You don't need to be a millionaire to live a rich life, at least not according to my guest today, Ramit Sethi. In this episode, we'll go way beyond budgeting tips and tackle the deeper mindset shifts needed to spend with purpose. Whether it's flying business class, buying a sweater you love, or saying yes to a vacation without overthinking it, this conversation is about using your money to create joy.

As Ramit says, just spending more money is not always the best option. Spending money meaningfully for your rich life is really what we're talking about here. So today we're going to lay out a tactical four-number framework, explain how to ditch frugality guilt, and show you how to start spending meaningfully.

So whether you're in debt or you have money to spare, this conversation will help you design a life you actually want to live with intention. I'm Chris Hutchins. If you enjoy this episode, please share it with a friend or leave a comment or review. And if you want to keep upgrading your life, money, and travel, click follow or subscribe.

Ramit, how much money do you think someone actually needs to start living a rich life? How much weight do you need to be able to push in order to be healthy? It's kind of a similar question. You can live a rich life if you have $150,000 of student loans.

You can live a rich life if you have $25,000 of credit card debt. You can live a rich life if you make $40,000 a year or $450,000 a year. The income matters, of course. It's much easier to live a rich life if you're making a lot of money. But just having a number alone does not do it.

I know a lot of millionaires, I speak to them on my podcast sometimes, and they are wracked with anxiety and guilt and worry. So it's not just a number. It's really about a worldview, a way of looking at the world and realizing money is supposed to be joyful, not just guilt inducing.

So then I guess let's rephrase that. How would you define living a rich life? Well, a rich life can be picking your kids up from school every afternoon. It can be taking a six month vacation or traveling two months a year. It can be buying a beautiful sweater because you just love it.

But your rich life is yours. So each person listening to this is probably going to have something very different. I'll just give you some specifics from my own rich life. Every time I eat out, I have created a rule for myself. I want to be able to order appetizers because as a kid, I couldn't, we couldn't afford it.

And if I'm eating out with coworkers or something like that, I'm always saying, whatever you see on the menu, order it. Don't even think twice. You see three things you like, get them all because that was totally abundant to me as a kid. We never could do it. So that's like a smaller part of my rich life is like the 10 or $15 appetizer.

And then there's the big stuff. It's being able to work with people I like and respect. It's flying business class on any flight over four hours. It's those kinds of things that are meaningful to me, which might be very different for somebody else. For someone who hasn't gone through any exercise to even think about that, how do you encourage them to figure out what their rich life would look like?

I always like to ask people what they love to spend money on. I just love it because like, look at your face right now. Everybody lights up. They always have an immediate answer. The most common answer is travel. And that's what I call a money dial. It's something you can turn up or turn down.

We have eating out or food is a big one. Mine happens to be convenience. I love to spend money on things that make my life convenient. And then there's a whole other list of money dials. So you can just see people's eyes light up. And then I ask them, what if you could quadruple your spending on it?

People get kind of uncomfortable. They get stuck. They go, oh, I would eat out at Chipotle four times a week, blah, blah, blah. I go, are you sure you'd still eat at Chipotle? You wouldn't maybe invite somebody out and pay for their bill? And they're like, oh yeah, actually I would love to do that.

So I start to show them how money can be multidimensional. It's not just doing more of the same thing. The whole point of this is to get people to realize that money is not something you just worry about. It's also not something that you try to minimize as much as possible.

The hyper frugality world loves to look at cost only. How much does it cost? How much does it cost? That cost too much. I could get a 20% cheaper. I'm like, get a life. There's more to life than just saving money on $3 expenses. There's also sometimes where you spend a lot of money because you just want to, because you want to create a magical experience for your kids, because you know that you're going to go to a restaurant where it's quiet enough that you can talk to your wife or your husband or your parents.

And you know that there's not going to be people partying next to you doing tequila shots. There's so many different reasons to spend more money. And of course, sometimes there are reasons to spend less. Now, I imagine you're talking to a random couple, random person, and they're like, oh, great.

That's what it would look like if I really spent all this money. But not everyone should just go and spend a lot more money. So how does someone start to implement that rich life without throwing their finances into shambles? It's an interesting question you ask because first of all, in the frugality world, there's this very pervasive concept of, I don't need to spend a lot of money on fancy stuff.

I don't need fancy wine. I don't need fancy trips. I'm perfectly content here. And at the heart of that belief, which is almost always said in a sort of vaguely superior way, is fear. The fear that if I eat out at a nice restaurant once, that I'm going to trip and fall and eat there every single day for the rest of my life.

That if I go on a nice trip once, that now I have to only stay at a Four Seasons resort every single time I travel. No, you don't. I trust myself enough to spend good money on say an anniversary dinner once a year. And then most of the time I'm eating normal stuff.

So I want people to know that you can begin to trust yourself to spend extravagantly on a few key things and cut costs mercilessly elsewhere. How do you do it? You got to know your four numbers. You got to know your fixed costs, your savings rate, your investment rate, and your guilt-free spending number.

Those four key numbers, you need to know them like the back of your hand. You don't need to know how much yams cost at the grocery store. It's a complete waste of time. You don't need to track every single entry you make in some thing, some app. You don't even need apps on your phone.

That's a waste of time as well. I have no financial apps on my phone. It's a waste. I have four key numbers. I know them like the back of my hand, and I am always confident about those numbers. In other words, you need to focus on the big wins in life.

And if you get those right, then the price of a Topo Chico does not affect you in any way. Okay. So fixed costs seems maybe the most straightforward. Is that fair? You could look at the things you spend money on, and they're probably big ticket things. I'll go through them quickly.

So the first category, fixed costs, that number ideally should be 50 to 60% of your take-home pay. That's after tax. So in fixed costs would be your rent or mortgage, your utilities, groceries, car payment, debt payments, all the stuff you need to keep the lights on every month. The stuff that even if one of you got laid off, you would still pay it.

Childcare. Those are all fixed costs. The next one is savings. This is like money for an emergency fund, or even a trip you're going to take two years from now. 5 to 10% is a good range. Obviously, the more the better. Great. Once you hit your emergency fund, you could probably cut that number down a bit.

Investments. This is where the real wealth is created. 5 to 10% of take-home pay, although the more the better, and I really mean that. It's a little ironic that we spend our entire life trying to find a discount at Taco Bell. Meanwhile, we don't spend any time talking about this one number, which literally can be worth millions of dollars.

