A money expert and self-made millionaire claims they are "broke" despite being in their 40s and worth nearly $1 million.

Michelle, 42, and Ryan, 43, are devoted to their three young children and lavishly spend money to demonstrate their love.

Michelle stated to Ramit Sethi on his "I Will Teach You to be Rich" podcast that she does not express the sentiment, "We lack the funds, we cannot afford it." Instead, she avoids saying those things.

Despite earning nearly $140,000 annually as the sole financial provider and having a net worth of around $970,000, the couple is stressed about their day-to-day finances and frequently dips into their savings to cover their regular expenses.

""We will run out of money if we continue this way," Ryan said, implying that the situation was dire."

The couple's total expenses, including their mortgage, insurance, transportation, and other necessities, exceed their monthly income. Additionally, their spending on discretionary items like a beach canopy and purchases from Target and Amazon has spiraled out of control, totaling nearly $2,000 per month.

"Sethi informed them that they were losing money each month, resulting in their financial instability."

Sethi advised the couple on how to overcome their feelings of being stuck in their situation.

'Death by 1,000 paper cuts'

Michelle and Ryan frequently mentioned their spending issues when Sethi inquired about them, focusing on their purchases from Target and Amazon.

The couple's impulse buys on Amazon, such as kids' sunglasses, soccer equipment, and bike tires, add up to $15 to $30, in addition to necessities like groceries and diapers. "It really is death by 1,000 paper cuts on the Amazon front," Michelle said.

Sethi remained unconvinced, but advised the couple to make a more conscious effort to cut out unnecessary spending. However, he emphasized the need to consider the bigger picture.

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The couple's lack of systems to make better decisions is what makes them prone to making a lot of spontaneous purchases, as Michelle was hesitant to cut back on expenses that she felt were necessary when Sethi asked where they could cut costs.

"Sethi stated that when one's spending becomes uncontrolled, it becomes challenging to reduce expenses because the mind convinces us that everything we have accumulated is essential."

To gain clarity, he suggested reducing their discretionary spending by 50% over six weeks, starting with areas like dining out and shopping at Target.

Sethi stated that it may be challenging to begin saying "no" to their children, but it will ultimately aid in establishing a healthier relationship with money as they mature.

'Right now, we're screwed'

Sethi rarely informs individuals that they're saving excessively, but with Ryan and Michelle, it's contributing to the issue.

Michelle is proud of the savings and investments she accumulated through good habits in her 20s. In contrast, Ryan was not as careful with his money, but he bought their house before they became a couple.

The couple has accumulated approximately $585,000 in assets, including their home and over $468,000 in retirement savings and other investments.

"In retirement, we're set, but now we're screwed," Michelle remarked.

The couple was investing 14% of their take-home pay towards retirement and other post-tax investments, which is a great strategy for building up investments, but it doesn't align with their monthly spending.

"Sethi advised them that their spending was excessive and their investments were sufficient if they stopped today."

By reducing their monthly investments, the couple can obtain the cash flow needed to cover their essentials and indulge in activities that have been neglected, such as date nights.

"Sethi stated that the largest advancement occurred when they recognized their ability to manage their expenditures. Additionally, it is beneficial that they are over-investing, allowing them to redistribute their funds."

Check out the conversation between Sethi, Michelle, and Ryan in parts one and two.

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