us haven’t thought about those vivid details. And what I’m really looking for, when I asked that question is something that is unmistakably you.

 

Mark Divine 14:07

Right

 

Ramit Sethi  14:08

You know, I want to take my parents to Italy, I want to sit on C2, because my parents are older, and I want them to have legroom, and I want to eat at this place watching the sunset in Rome. That’s a beautiful vision that can only be yours. And in fact, the more your rich life is calibrated and refined, the more it will sound unbelievable or even crazy to other people. That’s the way it’s supposed to be. It’s a custom made life for you. 

 

Mark Divine 14:39

100%. Now, having a vision is great. It’s a starting point, and it can take some time to develop that, right. So recognize that it’s not as simple as a quick vision board, you know.

 

Ramit Sethi 14:49

Correct.

 

Mark Divine  14:49  

It does take time especially, you know, the difference between creating a vision and visualization is, visualization is kind of the practice of that so that you you’re iterating, and you’re adding energy to a vision. 

 

Ramit Sethi 15:03

Yes.

 

Mark Divine 15:03

Creates this like magnetic pull toward it. But one of the things that you write about, and I think that’s really important is that, regardless of how strong your vision is, if your beliefs about money, are in contradiction to that vision, then you’re just going to sabotage yourself. 

 

Ramit Sethi 15:18

Yeah.

 

Mark Divine 15:18

Left and right. So how do we rewire our beliefs? And how do we even understand what our beliefs are? 

 

Ramit Sethi  15:25  

Well, you know, I was just thinking about this yesterday. So I was working out, and I have a trainer. And he pointed out that I have a tendency to overuse my shoulders when I’m doing certain exercises. And intellectually I know that, so I’m trying to be conscious of it. But it pops up in peculiar ways. And I’m doing a certain exercise, I’m not even thinking about my shoulders, and they’re they are taking over for me. And the same thing happens with money. One of the most classic maladies with money in psychology is scarcity. I’m not going to have enough, I need to save, save, save, save, save. And when we talk about it, people can intellectually get it. They go, yeah, I’m scared of money. My parents were scared of money, etc, etc. But it pops up in peculiar ways. It might be when people think about their vision, they go, I want to take a seven day trip to blank. And I might go, That sounds amazing. Why only seven days, and it will just hit them. I never thought I could take a longer trip than that. Or, where do I want to eat? I asked somebody I remember I was in DC, I asked somebody what his rich life is. He told me he likes to eat out. I said, What if you could quadruple the amount you spend on eating out? And he made this funny offhand comment that I’ll never forget, he said, I probably need to go to the gym more, because I would be eating out four times a week. Ha ha ha. And I thought that’s a very interesting joke. Because it’s very linear. The idea that if you spend more on something, you’re just going to do more of it. What about going to a different type of restaurant? What about bringing your family or your loved ones or your friends and treating them? There’s so many different multi dimensional ways to think about how you would spend money.

 

Mark Divine 17:06

Right.

 

Ramit Sethi 17:06

But if you don’t identify what I call your invisible scripts, those invisible beliefs that guide you about money, you’re going to constantly be ending up in the same situation that you’ve probably been in.

 

Mark Divine  17:20  

Right. What are some of the other more common beliefs about money that can really hold people back or limit them in scarcity.

 

Ramit Sethi  17:28  

I’m not going to have enough, that’s by far the most, I’m not good with money. 

 

Mark Divine 17:33

Yeah.

 

Ramit Sethi 17:33

Another interchangeable one is I’m not good at math. And the good news, don’t have to be great at math. In fact, if you can do basic addition, you know, enough, that’s not for people like me, that would be looking at a restaurant, etc. And all these can often be traced back to certain phrases that you hear as a young child, like, money doesn’t grow on trees. We don’t talk about money in our family, things like that. And so one of the exercises, when I have a chance to speak to people in detail, is I’llsay, How did you grow up with money? What do you remember about money around your family? What did your parents say? And that often, we are guided by these scripts 40 years later, that we never realize our parents knowingly or unknowingly passed on.