Changing that number by 1% can be worth hundreds of thousands of dollars over your lifetime. So this category is really, really important. And then finally, guilt-free spending. This is like eating out, drinks, travel, nice bag, whatever you want. 20 to 35% of take-home pay. That's kind of a lot of money.

When you think about it, you go, wait a second, I can spend 20 to 35% on clothes, eating out, hair, friends, all that. Yeah. If you have your other key numbers dialed in automatically, then you have a lot of money left over to actually spend on the things you love.

So once it's like Tetris, you just got to make everything fit. However you want to do it. If you want to spend extra over here, but less over there, that's your rich life. You can do it. So I think probably where I kind of fell off the wagon was just dialed down the guilt-free spending and dialed up the investing, trying to save more for the future.

I can't go back in time, but would your advice have been stop saving that much, save less? Wait, are you saying that you saved too much and you didn't spend enough? I would say that was probably the first 10 years out of college was certainly my MO and that shouldn't be surprising.

I'm not surprised. How much of this pod, the rest of this podcast is going to be me making fun of you for being hyper frugal? Hopefully less than the last time we spoke. I feel like I'm getting better. I love it. I love it. Okay. Yes, there are some people like you who are what I call optimizers.

The four money types, optimizers, one of them. And I actually was an optimizer too. Optimizers love spreadsheets. You know, we're always planning for like 40 years from now. We calculate all these different withdrawal rates and stuff. The problem with being an optimizer is that it can actually serve you really well.

Like you, you over save, you set yourself up amazingly well, you've done great. And every day you look and you're like, oh, the number's going up. Like I'm so cool. Let me keep doing it. The problem is that if you take it to its logical extreme, optimizers become unbearably boring and unbearably cheap.

Like they literally only live for the future. They look at cost, the price of a lunch, they go, oh, that taco, we could get it today. But if we actually take the money and invest it for the next 45 years, that $12 will actually turn into a $1,664. And they just end up doing nothing.

They're unbearable to be around. So I like, I love optimizers because I get them. And it's kind of funny, but also it's not funny. I want them to realize there's a certain point where you won, you won the game. And you actually now, the point is not to look at another model or another fire subreddit.

It's actually to have gratitude, give yourself a big pat on the back, celebrate, and then turn the page and start focusing on the next chapter, which often is learning the skill of spending money meaningfully. Do we get to talk about that today? Absolutely. Like you've done it. That's a skill I think I've, I have not mastered, but I've been an apprentice of for the last, I don't know, five years.

And there are things that I used to spend a lot of time trying to dial in that I'm not. Can you just tell us so that we can laugh for a few? I really like dram. It's like an, it's like your Topo Chico example. It's like an expensive sparkling water.

Yes. The Kirkland water is cheaper, but like, I just really like it and it tastes better. And if I go and spend $300 ordering a bunch of cans that last months, I don't care. Like, and that's a small example that I'm sure you'll make fun of, but I think old me would be like, why would I spend this much?

Like there's an alternative that's cheaper. And I don't think like that as much on many things. I actually love that example. Um, it is a little ironic that you're drinking that expensive sparkling water and I have tap water in front of me. That's quite funny. Okay. Well, that's, that's well done.

I think we should talk about how to build that skill. Also remembering you don't have to be a multimillionaire to build the skill of spending money meaningfully. Okay. I certainly didn't grow up as one. And you know, my parents are both immigrants from India, big family, dad worked, mom stayed home with us.

We ate out very rarely. Our trips, we, I don't think we've ever been on a plane, all of us together. We just couldn't afford it. But we also learned about spending money meaningfully in a way that was relevant for us. Us going to like, you know, six of us to a movie, never going to happen too much money.

However, if it was some type of sports thing for, you know, club event or whatever for our school, there was money for that. If it was buying a book because we needed it for school, there was money for that. And I think that really taught me that you can sharpen the edge on what's important for you.

You can actually be incredibly resourceful if you need money or you want to spend money on certain things. But then for other things, like I think about all the things we did not do as a kid for financial reasons. And it actually taught me a lot. I remember walking past restaurants that our family would never go into.

They were simply too expensive. I was not resentful. I was like, you know what, that's that's not for us. But one day I'll be able to go in there and eat whatever I want. And I am today. And I feel incredibly grateful. So I think that part of it is like, if you achieve this, if you save, if you're fortunate enough to have a good job and work hard and you accumulate, what's it all for?

You better learn how to spend that money meaningfully. Otherwise, it just accumulates. And then what's the point of it all? Yeah, I think the conversation I had with Bill Perkins wrote Die With Zero really reframed a lot of things, thinking more about seasons, thinking about when is the time to spend your wealth?

Because a lot of people are like, I'm going to save for this future thing. But I started realizing, well, maybe the best time to spend the money for the future thing is now. This is probably not the best advice for how to learn to spend money. But when you have children, somehow it just becomes easy to spend money on things that seem wildly expensive before.

I think it's like a parental instinct where you're like, well, do I want my kid to be safer in the swimming pool? So private swim lessons sounds like a really good idea. That would have seemed crazy before, but it's like, oh, the best thing for the kids. Like, we got to do that.

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So I've learned a little bit of that skill to spend more, but you've said you were an optimizer. You've jumped way past that. What are some of the things that made it easy to not fall back into that habit, right? Sometimes I still see things that I know this is a little cheaper over there.

Like I still want the deal. Even if I know it's not that meaningful to my financial picture, it's hard to break that habit. I have a few ways that have helped me reframe looking at cost alone. Some of them were these pivotal moments that happened to me. Right when I graduated from college, I wanted to dress better.

And I asked one of my friends who dressed very well, if she could go shopping with me and help me understand how to do this. So she went shopping with me and I started picking out clothes and then she started getting really excited. She's like, Oh my God, that looks so awesome.

And she was getting enthusiastic. So I was getting enthusiastic. That was the first lesson learned is when it comes to spending money, it's actually okay to get enthusiastic. Most of us actually approach money as if spending money is losing. I don't lose when I spend money. I win. I trust myself.

I know I'm not tripping and falling and getting tricked by some salesperson. If I buy something, whether it's a shirt or a car, I did it with my eyes wide open. And so I get excited. We have to reframe the entire way we think about spending money. It's not painful.

