Couple racked up over $20,000 in credit card debt, but ‘I feel like I'm rich,' husband says

David, 33, and Halima, 37, have nearly $520,000 in debt.

But, "I actually feel like I'm rich," David told self-made millionaire Ramit Sethi on his "I Will Teach You to be Rich" podcast in December. Their last names were not used.

The couple earns a combined $192,528 a year and the mortgage on their New Jersey home makes up the majority of their debt. They came on the podcast in hopes that Sethi could help them figure out how David can retire early.

Here's a look at their finances at the time of the podcast recording:

• Assets: $524,000
• Investments: $11,249
• Savings: $63,752
• Debt: $517,045
• Net worth: $80,956

Their debt includes their $447,000 mortgage, as well as $47,144 in auto loans and $22,900 owed on credit cards.

A number of red flags left Sethi concerned not only that the couple won't reach David's early retirement goal, but could face even more financial turmoil if they don't change their attitudes and habits with money. 

As Sethi told them, "You make a lot of money but you don't make that much money."

Here are three money missteps that helped push David and Halima into the red and how Sethi recommended they work their way out.

1. Chasing someone else's financial dream

David and Halima both navigated their way out of dire financial situations earlier in their lives, which is part of why they feel good about their finances today. Owning a home was like a dream come true.

"Buying a house was instilled in me," Halima said. "Growing up, it's like you have to get married before you have kids, buy a house — it's the American dream, that's why my parents came [to the U.S.]"

But Sethi said that dream doesn't have to be everybody's goal. He asked Halima what comes after the "house with the white picket fence," and neither she nor Sethi had the answer.

"So many of us are following money stories that someone else wrote for us and they didn't even finish it," Sethi said. "Don't just follow the idea that someone else created."

What David and Halima were really looking for in buying a home was safety and security, Sethi said. And a home isn't necessarily the only way to achieve that, he told them.

Their home, specifically, has become a something of a money pit. They purchased a "fixer upper" and have spent thousands renovating it, bringing their total credit card debt to nearly $23,000. Sethi recommended they stop renovating as soon as possible and pay down their debt before jumping into another project.

2. Having an 'unrealistic' view of money

Though they currently have a solid income, part of their rocky financial foundation comes from around 20 years of David trying different "get rich quick" schemes, as Sethi called them. Over the years, David tried to make money through two different multi-level marketing companies, investing in cryptocurrency and getting his real estate license. 

"I wanted to create a life where I can provide for my wife and kids, not [have] to say no. I want to give them a better life than what I had," David said of his money habits. 

But as he learned the hard way, none of these were easy or sustainable ways to build wealth.

Although David now has a steady income, he still falls into money traps, Sethi said, such as thinking a 0% APR balance transfer deal is the answer to their debt problems and buying a timeshare to save money on vacations. 

"David chases ways to get rich quick," Sethi said. "He confuses wants with needs and he essentially buys things without understanding how they affect his overall picture."

He encouraged David and his other podcast guests to speak with a therapist who can help them unpack where these beliefs come from and get to the root causes of any issues. A professional can help him "understand why he has this unrealistic relationship with money that is manifesting in so many different ways."

3. Not working as a team

One problem underlying the couple's financial distress is the fact that David has been making all of the financial decisions on his own because Halima doesn't feel comfortable enough in her own financial literacy. 

Additionally, they both have long-held beliefs that the "man of the house" should be the primary provider and as such, David has been competitive about their individual salaries. But that hasn't worked out well for them.

"Life is better now because we have each other," David said, highlighting the struggles they faced as individuals before they met. "But financially, we're pretty much back in the hole."

Sethi asked Halima to take money seriously and make a concerted effort to ask questions when she doesn't understand financial concepts. But he also encouraged David to see Halima as his teammate, not someone he should ever be competing with. 

"You can definitely push each other, you can set ambitious goals, you can [say], 'When we achieve that number, then let's do X,' that is very motivating," Sethi said. "And you can congratulate your partner — 'Oh my god, you did such a great job. I love you. I feel totally confident with you' — those are the ways that you can be a team."

He pointed out that if two people are competing and one of them wins, the other person is the loser.  "I don't really want to make my partner feel like a loser," Sethi said.

Check out the full podcast episode here.

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