 

Mark Divine  18:17  

So you’ve got to surface those and when you surface them, you can poke holes in them and and recognize that they’ve been driving some subconscious kind of thinking, and which then became a set of rules for you. 

 

Ramit Sethi 18:29

Correct.

 

Mark Divine 18:29

Right. And so So first, you attack the, or route out the the negative or the unhelpful beliefs, then you can begin to change the rules. And when you do it the other way around, doesn’t really work that well. And this is kind of like, you know, the analogy would be back to the Navy SEAL, right? So you got to set a rules or beliefs about your worthiness to be a Navy SEAL. It doesn’t matter how, what your rules are around how often you do push ups, and you go to the gym, and all that kind of stuff. Because eventually, when you hit that dark night of the soul moment, you’re going to quit. 

 

Ramit Sethi 19:01

That’s right. 

 

Mark Divine 19:02

Or you’re not going to discipline the state to stay at it. So first come the beliefs, and then come the rules. What are some of the rules? Let’s talk about rules, like what are some of the rules that keep people locked in poverty or poverty mindset? And contrarily, you know, how do we develop some powerful lever type rules that move us toward freedom, wealth and prosperity?

 

Ramit Sethi  19:22  

Well, everyone who listens to you and follows you will know this intuitively, because you really show people how deep you can get with your beliefs. I still remember in San Francisco, you’re telling me about your mental dojo, and how you’ve spoken to your mentors dead or alive 1000s of times.

 

Mark Divine 19:38

That’s right.

 

Ramit Sethi 19:38

And, and when you interrogate those questions, oh, my gosh, you can create your own vision. And so that has stuck with me for many years, and I still come back to that idea. I think even the word rules has connotations. Typically, rules are a teacher telling a child, son’t go to the bathroom. Don’t do this. Don’t use a black marker.

 

Mark Divine  19:59  

That’s right, and it’s got a negative energy to it for sure.

 

Ramit Sethi  20:02  

Correct. My money rules are positive. So remember, they’re my rules, I get to create whatever I want. So I have 10 Money rules. Everybody can Google, Ramit’s 10 Money Rules. And as you read these, what I love about them is people start reading them. And the first couple are very standard there, save 10%, invest 20% type of stuff like that half a year worth of cash. Okay, fine, maybe that’s a little more than most people, but fine. But then they get into much more of a sharp edge, they are mine, one of them says, fly business class on any flight over four hours.  People go, wait a minute, what this guy what. And that’s because at a certain point, I made enough money. I said, I don’t want to have to think about it. I’m just creating a rule. And this is the rule. Another one I have is spend any amount of money on my health, on appetizers, and on a friend’s charity fundraiser. 

 

Mark Divine 21:00

Nice. 

 

Ramit Sethi 21:01

So if people are, if people are watching it, they go what why is this guy talking about appetizers that makes no sense. He’s talking about like, all this other stuff. And the reason is, when I was a kid, my parents, immigrants from India, we never ate out once every six weeks with a coupon. And we would never order appetizers never, it was not a thing. We didn’t have the money. Now, when I go out to a restaurant, it feels incredibly rich, to see an appetizer and say, I can get that or I can even get 2.

 

Mark Divine  21:30  

These are your rules. They’re not universal rules. I love that but but they’re built upon a universal rule of generosity of paying yourself of…

 

Ramit Sethi 21:38

Correct.

 

Mark Divine 21:38

Of you know, not fearing money. Fearing spending too much. I love that. 

 

Ramit Sethi  21:41  

I’ll give you a generous example too, because I want to inspire everyone listening, that your rules do not have to only be restrictive, you might have a couple of restrictive rules out of 10, I think you probably should have one about a savings rate and an investment rate. I think that would be good for long term financial health. But during COVID, you know, my wife and I started looking around at the people who were delivering food. And we were like these, they’re out here taking a risk to their health. Let’s be extra extra generous with them. And I remember I ran a little calculation, I said, I want to tip $5,000 a year. 

 

Mark Divine 22:18

Nice. Yeah.