It's actually joyful. The second thing is I started looking at the prices. She goes, put that away. I said, what? Because in my family, we look at the price first. She goes, first decide if you love it, then go try it on. And then we'll look at the price.

It blew my mind. And I realized leading with cost makes you lead with cost. Leading with experience or joy or delight or just I like to wear the pair of pants looks that changes your entire dynamic. So it's basically putting a guardrail around yourself that says maybe I shouldn't be looking at price first.

And that applies to restaurants. It applies to flights. It applies to anything. Same thing with vacations. It's kind of startling to me how, when I ask people like, how do you plan a trip? It's quite remarkable. Everybody says the same number. They don't even have a budget. They have no number for it.

It's the same number they use when they were 22 years old. It's $5,000. It doesn't matter if they have three kids. It doesn't matter if they are single. It doesn't matter if they're going international or going to Texas. It's always the same number. That really shows you that people don't really actually think about money in the way you think that they're not rational.

They just pick a number that they used to use 20 years ago. And so what they'll do is they'll go to look at different hotels and this is how they pick it. They'll be like, that's the most expensive one. We're obviously not going to go there. That one's cheap.

I don't know if we want to stay there. Let's go to something in the middle, maybe a little bit better than just the middle. That's how they pick it. And I'm like, what is happening right now? You take one vacation a year and this is how you plan the experience.

A different way to do it is to think of it almost like a wedding. What is the experience we want? When we land, what do we want to have happen? Do we want to take the bus? Do we want to take a train? Do we have somebody waiting with a placard for us?

Let's just put it down. We're not even going to look at cost right now. It's the same as I didn't look at pants when I was 22 years old. When we travel, we're going to go for how long? Eight days? Are we out and about every single day? Are we going to take one day that's just in the hotel?

Oh, I would have never dreamed of doing that when I was a kid, because we only have a limited amount of time. We better go. We don't want to waste it. But we're not wasting. We're reframing it. Maybe we're recharging. And then finally, after we've crafted this entire experience, then we start to look at cost.

Ooh, we're a bit over how much we put aside. Let's cut that one excursion or maybe we can stay for one day fewer or a cheaper hotel, etc. In other words, I would rather you start with the experience you want to create rather than a dollar value. It totally flips the entire calculus on its head.

It's interesting. As you were saying this example, I was thinking about how some purchases are really easy. Like if I go to a restaurant, I don't have to think, "Oh, you know, there's four entrees. Why would I buy the $40 one instead of the $20 one?" Whatever it is.

That doesn't seem to have an impact on me at all. And I think part of the reason is it's very hard to compare. And you didn't say this strategy, but I pulled it out, which is trying to just highlight the difference between two things. So if I'm at a grocery store and I'm like trying to buy something, I'm like, "Gosh, I know this thing is a lot cheaper somewhere else." And I'm using a small example because it's probably both relatable to some people and something that still gets me at times.

It's like, "Well, this thing is not just more expensive, but it's here. It's in front of me now. It's not a drive away. It's convenient. I've already got things in my bag and just trying to process all the things that are kind of like bonuses you get, even if it's more expensive." Now, I know that's probably a little cost first, but it's looking at a thing and thinking about everything around it actually might help me a little bit in some of these scenarios.

But we've recently gotten better on vacations and taken, "Okay, well, we really want to go to this thing. We want to have this experience. And the only way to have it is at the Four Seasons. So we're just going to pay for it." Let's go through this because I want to understand it.

First, can you just describe what you used to do? And then let's talk about what you do now. I'm curious. We used to go say, "Okay, well, what kind of a trip do we want?" And I think we would start with the high level of, "We want to go to a beach." And then it might be, "Okay, is there a place that we can go using points to make the trip a decent amount lower that would meet those criteria?

Is there something that matches it?" And hopefully there is. In this particular case, it was, "Gosh, I want this trip." And for anyone who doesn't know the Four Seasons, there's no points option. There's no special deal. Like there might be some promotions. And I did an episode about why I actually thought it wasn't as expensive as I thought, but I only found that out after the fact.

And we were like, "This is just a thing we're going to make happen. We're going to spend what it takes to do this trip that we want." Because we decided that that's the thing we wanted to do. Now, would we have been able to do it if it were five times as expensive?

Probably not. But it was certainly two or three times the price of other hotels in Hawaii. I know you're not a big budgeting fan, but one of the things that really helped, and in a way it's kind of the same as the four numbers you have, is I know that currently our income allows us to save enough money that we are saving enough.

I probably don't know the numbers as well as you do. I know my spending amount and I know my take home amount and my saving amount. I haven't really thought about the rest, but I just knew that if we spent this money, it's not going to derail anything. We've done a pretty good job of running through.

Here's where we spend money. If we were going to spend a little more, where would we want to spend it? And in this case, that was how we wanted to do it. And it wasn't hard. Like it was weird that it was easier to spend thousands of dollars more on a vacation than we normally would.

Yet it's probably still difficult to spend 40 extra dollars to rent an SUV on a trip we're taking right now. Like I'm actually booking a rental car. And for some reason that I can't explain, I'm like, "God, do I really want to spend the $40 to have the four-wheel drive car?" We're going to Costa Rica during the rainy season.

Like it seems like a smart decision. But that decision is actually harder for me than spending thousands of dollars on a vacation. I think part of it is it's one of those things that usually doesn't always matter. It's like insurance. The other day I bought insurance to ship a package and then guess what?

The package got there. You could say it was a waste of money, but I had the peace of mind going into it. In this case, I'm like, "Do we really need that?" It's like every time we go visit family in Colorado, it's like, "Well, we probably should get the four-wheel drive car and 99% of the time it's not snowing and icing and we didn't need it." I mean, there's a lot of things we don't need.

I think that when I talk to people who are optimizers, reformed optimizers, there's always a sense of control that's trying to be exerted. And I think that sometimes we can find more control in playing small than in playing big. So for example, I spoke to a couple on my podcast.

They were in severe debt. They presented it as having $313,000 of debt. I ran their numbers. They actually have $350,000, $3,000 of debt. So they were under by like 40 grand. They didn't even know. And she spends three hours a day. That's not an exaggeration. Three hours a day on a spreadsheet looking through their numbers.

