36. “We make $145k per year but have $828k in debt — and feel totally paralyzed”

Podcast Summary

• Designing a rich and fulfilling life through money management: Money management is not just about saving and budgeting, but also about envisioning and planning for a rich and fulfilling life, regardless of financial situation.

  Money management isn't just about saving and budgeting, but also about designing a rich and fulfilling life. Ramit Sethi, the host of "I Will Teach You TO Be Rich," recently held events in New York City, Philadelphia, and Boston, where he brought couples on stage to discuss their financial struggles and goals. He emphasized the importance of his "The Journal," a tool to help individuals envision their perfect week, month, and year, regardless of their financial situation. Sarah and Nat, two physical therapists with a combined debt of over $175,000, shared their story of feeling trapped by their student loans. Ramit aimed to help them develop a plan to live their rich lives despite their debt. The event underscored the importance of not letting financial burdens limit one's vision for a fulfilling life. To attend Ramit's upcoming events or purchase "The Journal," visit iwt.com/philly and iwt.com/boston before May 3rd using the presale code "rich life."

• The importance of financial literacy and understanding implications: Making informed financial decisions based on a clear understanding of costs and future implications is crucial to avoid regret and secure a strong financial future.

  Making large financial decisions without fully understanding the implications can have significant and long-lasting consequences. Sarah and Nat, both PT students, found themselves in debt they didn't anticipate due to a lack of transparency about loan costs and the impact of capitalization. They wished they had been more informed and made different choices. This experience underscores the importance of financial literacy and considering the future implications of current financial decisions. Whether it's buying a house, an expensive car, or taking on student loans, understanding the potential impact on one's financial future is crucial. The regret Sarah and Nat feel serves as a reminder to prioritize financial education and make informed decisions.

• Struggling with PT debt and financial challenges: Despite high incomes, many PT couples face financial hardships due to student debt. They may need to consider alternative repayment plans, negotiate salaries, or seek additional income sources.

  Many physical therapy couples face significant financial challenges due to high student debt. The speaker and her husband, both PT graduates, are struggling to make ends meet with their combined income, which is not enough to cover their childcare expenses and debt payments. They feel they have had to give up some of their dreams and live paycheck to paycheck. The speaker mentions that some of their friends are able to pay off their debt faster due to their financial situation, but this is not the case for them. They are considering working additional cash pay jobs to increase their income. The speaker also shares that during their PT school days, a large number of students had to take out loans to cover their education costs. She feels that the high cost of PT education is unfairly placed on students and that there seems to be few alternatives to dealing with the debt other than accepting it and deferring payments until later. If they were in Sarah and Nat's position, some potential solutions could include exploring income-driven repayment plans, negotiating for higher salaries, or seeking additional sources of income.

• Balancing careers and family life in physical therapy: Physical therapists face a difficult decision between stable, underpaid jobs with no benefits or higher-paying jobs with long hours and limited flexibility, while the healthcare industry's reliance on insurance payments keeps salaries stagnant.

  Both Sarah and Nat are currently facing the challenge of balancing their careers in physical therapy, with Sarah having a stable but underpaid job with no benefits, while Nat has a better-paying job but with long hours and limited flexibility. They discussed the possibility of Sarah taking on cash pay clients to increase her income, but the potential negative impacts on their family life and the stress it could cause outweighs the benefits. The healthcare industry's reliance on insurance payments keeps salaries stagnant, forcing therapists to choose between low pay and the type of practice they want or higher pay but less fulfilling work. Both Sarah and Nat are grappling with the decision of whether to continue in their current situations or make a change, and the complexities of their industry make the decision a difficult one.

• Discovering joy amidst financial challenges: Explore travel experiences, find moments of luxury, and prioritize happiness to enhance life despite financial struggles

  Even when faced with financial challenges, there are solutions to enhance and bring joy to everyday life. For instance, Nat's struggle with his job and debt could be alleviated through exploring travel experiences with the help of platforms like Viator. Meanwhile, finding moments of luxury and self-care, such as drinking high-quality tea from Peak Tea, can make a significant difference in one's daily routine. However, it's important to consider the potential financial implications of certain programs, like loan forgiveness, and plan accordingly. Ultimately, discovering ways to make the most of one's circumstances and prioritizing experiences that bring happiness and enrichment can lead to a more fulfilling life.

• Unprepared for potential financial setbacks: Individuals must consider all options and be prepared for various financial outcomes, including tax implications, when dealing with debt and retirement accounts.

  Despite worrying about their financial situation for a decade, the individuals in this discussion were unable to clearly outline their options when faced with a potential worst-case scenario. They had not considered how they would handle a significant tax bill that could arise after debt forgiveness. This highlights the importance of not only worrying about financial problems but also actively seeking out solutions and being prepared for various outcomes. The reluctance to project future earnings and the potential impact of taxes on retirement accounts were also noted as common challenges. Overall, this conversation underscores the importance of financial literacy and proactive planning.

• The Complexity of Student Debt: Understanding the systemic issues behind student debt, including lack of clear information, employment restrictions, and personal decisions, is crucial to finding solutions.

  The complex web of societal structures and personal choices make it challenging for individuals, like Sarah and Nat, to escape the burden of student debt. Schools often fail to provide clear information about the true cost of education, and the tie between insurance and employment in America restricts job mobility. These factors, combined with personal decisions and unexpected circumstances, create a difficult situation for those seeking to improve their financial situation. It's essential to understand that the student loan debate is not as simple as blaming individuals for their debt or advocating for loan cancellation. Instead, it requires recognizing the systemic issues that contribute to the problem and finding ways to address them.

