Why don't you earn more money?

[nawhite]

It's possible to become a multi-millionaire in absolutely any field very quickly if you choose to try.

If you spent no money, and paid no taxes, it would take ~33 years to reach a million dollars at 80 hours per week of minimum wage.  Not everyone has the intelligence, resources, time, or support to overcome their situation.

Maybe I'm a little too libertarian about this one but every single person (without a mental illness or severe physical handicap, I'll conceed those exceptions) can get a job which pays more than the national minimum wage if for no other reason than some cities have minimum wages greater than $10. So what is holding a person back is lack of willingness to move.

There is no reason other than lack of effort or resolve that a person would work for 33 years making minimum wage. If you have a job (even one making minimum wage) then going to one that pays more is only a matter of location.

Beyond that, there are SO MANY WAYS to improve your earning potential or your intelligence, resources, time or support network. Putting in the effort to find the combination that works for you is the hard part. And luck helps a lot too.

I won't say like nktokyo that anyone can make any amount in any field but I will say that every person can better themselves beyond minimum wage and likely out of poverty with a little bit of luck if they work to figure it out instead of accepting that they are in a rut.

[MrMoneyPinch]

Having gone from a very secure job to being a consultant, I can tell you about risk Vs pay.   It's been 4 years, and it's been a good trade financially, BUT: you got to be mustachian about it.  The first thing to do with the better pay is to stash enough money in case of a hole between contracts.  Then you can consider the rest as real savings.

The real ratio to consider a secure salary equal to my consulting revenue is around 2:3, meaning the jump was only worth it if I got a 50% raise out of it.

[hybrid]

I can definitely relate to the OP. I am paid hourly, $14, which comes to around $29k per year. It's hard to read about people saving $3k/ month when I don't even clear $2k/ month after taxes!

For myself, though,  I'm young and know I will have an opportunity to make more in the future. And once I pay off those pesky student loans, I will have more money to save than ever!

This is the same conversation I have with my daughter.  She isn't anywhere near where I am right now, but when she reaches my age she'll probably be better.  Don't be in too much of a hurry to be 46, you'll get there soon enough.  I don't want a time machine to regain my lost youth, but if I could make a few decisions more like what you are probably doing right now.....

[jdoolin]

WEPNER!  dhalsimrocks here!

I've seen some of your posts and threads and didn't notice it was you until this one.  Good to see you here!

I'm currently earning less than you as a community college instructor.  Now, that's for a 9 month contract.  I can do additional work such as teaching overloads and in the summer.  I taught one course learning contract in the Spring and I'm teaching one this summer, which brings in another couple grand.  Sooooo, technically I'm right about where you are.  I also have ample time to work on side projects that can earn money, but honestly, I haven't been doing so very much.  It's been too nice spending time with my wife and daughter.

I could probably earn more somewhere else if I looked hard enough.  But it would take a SUBSTANTIAL amount more to make me interested.  Right now my schedule is so great, I enjoy the work so much and it is so low stress and fun that it more than makes up for the lesser pay.

The second advantage I have is an awesome, hardworking wife, also a teacher, who makes more than I do.  Our combined incomes make saving a lot of money pretty easy.

The third advantage is that we live in a VERY LOW cost of living area.  You can get a LOT of house around here for $100k, property taxes are practically nothing compared to other locations and it's just way cheap in general.  So our combined wages of somewhere around $70k are pretty substantial around here (although some local residents would have you believe it's still hard to get by on that amount).

I realized pretty quickly when first reading MMM's blog that I would not be able to retire for about 10 years, possibly 12.  However, just having that light at the end of the tunnel... knowing there was an end in sight to my working career, and more importantly, solving all our financial problems within about 1 month and setting us on the path to security, was far more important than how long it would take us to reach FI.  We are so much happier, healthier and optimistic.

So what we have essentially, is a situation where we already feel 25% retired.  In 10 years, we'll be 100% retired according to MMM's excellent definition of the term.  I'm very happy with that, and I'm not so sure even double my current income would be worth it.  Especially considering the type of work I'd have to do and the type of place i'd have to work for to get that extra income.  No way.