And I looked at the spreadsheet and it was incredibly confusing. All red. Everything was red and just depressing to look at. I said, "Do you like this?" She goes, "No, I don't like it." Well, she spent her time there every day, over 20 hours a week, because it gives her a sense of control.

Once in a while, I find myself looking for a purchase, like a $20 item on Amazon. And I've got five tabs open. I'm reading the freaking Wirecutter reviews. And I'm like, "Oh my God, I got pulled into this." A couple of reasons. One, the world makes it easy for us to cross compare information.

But two, if you're an optimizer, if you're especially good at crunching numbers and comparing things, you're just drawn to that. The solution is not to beat yourself up. It's actually just to create a rule. That's it. It's just to say a worry-free number. And you say in your family, "Any number below this, we're just not going to worry about it.

I'm just going to buy the best, or I'm going to buy the middle." Whatever the rule is for you. For a lot of people, the easiest place to start is just $20. Anything below $20, we're just not going to worry about it. Okay? And it could be, "Should we get this thing of fruit?

Should we get this? Should we get that?" 20 bucks, not going to think twice, going to get it. Now, the first question people come back to me with is, "Oh, Ramit, so you're saying I can spend 20 bucks 10 times a day, times 30? It's going to bankrupt us." Funny, again, that that's what people immediately jump to, as if they're going to go from frugalistas to suddenly spending $6,000 a month on fruit.

It's never going to happen. What they really are saying is, "I don't trust myself to give myself that freedom of a $20 worry-free number." Trust me, if you spend too much, you would catch it, and you would dial it back. We're going to do a worry-free number. We're going to feel good about money.

You might have your own core values in your family, like personal safety. That's number one for my family. And for a lot of parents, I think that's a great value. That means if we're booking two hotels, and one looks to be safer, and the other's in maybe a dangerous part of the state, we're not going to do that.

If we're booking a certain car, and one is safer because there's muddy roads, we're going to get the thing, and that's it. And if it means that we have to stay one last day, that's what we're going to do, because that's our core value: family safety first, right? These are kinds of ways that you can actually become more fluid about it, versus finding yourself cost comparing on $20 or $40.

I don't know if you would consider this a healthy habit or not, but we had a challenge that every time we looked at flights, and almost everyone probably can sympathize with this, the inconvenient flight is so cheap. It's like, "Oh, do you want to go to the airport at 5 a.m.

and change planes in Dallas?" And it's like, "No, I want to fly direct, and I want to do it at 10 a.m." So I just filter it out. I am not convinced I have the perfect control where I'm like, "Wow, it's $400 cheaper to do this thing. Maybe I start to second guess." But I find that if I just remove it from the search results, like I set the filters on Google Flights to not even show it, I could basically lock the rule in the software.

It's different if you're 21 years old and you have less money and more time, then you should be looking at those flights. Those are the flights I took, the cheap ones. I've done it where it was the train, the bus, you know? Yeah, I totally agree. We took the cheapest stuff when we were backpacking in Europe.

I love that stuff. But as I got older and as I had more money, I turned the page. And I think this is so important for people to realize. I'm not talking about everyone going and spending $20 million on this and that. I'm saying look at the stage of life you are at and spend your money accordingly.

If I'm 21 and I'm going backpacking in Europe with my high school buddies, then I don't have a lot of money. I don't even mind carrying a big backpack around and walking around. I don't mind. I actually love it. And I'm going to do that. I'm not even going to feel guilty about not being able to stay in the fancy thing.

But now, 20 plus years later, if I have more money and I'm with my wife and I want to have a beautiful time and maybe I'm into hotels and this and that, then I'm going to spend money differently. And I'm actually going to appreciate it. I want to share this thing.

I went to the train station in Paris. And it was either Paris or Rome. I had gone there backpacking. And I remember exactly what it looked like. In fact, I remember reading from a guidebook because we were actually we got there at like two or three a.m. We're just going to sleep there because we're like, ah, let's save some money.

And we opened up our guidebook back then used to have guidebooks. And it was like, whatever you do, do not sleep in the Paris train station. You will definitely get robbed. I was like, oh man. So we went to find some cheap hotel, whatever. 20 years later, I go back with my wife.

We had a beautiful time. We came back to that very same train station. And this time we were taking the train and I guess we had like business class seats. So we went up to the second floor and there's some like informal lounge or something. I didn't even know that existed until just now.

Because when I was a kid, how would I have? I didn't even know to look up. And I remember as we went upstairs to the elevator and I was like, oh my God, this is such a powerful moment for me because I'm sitting there looking at the exact view I had when I was there with my high school buddies backpacking and we had the time of our lives.

And now I'm here with my wife having the time of our life, but differently. We are in a lounge. It's nice. And I feel so grateful to be able to spend, I don't know, 30 bucks more on a train ticket or whatever it costs and that I got to do that the way I did then.

So what I want everybody to know is just spending more money is not always the best option. Spending money meaningfully for your rich life is really what we're talking about here. And sometimes it can be cheap and sometimes it can be lavish, but I want you to be able to toggle between all of those without feeling guilty and stricken.

When do you start thinking about income? Because you talked about the four things you keep track of. And I know that you often talk about spending as playing defense, but is there a stage where it might actually be more advantageous to just focus on earning money and focus less on where you're spending?

Yes. Keep in mind that all those four numbers are a percentage of your income. So if you have more income, you're going to have a lot more to play with in those four key numbers, 50 to 60%, etc. Yes. I think this is overlooked a lot by the personal finance world.

It's easy to obsess over cutting costs on freaking bread. But at a certain point, there's a limit to how much you can cut and no limit to how much you can earn. I have found increasing my earnings to have been one of the most powerful levers in my entire financial system.

So there's a few ways of thinking about it. One, if you have a job, learning the skill of raising your salary. That is a skill. That skill can be negotiating your salary. And I have all kinds of scripts on exactly what to say to your boss, when, what to write in the email, what to say in the negotiation.

Also, if you can't negotiate your salary, switching jobs, learning how to switch jobs and actually increase your salary. This isn't pipe dream stuff. I feature people who got $5,000, $10,000, $25,000 raises. This happens all the time at companies all around the country. So it's really important for you to understand how this works and to be able to build that skill.

