@Anonymous wrote:
@Anonymous wrote:
I hear what you are saying, but I think Ramsey advice is good for people who live paycheck to paycheck (whether you make $10k or $1 mill - you can still be living paycheck to paycheck if you spend more than you make). It's too easy to rack up credit card debt if you dont have a right view of money.
Debt can be really bad if you use it to keep up with the Jones' (car pmts, trips, eating out, frivolous stuff).
I think Ramsey would say live within your means (for some a 5 mil home is within their means), and learn to master money otherwise it will master you!
This. I've often wondered about the details of how people with larger means live compared to those with less. A lot of peope seem to live paycheck to paycheck, yet some only make $30K annually versus $200K. A vast difference, and the $30K earner would assume they could live the dream life on $200K. Unfortunately that person as no experience with this kind of Money, so when it happens they dig a big hole fast. I've seen/heard of the Lottery stories that go awry. However, someone who naturaly builds up to that wage should have learned how to manage it properly along the way. Regardless of income level we all have our burdens, usually the people with higher income has student loans to pay off half their lives. The lower end can barely scrap together rent, utilities etc. Mostly due to housing increases that come from outside sources driving it up.
I once was a low income earner who live paycheck to paycheck, and barely had extra Money left for entertainmnt budget etc. I used to think wow, what I could do with $100K+ income! Fast forward to several years later, still no $100K income, but I manage to live comfortablely and no longer have that paycheck to paycheck lifestyle. So it is true that you can double your income without increasing your bills. That said, if i had had a higher income back then with less experience. I just as easily could have blown through it without even understanding it all.
The problem I see is that most people have no clue what "live within their means" really means. I know people who think that they are living within their means spending 90% of their take-home pay on "essentials" like car/home/internet/phone/etc with the other 10% discretionary. None of that 90% is savings. If you aren't saving at least 20% gross every month while still covering all of your expenses, you are not living within your means. These people are in for a rough time when they get older as they realize they either retire with a restricted budget or can't retire at all.
I also hear the tired old argument that as income goes up, so does cost of living. If a $900 mortgage payment worked for you when you made $50k/year, it works for you when you make $200k/year. People just think they need/deserve bigger and more expensive because they make more. My income is now north of $200k/year but my mortgage is still $900/month. I'm content. I spend less than $100/month on cable/internet/phone, and until earlier this year didn't have HD. I walk a lot, and I take the bus and subway a lot. I still live like someone making $50k/year because it worked then and it works now. All the extra money goes to savings, where it belongs.
As you state though, far too many don't adhere to this. I can't begin to count all the kids I've worked with who, the second the first paycheck hit, had as their first priority going down to the BMW or Mercedes dealership and getting a car that cost over half their annual salary.