[Albert]

I won't say like nktokyo that anyone can make any amount in any field but I will say that every person can better themselves beyond minimum wage and likely out of poverty with a little bit of luck if they work to figure it out instead of accepting that they are in a rut.

Probably, but would it be possible for everyone to do it so that there are no poor people left at all? I don't think so, not in the current economic system at least.

[gdborton]

I won't say like nktokyo that anyone can make any amount in any field but I will say that every person can better themselves beyond minimum wage and likely out of poverty with a little bit of luck if they work to figure it out instead of accepting that they are in a rut.

I agree with the minimum wage bit and mostly agree with the poverty part, my only point was about millionaire status.

[Frugalady10]

jdoolin-where do you live? the average home price in my town is $450,000- you are hard pressed to find a single family home under $500,000 w/ taxes around 10,000. 100,000 literally can only get you a dumpy trailer here. I tell my husband all the time we live in the wrong place...

[randymarsh]

jdoolin-where do you live? the average home price in my town is $450,000- you are hard pressed to find a single family home under $500,000 w/ taxes around 10,000. 100,000 literally can only get you a dumpy trailer here. I tell my husband all the time we live in the wrong place...

I live in southwest Ohio and prices are similar. A single family home for $500,000 would be huge and luxurious. In fact, there are probably only a dozen or so homes in my school district that cost that much. The typical middle class home I'd say is more around $200K.  Something like this is pretty common: http://www.zillow.com/homedetails/4909-Shannon-Ave-Springfield-OH-45504/33288538_zpid/

[wepner]

WEPNER!  dhalsimrocks here!

Awesome! I kinda thought this was you... but I wasn't 100% sure. In hindsight its pretty obvious.


Ladies and Gentleman this man's enthusiastic post on another message board is the reason I even know what MMM is, but try not to hold that against him, lol.

[jdoolin]

jdoolin-where do you live? the average home price in my town is $450,000- you are hard pressed to find a single family home under $500,000 w/ taxes around 10,000. 100,000 literally can only get you a dumpy trailer here. I tell my husband all the time we live in the wrong place...

Near Wheeling, West Virginia but in Ohio (though depending on where we buy, we may end up living in Wheeling).

Here's what $500,000 can get you around here:

http://www.zillow.com/homedetails/130-Spring-Hill-Ln-Wheeling-WV-26003/22947780_zpid/

Check out those property taxes. :D

Yes, I love where I live.

[Redbeard]

Regarding the OP:

I currently make 43K and my wife stays at home with our one year old boy. For us, MMM is less about savings rates/FIRE, but more about clarifying our life- and financial goals and framing our choices around those goals. We've always been fairly frugal, but MMM and the forums offer a lot of tips on optimizing expenses that we had never thought of (MVNOs for phone service, biking to work, what to think about when buying a house, different investment vehicles, etc.). Most importantly, the idea of trade-offs has helped us move from "We can't buy it because we can't afford it" to "We are making a deliberate choice not to buy this item in light of our more important financial goals." A subtle shift, perhaps, but one that has helped us tremendously. It works both ways, too. We've considered several opportunities to increase our income, but they involved significant trade-offs with other goals, trade-offs that we aren't willing to make right now. If that delays FIRE, so be it.

Our financial goals, in general order of most important to least important, are 1) give generously 2) allow my wife to be a stay-at-home-mom 3) allow myself to spend plenty of time with the wife and kid(s) 4) becoming foster parents/adoptive parents 5) provide some level of assistance for kids' future college expenses 6) early retirement. No matter what your goals are, the advice on the blog and on the forums can help you move toward them.

[avonlea]

Regarding the OP:

I currently make 43K and my wife stays at home with our one year old boy. For us, MMM is less about savings rates/FIRE, but more about clarifying our life- and financial goals and framing our choices around those goals. We've always been fairly frugal, but MMM and the forums offer a lot of tips on optimizing expenses that we had never thought of (MVNOs for phone service, biking to work, what to think about when buying a house, different investment vehicles, etc.). Most importantly, the idea of trade-offs has helped us move from "We can't buy it because we can't afford it" to "We are making a deliberate choice not to buy this item in light of our more important financial goals." A subtle shift, perhaps, but one that has helped us tremendously. It works both ways, too. We've considered several opportunities to increase our income, but they involved significant trade-offs with other goals, trade-offs that we aren't willing to make right now. If that delays FIRE, so be it.