 

Ramit Sethi 22:20

When I actually reverse engineer that’s about $4-500 bucks a month. And if I’m only going out like four times in a month for coffee, or to get some pizza or whatever, boy, that means I need to tip a lot every single time it essentially means I need to be tipping 20 bucks, every time I go out. I love that. I love that I can create a number for myself that is ultra generous. And I can use my money to live in alignment. So for everybody here, I would ask you, what type of person are you? Are you a generous person? Do you value relationships? And whatever it is, and then I say, okay, show me your calendar and show me your spending? Does it align with that? If you’re a generous person, you can make a money rule for yourself to align with being generous. And once you do that, you know better than anyone else, how it feels to live in alignment. And that is a beautiful thing.

 

Mark Divine  23:14  

I love that one principle I think is a complete game changer. I remember reading a really fascinating book, you might have stumbled across a guy named Sheinfeld and it’s called busting loose from the money game. 

 

Ramit Sethi  23:25  

Oh, I have not I’m writing it down right now. Thank you.

 

Mark Divine  23:26  

So check it out. So he his is a very kind of spiritual approach to money. And, and you know, he’s fully versed in kind of like quantum mechanics and the holographic field theory that we are, generally like, humans are a holographic projection into this material realm. And so so where I’m going with that is like his belief is that when it comes to money, and especially with, like this idea of tipping, is that if we’re in a holographic world, then everything that happens out here actually is happening in my mind. And so if I’m tipping someone, I’m actually tipping myself, so why wouldn’t I tip myself really, really well? Isn’t that beautiful?

 

Ramit Sethi  24:06  

It’s so fascinating. I love that, I have to read this book. Thank you for the rec. When I started talking about tipping. The reactions I got were absolutely fascinating. So I started talking about how I really hate cheap tippers. I really hate them. And I want to encourage people for what might be 3 or $5 for you, which I know my readers, they’ve done very well financially, it means nothing to them. But it can mean so much to the recipient. 

 

Mark Divine 24:34

That’s right. 

 

Ramit Sethi 24:34

Seems fairly straightforward. And the comments that came back many people very supportive, very happy, especially people from the service industry. But one of the most common critiques I got was, oh, so you’re saying that if I get terrible service, I still have to tip 25%? And I thought that was such an interesting reaction. First of all, if you get terrible service, I’m not telling you what to do with your money. It’s your money you could tip Zero sometimes that’s okay. But what an interesting first reaction to focus on what can go wrong, instead of what can go right?

 

Mark Divine  25:10  

Right? Because you have to consider that there’s, you might be the reason you’re getting terrible.

 

Ramit Sethi  25:15  

They don’t think of that they don’t think that. But when I go out by default, I’m going to have a great experience. And by default, I’m going to tip 25 to 30%-Plus. That’s by default. Now, if something goes wrong, of course, I can change it. But for anyone who’s a high performer in any field, they’re going out every night, they are going to have an amazing performance, whether you’re a singer, athlete, speaker, that’s what I expect, because that’s what I’ve trained for. Now, sure, if things go bad, fine, I’ll deal with it. But by default, I’m going to have an amazing experience every time I go out.

 

Mark Divine  25:48  

That’s cool. That’s there’s two rules on this. And you’re on your list of 10 that I think are worth speaking about.Eearn enough to work only with people who you respect and like and marry the right person. Which I think you’re speaking to like how other people can really affect us when it comes to our beliefs about money. And so we want to make sure that we align with people who are aligned with our beliefs and rules, right?

 

Ramit Sethi  26:15  

Yeah, exactly. I’m not surprised that you pick those two out, because there’s some very crunchy tactical ones in there, which you know, they’re interesting. But if you earn enough, then you can say no to opportunities that don’t align. And that might be having to fly and be away from your family. It might be someone you’re not philosophically aligned with, it might be a variety things. I feel very proud when I’m able to turn down an opportunity, that would have made me a lot of money, but it’s just not the type of person I want to associate with. Because my reputation is everything. And so to be able to be in a place where I don’t have to say yes to everything, just for the quick dollar, means that I have preserved my integrity. And then secondly, for marrying the right person. I mean, it is the most important financial decision most of us ever make. And you don’t have to be exactly aligned with a partner, you never will my wife and I still see things differently when it comes to money. And we work through it, and it takes time still. But if your values align, for example, if you believe that we should save, or we should spend money in these ways, but not these ways. If you believe that if you work harder, you can be more successful. Those values are really important to have alignment on with a life partner. 

