Ramit Sethi’s advice to a couple with $520,000 in debt

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It’s not uncommon for people to keep financial secrets from their partners. Nearly 1 in 4 Americans in relationships admit to keeping a money-related secret from their significant other, according to a 2023 Bankrate survey.

A $520,000 secret is a pretty big one, though.

That’s how much debt Aldo was hiding from his wife Cassandra, the couple recently told self-made millionaire Ramit Sethi on his “I Will Teach You to be Rich” podcast. The couple’s last names were not used.

Aldo and Cassandra earn a healthy joint income of $165,000 a year, plus Aldo said he’ll earn an additional $127,000 in commission this year. But the couple made a number of financial decisions that landed them in debt.

First, they have a $339,000 mortgage, as well as around $14,000 in student loans. Then a number of planned purchases over the last couple of years, including a home renovation and multiple vacations, ended up costing more than the couple budgeted for. They covered the difference with credit cards and personal loans, bringing their total debt up to half a million dollars.

While Cassandra knew their family was spending money, she didn’t know how everything was being paid for since she let Aldo handle all of their finances.

Prior to coming on Sethi’s podcast, the couple said they watched his Netflix show, which led Cassandra to ask Aldo how much debt they have.

“When he wrote it all down, I almost fell off the chair,” she said on the podcast. “I didn’t know everything was being charged on credit cards.”

Aldo wasn’t necessarily trying to deceive Cassandra, but he told Sethi he wanted to shield his wife from feeling stressed about their finances. Sethi’s take: Putting off telling Cassandra about the debt or bringing her into their financial planning let the problem get worse — and wound up hurting Cassandra.

Here’s why keeping money secrets from your partner can cause problems and Sethi’s advice for Aldo and Cassandra.

Real money ‘heroes’ have a sidekick

Growing up, Aldo’s family didn’t have a lot of money, and he learned at a young age not to ask for things because he saw how much finances stressed his parents out, he told Sethi. In adulthood, he continued to believe that money is stressful, and tried to handle it all on his own.

As a child, he understood his family didn’t have a lot. As a result, he’s tried to make sure he, Cassandra and their children have a comfortable life.

While she didn’t know about the debt, Cassandra takes responsibility for her part in yielding all the financial decision making to Aldo. “I sat back and let him deal with everything … never would I have thought we’d be in this predicament,” she said. “But I felt hurt, I felt like we’ve been living a life maybe we shouldn’t be living.”

Sometimes people lie about money in their relationships to hide an undesirable habit or a larger issue, but that’s not the case for Aldo, Sethi said. He was coming from a place of love and wanting to be a hero for his family, he added.  

“In many relationships, the ‘hero’ when it comes to money is the person who says ‘yes,'” Sethi said. “But in my view, the real hero is one who builds a partnership with their spouse to talk about money regularly and they truly include their spouse in decision making.”

No quick fixes when it comes to debt

Aldo and Cassandra were disappointed to hear Sethi tell them it would probably take at least five years to work their way out of this debt. Aldo suggested using a home equity line of credit to consolidate some of the debt, but Sethi was concerned they see that as a “quick fix” that won’t last.

“Today, I see debt upon debt upon debt. A home equity line feels like another ‘get rich quick’ opportunity,” Sethi told them.

HELOCs and credit card balance transfers can be useful tools for some people to get out of debt. They can streamline your debts so you only have to make one payment, and may offer lower interest rates. But you have to commit to paying off the “new” debt and not continuing to rack up balances on your cards, which Sethi doesn’t believe Aldo and Cassandra will do, based on their current habits.

Rather than complicating their debt payoff strategy, Sethi recommended Aldo and Cassandra stick to three black and white rules. Note that this is a plan tailored to Aldo and Cassandra’s situation, and you might need a different strategy if you’re looking to tackle debt.

  1. Put every bonus or commission check toward paying off debt. Sethi recommended the couple start by putting 80% of any bonuses toward debt and 20% to build up their savings. While this will “severely limit” their day-to-day spending, Sethi said this is what it will take to get out of debt.
  2. No more credit cards. Aldo and Cassandra struggle to even add up how much debt they have across a variety of credit cards. If they want to pay it off, they absolutely need to stop using them, Sethi said. They should then close each account after the card is paid off.
  3. Get honest about their discretionary spending. Sometimes home repairs or new clothes are necessary, but Sethi encouraged Aldo and Cassandra to take the time to really consider whether a new purchase is something they need. Finding areas to cut back their spending now can help them have more to put toward their debt and help prevent them from falling back into serious debt in the future.

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