Our financial goals, in general order of most important to least important, are 1) give generously 2) allow my wife to be a stay-at-home-mom 3) allow myself to spend plenty of time with the wife and kid(s) 4) becoming foster parents/adoptive parents 5) provide some level of assistance for kids' future college expenses 6) early retirement. No matter what your goals are, the advice on the blog and on the forums can help you move toward them.

I love this.

[steveo]

Most importantly, the idea of trade-offs has helped us move from "We can't buy it because we can't afford it" to "We are making a deliberate choice not to buy this item in light of our more important financial goals."

My wife is fairly frugal but she struggles with this one. She is always stating how some person from her work is going on a 6 week holiday to Europe or something. My take is exactly as per this comment here. I think that some people will choose to spend all their money on consumption of whatever they choose whereas others will choose to save.

I could easily buy a luxury car and the car that we have isn't a bad car by any means but I really have no need or even want for the luxury car. I also don't want to go on an expensive holiday either. Maybe if I retire rich I will consider the expensive holiday but that is for a later time.

[nktokyo]

I won't say like nktokyo that anyone can make any amount in any field but I will say that every person can better themselves beyond minimum wage and likely out of poverty with a little bit of luck if they work to figure it out instead of accepting that they are in a rut.

I agree with the minimum wage bit and mostly agree with the poverty part, my only point was about millionaire status.

Working for other people isn't the only way to generate an income in whatever your field of expertise may be. If you find enough customers to serve a million dollars will find its way to you soon enough.

It's not easy and most people won't consider that approach but it's their choice not to try, rather than some economic cap enforced from on high. Saying "I'll never earn a high income because I'm a X" makes about as much sense as "I'll never run 10K because I'm 15kgs over weight".

[nktokyo]

Not everyone has the intelligence, resources, time, or support to overcome their situation.

The path is different for each person but at least there is a path.

[arebelspy]

It's not easy and most people won't consider that approach but it's their choice not to try, rather than some economic cap enforced from on high. Saying "I'll never earn a high income because I'm a X" makes about as much sense as "I'll never run 10K because I'm 15kgs over weight".

I liked this analogy on first read, but the problem is you give a single reason in the second example, but ALL reasons in the first.  That doesn't work, as we may agree that that one reason is bullshit, but that doesn't mean there aren't legitimate reasons.

"I'll never run a 10k because I'm a paraplegic," for example.  So you'd have to change the first example to replace X with a specific excuse (one that might be common would be best) like "because I didn't major in a STEM field" or "because I'm not smart enough" or something like that.

[MakingSenseofCents]

My significant other and I make decent money, especially for being 24 years old. We are in the $250K -$300K range together. I will say that life isn't all about money though. We have realized now that we want to cut back because we don't have much time for anything else in life since we are both working so much. Soon we will be down to about the $150-$175K range and are happy with that. Our spending is around $40K per year, so our savings rate will still be great.

We both regret taking jobs for money, and majoring in fields that are not our passions. We are switching this up though! We are lucky in that our passions are still quite profitable.

[nktokyo]

It's not easy and most people won't consider that approach but it's their choice not to try, rather than some economic cap enforced from on high. Saying "I'll never earn a high income because I'm a X" makes about as much sense as "I'll never run 10K because I'm 15kgs over weight".

I liked this analogy on first read, but the problem is you give a single reason in the second example, but ALL reasons in the first.  That doesn't work, as we may agree that that one reason is bullshit, but that doesn't mean there aren't legitimate reasons.

"I'll never run a 10k because I'm a paraplegic," for example.  So you'd have to change the first example to replace X with a specific excuse (one that might be common would be best) like "because I didn't major in a STEM field" or "because I'm not smart enough" or something like that.

Fair point.

