• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Unrealistic with money

Financial Independence, Retire Early (FIRE) is a movement of people maximizing their income and minimizing their spending to quit the workforce years or even decades earlier than average retirees.

This typically involves aggressively cutting back on spending and saving up huge portions of your income. However, David and Halima don’t seem to be doing either of those things.

Instead, the couple earns $11,776 a month, after taxes, but regularly spends more than they earn. Sethi believes this is because both partners have an unhealthy relationship with personal finances.

“I see this theme of being unrealistic with money,” he said.

The couple also seems to be competing over who makes more money in the partnership. At the time of recording, both were earning high incomes, but Halima was earning slightly more.

“Part of me does feel like I should make more money than her, because it’s a cultural thing,” David said, referring to their Hispanic and Turkish backgrounds. “In both cultures, usually it’s the man that makes more money.”

David’s past also influences his financial decisions.

“I was basically homeless at one point,” he said. He describes living in an abandoned house, showering at a gym and working multiple jobs to get himself out of the situation.

“I was so tired from working all those jobs I got into, like, two car accidents from falling asleep driving.”

Now, he believes he’s susceptible to “get-rich-quick schemes,” such as cryptocurrencies and multi-level marketing (MLM). The Consumer Awareness Institute analyzed over 350 MLM schemes and found that less than 1% of participants walked away with a profit. David came to the same conclusion, saying: “Get-rich-quick doesn’t really work.”

Meanwhile, Halima avoids discussing money.

“Finance isn’t something I’ve studied,” she said. “I don’t really have much experience with it, so to me it’s like a different language.”

The couple’s lack of budgeting and communication led to bad financial decisions, such as signing up for a vacation timeshare program that’s likely to cost $110,000 over the next 10 years, according to Sethi’s calculations.

“Every dollar you spend on this is one dollar not going toward your retirement,” Sethi told David.

How to get a free $20 to invest in your future

An app called Acorns automatically rounds up purchases made on your credit or debit card to the nearest dollar and places the excess "change" into a smart investment portfolio. Acorns offers a $20 welcome bonus, immediately from your first investment.

Get $20

Wake-up call

“Unfortunately, they need a true wake-up call to see what their future really looks like,” Sethi said of the couple at the end of the episode. He wants them to take decisive action to shift their trajectory.

In a follow-up, Sethi recommends speaking to a therapist to improve their perspective on money. He believes David and Halima can break their cycle of bad spending habits if someone can help them detach how they feel about money from their past experiences. He also recommends they talk to each other more often and openly communicate about each financial decision. Instead of competing to earn a higher income, he wants them to work as a team.

David and Halima need to reduce their spending, mitigate their credit card debt gradually, get rid of the timeshare, lower fixed costs to 60% of their income and start investing toward their goal of an early retirement.

“If they took this seriously … they have a chance to totally change the trajectory of their lives and the lives of their kids,” Sethi said.

Sponsored

Follow These Steps if you Want to Retire Early

Secure your financial future with a tailored plan to maximize investments, navigate taxes, and retire comfortably.

Zoe Financial is an online platform that can match you with a network of vetted fiduciary advisors who are evaluated based on their credentials, education, experience, and pricing. The best part? - there is no fee to find an advisor.

About the Author

Vishesh Raisinghani

Vishesh Raisinghani

Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

What to Read Next

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.