This couple has $11 million in assets but says ‘there’s a struggle to pay the bills.’ How do multimillionaires end up living paycheck to paycheck?

“We’re considered a top-whatever-percent wealthy people,” Margo told financial expert Ramit Sethi on a recent episode of his I Will Teach You to Be Rich podcast. “However, there’s a struggle to pay the bills month to month.”

The Brooklyn couple, who are 42 and 52 and have five children, came to Sethi describing themselves as “rich, poor people” — partners with a high income and a comfortable lifestyle who somehow end up with almost nothing left over.

So how exactly does a family making that much money end up so short on cash?

Most of their money is tied up

To the average American, Margo and Kevin are doing quite well. Their assets total about $11 million, while their debt is roughly $2.3 million, leaving them with a net worth of about $9.25 million, according to the figures they gave Sethi.

Their two homes account for roughly $9 million of those assets, while their business is valued at about $2 million and they have around $500,000 in individual stocks.

The problem is that most of that wealth isn’t sitting in an account they can use to pay next month’s bills. Their liquid savings amount to just $50,000, and they aren’t currently putting money into investments. Kevin also owns a wholesale business, so his income can vary from year to year.

Sethi calculated that the couple’s gross income works out to roughly $1.15 million a year, or about $96,500 a month, based on their take-home pay of around $50,000 a month.

Even with that income, their fixed costs were initially running at 67% of their take-home pay, and Sethi says that figure eventually climbed above 100% once they accounted for expenses they had missed.

In addition, they spend roughly $160,000 a year on private school tuition and summer camps for their five children. Their health insurance alone costs about $4,500 a month, while their mortgage payments total about $11,000 a month. (35:07 onward)

Then there are groceries, vacations, cars, gifts, and the other costs that are easy to underestimate when you’re not actually tracking them closely.

At one point, Sethi estimated the family was spending what he called an “astronomical”$4,000 a month on food. “You can’t do that and do tuition and do summer camp and do vacations and do the insurance that you have and the mold remediation,” he told them.

The family had also dealt with a mold problem that cost roughly $400,000 to $500,000, further eating into their financial cushion.

Margo and Kevin aren’t the only high-income, high-wealth people with little cash on hand. Federal Reserve researchers have described “wealthy hand-to-mouth” households as families with substantial wealth but relatively little in liquid savings.

For Margo and Kevin, though, the issue isn’t simply an unexpected emergency. Their regular spending is consuming most — if not all — of what they bring home.

So what can they actually afford?

Initially, neither Margo nor Kevin sees a clear path to cutting their spending.

Margo said she believed the couple needed to find a way to earn more because there weren’t many significant expenses they could reduce. Kevin has also spent much of their marriage handling the finances, while Margo has had limited visibility into the numbers.

Sethi eventually gets them to confront something more difficult than a bad spreadsheet: Many of their expenses aren’t just expenses to them, but they’re part of the lifestyle they’ve built around themselves.

Their children attend the same types of private schools Margo attended. Their community places a high value on education, family traditions and certain standards of living. As Margo explained, the cost of tuition, food and other necessities has risen much faster relative to income than it did for her parents.

“Something has to give,” she said.

Sethi agrees, but points out that their current setup leaves them with very few easy options.

They could cut spending, try to earn more or start reconsidering some of the things they’ve treated as untouchable — including their homes and lavish vacations.