Then of course, they're starting a side business. We talk about that in my earnable program all the time. Take the idea you already have. I know people who are professional dog walkers, who teach kids how to paint, teach a second language, are Excel analysts. There's all kinds of stuff.

Taking that thing you're already good at, being a personal stylist, and turning it into a business where you can make $1,000 a month, $2,000 a month. At a certain point, you may even decide to go full time on that. That becomes incredibly powerful. Yeah. I think one of the things I learned is to try to divert that optimization energy on bigger and different problems.

So it's like, look, I don't have to just worry about how do I get a deal on this, but maybe I'm going to try to divert it to, we're going to buy a car. What's the most optimal way to do that where it's a much bigger purchase than a dinner or some groceries or a house.

And so I think in the first interview we did, you talked about solving the 30,000 foot view or problem or- Focus on the $30,000 questions, not the $3 questions. Let me give you an example. $3 questions is optimizing the price of pomegranate. Who cares? $30,000 questions are things like, what's the exact month and year my debt's going to be paid off.

Can I add 1% every December to my investment contribution rate? So instead of 5% next year, it's 6% then 7%. What is my asset allocation? Is that properly set up? Am I paying too much in investment fees? That matters a lot. These are 30,000, sometimes even $300,000 questions. So I would rather we take that energy exactly as you said, I think it's really smart and focus it on these big wins.

Because if you do that, then you don't have to worry about, you know, how much your grand slam breakfast costs at Denny's. It's irrelevant. I've been fortunate to learn that if you have that joy of optimization, you can find other areas to tackle it and not like you mentioned, sometimes it's fun, right?

Sometimes you get caught trying to save money on Amazon. If you can find a place to channel it, that's better. Or if it really is fun, right? If you're trying to buy something on Amazon for $20, and you're not saving the money because you're necessarily trying to save $3, but because you just want to get that itch of just playing the game of trying to find the right deal.

And I assume that's just okay. Like it's okay to spend your time in the way you want. No, no, no, no. See, it's one thing if you do it because you have to, okay? If you really have a very limited income, maybe you have a big family, you have to, you're sitting there freaking looking at which place has the specials for tomatoes.

Okay, great. When I ask people, what is their rich life? I have never, ever gotten someone saying, I want to sit around all week and optimize the price of printer paper. Not once, ever. And yet they spend literally hours per week doing it. When I ask them, what is your rich life?

They will always say things like spending more time with my family, traveling, new experiences, just going out with my partner and going out for a date night, those kinds of things. Okay. One of the, I think core principles here is to really get honest about what your rich life is.

Your rich life does not have to be what mine is. In fact, it never will be. Ours are going to be completely different. That's how it should be. But then once you know what your rich life is in crystal clear clarity, you ask yourself the questions, get your partner involved.

Then you look at what you're actually spending your time and money on. You go, wait a second. Am I actually aligned with what my vision is? You know, we claim we want to travel, but the last time we traveled was like six years ago. What's going on here? We claim we want to be more in touch with our family, but when was the last time we actually spent money and time seeing them?

So I get the urge to want to optimize and to look at, you know, it's fun. I get that. But I find it once you get past needing to do it. I find that almost every single person is doing it because that is what they've always done. That is what they know.

And they have never dreamed bigger than that. And I simply will not watch people play small for their entire life. It's just not going to happen in the, I will teach you to be rich world. So you asked me, is it okay? I love it. Can I do what?

No, you can't play bigger, turn the page, turn the chapter to the next meaningful part of your life and start spending and saving money in a way that is meaningful to you. Okay. This episode is brought to you by Notion. Now I'm always juggling everything from goal setting for the business to outlining big projects, to planning travel.

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That's all lowercase letters, notion.com/allthehacks to try the powerful, easy to use Notion AI today. And when you use our link, you're supporting the show, notion.com/allthehacks, or find the link in the description. This episode is brought to you by Quince. I'm not into chasing trends, but I am all about stuff that fits well, feels great, and actually holds up over time.

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So stick to the staples that last with elevated essentials from Quince. Go to chrishutchins.com/quince for free shipping on your order and 365 day returns. Let's move on to something bigger, which is some big financial decisions. I think sometimes the big decisions matter, right? Here's an example that I'll throw out.

And I want to kind of hear your perspective on it. Someone's thinking, "I want to decide if we can take this trip," right? We listened to Ramit. We thought about this rich life. We said we want to travel. We're not. But we thought about how much of a safety net or emergency fund we want.

And I think we're behind. How can we decide whether we take that trip now or we need to prioritize these other things? Great question. This is the type of questions I wish people asked more of. "Hey, we actually decided we want to do this, but like, can we afford it?

How do we know if it fits?" These are great questions. So, you know, there's some simple guidelines that I will give, and then we'll get into a bit of the nuance. If you have high interest debt like credit card debt, you're not taking a vacation. It just makes no sense at all.

Bar none. End of story. Boom. 26.99%. And I have people putting aside, you know, 500 bucks a month for a vacation fund. I go, "Not in my world. I move that money right to their credit card debt. Pay that freaking thing off." And then we start to say things like, "Hey, we want a six-month emergency fund.

We currently have four months. Should we fill that up before we go on vacation or should we go on vacation?" Now, this is where I think you can apply your own decision-making skills. Personally, if you have four months and you can afford to wait like six months, fill up your emergency fund, wait, then go.

On the other hand, I recently saw a post just a couple of days ago. Somebody said, "My mom had cancer and she did a family vacation to Hawaii. We decided it wouldn't have blown our budget. It would have stretched us a little. We decided not to do it." And it was the last trip she ever took.

And this person said it was a huge mistake. And we realized like we have been over focusing on money. To me, that is putting dollars in front of love. And this person said it themselves. They were not going to break the bank. They simply were playing a game that was playing too small.

They were living in the spreadsheet. So that to me is an obvious, "No, don't do that." That is how I start to think about it. Then to get into some of the nuances, you want to make sure that, "Hey, do we have money set aside for this vacation? Or is it going to go on a credit card?" That determines it.

Are we hitting all the rest of our numbers? If we're not, like if we don't have savings, if we don't have investments going automatically every single month, we're not going on vacation because we need to set that up first. That's just the way you think about it. It's less like lick your finger and put it up to the wind and decide like, "Oh, should we go on vacation?" No, it's actually quite methodical.

