Episode 197 - Surprising Reality: One-Third of High Income Earners Struggle with Paycheck to Paycheck Living
Welcome to episode #197 of the Debt Free Dad Podcast. A recent article written by Jeannine Mancini on Benzinga says $150,000 salaries aren't enough anymore and high earners are still TRAPPED living paycheck to paycheck and CAN'T get ahead. Seriously?We are going to get into this on today's show.
What You'll Learn
- Recent data shows that people making over six figures are living paycheck-to-paycheck. Hear our take!
- Discover the reasons high-income earners are struggling. Are they really struggling, or is there another reason?
- The majority of us are debt-free... hear our take on articles like these.
Resources Mentioned
- Brad's Totally Awesome Debt Freedom Planner
- For more help, and a step-by-step process to get started, enroll in Brad's FREE online course, LIFE WITHOUT PAYMENTS.
Free Tools and Downloads at www.therealdebtfreedad.com
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- YouTube - https://www.youtube.com/channel/UCtbAadBrWLL81CZbA6sI5pg
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Episode Transcript:
Brad:
Hey everybody, welcome to episode number 197 of the Debt Free Dad podcast. So a recent article written by Jeanine Mancini on Benzinga says $150,000 salaries aren't enough anymore and high earners are still trapped, living paycheck to paycheck and can't get ahead. Seriously, we're going to react to this article and this information on today's episode. Stay tuned.
Speaker 2:
You're listening to the Debt Free Dad podcast with Brad Nelson. Brad and his co-hosts experienced the anxiety of living paycheck to paycheck before learning the fundamentals of financial security. They are now on a mission to empower regular people to pay off their debt for good and enjoy happier, less stressful lives. Keep listening for inspirational interviews, tips, tricks and practical advice to gain financial freedom.
Brad:
Hey, hey, hey, how's everyone doing today? You can find us on Facebook, tiktok, YouTube and Instagram. Just search Brad Nelson Debt Free Dad. And, as always, guys, welcome to today's show. Remember to get all the resources, show notes and links for today's show. You can head over to thedebtfreedadpodcast. com and check out episode number 197, along with all of our other episodes there on that website. So we're going to react to this article and we're going to kind of go through this a little bit step by step, guys, and just kind of react to each of the sections here. And this first part from the article says when people think of the term living paycheck to paycheck, images of low-income families struggling to make ends meet might come to mind. But new data reveals that a significant portion of high earners, particularly those ranking in over $150,000 annually, also find themselves caught in this vicious financial cycle. And here are some of the statistics from this article. According to CNBC, while three-quarters of individuals earning $50,000 or less are living paycheck to paycheck, 65% of those earning $50,000 to $100,000 are in the same predicament and of those earning $100,000 or more, 45% reported living paycheck to paycheck. Moneywise highlighted a new study referencing research from the personal finance software Quickin that indicates that 32% of Americans with a yearly income of $150,000 or more are struggling to make ends meet and to close the gap, they're turning to credit cards between paychecks. Recent statistics from the Federal Reserve Bank of New York showed a significant rise in borrowing behaviors. By the second quarter, the total credit card debt reached over $1 trillion. Despite escalating interest rates, people across various income brackets are increasingly using credit cards, especially to fill the gaps from one paycheck to the next. So, guys, what are your thoughts on this? I mean, personally, not terribly shocked by the under 50. I was a little surprised. 65, 50 to 100. I thought that would be a little bit lower, but 65 is. I mean it's approaching 7 out of 10 people. But man, those higher ones, over $100,000. What are your thoughts, Chris? Chris is just like, just let me talk, sign me up.
Chris:
You had me way back before the intro music when you said $150,000 salaries aren't enough. Enough for what? Maybe that's where we need to start off with is what's the definition of enough? But here's the point I want to make, just right off the top. After seeing or hearing you read that, if you're listening to this podcast and you're living paycheck to paycheck and you're not making $150,000 or more, don't feel alone, right? It can happen to anybody. It's not a matter of how much money you make. That's going to set up or dictate how well you are financially, whether you live paycheck to paycheck. If people making $150,000 or more are living paycheck to paycheck and it's happening to them, it can happen to anybody, right? So it's all about the decisions that you make and what you do with the money that you do earn. You're right, Brad, if you're making $50,000 or less, that's probably a different category. If you're between $50,000 and $150,000 and you think, oh, just another $10,000 is going to make a difference, nope, wherever you are right, now is the time for you to make the decision that I got to do something different. We talk about thinking differently a lot here because, even if you made $150,000 a year, still not going to fix your problems. It's not going to turn things around. It's the behaviors that you're going to have to manipulate in a way that you're going to build wealth.
