A Life Without Debt: “You Must Have a Huge Income!”

One of the most common responses I get when people find out that I’m debt free is, “Well, that’s nice for you, but you probably have a huge income.” I’m not alone. Many of my debt free friends say that they get the same response. The assumption is that in order to live debt free that you must have a giant income (or have a trust fund or be the beneficiary of a great inheritance). It’s inconceivable to many people that a debt free life is possible on a small income.

I assure you that a large income is not a prerequisite for a debt free life. While we now have a good income for our area (upper double figures), that has only been the case for about two years. Up until that point we were never above $50,000 and most years a lot less than that. We lived debt free making as little as $18,000 a year. Granted, it wasn’t a very big life, but we were fed, clothed, and sheltered and managed a few small extras and vacations to nearby destinations.

We knew early on that we wanted to live debt free and we simply made sure we never spent beyond our means, even when those means were tiny. Now we can afford more extras and nicer vacations with a larger income but we still don’t go nuts, preferring to save against the day when we might need more money for retirement or a medical issue.

Certainly it can be easier to live debt free with a big income, but a debt free life isn’t a function of the size of your income. It’s a function of what you choose to do with the money you do have. At any income level you can save or you can overspend. You can choose to buy things you can’t afford or you can save up and learn to live with delayed gratification. You can make do with older items or you can always insist on having the newest and greatest. You can learn the tricks of a frugal life like couponing, energy conservation, DIY, and gardening or you can pay to have everything done for you and not worry about watching your expenditures. You can choose to take care of financial tasks like insurance and balancing statements or you can let it all go hang and hope for the best.

I know plenty of people who make three and four times what we do who are so mired in debt that they may never see the light of day again. And I know people who make a quarter of what we do who live very nice debt free lives. It’s not about the income level, it’s about the daily choices we all make with money. So when you learn that someone is debt free, don’t jump to the conclusion that they are making a fortune, or that they are a trust fund baby, or that they received a large inheritance. That might be true, but it might also be that they simply make smart money decisions every single day. You might discover that they work hard at being debt free and that there is something you can learn from them.

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12 Responses to A Life Without Debt: “You Must Have a Huge Income!”

  1. Great post.

    When it comes to personal finance there is no substitute for LBYM.

    That said, I’m something of a debt junkie – I use debt to buy rental properties. So far it’s working well, but when the last mortgage is paid off……

  2. We’ve never had a high income, yet we’re now debt free.

  3. You used the old fashioned discipline of not living above your means and spending sensibly.

    John DeFlumeri Jr

  4. We live credit-card debt-free, but I don’t understand how anyone can afford a home and still live debt free. Saving enough to buy a home with cash would take an entire lifetime, and then you have no time to enjoy the home you’ve purchased.

  5. Rick says:

    I never had debt until I started making good money.
    I guess you just get lazy because you don’t have to pinch pennies.

  6. WhiteEyebrows – we did have a mortgage for a number of years, we just made an extraordinary effort to pay it off early.

    I see no problem with people saving up a decent down-payment and getting a mortgage. Just be careful and buy a home that you can EASILY afford and still have other income for the remaining necessities in life and upkeep on the home. Then, try your best to pay that mortgage off as early as you can. Make it Priority #1 with any extra money that comes in being thrown at the principal.

  7. Monkey Mama says:

    Great Post.

    When I was younger and naive I took it for granted I must be better off – and would be generous with very broke friends. Imagine my amazement to eventually learn that everyone who was jealous of our “debt free lifestyle” and assumed we made tons of money – well they all tended to make 2-3 times our income.


    I was giving people nice gifts because I Felt sorry for their “low incomes.” Obviously the truth is easier to see in these times. But I appreciate being a financial professional and having so many people reveal their true financial situations – it can be rather shocking.

    In reply to WhiteEyebrows – it just doesn’t have to be that way. If you think the only way is to take a lifetime, so it is… Sometimes you just have to think outside the box a bit.

  8. thriftorama says:

    I’m 34, hubby is 36, we have two kids and zero debt. That includes a house free and clear. People think it’s just luck. Luck is only a small part of it. The biggest is deciding you want to live free and clear and own everything outright, and then making choices that help you reach that goal.

    No.1. buying a house you can actually pay off. The bank wanted to give us a lot more money to buy more house. But we went for about $50k less than the expected amount, because we wanted to pay if off. Might not work in California, but in Ohio, it does.

    No. 2 Making an effort to only live on one salary and to save the other or use it to pay off debt. it also helps you weather economic uncertainty. You aren’t stretched to your max when bad times hit.

    Will we never have debt again? Probably not. we might buy a car or a rental property and finance it. But again only with the plan in place to pay it off ASAP.

  9. ferrariboy says:

    I was in about the same situation 2 years ago. Getting out of debt is simple for people who want too. First most people want an easy way out and wont work two jobs. The basics come down to dont spend more than you make. Drop luxuries like cable tv, cell phone, internet, and pay off your debt. Second jobs or working weekends can help too.

  10. Mike Bau says:

    The amount of debt you have is a direct reflection of how content your are to live within your means.

    Contentment is found in wanting what we have, not having what we want.

  11. Minny says:

    Something that I have discovered through life is that people use their own situation as a starting point.

    So, they look at someone who is debt free and look at them through the filter of their own spending habits.

    They do not see that other people do not eat out or have takeaways on a daily basis. That people do not buy DVDs or CDs every week. That people do not buy new clothes, gadgets and general money/credit absorbing stuff!

    I remember at work a young woman came into work looking very sombre. The story was that she had asked har parents for a loan – she lived at home. Her parents had sat her down and gone through their finances.

    They ran their home, their lives including holidays and everything on LESS than than their daughter earned. Talk about a wake up call!

    They do not look and see th

  12. Aleks says:

    Nice post. In the end, living a debt-free life all comes down to finding the right balance of living.

    Although, I do believe debt might be inevitable for a few selected things, such as buying real estate if you want to settle down. However I would rather see this as an investment, which is saving me money on the long-term.

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