One of the biggest myths out there is that you need to make a lot of money in order to get out of debt. But that’s not true at all. You don’t have to make a lot of money to get out of debt.
Common feelings
When you hear debt-free stories from people who make more than you do, you might think things like this (and I know I used to):
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Well of course I could pay off debt if I made that kind of money. Duh. I’d like to see a realistic situation described for once.
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I can’t even imagine what it would be like to bring home that much money each month. They make more in four months than I make in a year! How hard could it be to get out of debt when you make that kind of money?
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I’ve never even had the things they “cut back on” in the first place. What am I supposed to cut?
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Great. So there’s basically no way I can get these debts paid off since I only make $______.
The thing is, it’s not about how much you make. It’s about how much you spend and borrow.
Dispelling the high income myth
If you make $100K a year and owe $450K in debt, are you any better off debt-reduction wise than someone who makes $32K a year and has $140K in debt?
Proportionally speaking, no.
Yes, you’ll have a bigger shovel (to borrow one of Dave Ramsey’s sayings). But you’ll also have a bigger hole.
Now true, someone who makes $100K a year is going to find it a lot easier to pay off $5K than someone who makes $32K would, but it would be highly unusual for someone with a debt-minded mentality to owe so little compared to their income. It’d be much more typical for their debt to be proportionally larger too.
And yes, they’ll probably have more places that they could cut back than you do if you’re making less.
(Maybe you’re not sending your kids to sleep away camp, horseback lessons, tennis, piano, and tutoring. Maybe you’re not taking annual family vacations to 5-star resorts. And so maybe there’s no way you could cut those things out.)
But unless you are living below the poverty line, you probably DO have things you could cut. (And if you ARE living below the poverty line, your best shot at getting out of debt is finding a way to bring in even a little bit of additional income.)
How to get out of debt, no matter what your current income is
It’s not about how much you make right now, or about how much someone else makes. If you want to get out of debt, what matters is what you do with whatever amount you are making.
In other words, it’s all about the choices you decide to make, and about taking a step back and looking at your situation objectively.
Probably you need to track your spending, budget, make a plan, and then stick to it until you’re debt free. And you can do that at any income level.
I'm Jackie Beck, personal finance writer and creator of 
I would say if you can’t pay off your revolving debt in 2-3 years with your current income, you need to focus on increasing your income. Cutting spending can ony get you so far…
That sounds like a good rule of thumb to me too :)
Cutting spending got me out of debt as our pay slowly decreased!
It took us 14 months but we paid off $ 97,000 (consumer debt)
making $140,000 per year .
Then we took on the mortgage and now 3 years later are completely
debt free and our income is down to $90,000 a year (slow economy)
18-24 months should be a good goal without having to sell things.
We sold nothing in the 3 years……kept all the toys!
Just worked hard and spent nothing. I even kept the horses fed.
Very good article! It’s all about determination, and hard work.
Wow that’s awesome! Hard work + low spending definitely pays off :)
Thanks, my friends think I’m a nut!
I’d rather be a debt free nut in this recession though.
;)
So so true. I try not to read into too many blogs that deeply. There are people who make more than me but I am richer than most in other areas. I have learned a ton about money and it’s responsibilities on Yakezie and many of the blogs on here but I have other journeys in my life and try to read for what it is and nothing more.
Sounds like you’re pretty good at not making needless comparisons then :)
Oh, I’ve had at least 3 out of those 4 thoughts. I get kinda judgey when I read articles like “Why a $200,000 Income Isn’t Enough” (I made that up, but you’ve probably seen similar ones).
It does help to get some perspective. I don’t “make a lot of money” for my high cost-of-living area, for example, but I make more than the average American household. I make enough to save 50%+ of my take-home income, including paying off all my student loans and avoiding debt for our wedding. And because I made that choice this year, I really shouldn’t be complaining about feeling budget-pinched. It’s a good reminder to myself to appreciate the good things I have, from both luck and conscious decision-making.
Yeah it’s always good to remind yourself, and to get a little perspective :)
I’ve definitely had those exact thoughts before. But I make myself feel better by reminding myself that I only need to focus on my wife and my’s situation. Thinking someone else is lucky or shouldn’t have any problems or whatever is the short road to useless thinking. Listening to others’ stories can be helpful in avoiding certain pitfalls or in getting some advice, but the comparison to others shoudl certainly be kept to a minimum!
Focusing on your situation is the way to go (unless you’re able to get useful tips from other’s situations too).
Dave Ramsey saved our financial lives!
It’s all about determination, and not making excuses!
And you’ve got that right!