Another Example that Earning a Boatload of Money Won't Make You Wealthy

Here's another example of a couple that earns a six-figure income but is going backwards financially because they can't control their spending. The details:

Dohy and Farber have almost no savings - between the two of them, only a few hundred dollars in the bank and a few thousand in retirement accounts.

They've also got around $40,000 in credit card debt, with only closets full of "stuff" and memories of dinners out to account for it.

The two don't lack for money. Farber and Dohy earn a combined six-figure income in medical-supply sales. It's their behavior that's out of whack.

At this point, there's not much I can say that I haven't already said on this issue, so I'll just repeat the basics to remind us all what's going on here (and how to avoid it):

• It's not what you make, it's what you spend. It's better to earn $40,000 a year and spend $35,000 of it than to make $100,000 and spend $110,000. One couple is going forward in this instance, and it's not the one making the big bucks.

• This is the reason that I think spending less than you earn is financial principle #1. If you don't do it, you're sunk no matter what else you do. In fact, it's the key to financial security and the first step in becoming rich.

• Living above your means is the biggest barrier to becoming rich.

• If you can control your spending, then making more money can really be a big benefit to your finances. For some tips on how to add some extra income to your life, check out Free Money Finance Guide to Making More Money and some of my $10k ideas.

Comments

[Bill Chen]

I agree with you. Nevertheless, most people still have the misconception that being rich means eating and spending lavishly, drive big cars and live in luxurious houses. They are what I called 'The Under Accumulators of Wealth'

Bill Chen