Trent had an interesting post today about wealth. In it, he showed two (fictitious, I’m guessing) scenarios involving two 25-year-olds. One earned $100k and lived large, and another earned $35k, lived modestly and put money in savings.
To make his point, both scenarios were to the extreme.
But still, I think the post raises an interesting point on income and expenses in general.
If you have a large salary, but also have a lot of debt, your money may not go very far. You’re paying a portion of your income to debt repayment and interest.
Contrast that to someone who has a lower salary, but also is debt-free. That family might have more disposable income than the family with a lot of debt.
More disposable income means more to fund retirement, more to save, more to enjoy, and more to give. Oh, and more breathing room!