It’s possible, but requires discipline and commitment.

Striving for a high income vs. cutting your spending and investing the maximum possible. Which strategy comes out on top?

It’s not easy to withold buying stuff. Especially when anything you could ever want is just a click or finger tap away. Dave Ramsey is known for making the point that credit cards help numb the “pain” of spending, making it feel like it’s not real money. Until the bill comes due.

Combined with the ease of e-commerce, credit cards make for a potent combination that can lead to fiscal disaster. Making matters worse is the current subscription trend. Not just streaming companies like Netflix, either. Even razor blade companies want you to subscribe for a monthly fee. Wal-Mart just tried to get me to start a toothpaste subscription. It’s getting out of hand.

Diligently investing a part of every paycheck into retirement accounts and personal investments, particularly into S&P 500 index funds/ETFs is probably the best and most assured path to wealth for the average person. The problem is most people in the United States don’t make a high income. The median individual income is only $37,000, while the national average wage index is only around $64,000.

If you live in a major city or have a family, those incomes hardly go far. This is why side hustle culture has become so necessary and so big today. Everyone has some kind of side gig or second or even third job. Because without one, it’s almost impossible to get ahead.

It’s easy to blame things like out of control cost of living expenses, greedy companies, competition, industry fluctuations, economic crises, and inflation. Those things are at fault in many cases. But very often people set themselves up to fail.

It’s not an income problem, it’s a spending problem.

Years ago I worked for a market research company. When our director got promoted to the Vice President level overseeing our facility, she immediately went out and financed a downtown condo and a new Cadillac Escalade. All while declaring openly she had “no idea” how she was going to pay for any of it. Her new “big” salary was all of in the $70,000 area.

Another guy I knew at another place did something similar. When he got a promotion he ran out and financed a new Ford SUV, justifying it as a “need” because he went on camping trips a lot and needed something to pull his camper. Oh, and he also bought a high-end camper, too. Something he was somehow convinced would actually save him money in the long run on lodging costs for his family. All on a salary of around $100,000.

I worked with one lady who was studying for a Masters in Psychology so she could get higher pay in the mental health field. She was already $40k in the hole in student loans, with more to come. When I asked her how much she stood to gain once she had this prestigious degree, she just smiled and shrugged her shoulders.

I’ve screwed myself, too. Twelve years ago I was drowning in debt. I had about $20,000 in student loan debt, $6,500 in an auto loan, and two credit cards maxed out. What was really sinking me was the student loan, as my payments were being garnished out of my paycheck. Garnishment is not a fancy side dish, by the way. It’s a horrible thing that allows your employer to extract money from your paycheck for repayment to the government. It sucks. Before my wages became garnished, I was actually doing okay, even though I was only making about $35,000 a year. I had extra money every month. I was contributing what I could to my retirement accounts. But that garnishment took the maximum allowable of 15% out of my income. A huge chunk.

On top of that, I had constant car troubles. Eventually, I was forced to finance a newer car since my beaters kept breaking down. That left me with a monthly auto payment and a much higher insurance rate. Between those and gas and tolls I was paying almost $750 a month just to drive a car back and forth to work. Mere existence became a living nightmare.

Looking back, my wounds were largely self-inflicted. I made the wreckless decision to take out student loans for a private college that was way out of my economic station. For a worthless liberal arts degree, too. I chose to keep working in a bad industry (printing) that was undergoing consolidation, that offered little real prospects for growth and promotion. Basically, I wandered onto a minefield and eventually got blown up.

Had I not hamstrug myself, even with my low income, I still would have been able to squeak out a win. I was investing something like 15% of my money until the garnishment hit. That was about $5,000 a year into my retirement accounts, including the company match. A mere $5,000 a year over 30 years earning an annual 10% comes out to almost $900,000. Not bad for a low salary.

As you can see, becoming wealthy is not all about just having a high income. You can make good money and cripple yourself with debt and high ticket purchases that lose value. You can also make a low income and still become a millionaire.

Nowadays, I invest close to 60% of my income. I live pretty simply. I still drive a beater car. I have zero revolving debt. Most importantly, I weigh spending options much more carefully. Generally, it’s not so much a lack of income that will get you. It’s making a few big mistakes that can set you up badly for years to come. Student loan debt. Car debt. Or something catastrophic like a nasty divorce or relationship issues.

As I’ve learned over the years, financial succes or failure very often comes down to making good or bad personal choices. Especially when you’re young. It doesn’t mean it’s all on you. Medical problems or family issues can make things very hard, and those struggles are not always anyone’s fault. But you should try to control what you can.