Ryan:
I think that for me, that's like one of the main things that stuck out to me with this and this is one of the things we talk about all the time is if you make less than $50,000 and you behave poorly with money. These statistics show that if you make $100,000, yeah, there's some people that do better, but there's still a large majority over, or 45%, are still reporting that they're living paycheck to paycheck. We always say, if you behave poorly with a little bit of money, you'll behave poorly with more money. That was 100% me. I mean, we started off our marriage. We didn't make great money. We made more money as we got older and the more we made, the nicer cars I got, the bigger house I got, the bigger, more debt I had. It was just I behaved the same way as I did. I just was able to be more flashy with it when we got more money.
Kati:
Were you trying to impress more people?
Ryan:
Oh, 100% all it was about. Yeah, for sure, I mean that's all my. I mean that was the wake-up call for us and for me and my wife, and for me to realize that's really. I was buying all the stuff for other people's opinions of me. None of it was for me really.
Amber:
Yeah. Paul and I were in that 65%. We were doing all the things and we were living paycheck to paycheck. We were getting paid on Friday and then by Monday we had food in the fridge and we were okay. But if something happened we were in trouble for the next two weeks. We just didn't have it and we were in that 65%. We were just doing dumb things with money.
Kati:
Yeah, I definitely. I had had jobs in the past where I made more money, so that meant I had money to spend and not save, not do anything else and I was still charging to my credit cards. So I'm like, why didn't I just stick to what I could actually afford? But that just wasn't a mindset I had before joining .
Brad:
Right. So this article goes a little bit deeper and it talks a little bit about why. So why are high income earners struggling, according to this article? So the reason high income earners are ensnared in this cycle are? Okay, help me out. Multifaceted, sorry, multiconservative. Here are some contributing factors High cost of living in urban areas. Many high earners reside in metropolitan areas where the cost of living is exponentially higher or greater. Housing, transportation and daily essentials consume a significant portion of their income. Debt obligations Despite their impressive salaries, many still grapple with the debts such as student loans, mortgages and credit card balances. And then they get societal pressures. There's an unspoken expectation for high earners to lead lifestyles that reflect their income brackets. This can mean purchasing luxury items, dining at upscale restaurants or indulging in expensive type hobbies, and then lack of financial literacy. Earning more, like we've talked about just now, doesn't inherently mean understanding how to manage those earnings. Without proper financial education, high earners can make missteps that diminish their financial stability. So I've been seeing a lot of people on TikTok, as we've been posting a lot more content there and watching the TikTok Reels and everything where these people will come on and say well, is 100,000 to 150,000 the new middle class, because it used to be thought like, well, if you make over six figures, you're living the life, and the reality is is, I think, for a lot of these people who are making these six figures. I think this article kind of hits right on the head as to why that's happening. And you know where you live is going to play a significant role in, obviously, cost of living. And if you're living in some of these bigger cities, of course you know it's going to eat up income like crazy, right? So I mean there's always going to be, you know, the negative side to making a higher income. If you have to, like live in a certain area in order to get to that job, for instance, even like if you think about the way you have to dress for certain positions and certain jobs, like there's going to be higher costs involved. Like if you're in a more formal business setting where you've got to wear a suit or you know more formal clothes all the time. I mean, obviously you're you're going to have a more, a much higher cost to working at some of those jobs than, say, somebody who works from home and just needs to be business on the top. But you know, I think there's a lot of things we like we talked about. I think one of you I forget which one of you said is is it's all about decisions and the choices that you're making. And with those choices always comes those secondary expenses. And so I think for some of these people they're like you know, well, you know, I can't live the way that I want to live now, and it's like they're kind of whining about it and it's like, well, you're it's the old saying right, you're not a tree, so just move right, get out of some of those higher areas, look for other areas that you can live in, maybe even doing a job change in some cases. But don't just say like I can't afford to live on this anymore. And when we're talking about some of these, these more, I wouldn't say I wouldn't know if I call luxury type spending. But if you're going to higher ticket eating out and events and things like that, like it's just are we are we whining now? Like, if we're going to whine about all of this, like it really it's just about you know, living below your means and if you can't make $150,000 work, it's like what are you doing?
