Fixed costs gobble up a staggering 92% of this high-earning couple's income. Ramit Sethi explains what's blocking their path

Stephanie and Chris, both in their early 40s, have three young children — two with special needs. Their gross income, combined, is about $155,000 a year. But they’re carrying $544,000 in debt — including a $460,000 mortgage — and while they have some investments, mainly from previous employer-sponsored retirement plans, they have no other savings.

Perhaps most surprising: 92% of their net income goes toward fixed costs.

In an emergency, “I think we’d be in big trouble,” Stephanie told Sethi.

But budgeting tweaks may not be enough to solve their financial woes. Sethi says they have to deal with what’s really blocking their financial future.

No room for error

When fixed costs consume nearly all of a household’s take-home pay, it’s typically one emergency away from a crisis. On top of their mortgage, Stephanie and Chris are also about $15,000 in credit card debt with a $13,000 line of credit balance while owing their parents $50,000.

Fixed costs at 92% “tells me a lot, tells me they’re broke, tells me they’re spending more than they make,” Sethi said.

Sethi’s own conscious spending plan organizes household income into four buckets: fixed costs (including essentials and subscriptions or memberships) at 50-60% of take-home pay, investments at 10%, savings at 5-10% and guilt-free spending at 20-35% (2).

There are a number of other budgeting frameworks out there, like the 50/30/20 rule in which you spend up to 50% of your after-tax income on needs, 30% on wants and 20% on savings and debt repayment.

But you can’t begin organizing your finances if you don’t understand your baseline. For example, Stephanie and Chris recently bought a bigger house at a time when Stephanie reduced her hours at work.

“After the third child, we needed a bigger place and we sort of semi-ran the numbers and said it’s doable,” Chris told Sethi. But at the time Stephanie was working full-time. When she made the decision to work less they didn’t adjust their expenses.

Central to the couple’s troubles, Sethi says, is their near-term thinking. They’re stuck in the weeds and unable to make good, long-term decisions. This is apparent in their communication.

Indeed, almost half (44%) of Americans aren’t comfortable talking about finances with their partner because they’re worried it will lead to disagreement, according to a 2025 survey commissioned by Wise (3). And it often does, with couples reporting an average of 58 money-related arguments per year. Arguments range from what constitutes “necessary” spending (43%) to decisions on how much they should be saving (34%).

But, past research has shown that “when couples work together and talk about money, they spend more responsibly and are generally happier,” Nirajana Mishra, a consumer psychologist, told the Yale Center for Customer Insights (4).

Getting back on track

Sethi says the couple needs to create a “radically different relationship with money” and go from being on the defense to being on the offense.