[bash]

I am very fortunate to earn $100k+ at age 27, but I've also made some sacrifices for that income.  Some were conscious decisions, some just came with the job, and some of the perceived downsides may not even be real or may have silver linings.  I experience a ping of jealousy when I hear about younger people making more than me, but there will always be someone with more...good on these guys and gals for earning what they do.

I've considered going back to school to increase my earning power, but frankly I'm not sure the investment would pay off.  Tuition, living expenses, and the opportunity cost of not working or working less are just too high.

Also being 27 and single, I'm acutely aware that one of the most important financial decisions I make will be finding the right woman.  Not to put any more pressure on dating, of course.

[nktokyo]

My significant other and I make decent money, especially for being 24 years old. We are in the $250K -$300K range together. I will say that life isn't all about money though. We have realized now that we want to cut back because we don't have much time for anything else in life since we are both working so much. Soon we will be down to about the $150-$175K range and are happy with that. Our spending is around $40K per year, so our savings rate will still be great.

We both regret taking jobs for money, and majoring in fields that are not our passions. We are switching this up though! We are lucky in that our passions are still quite profitable.

I was there. Good move!

[wepner]

My significant other and I make decent money, especially for being 24 years old. We are in the $250K -$300K range together. I will say that life isn't all about money though. We have realized now that we want to cut back because we don't have much time for anything else in life since we are both working so much. Soon we will be down to about the $150-$175K range and are happy with that. Our spending is around $40K per year, so our savings rate will still be great.

We both regret taking jobs for money, and majoring in fields that are not our passions. We are switching this up though! We are lucky in that our passions are still quite profitable.

I think decent might be understating it a bit ;)

What fields are your jobs in? What are your passions? Do you plan on changing your jobs soon? Just scaling back the hours? How soon do you plan on retiring?

[Daleth]

I feel dumb and unqualified whenever I start to think about switching careers to something more lucrative.  I enjoy problem solving, but majoring in engineering was a huge mistake.  The environment in my college was so hostile to women that it seriously undermined my self esteem. 

Every time I think I should put my degree to work for me I feel kind of panicky and then I feel guilty for being underemployed and poor. 

I try to avoid thinking about it because, aside from this very thing, I'm very happy with my life.  And my current gig is pretty good.  Completely unfulfilling, but whatcha gonna do?

I would check some books out of the library: What Color is Your Parachute, for one, and also Do What You Are (http://www.amazon.com/Do-What-You-Are-Personality/dp/0316167266). You're smart, you've got a lot of time left on this earth presumably, and it sounds like you have an engineering degree... you have a lot of options, and with some time spent reflecting and really trying to figure out how you'd like to spend the time you spend earning money, I'm betting some of your options could BOTH increase your income AND be fulfilling. Best of luck!

[Daleth]

I make $120k and my wife about $40k. I don't think we are rich...

Ouch. Speaking as someone who's in a similar bracket to you guys, if we're making around FOUR TIMES the average American household income, which we are, we're rich. Any household bringing in more than $116,623/year is in the TOP 10% of United States income... i.e., is rich.... and anything over about $161,000 is the top **FIVE** percent nationwide, i.e., definitely rich. So, that would be us.

I didn't grow up anywhere near these brackets, nor did I even remotely approach them until I was past 35, so I well remember earning $18,000-$30,000 a year--which I think is why I said "ouch" at the start of this post: because I remember how clueless it seemed back then to hear people making $100k+ and yet not considering themselves rich.

[Daleth]

Maybe I'm a little too libertarian about this one but every single person (without a mental illness or severe physical handicap, I'll conceed those exceptions) can get a job which pays more than the national minimum wage if for no other reason than some cities have minimum wages greater than $10. So what is holding a person back is lack of willingness to move.

Any thoughts on HOW they would move--that is, how someone earning that little would get the money to transport themselves (and enough possessions to set up a bare-bones household) across the state or across the country (or just transport themselves and buy the necessary possessions once there), and then come up with the two or even three months' deposit that most landlords require, and then sustain themselves while finding a job and getting the lay of the land, and then transport themselves from place to place (i.e., commute)?

