Self-made millionaire’s advice to help couple rein in spending after racking up $65,000 in credit card debt: ‘It’s not about a mole’

Forest, 40, and Kathleen, 42, are living large in California.

The couple makes over $286,000 a year, which should be enough to live quite comfortably with their two children. But years of reckless spending left the couple in the red, millionaire Ramit Sethi, author of the upcoming book Money for Couples, recently told an episode of his podcast. Their last names were not used.

“We live on the edge,” Forest said. “If my income stopped coming, it wouldn’t be good from a financial point of view. We would lose everything pretty quickly.”

Credit card debt is a common problem in America, with half of cardholders carrying a balance from month to month, according to a recent Bankrate survey. Forest and Kathleen have nearly 10 times more credit card debt than the average millennial, who, according to Experian, owes just over $6,500.

While many Americans can at least partially blame economic conditions, such as inflation that drives up prices and high interest rates that make it difficult to avoid or lower credit card debt, that’s not quite the case for Forest and Kathleen.

“Forest likes to ski and bike, and I like to go to yoga and travel,” Kathleen said on the podcast. “And I know this is boogie stuff… I care about adventure and fun and lifestyle.”

Here’s how they racked up tens of thousands of dollars on cards and Sethi’s advice for the couple on how to get out of debt.

While there were several big-ticket items that contributed to Forest and Kathleen’s debt — two $5,000-plus bicycles, a trip to Montana, the aforementioned yoga classes and skiing — the main issue, Sethi said, is that the couple had no guidance. principle for their expenses.

Kathleen said her principles were, “Everything was going to work out in the end” and “Let’s not worry about it.”

While it may seem like they could quit doing those expensive things and just focus on paying off debt, it’s not that simple, Sethi said.

“It’s not just about a decision or two, because if we just try to do it through decisions, it’s like playing mole,” Sethi said. “It’s about going deeper. It’s about understanding the principle, not the tactic.”

He led the couple through some exercises to see how they feel and think about money. They are both anxious and know their situation is pretty bad, but they haven’t sought help because they don’t like feeling bad about their decisions. They want to feel proud, empowered and like they are actually as good as their salary and lifestyle suggest.

They say they’re committed to making the changes necessary to get there, but they also accept it won’t be easy.

Forest and Kathleen suggested some ideas that could help ease their debt burden.

They could sell those expensive bikes and make a plan to eat at home rather than restaurants, but, Sethi reminded them, they needed to commit to a simple and practical course.

In the past, Forest has done things like use balance transfer cards and a 401(k) withdrawal to pay off credit card debt. Sethi advised against this.

“You have to have clear rules, and one of those rules has to be no tricks,” he told the couple.

He agrees with them, selling as many of their possessions as possible to make a considerable dent in the debt balance. These include bikes, one of their cars, a rowing machine, and potentially more as they take stock of all the elements that helped them get to where they are.

Looking forward, Kathleen said she expects to start working full-time again soon so the couple’s income will increase. Sethi encouraged them to set some rules about how to use the extra money, such as putting a certain percentage toward debt and another portion toward their emergency savings—which at the time of registration was almost nonexistent.

Additionally, Sethi encouraged Forest and Kathleen to make an appointment with a therapist who could help them work through some of their emotions around money and communicate better with each other.

“There are going to be times when you’re going to go backwards, you’re going to make a mistake. That’s okay,” Sethi said. “It’s more important to create a healthy money culture so that whenever these things happen, you can recognize them and correct them.”

Watch the full episode here.

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