Chris:
Well, I think there's a all of us, every human being in existence. There's a, there's a small part of us that says I don't get to do what I want to do. But you know, at some point you've got to be content with what you do get to do and be happy with it and not whine, as you say, about the things that you can't do. All right, If you make more money and you satisfy all of your wants, well, guess what You're? You're going to have a new list of wants. They're never going to go away, they're always going to be there, and when you fulfill all of them, you're going to come up with a new list. So you're always going to have something that you can't do. So the day that you recognize just be happy with where I am and make the decision to make some changes will be the best day of your life, because from that day forward, things are going to improve quite dramatically. Now, Ryan, I'm not going to pick on you here, but you said something pretty profound here and I know the reason that you do this podcast is because you want to help people. You want to educate people. You want to help people, not end up like you are you talked about how you bought things to impress people, right? But then on the other side of the door, the side of the different door that people don't get to see inside the house, there was all the struggles, even though you made good money. There was this we're living paycheck to paycheck. We don't I don't want to say like our life, because I'm sure you loved your life, but you get what I'm saying here is no, we, we, we hated their life. Okay, well, I didn't want to speak for you, but the point is is, let's just suppose somebody did see all the stuff that you had, the stuff, the image that you were trying to to show to them. They may have had that perception of that's who you were. But on the other side of the door, you don't know what struggles are going on. And I used to, I used to do this with my students early on in the semester. Just show them a house, a picture of a really expensive home, and I said now, how many of you know what's happening on the other side of the door? How many of you know if they're living paycheck to paycheck, if they're behind on their bills, if they're up to the right balls and debt, they've got a negative net worth? You don't know any of that stuff, because most of the time, what's happening on the other side of the door and I think, Ryan, this is what you're saying is it's not all fun and games, you're not getting to be who you want to be, all right, and you're stressed and you hate life because you've got all those payments. So at some point, make the decision that I'm going to do things differently and stop worrying about what other people think about you I think is the point that you're trying to make, Ryan is then you can be happy yourself and not try to impress other people, because at the end of the day, they're either not noticing it or, if they do, is it worth them noticing for the stress that you put on yourself?
Kati:
Right, right. And I would say, like all those stories we hear about professional athletes and celebrities and people who win the lottery every day, people that just all of a sudden get a whole bunch of money, they're broke in a couple of years because they just didn't know how to manage that money once they had it. So that means when you're given a little and you can take care of that, then as you get more money maybe you can handle it better. But if you can't handle a little, you can't handle a lot.
Ryan:
I think to you as you read through this article media marketing, all that. They capitalize on the pulse of the people, and so that's like words that this author uses like high earners are trapped, they can't get ahead. I think in another part in this article that you just read, Brad said where did I see it? They're struggling to make ends meet. Yeah, and and and. To some degree I don't want to act like every high earner that's making over a hundred, like maybe there are. I mean, I know that there's some higher end and they're doing all the right things, but housing there may be a few of them, but when you get down to the reasons and what we just kind of discussed is, I'm willing to bet that a large majority of the people that can't make ends meet and can't get ahead, it's due to debt, obligations, societal pressures, lack of financial literacy. It's like what are all of those things that's causing it, and I think that what we like to do is we like these flashy headlines and then people jump on it, you know, and that that, to me, is, I think, just what are really. Where I want people to really challenge themselves is are you, are you really struggling? Are you really you can't get ahead, or are you? Are you just wanting to live the life that you can't afford and therefore I can't get ahead, right?
Kati:
And I think that's a good way to get to this mindset or perspective, because an ex boyfriend of mine who, at the time when we were dating, made five times more than I did, and he would complain that he was broke all the time. And I'm like I make like $20,000 and you make over $100,000. How are you broke? And it's like he would save more in a month for retirement than I made in a month. And then he would go out. We would go out for these fancy dinners and he would buy a really super nice bottle of wine and we would have a meal that costs more than my monthly rent. And I'm like you're not broke, like you don't understand, like how broke works. I feel like, and so, yeah, it's really just how they think about it. And I'm sitting here going no dude, like you don't even get it.