 

Mark Divine  27:37  

That’s the biggest wealth redistribution scheme, you know, ever invented by…

 

Ramit Sethi 27:42

There you to go. 

 

Mark Divine 27:43

So you had to be careful that you choose wisely there. I’m curious, what do you think about prenups? And even post  nups?

 

Ramit Sethi  27:52  

Great question. I believe in them, I have one. And it was the genesis of a lot of work that I started doing on relationships. Because we had such a hard time with ours.

 

Mark Divine  28:03  

Just having the conversation is really hard for a lot of people. 

 

Ramit Sethi  28:07  

It’s, it was hard for me. My wife and I were both raised pretty similar middle class, both our moms are teachers. And it’s just by virtue of me, starting my business almost 20 years ago, that I’ve been very fortunate financially. And when we got more serious, we sat down and started talking about money. By the way, I violated my own rules. I should have talked about it way earlier. But okay, we talked about it. And eventually I said to my wife, now wife, I said, you know, it’s really important to me that we discuss a prenup, not that I don’t trust you. It’s that because of virtue of my business, etc. I’m coming into this marriage with an amount. And she was quite receptive to it actually, I was really nervous. And I just tried to explain myself. And, you know, it’s funny, I looked for advice on how to have that conversation. And some of it really rubbed me the wrong way. Some some stuff online says that, you should just blame it on the lawyer. And I go, how can I have integrity with myself? It’s not my lawyer that’s telling me this. It’s me. I believe this.

 

Mark Divine 29:08

Right.

 

Ramit Sethi 29:09

So we started talking about it. And it was good. It was good at first. And then it was not good. And it started getting complicated. And the numbers started flowing. And both sides had lawyers. And at one point, my wife now wife said to me, we got to talk to somebody because this is not going well. And she was right. So we went to see a therapist. And, this therapist was very good. She asked us a lot of questions. And one of the questions I still remember she asked, she said, What does money mean to you? And she turned to me first. And that’s the easiest question in the world for me. I’ve thought about money every day for 25 years. This is my business. I said growth. It’s obvious compound interest. 4% rule. Like I could see the numbers flowing in front of my eyes. And then she turns to my wife and she asked the same question and my wife said something I’ll never forget, she said, safety. And I could not understand that word as associated with money, like the two words weren’t in the same universe for me. I said, what do you mean? And the way we fundamentally thought about money was different.

 

Mark Divine 30:13

Right.

 

Ramit Sethi 30:13

And this therapist helped us understand that. So with her help, things got a lot smoother, still number of bumps in the road. But at that time, I really wished that we had been able to listen to other couples talk about money. Because especially for prenups, and post nupsl, there’s virtually no good advice online. It all happens behind closed doors. And that’s one of the reasons I started my podcast later with couples where I talked to them. And you can hear them sharing real numbers and you know, crying and laughing. But at that time, it felt very lonely. And it was a tough time. Honestly. 

 

Mark Divine  30:53  

That’s such a valuable thing that you’re doing there. Because tell you what money has destroyed more relationships, when the relationship wasn’t working, but maybe had a chance of salvation? 

 

Ramit Sethi 30:05

Yeah. 

 

Mark Divine 30:05

And then you enter in the the money that’s accumulated through that relationship. And all the beliefs like you said around that, and boy, in all the legal issues and taxation issues, it’s a nightmare.

 

Ramit Sethi  31:16  

You know, there was a man, he was roughly in his early 50s. And he wrote me a message and he said, Ramit all caps, please help. My wife of 21 years is about to divorce me, because I’m too cheap. I need your help. So I said, Okay, he came on my podcast. And I love talking to couples about money. When they agreed to come on, they agreed to share all their numbers. And they agree to talk about anything relating to money. And most of us have never heard a couple honestly talking about money. We’ve only heard ourselves, so we’re very much in the dark. And he comes on. And his wife of 21 years, they’re they’re a nice couple. He asked his wife, can you find a better mattress for our daughters? So she spent like two weeks creating this matrix with all these features? And the mattress was like 400 bucks or something? And he goes, No, that’s too expensive. Now, can you guess their net worth?