And you can make decisions. It's not restrictive because all the systems that I have in I Will Teach You Be Rich, they're all set up for you to live a rich life. You want to go on vacation or you want to go out for drinks or you want to get food delivered three times a week?

It doesn't matter to me. It's your money. You just have to know four key numbers. And as long as you fit in those numbers, you're good to go. I noticed the fixed cost number is relative to your income. Yeah. I feel like there's this counter story, which is as you raise your income, you don't need to necessarily increase your cost of living and have lifestyle creep go all the way up.

On the fixed side, it sounds like maybe you should. I don't believe in lifestyle creep. Lifestyle creep is this idea that I'm going to make more money and I'm just going to blindly spend it on whatever comes in front of me. And I will grant that a lot of people do that.

When I say I don't believe in lifestyle creep, I don't believe in it for me and for my readers. Because when I go and buy something really expensive, I'm not creeping anything. I'm not lifestyle creeping anything. I am running my numbers. I am always leaving a fat buffer because I don't ever want to get close to the red line.

And I'm going to buy it. If I make more money, of course, I'm going to spend more money. That's the point. The point is not to save this money like freaking Scrooge McDuck. No, I'm actually going to be methodical. I even have a number for every bit of unexpected income that comes in.

My wife and I have a plan. This percentage goes to investments. This percentage goes to travel. This percentage goes to permanent lifestyle increases, like going out for an extra date night, something like that. So again, it's planful. It's thoughtful. But you better believe if I work hard and if I make more money, my life is going to get better.

That's the point. I love it. Okay. In the example, you talked about the family that didn't take the vacation. It kind of hit on the fact that sometimes money decisions aren't rational. They're not financial. They're emotional. Yes. So I want to come back to this decision that I got your advice on a few months ago.

So we had bought this eighth of a vacation home and it was up in Napa. We'd gotten some great use out of it. And we found with our kids schedules, which for anyone who has young children that aren't yet in school, don't make the naive mistake I did, which was not realizing that your entire life will revolve around a school calendar as soon as they are in school.

And so we had an eighth of a home. It was awesome. I'm so glad we bought it. Then we had six weeks a year that we had to spread over a school schedule and it meant we were going to take every vacation up there. But the fractional real estate market in Napa wasn't great.

And we got an offer that was so-so and we were trying to figure out what to do. And I called you and I said, "How should we be thinking about this? Because it's not a slam dunk to sell. We're going to lose some money, but we're not necessarily getting the value out of it." Maybe share a little bit about the advice you gave me and then we could talk about what happened and how I'm feeling now.

Okay. I'm very curious to hear what happened, but can you actually share what you heard me tell you? What was your experience? What'd you end up doing? Okay. So I did say, you know, I was worried like once you've bought this house, you kind of have this fixed cost.

You're committed to it. Would we be able to spend that same amount on a vacation if we had to think about it every single time? And you said, "Don't keep an investment that you don't think is a great investment because you have an unhealthy relationship with spending money." That was the takeaway.

And I remember I called my wife right after and she was like, "Oh, what did Ramit say?" And I said, "If you have trouble spending money on vacation and you have the money, you need to fix that. And don't keep a house you don't want because you can't fix this obvious problem." And at that moment we were like, "Yeah, that is true.

We shouldn't keep doing that." And the other advice, and maybe you weren't the one that gave me this piece that I talked to friends, is they said, "Hey, every time you talk about this house, you're like, well, we're trying to sell it. You're never calling me to tell me how amazing the house is and how awesome it is.

You're calling about some problem." That's every American homeowner. All they do is complain about their godforsaken houses. That doesn't sound fun, my friend. Anyway, yes, I agree. And so we did. We negotiated a little bit of the offer, right? I think everyone should negotiate as much as you can.

And we sold it. You sold it. I love this. I love it for so many reasons. I love that you were decisive. That's amazing. You and Amy, like kudos. That's awesome. I love that you recognize like not every financial decision results in profit, not even investment decision, and that's okay.

And I love that now you have the flexibility to not look backwards, but to actually look forward. I'm curious, what are you going to do now that you have more flexibility? Well, it was funny because this summer and next summer, one of the things that's not great about owning a fractional piece of a home is we had to kind of schedule it out.

So we were like, well, we have this week in August. We had next summer booked out. And now we were like, oh, what should we do in August? Like we could do whatever we want. We are not constrained by anything in terms of where we go and what we do and what the schedule is.

We don't really want to go on a big long trip because our daughter's having this surgery. And so we just found a place down in Carmel and we're like, we're just going to book a trip there. We're going to go do the things that we want to do and not be constrained by this house.

The other thing that I think is really hard for a lot of people to process, especially when it comes to owning stock in a company or owning property, things that have value that you resell that I think this wasn't my problem, but I know a lot of people that have it is, oh, well, the house is down.

We're going to lose money. And maybe in the future, it'll go up. My argument is like, there were two separate decisions we were making. One was, do we want to sell this house? And it has a market value, right? You could say you think it's worth more because you paid more, but it's only worth whatever someone else is going to pay you for it.

And so holding onto the house so it appreciates is the same as buying another. Like if I think it's really going to appreciate, I should buy out all the other owners and own the whole thing. And then the other was, we want to pay the monthly operating costs of the house, which we could choose.

That was in our control, what the price of the house wasn't. And so I don't actually feel like we lost money on the house in that we bought it. It's worth less. We didn't sell it for a loss. We sold it for the market rate now. Like it didn't feel like we were losing money in the moment.

It just felt like we lost money in the long run, but we didn't accept a bad offer. In fact, we accepted a great offer. We negotiated it up. We didn't really lose on the price because we got a market price and we'd waited a year for an offer. So it would be hard to imagine that waiting a year for someone to buy something.

And you're like, well, I think it was worth more. No, it's probably worth about what it was paid for. So it feels great. It feels freeing. It seemed so obvious talking to you and a few other people that what we should do. And I actually use this advice with a friend today.

He was like, someone made an offer to buy this company I've been building. And it wasn't a huge offer, but he'd been building for a long time. And he's like, how are you thinking about it? And I was like, every time you talk about this company, you're talking about trying to sell the company.