• Struggling with healthy choices and finances, but recognizing the importance of personal responsibility: People are willing to change behaviors for better lives, but need right tools and motivation

  Making positive changes in life, whether it's related to health or finances, can be challenging. The speakers in this discussion have expressed their struggles with making healthy food choices while traveling and managing their finances. They wish for systems that make these choices easier, but ultimately acknowledge the importance of personal responsibility. The speakers also share their solutions to streamline their emails and sleep better, highlighting the importance of productivity and self-care. The underlying message is that people are willing to change their behaviors for the better, but it often requires finding the right tools and motivation. The speakers encourage listeners to reflect on what they're willing to change to improve their lives. As Ramit puts it, "Clearly, you're here talking to me because you're interested in seeing if there's something you can do. But I guess my question to you is, what are you willing to change in order to live a better life? Anything. Really?"

• Exploring Entrepreneurship with Significant Debt: Despite financial concerns, some individuals may still choose to pursue entrepreneurship for personal fulfillment and income control, but must carefully consider the potential impact on their financial security and ability to build wealth.

  Despite having significant debt, including student loans and a mortgage, the speaker is willing to explore starting a business due to dissatisfaction with her current job and the desire for more control over her income and work-life balance. However, she expresses concerns about the financial implications of leaving her stable job and the potential impact of her loans on her ability to build wealth and achieve financial security. The speaker also acknowledges the importance of investing and growing her assets, but feels anxious about using her investments to fund her business idea due to the potential tax implications and the need for an emergency fund. Ultimately, she is considering all options and seeking to find a balance between financial security and personal fulfillment.

• Managing debt while dealing with emotional discomfort: Individuals managing debt should focus on establishing an emergency fund to reduce anxiety and improve financial security.

  Despite making progress in managing their debt, the individuals in this conversation still express feelings of discomfort and anxiety regarding their current financial situation. They acknowledge the emotional toll of their financial struggles, which stem from past decisions and external factors. To improve their relationship with money, they plan to establish an emergency fund to reduce their reliance on external support and build a sense of financial security. This conversation highlights the importance of addressing both the practical and emotional aspects of financial well-being.

• Trusting Financial Management: To achieve financial success, trust the person handling finances and the overall financial situation, or consider increasing income, reducing expenses, or exploring non-clinical opportunities.

  While letting go of financial control can seem appealing, it's crucial to trust both the person handling the finances and the overall financial situation. The speaker's hesitance to delegate financial responsibility completely stems from her control tendencies and fear of the numbers dwindling. However, delegating without trust can lead to unnecessary stress and anxiety. The speaker and her partner currently have a tight budget and are struggling to make ends meet, especially with the addition of a second child and student loans. To improve their financial situation, they may need to consider increasing income, reducing expenses, or exploring non-clinical job opportunities. Ultimately, the speaker's passion for PT and working with patients drives her to find a way to make her career financially sustainable.

• Discussing work-life balance and career changes during the pandemic: Two friends discuss the importance of finding a work-life balance that suits their needs and values, while acknowledging concerns about financial stability and risk-taking in the context of potential career changes.

  Both individuals in the conversation recognize the importance of finding a work-life balance that suits their needs and values. They acknowledge that current circumstances, such as the pandemic, have highlighted the need for flexibility and potential career changes. However, they also express concerns about financial stability and risk-taking. Despite these concerns, they both express a desire for more autonomy and control over their work, which could lead to greater job satisfaction and financial rewards. Ultimately, they are trying to figure out how to make these changes while mitigating risks and maintaining financial stability. It's clear that they value each other's opinions and are committed to finding a solution that works for both of them.

• Overcoming Fear and Taking Calculated Risks: Explore options, consider starting a business on the side, understand financial implications, make a decision, and take action to overcome fear and achieve goals

  Fear and risk aversion can hold us back from making important changes in our lives, such as starting a business. Sarah, in the discussion, expressed concerns about leaving her current job due to financial obligations and uncertainty about the success of a new venture. However, the speaker encouraged her to explore her options and consider taking calculated risks, such as starting a business on the side while maintaining her current job and saving for the transition. The speaker also emphasized the importance of understanding the actual financial implications of debt and the potential solutions to address it. Ultimately, the speaker advised Sarah to make a decision within a specific timeframe and take action, rather than staying stuck in her current situation. This conversation highlights the importance of overcoming fear and taking calculated risks to achieve desired goals.

• The complexities of life can make achieving financial goals challenging: Be patient and persistent, explore new options, and understand the challenges to reach financial independence

  Changing your life and achieving your financial goals is not a simple or straightforward process. There are countless external pressures and responsibilities that can make it difficult to focus on your goals. Sarah and Nat's story illustrates this, as they were making progress on paying off their student loans but were suddenly faced with the need to attend to their children. This reminder of the complexities of life underscores the importance of being patient and persistent in your efforts to improve your financial situation. Sarah and Nat's experience also highlights the value of exploring new options and being open to change, whether that means seeking out higher-paying jobs or finding more efficient ways to manage your debt. Ultimately, the journey to financial independence is a long one, but with determination and a clear understanding of the challenges you may face, you can make progress towards your goals.