 

Mark Divine  32:13  

I don’t know. But you know, the way you framed it up, but they’re probably fairly well off. 

 

Ramit Sethi 32:18

They’re worth over $10 million. 

 

Mark Divine 32:19

Oh my and he can’t see, yeah… so that’s pretty classic is kind of what I alluded to, with, like my parents, like, 

 

Ramit Sethi 32:24

Yeah…

 

Mark Divine 32:24

They’ve got a lot of stuff. But it was stuff that was kind of handed down generationally, you know, family business, and some real estate stuff. And, but they’ve also saved a lot because they’re, you know, they were part of a big boom, you know, that we all kind of benefited from, from the, you know, this whole kind of Bretton Woods post World War Two, you know, baby boomer generated capital, boom, you’d have to be like, head stuck in the sand to not make money in the last 40 or 50 years. Right. So they did. But they won’t spend it.

 

Ramit Sethi  32:52  

Yep. This is classic. So I totally get it. And when you tell them this, they might even begrudgingly acknowledged, like, yeah, you know, we’ve, we’ve done okay, you, you’ve done more than okay, you know, the number of zeros that your parents have. But it’s a muscle that has not been exercised in 40 plus 50 years. And when you ask them, like, what are you going to do with the money? A lot of people like your parents generation will simply say, I’m going to, you know, leave it to you. But the last thing we want to see is our parents handing us money. If anything, I told my parents, I want you to spend every last cent. 

 

Mark Divine  33:30  

100% I said the same thing. I don’t want anything. Spend it, enjoy it.

 

Ramit Sethi  33:34  

Yeah. Enjoy it, you have passed along lessons that have allowed you and me to be successful.

 

Mark Divine 33:40

Right.

 

Ramit Sethi 33:41

We don’t need the extra money. But I will say this, another couple I spoke to her, she wrote me saying should I retire from my job. And of course, the story becomes much more interesting. She had had a double lung transplant. And she successfully went through it. But she has five years, 5-10 years left to live. And she knows that she’s concerned about her job, should she leave it. When she has five to 10 years left? And she has two young daughters she wants to spend time with I said, Why do you stay at your job? She said I liked the income. Again, what’s your net worth? Something around $13 million. She can’t spend the money if she tried. And and so what I realized is, you know many of us we have this belief, we always our future selves are always perfect. We work out in the future. We to call our parents every day we spend our money dutifully. In her case, she has millions of dollars and a terminal illness. But even she can’t bring herself to spend it, because she has never built that muscle up. And one of the joys I get to do when I work with these couples on the podcast, whether they have millions of dollars or whether they have $800,000 in debt and everywhere in between is to help them realize money is about more than what’s in your spreadsheet. It is your relationship with money and ultimately, your relationship with yourself.

 

Mark Divine  35:03  

Let’s talk about debt. A lot of people are trapped with student loan debt. You know, my stepdaughter has a lot. And she’s like it just a real burden for her. And I remember, you know, I paid for my MBA and I got halfway through a doctoral program before the Navy called me back to war. And all that was in debt, it was over 100 grand, and it chipped away over 20 years to pay that off, but it was a huge burden. What should our relationship to debt be? Is there good debt and bad debt? And what does that do to our confidence in our relationship to money? 

 

Ramit Sethi  35:35  

For a lot of people, it’s overwhelming. It’s devastating. If they think about it every day of their lives. 

 

Mark Divine 35:39

Yeah I bet.

 

Ramit Sethi 35:40

You wake up, and it’s just this feeling in the pit of your stomach, you open up your phone, and you see a friend on vacation on a Wednesday, and you go, I can never do that because of this debt I have.

 

Mark Divine  35:51  

Yeah. And then standards of living had been declining, because wage growth is not there. And the access to credit has been almost criminal, right? 

 

Ramit Sethi 35:59

That’s correct.