Like, what is the holdup? You've been asking for this thing for years. Now it's here and you're wondering whether you want it, you know, you want it. And he was like, you're right. I do know. So it was so hard for me to know I wanted it and for Amy and I, but then when we talked to other people, they were like, we've heard you talk about this thing.

You want to move on. - It's actually a profound point you make of people will talk about something for years. They will want something for years. They want it deep in their soul. And then when presented with the opportunity to get the very thing they have talked about, dreamed about, agonized about, they will become skeptical.

I see it all the time. I have people in my community. They talk about starting a business. They've wanted to start a business for six years. They followed 13 people on social, three on newsletter, two on podcast. And they'll say, I don't have an idea. I don't have this.

I don't, we have a program that does exactly that. And they'll get to the sales page has literally every single question they could ever conceivably come up with. And then suddenly they start going, will it do this? Will it help a left-handed person who lives south of the equator, but only between September and October?

And what's really going on there, whether it was your friend, with you, with people who are facing a decision. Even with me, when I first started like trying to get fit, I had thought about it, talked about it, played around with weights. I didn't know what I was doing.

Finally, when faced with the opportunity to actually get a personal trainer and learn how this worked, I started debating it. Oh, should I do this? Will it be hard? What about injuries? Blah, blah, blah. It's just a human thing that we do. I love your example because it shows us it happens to everybody.

It happens at every stage. It happens with big decisions, small ones, all of the above. I actually think that's why one of the most crippling traits of somebody is to be indecisive. I see it all the time. And to be decisive is like a superpower. Decisive does not mean erratic.

It doesn't mean you just do things on a whim, but decisive. You have the information you have, you know what you want, what your core values are, and then you make a decision. One out of 10 times you get it wrong, but decisive people can catch that, correct it, and then get back on track.

And what do you think holds people back? I am not, in some areas I'm decisive and in some I'm horribly indecisive. What advice do you have for people who know they want to be decisive but aren't? Practice. It's a skill. I'll get on Zoom and I'll be like, "All right, I have a clipboard.

Take me around your apartment or your house." When you're in your own house, you have all kinds of stuff that's broken or there's a smudge or something. You just learn to live with it. All the light bulb is out. And go, "What are the things that annoy you?" Walk around with a clipboard and tell me what annoys you right now.

And it's like, "Ah, there's freaking kids Legos all over the place. They're always throwing it here. I stub my foot every day I come home from work." You're okay. Let's pick three things you're going to do in the next 24 hours to make these problems vanish. And you'll discover going from problem orientation, where you constantly talking about problems, sharing problems, commiserating on problems versus solution oriented.

Hey, you have to fix it. And then you really put a time constraint, 24 hours and it's going to be fixed. Suddenly it's like, "Oh, I don't have time to, you know, compare five different storage containers because I need one here in the next two hours. I need to go to the store right now and get one." Light a fire, pick something, and people will realize they've agonized over a freaking laundry basket for three years.

And when you light a fire, you say, "Look, we're going to become decisive. Go get any laundry container right now and come back in 20 minutes." And they do it. And then they realize, "Oh my God, why was I playing so small? Why was I agonizing over this? If I can become decisive over a laundry hamper, then I can become decisive over what we're going to eat for dinner tonight.

I can become decisive over my finances." So it's a skill that you can practice. I love it. One of the things that I've found when it comes to these things around the house that makes it easier for me to make a decision, because I probably had the same problem, is I always ask myself, "Before we sell this house, are we going to fix it?" And if the answer is yes, then I'm like, "We've already decided we're going to fix it.

We had this window and it wouldn't actually like you could open it and it would just fall down. You know, it wouldn't stay up." And we're like, "Well, before we sell the house, we've got to fix this window." So we've already committed we're going to fix it. So let's fix it while we can enjoy it." I totally agree.

If something is going to have to get done anyway, why not do it sooner? Now, if it were hundreds of thousands of dollars and you didn't have it, of course. But you know, I imagine most of the people listening have been in a situation like I was where it was not about that.

It was dollars. In fact, so many of the things we're talking about today are not about the actual dollar value. You hear Chris talk about the four seasons or whatever. It's not about that. It can be a very modest hotel or a very modest trip. It doesn't have to be one eighth of a house.

We're talking principles here. If there are things that you are indecisive about, you can fix that. If there are things that you spend time on that are not serving, you don't like it, then come up with a solution. Maybe it's doing it less frequently. Maybe it's delegating it to someone.

Or maybe it's just accepting right now I have to do this until I get my savings rate up to seven percent. And then I will take one percent of that and put it towards having some help around the house or whatever it may be. In other words, apply the principle.

Don't get hung up on the examples. Are there things as people climb up the wealth ladder you see pop up like common traps that come up as people solve some of these problems, new ones arise? Definitely. This is a great question. The biggest trap I see of people moving up the wealth ladder, they actually don't adjust their spending.

So they keep doing things that they used to do, which they simply cannot afford to do. There's an old Jim Rohn quote, "The more successful I got, the less I could afford to do certain things." He's talking about like mowing his lawn on Saturdays. He got so successful he couldn't afford to do that because he had a limited amount of time he wanted to spend it with his family.

So as you get more successful, you constantly have to be thinking, where am I turning the chapter? What am I doing more of? What am I doing less of? And less of is really hard for people. The next thing that people do is because their worldview for most people is I'm going to do it all myself.

They are highly inexperienced at delegation. And so what happens is they're making good money, but they're still grocery shopping two times a week, they're cleaning their house, they're doing all this stuff. And they're just like overwhelmed. They're busy at work, taking care of kids, family, spouse. And like so much of this stuff is so easily outsourceable now, especially now, you know, whether it be Instacart, whether it be having somebody come to your house once a week.

And their worldview is often I can't have somebody come and do that for me. That's for rich people. Two problems. Number one, the people I'm talking to sometimes are rich. They just don't think of themselves as so I shake them. I tell them point blank. You realize you're rich, right?

They're like, no, I'm not. I'm not Jeff Bezos. That's not who we're comparing ourselves to. You're rich. I had this person who told me they thought that the average income in their neighborhood was like $150,000 or something. So I looked it up right on the spot. They were making two times the average income in their neighborhood.

And they, they were like playing boo. Who is me? I will never let a rich person get away with telling me that they're, they don't have enough money because it's disrespectful to people who don't have that kind of money. The second problem is they don't know how to hire anyone to do this.