[MakingSenseofCents]

My significant other and I make decent money, especially for being 24 years old. We are in the $250K -$300K range together. I will say that life isn't all about money though. We have realized now that we want to cut back because we don't have much time for anything else in life since we are both working so much. Soon we will be down to about the $150-$175K range and are happy with that. Our spending is around $40K per year, so our savings rate will still be great.

We both regret taking jobs for money, and majoring in fields that are not our passions. We are switching this up though! We are lucky in that our passions are still quite profitable.

I think decent might be understating it a bit ;)

What fields are your jobs in? What are your passions? Do you plan on changing your jobs soon? Just scaling back the hours? How soon do you plan on retiring?

Ha, yes you are right. It is still a great income, but it will be hard to see it go down in a month or two. I will take a lower income for a more enjoyable life though!

He works in sales and I'm in investment banking. Our passions include cars (well, that's mainly his) and writing.  I plan on changing my job and focusing on my freelancing that I have been building up over the last year.

I haven't really thought about retirement too much. I would rather be financially independent.

[lisahi]

I make $120k and my wife about $40k. I don't think we are rich...

Ouch. Speaking as someone who's in a similar bracket to you guys, if we're making around FOUR TIMES the average American household income, which we are, we're rich. Any household bringing in more than $116,623/year is in the TOP 10% of United States income... i.e., is rich.... and anything over about $161,000 is the top **FIVE** percent nationwide, i.e., definitely rich. So, that would be us.

I didn't grow up anywhere near these brackets, nor did I even remotely approach them until I was past 35, so I well remember earning $18,000-$30,000 a year--which I think is why I said "ouch" at the start of this post: because I remember how clueless it seemed back then to hear people making $100k+ and yet not considering themselves rich.

I don't think a family making $161,000 per year is not "rich" as most people would define the word. They are part of the ever-growing middle class. Because of huge income disparity in the United States, the top 5% of incomes is not at all what it used to be. A family making $161,000 is certainly well-off and lucky, but they still very much have to watch what they spend and need to budget for every day items, monthly expenses, etc., because the opportunity to overspend is easy unless they are careful (or mustachian).

What I think most people consider "rich" is having so much money that money for every day items and reasonable monthly expenses is just there, without having to think about it. It's not nearly as easy to overspend unless you are very anti-mustachian.  When I think of "rich," I think of somebody making at least $250,000 per year, and perhaps even more. The increasing percentage of middle class individuals in the U.S. does not suddenly make their spending power larger than it was when they made up a smaller percentage of household incomes.

[arebelspy]

They are part of the ever-growing middle class....The increasing percentage of middle class individuals in the U.S.

Huh?  [Citation needed.]  The middle class is shrinking, not growing, from what I understand.

One house making as much as four median households  in one of the wealthiest countries in the world combined?  Yeah, that's rich.  It's not obscenely so, but it's rich.  It all depends on your perspective though.

Someone making close to that may not see it, but to someone making 20k?  160 is amazingly rich.  Hell, to someone making the median, someone doubling their salary would be amazing, but 3-4X as much money?

They'd quickly adjust (hedonistic adaptation), but from the perspective of while they were making that lower amount, that's rich.

[matchewed]

I make $120k and my wife about $40k. I don't think we are rich...

Ouch. Speaking as someone who's in a similar bracket to you guys, if we're making around FOUR TIMES the average American household income, which we are, we're rich. Any household bringing in more than $116,623/year is in the TOP 10% of United States income... i.e., is rich.... and anything over about $161,000 is the top **FIVE** percent nationwide, i.e., definitely rich. So, that would be us.

I didn't grow up anywhere near these brackets, nor did I even remotely approach them until I was past 35, so I well remember earning $18,000-$30,000 a year--which I think is why I said "ouch" at the start of this post: because I remember how clueless it seemed back then to hear people making $100k+ and yet not considering themselves rich.

I don't think a family making $161,000 per year is not "rich" as most people would define the word. They are part of the ever-growing middle class. Because of huge income disparity in the United States, the top 5% of incomes is not at all what it used to be. A family making $161,000 is certainly well-off and lucky, but they still very much have to watch what they spend and need to budget for every day items, monthly expenses, etc., because the opportunity to overspend is easy unless they are careful (or mustachian).