 

Mark Divine 36:00

They used to throw you in jail for being in debt. Now they push credit on you like it’s, you know, like, you have to do it, and you’re bad if you don’t do it. Yeah. So people get trapped.

 

Ramit Sethi  36:08  

They get trapped. And you know, when I speak to folks who have a lot of debt, the funny thing is, everybody believes they have a lot of debt. But the amount they have can vary all over the spectrum. Somebody will come to me, they’ll go, you’re never going to believe how much I have I go, Okay, how much they go $20,000 of credit card debt. I go, okay. I mean, I’ve seen it all. I have another couple they have $825,000 of debt. So the interesting thing is, they both feel the same way. Overwhelmed. 

 

Mark Divine 36:36

Right.

 

Ramit Sethi 36:37

What I want to help them do is understand, first of all, how did we get to this position. And it’s often the case that there are structural issues, as you mentioned, debt is freely available to 18 year olds, etc. It’s almost pushed on many. But there’s also an element of personal responsibility, right, you signed that document. So let’s, let’s understand both sides of this. Let’s not blame anybody, let’s just accept how we got here. And then the most important thing, let’s make a plan. In almost every case, in almost every case, I’ve talked to whether it’s $10,000 of debt or $750,000 of debt, there is a plan forward. It may take some uncomfortable decisions. But there’s almost always a plan forward. But what doesn’t work is just ignoring it and hoping it goes away. The most surprising thing I’ve learned is that people will worry about debt for 20 years of their life, but they will never pick up one good book on personal finance. and read it. And that’s got to change. 

 

Mark Divine  37:33  

They keep kicking the can down the road. In fact, I see, back to the student loan I did a little study on this as part of my doctoral program is like, you know, people will continue to take out loans to avoid paying off loans. Yeah, because they can keep deferring. And, you know, they can keep stay in school in there. And then also, they’re hoping with all the talk about forgiveness and debt relief, that it will just go away someday.

 

Ramit Sethi  37:57  

Yeah. And like I understand, I understand looking for a lifeline. And when people will come to me, they’ll often say, Do you think I should pay this off? Because I might get it, you know, canceled. I said, Look, maybe that will happen. Maybe not. But a plan is a plan that you control, regardless of external events. 

 

Mark Divine 38:15

Right.

 

Ramit Sethi 38:15

And, and you should see the relief Mark, when we make a plan together. Even if it might take 10 years, even if it might take 15-20 years to pay off. The relief in knowing that you have a plan and you can execute on it every single month is it’s such a relief to people.

 

Mark Divine  38:32  

Right. And just like with compounding in investing, you got to stick to it. Because if you if you interrupt that plan, or if you get off track, then you know oftentimes you’ll find yourself right back where you began. 

 

Ramit Sethi 38:43

Yeah. 

 

Mark Divine 38:44

What about mortgage debt? Do you believe in, I think I read that you don’t own your own house and and you’re a renter, and I know it’s probably very situational or personal. But what do you believe in mortgage debt and whether buy versus rent kind of story?

 

Ramit Sethi  38:58  

Oh, I love talking about this. I love this because you know, we both live in Southern California it’s high cost of living area. So I have lived in San Francisco, New York, LA, I’ve rented in each of those places by choice.

 

Mark Divine 39:10

All almost impossible to buy a home for first time buyers. 

 

Ramit Sethi 39:12

Yeah, correct. For the average young person, it’s essentially impossible to buy. And I like sharing my example because I actually could buy right now if I wanted to. But financially speaking, it doesn’t make any sense for me to buy. So when I look for example, in Manhattan, the same unit that I rented, if I wanted to buy the same type of unit same intersection, it would have cost me more than twice as much.