Amber:
Yeah, I don't think I kind of come in on the other side, guys, I see the high cost of living and it depends on where you live. But when you move, like, let's say, you do up and move and you get a different job, your ratios are supposed going down, your pay is likely going down, your housing is likely going down. And if you're living in places like like I'm in Ontario, so you're living in places like Toronto the average house is over a million dollars and that's a crappy little house Like. It boggles my mind how people can pay for these houses. But they might be like they're stuck and even going further north or outside of the city. They're paying exponential amounts of money to travel in and out of the city every single day to go and do their job. So I'm not. I think I agree. People are struggling and the hot cost of living is not helping. Is their debt crappy? Probably, like you know their cars and their fancy stuff. It plays a role, but it's getting tighter.
Ryan:
Yeah, I would agree. I think I think I do agree. So I don't want to print like, I don't want to lump every person that's making 150 grand in the same boat because they're not there. They're 100% not. This is really to the, this is really that. But I'm just. You know, when this article is written, they're not surveying and then saying okay, 32%, and they're all in the exact same scenario. There are people and I totally agree with you, Amber there are certain places where rent is high, houses are high, all that stuff is high, and we don't know everybody's reasons and all of that stuff kind of going like to what you said, Brad, you're not a tree, you know. We're not saying that you like, are all those choices on the table? I guess is the question, you know, or are we just saying like we're just stuck here and like we're just saying there's no way out of it? That's the way I would view. This is just, if you're in that situation, like what are your options? And maybe there are none, I mean there are people that were maybe there truly are none, but I know there's a lot of people probably that are listening to this that make way less than 150 and are being like are you f'n kidding me?
Chris:
like you can't make it on 150. So so I don't think there's anybody arguing that there are people who make 100 or 150,000 dollars or more who are struggling. We know they exist. Okay, because of a variety of reasons that we've mentioned. Yeah, but to say that we make $100,000 or 150,000 and it's not enough that's the point that I have a tough time with Okay, it's to say that it's not enough. Now, it may not be enough because you put yourself in a position where it's not enough, and then the question for you out there listening is what are you going to do about it? What changes are you going to make? Because 100 to 150,000 or more should be enough? I guess, is my perspective on it, although I do agree with you that there are a lot of people out there who make that kind of money. You're struggling why? Because they have debt, because they spend lots of money Big houses, big cars, big vacations, all those types of things. So that's my two cents.
Kati:
Yeah, and I had applied for a job out in the San Francisco area, which is one of the most expensive areas in the country to live, I know, and the job called me and they said do you live here already? And I'm like no, I would have to move there. They're like we don't pay you enough to live here. So we just want to be like really upfront and honest. Unless you are living with probably four roommates or your rich grandma left you a house here, we just don't pay you enough to make it worth you even applying, like going through the whole interview process. I'm like, well, thank you, I appreciate you just being upfront with me because I don't want to live there if it's going to be that expensive. It was insane.
Brad:
Yeah, yeah, and that's you know. And again, I would agree. I think, especially if you look up in Canada with the way housing prices are and all of that, I think there's definitely some situations where people who are making this kind of money, where it is still a struggle, it's the same thing as if a family is making, you know, 50, 60, 70 grand, and they're struggling too. You know. It's just the numbers are different. So, yes, I get that you know there could be people potentially making this kind of money that aren't overspending, that, that are just sticking to bare bones budget just to make things work. But we all know better. We've all worked with enough people, we've seen enough people, we've talked to enough people, we've coached enough people here to know that that's not the majority of people though, because it probably is coming from living a lifestyle that they've grown accustomed to that they're not willing to take a few steps back to really get their finances in our control. So instead, what we're going to do is we're going to say we're struggling right or we can't make ends meet, but the reality is is you're just not willing to make those cuts, and the reason I know that is because we coach people and we've had people who make that kind of money here and we've had people that you know the average, you know most of the people that we work with make less than six figures. And if these people can make the cuts and get out of debt, Kati, I mean, look at you. I mean, you're a single person. You've paid off how much now? Over $130,000.
Kati:
Yes, and I definitely do not make six figures.
Brad:
So over $130,000 paid off in five years on a single income. You know we see people doing this stuff all the time. We bring these people on our podcasts on a regular basis and they're sharing how they're doing it. So the reality is is if these people can do it under their situations, then I got to be willing to bet that these people making 100 to 150 or more are able to do some of the same things. It just comes down to again priorities and being to want to think different and make some changes.