What I think most people consider "rich" is having so much money that money for every day items and reasonable monthly expenses is just there, without having to think about it. It's not nearly as easy to overspend unless you are very anti-mustachian.  When I think of "rich," I think of somebody making at least $250,000 per year, and perhaps even more. The increasing percentage of middle class individuals in the U.S. does not suddenly make their spending power larger than it was when they made up a smaller percentage of household incomes.

$161k puts you at nearly the top 5% of income distribution within the United States. 95% of the households make less than that. The counter point to the thread title is that if you make $161k it will be much easier to control you spending. The same is true regardless if you make 161k or 50k. The only thing is that the household who makes 50k probably has less to cut, but they still have plenty to cut.

[footenote]

Fascinating that income mobility differs substantially in different regions / metros:
http://www.nytimes.com/2013/07/22/business/in-climbing-income-ladder-location-matters.html?hp

(Details on the study: http://www.equality-of-opportunity.org/)

On the "who's rich?" question, the only sensible answer is "It depends." In NYC, people worth "only" $5mm are sneered at as "Nickel Millionaires." But if you were worth $500,000 in the Deep South, you would be considered quite wealthy.

[gdborton]

Fascinating that income mobility differs substantially in different regions / metros:
http://www.nytimes.com/2013/07/22/business/in-climbing-income-ladder-location-matters.html?hp

(Details on the study: http://www.equality-of-opportunity.org/)

On the "who's rich?" question, the only sensible answer is "It depends." In NYC, people worth "only" $5mm are sneered at as "Nickel Millionaires." But if you were worth $500,000 in the Deep South, you would be considered quite wealthy.

Thanks for linking this, I really enjoyed reading it (probably mostly due to confirmation bias). 

[Albert]

Middle class is such an overused term in US - it means everything and nothing at the same time. Also in our current culture in the West people are just as reluctant to admit to themselves that they are rich as poor. 

Having said that the widely used household income is somewhat misleading. 120k for a single guy is one thing and the same money for a family of five something completely different.

[EMP]

I feel dumb and unqualified whenever I start to think about switching careers to something more lucrative.  I enjoy problem solving, but majoring in engineering was a huge mistake.  The environment in my college was so hostile to women that it seriously undermined my self esteem. 

Every time I think I should put my degree to work for me I feel kind of panicky and then I feel guilty for being underemployed and poor. 

I try to avoid thinking about it because, aside from this very thing, I'm very happy with my life.  And my current gig is pretty good.  Completely unfulfilling, but whatcha gonna do?

I would check some books out of the library: What Color is Your Parachute, for one, and also Do What You Are (http://www.amazon.com/Do-What-You-Are-Personality/dp/0316167266). You're smart, you've got a lot of time left on this earth presumably, and it sounds like you have an engineering degree... you have a lot of options, and with some time spent reflecting and really trying to figure out how you'd like to spend the time you spend earning money, I'm betting some of your options could BOTH increase your income AND be fulfilling. Best of luck!

Thanks for the kind words.  I'm not entirely uncomfortable where I'm at right now and inertia is a real B.  :)

Will check out the book recommendations though. 

[randymarsh]

A family making $161,000 is certainly well-off and lucky, but they still very much have to watch what they spend and need to budget for every day items, monthly expenses, etc., because the opportunity to overspend is easy unless they are careful (or mustachian).

I think you can be rich and still have a budget. In the US at least, we typically measure "richness" by income instead of assets. Just because a family is wasting their income on debt repayment doesn't make them poor. That would be insulting to people actually living in poverty.

[dragoncar]

A family making $161,000 is certainly well-off and lucky, but they still very much have to watch what they spend and need to budget for every day items, monthly expenses, etc., because the opportunity to overspend is easy unless they are careful (or mustachian).

I think you can be rich and still have a budget. In the US at least, we typically measure "richness" by income instead of assets. Just because a family is wasting their income on debt repayment doesn't make them poor. That would be insulting to people actually living in poverty.

As someone in that income range, I definitely have to budget.  It looks like this:

Spend whatever the heck I feel like
Save 70%

Of course this is based on careful planning of fixed expenses like housing and transportation.  And being a cheapskate at heart.