 

Mark Divine  39:39  

In terms of mortgage interest p&i and taxes and HOA fees and

 

Ramit Sethi  39:44  

Maintenance all of the above. These are what I call phantom costs. And in America, we are taught that house prices always go up. That’s not true. We are taught that renting is throwing money away to that I reply, do you throw money away when you eat out at that sushi restaurant on Friday, no. And similarly, we are paying your landlords rent, you wouldn’t say the same thing about you’re paying your restaurant owners mortgage. What is important to do with this decision is to run the numbers. It’s the biggest purchase of your life. Sometimes it makes financial sense to rent, and invest the difference. That’s the key. If you just rent and you don’t invest the difference, you are doomed. You have to invest the difference. Sometimes it makes sense to buy. And sometimes you run the numbers and you go, I’m going to make a decision that makes no financial sense. But that’s okay. Because life isn’t only about numbers, maybe you have a family, maybe you want to redecorate, whatever. But you have to be fluent with the numbers. When you’re thinking about renting or buying a house, it is a huge decision.

 

Mark Divine  40:47  

10 or 15 years ago, this may have made more sense. But a lot of people looked at buying just as kind of like a forced savings plan to know that. 

 

Ramit Sethi 40:52

Yeah.

 

Mark Divine 40:53

Just you had a long term amortization, it’s hard to find debt that was that cheap that had a 30 year amortization. You know, and again, 10 or 15 years ago, it was probably easy to think, well, real estate will always go up. Because it was, and if you buy in the right place, you know, if I just stay at it, and maybe down the road, I pay off, you know, start paying two, twice a month or two payments a month. And then 20 years, and I’m gonna own this thing free and clear. And that’s like, gives me a lot of back to people who are security and safety. 

 

Ramit Sethi 41:21

Yes.

 

Mark Divine 41:22

Conscious with money that that feels good to them. 

 

Ramit Sethi  41:25  

You’re right, there’s a lot of feelings. Again, in America, real estate is religion. And that involves feelings. Everything you said is true. I’ll just point out that 99.9% of people in America do not know what the word amortization means. So, you know, they don’t. And if I pointed out that the first 15 years of their mortgage, they’re essentially paying interest, it would blow their mind. But these are things that we’ve got to learn before we make these huge decisions.

 

Mark Divine  41:52  

Yeah, and that’s that’s where people got really tripped up with the refinance, boom, you know, before the 2008 crash is..

 

Ramit Sethi 41:58

That’s correct.

 

Mark Divine 41:59

Kept keep refinancing and keep resetting the clock. And so, but you know, we haven’t paid any interest off, you own the house for 10 years, and you’ve got to, you’ve still got a 30 year loan on it. Because you thought was a good idea to refi. And you haven’t paid any principal amount. 

 

Ramit Sethi  42:12  

See, everything you’re saying is quite complex to the average person. They know, what they know, is very simple. It’s almost childlike. I buy a house, I pay the house off, and then it’s free. That is essentially how people think about housing. And that’s what the industry preys on. They don’t talk about amortization, they don’t talk about ref’si. They don’t talk about phantom costs and total cost of ownership. They say you want to have your own house, it’s the American dream. And what I would say is, you decide what the American dream is for you. You don’t let anybody else certainly not a mortgage broker tell you what the American dream is.

 

Mark Divine  42:52  

I love that, that goes back to kind of creating your vision and your relationship with money. And be careful what you’re told, because there’s a lot of misinformation and myths, like you said about…

 

Ramit Sethi 43:03 

That’s right. 

 

Mark Divine 43:03

And so to get to the bottom of it, understand your relationship, develop a positive relationship with money, which means you have to have a positive relationship with what you were taught about money, and eradicate the old negative beliefs that were handed to you by your parents like a gift and not serving you. And then set up some new rules. And then and that’s where you get into the tactics. And once you do all that work, then you get into the tactics.

 

Ramit Sethi 43:25

Then it’s easy. It’s fun. 

 

Mark Divine

At that point, you go oh my gosh…

 

Mark Divine 43:28

Formulaic almost, yeah?

 

Ramit Sethi  43:30  

Exactly. If I fiddle with this, if I increase my savings rate, 1% per year, I can be a millionaire seven years faster, and it starts to become a game. That part it’s fun. For most people when they think about money on the first time. It’s, it feels heavy, it feels like an obligation, it kind of feels like going to the gym for the first time. But once you have a vision of what you want to look like and feel like going there is the easiest part of all.

