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.