So they have, have somebody come over. One person told me, oh, she doesn't fold my clothes the same way I do. I'm like, okay, why don't you take a video and video how you fold your clothes and then anyone will be able to follow it. In other words, be a good manager.

If you want things done, remember my money is good money. I will find somebody who will take my money and they will do things the way that I want it done. And if the first person won't, that's okay. I'll pay them and I'll find somebody else. So these are the ways that I see people getting stuck in traps.

They play small. They don't change the work that they're doing. That's the way they're spending their time. And I see it. I see it happening in lots of different areas of life, travel, household, all that stuff. This episode is brought to you by Thrive Market. You know, that feeling when you're standing in the grocery store, staring at labels, trying to figure out what's actually healthy, but that ingredient list is so confusing.

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That was somewhat intentional. But the one thing that I found when it comes to making big decisions about travel that points has really helped me get better at in being decisive is that it's very reversible. And so we're thinking about taking this trip to Europe. Oh, we found some flights.

We knew we could cancel it with no fee. So let's just do it. And in the case of the trip to Europe, we ended up canceling it. But in nine out of 10 times, we don't come back and think, oh, could we have changed this? Like we're able to be decisive because it's refundable, which I think is a big decision that people stress out about.

And it's not only with points. A lot of airlines will give you credits now or hotels are refundable. Rental cars are refundable. So a challenge I'm going to give people around decisiveness with travel is if you find something that kind of works and it's refundable, just book it now.

Like you don't have to wait until you finalize things. It's kind of out of sight, out of mind. And I think the thing I love about points aside from the deals is that it makes me more decisive because it makes things more refundable. Yeah. You wrote the book, I don't know, 10, 15 years ago, you came out with a new version in the last few years.

Do you think AI or technology is going to make some of this financial decision-making process easier for people? I think AI is actually changing it in a really powerful way. So a lot of people, they don't want to have an entire system operating. I want them to. I love a good system.

I know you do too. Some people, they just don't operate that way. And when it comes to questions like, can I afford to go on this trip? How much car can we afford? When are we going to be debt free? If I ask somebody who's a full, I will teach you to be rich reader, they know those answers like the back of their hand.

They know the exact month and date they're going to be debt free. They know it 24 years in the future. But most people don't. And so to be able to go into an AI tool like one that we're developing and just be like, tell me the exact month and year that I'm going to be debt free.

Whoa, that is pretty cool. It allows people to make ad hoc specific requests, get an answer. And then of course, be able to stitch it all together and see the big picture. I've been pretty amazed at the ability, even if it's not tied into your financial information, to just start asking questions.

Like, you know, if you haven't had a financial planner, you haven't had a financial advisor, but you just want someone to talk to about your financial situation. Other than it, it's overly biased seeming to please you. I remember I was trying to come up with a good question to ask a guest once.

And I was like, you know, give me a good couple ideas, gave me a couple ideas. I was like, I don't like these. What about this? And it's like, Oh, that's great. And I was like, maybe this sucks. Like, it's not good at pushing back, but it is good at kind of digging around and answering things and asking questions.

I had a friend who told me that she asked it to be nice to her. And I was like, revolted. I'm like, nice. I told it to stop talking to me. Like, don't use extra words. Just be terse as possible. I don't need a new friend through my AI tool.

Like, give it to me straight. And that's it. She was revolted. She was like, that's so mean. I'm like, wow, we are really two different people. Yeah. I mean, I probably just need to say like, Hey, be critical. Like I'm not, I'm thinking of it like an employee where I'm like, if you see me doing something wrong, an employee over time is gonna be like, Hey, maybe there's a better way.

And wait, what if you had your AI be me? And you were like, I'm thinking of these purchase decisions. What would Ramit say? I mean, I think I told you this once. I was like, if you took all the transcripts of all your episodes and fed it in and say, Hey, here's Ramit.

And maybe you could do this with Gemini with Notebook LM be like, take Ramit's channel and berate me like Ramit might berate me. Great. It's all love over here. It's all love. Awesome. So, so one thing I want to leave people with, is there a challenge you would give people, myself included, as a parting part of this conversation to go focus on and think about over the next week?

I would challenge everybody to whether you are solo or you're with a partner is to sit down and say, what is one magical thing that we want to do this year and get specific? It's, this is not a dream. This is actually something you're going to make happen. So it could be as small as we want to both take a half day off work three months from now.

And we're just going to go see a movie in the middle of the day and go have lunch outside. It could be as small as that could be as big as we want to take an international trip for a month, whatever you want. I want you to pick something that you can achieve.

It can have no dependencies like, Oh, we need to have this happen. And that happened. Nope. If that's what you've picked, go smaller so that you could guaranteed make it happen. I want you to put on the calendar and I want you to make sure that you have some money assigned to it.

Again, it could be as small as $10 to go see a movie, or it could be as big as tens of thousands for a trip. And when you do that, the time between now and then I want you to start using it to get excited about it. So if you're going to take a trip, you or you and your partner are sending each other articles, oh my gosh, we can go on this hike, or I think we should eat at this restaurant.

If you're going to see a movie, you're sending like, which theater are we going to? This might seem theatrical. Why do we have to talk about movie theaters? We always go to one of the two ones. The point is, you have now created a vision of what you're going to do.

You are now getting excited before you ever get there. And finally, when you do it, you're going to experience another moment of joy. Whenever I do something in my rich life, I get three moments of joy. One of them is planning it. One of them is being there. And then the third one is actually sharing it afterwards, whether it's with friends, family, just looking at my own photos.

This is how we really start to appreciate these moments of awe that we are engineering for ourselves. That is my challenge. I love that. I will take that challenge as well. This has been great. Where can people who want to go deeper on all the things you talk about, all the things you're working on, find it all?

I have a new book out called Money for Couples. You can get that book anywhere. I also have a podcast, Money for Couples, where every week I go behind closed doors. I have real couples on YouTube and audio. They show real numbers, how much they make, how much debt they have, where they are spending money.

Sometimes we have people in $500,000 of debt. Sometimes we have people who have millions and millions of dollars and the stakes are high. So you can find that and any of my other material on any social media channel. Awesome. Ramit, thank you so much for being here. Thanks a lot.