Ryan:
And the other thing I'd say too is, like the societal pressures you know, when they talk about, there's an unspoken expectation for high earners to lead lifestyles. I mean that to me, like my wife and I made good money and once we moved into a nicer neighborhood, there was a hundred percent Like you are keeping up with the Joneses, they got this, we got this, they bought this, we're going to buy this. There is this, this, like when you buy a house. What we realized is when we bought a house. We never really realized this before and we did it, Brad, when in the first house we bought. We were the first house we built, we was in a nice, really nice subdivision, and when you do that, you don't realize the underlying psychology that's going on there that makes you do things that you can't afford. You think like I'm going to buy this and I'm totally good, but you see, all these other people who may be in your same boat, but also many of them probably are making more money than you and maybe some of them can even afford some of that stuff that you can. But you have this idea because I live here, then I should be able to afford that. So then you do what they do and slowly you just start amassing more debt without even realizing it. You bought into this neighborhood thinking you weren't going to do that, but over the years you do it because that's what everyone else around you is doing. Yep, I mean, we moved to this house here. When we downsized, I mean it's the greatest thing ever. I just don't ever. I just lost all that when we moved here. I don't, I don't feel that anymore to feel like I got to keep up with everybody.
Chris:
And you don't hate life anymore either. Right, by the way, if there's no saying, if the Smiths knew how much trouble the Jones had keeping up with the bills, the Smiths wouldn't try to keep up with the Jones.
Brad:
Yeah, yep, but I think it's becoming like this badge of honor now almost. You know it's like just a. Oh well, you can't take it with you, right?
Speaker 2:
You might as well, just spend it all right.
Chris:
Yolo right.
Brad:
Yeah, you only live once, in fact we get.
Chris:
that's your mentality. You only live once, and stop whining about the fact you make $150,000 a year next time. Enough, you can't have your cake and eat it too. Right, you're the one about one thing or another. Pick your, pick your poison.
Brad:
So the totally awesome debt freedom planner is helping so many people make consistent progress with their finances, whether that be building emergency funds, paying down bills, budgeting, tracking paydays, saving up for larger purchases, goal planning and planning before those irregular yearly expenses that always seem to catch you by surprise. Now the debt freedom planner will help you take the stress out of managing your money. And if the thought is running through your mind, hey, I just need to have a simple tool to get my finances together. This planner is perfect for you. Head over to therealdebtfreedad. com. Click on the debt freedom planner in the menu at the top of the page and order your debt freedom planner today.
Amber:
And that sound means it's time for the celebrations of the show. First we have Amanda Andrews. I was able to work out repayment plans for two credit cards that reduced interest rates for him from nearly 30% to 6.99% and much lower payments. This will free up money in my budget and help me pay them off much faster.
Brad:
Yeah, that's a great win. And just another great tip and reminder if call your credit card company, see if they'll work with you on those interest rates. Many of them will. Also, some of them won't, but the worst they can say is no, so it's at least worth a try. Jennifer Cormier, we are selling things that we don't use anymore. I will be posting our second car that we don't use this weekend, which is awesome. Great way to make some extra money, especially selling a vehicle right now. So good for you.
Chris:
And Brad gave me a hard one, so I'm sorry if I butcher this name. Is that Laura or Laura Pike? Art Like art? Yep, like art. Okay, I scored it extra hours with my side hustle and had a yard sale, so $200 extra quote found this week.
Brad:
Yeah, that's awesome. Good for you, Laura.
Kati:
And Kim Schmidt, who I believe is one of our top contributors and kind of a newer group member in Roots, staying on budget All bills paid, monthly budget done and they won one of the Amazon gift cards in bingo.
Brad:
Yeah, we have a big win. Had Roots bingo the other night. Our members love that we celebrate. We kind of finish off our sessions with some games and bingo. Kim was one of our lucky winners. It's always a good time.
Ryan:
And Jordan Hayes still didn't use debt and no overdrafts, I turned off allowing charges over the available funds.
Brad:
Awesome Way to go, Jordan. Congratulations to all you guys. And hey, if you're just getting started with our podcast, or maybe you've been listening for some time and you're interested in how you can get started on the road to financial freedom, and if you're interested in that, you can get started at debtfreedad. com. Sign up for our free a life without payments workshop, where I'm going to show you the first steps that have helped tens of thousands of people just like you and I. Kick financial stress and worry for good.
Speaker 2:
We'll see you guys next week. Thanks for listening to the debt free dad podcast. Connect with us on Facebook, tik Tok, youtube and Instagram at Brad Nelson debt free dad. If you found value in today's episode, please leave a rating and review. We so appreciate it. For resources, show notes and links mentioned in today's show, visit balancedcents. com. That's balancedcents. com. Catch you next week.