 

Mark Divine  43:56  

That’s awesome. Really appreciate you doing this. You know, it’s um, you dedicated a lot large chunk of your life to teaching people about money and, and now that you’re doing it with relationships, I think it’s really valuable. A lot of people are gonna find a lot of value in that. So thank you for doing that. 

 

Ramit Sethi  44:11  

Thankyou very much. It means a lot to hear that from you.

 

Mark Divine  44:13  

Yeah. Where can people learn about the journal and where? Where can people learn about you if they want to work with you and come on your podcast and such?

 

Ramit Sethi  44:20  

The name of the journal is I Will Teach You To Be Rich, the journal you can find it at any bookstore, including Amazon, independent stores. I’m on social media at R-A-M-I-T and my website is website. And if you like listening to this, I would encourage you to check out the I Will Teach You To Be Rich podcast. I think once you listen to a couple of episodes, you will really fall in love with the voyeuristic part of listening to other people’s conversations about money.

 

Mark Divine  44:48  

And do the podcast you just like invite people on are kind of like train wrecks with money or do you invite people on who’ve done a good job withit as well.

 

Ramit Sethi  44:56  

We talked about well, they’re not all train wrecks. No I, some of them, listen to me. Some of them don’t, because that’s reality, but there’s always something at stake. There’s a reason for them where they come to me for help and bear all their numbers.

 

Mark Divine  45:13  

That’s cool. Do you do like a before and after? You know, I was recently on Daniel Amiens tik tok show. Hilariously I love that, but he does like a brain scan and here do this do that to fix your brain. And then six months later, he has your back. I can see you doing 

 

Ramit Sethi 45:28

Oh, I love that.

 

Mark Divine

Formulaic here. You know, here’s your assessment. And then six months later, come back. And you know, tell us how you did.

 

Ramit Sethi  45:35  

That, we do follow ups, but six months later is one of our most requested and I think you’ve given me a great idea. 

 

Mark Divine 45:41

Hooyah!

 

Ramit Sethi 45:41

I think we’ll do that. 

 

Mark Divine  45:43  

Right. No extra charge. Awesome. Ramit, thanks so much for your time. I appreciate it, brother.

 

Ramit Sethi  45:49  

Always a pleasure. Talk to you soon.

 

Mark Divine  45:52  

Hooayh! Really enjoyed that podcast with Ramit Sethi. This is like the third time I’ve talked to him and just got such a great spirit and really helping a lot of people deal with a very difficult subject and that is money and beliefs about money and your relationship to money. And so I really think this podcast will help a lot of people and that Ramit is doing a lot of great work. So thanks again. Ramit Sethi podcast will be up at Mark Divine.com and the YouTube channel there are linked from there. You can find us on social media at Mark Divine and Twitter at eal Mark Divine, an IG and Facebook find me on my LinkedIn channel just by searching for my name. My new newsletter Divine Inspiration comes out every Tuesday morning, and I have shownotes of our podcasts for the week, I’ve got a blog, I’ve got also really interesting things that come across my desk that I think would inspire you, or help you and I also offer a practice every week. So go to MarkDivine.com And subscribe if you’re not on that list and share it with your friends. Thanks to my great team, Jason Sanderson and Geoff Haskell and Q. Williams, who helped bring guests like Ramit Sethi to you every week. reviews and ratings are very, very helpful. So if you haven’t done so and you feel you’ve got the time to do so then consider rating and reviewing our show wherever you listen. It helps other people find it and keeps us at the top of the rankings. world is changing fast. We’re facing a VUCA world and we all need to be ready for the hero’s journeys that are approaching in that we need to get new skills and develop new courage and align with new teammates and mentors. And that’s why over at SEALFIT company where we train people to embark upon your hero’s journey, especially Navy SEAL candidates, but pretty much anyone nowadays, we’re offering a bunch of quests next year in 2023 is the year of the hero’s journey. We’re offering four different quests. Each has a different theme, get SEALFIT, Be Unbeatable, search for your Inner Warrior, and be Sheepdog Strong. Check it out at sealfit.com/show. And thank you again for your support. Thank you for being part of the solution in the world and for paying it forward. And let’s do it at scale. Till next time this your host Mark Divine.

 

Transcribed by Catherine and https://otter.ai