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6 days ago
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Man Calls Dave Ramsey For Guidance Because He Has No Savings Despite Earning $200K Annually
The Federal Reserve estimates America's median household income is $77,000 annually. With that in mind, you might think that someone earning over $200,000 per year would have no problem saving money. Unfortunately, it's not uncommon for high-wage earners to struggle with financial discipline. Investment guru Dave Ramsey recently offered some common-sense advice to a man who earns over $200,000 per year but has no savings. Don't Miss: Maximize saving for your retirement and cut down on taxes: . Invest where it hurts — and help millions heal:. Jackson is a 25-year-old earning over $200,000 per year working as a heavy-duty mechanic. Despite that high salary and not carrying any debt, Jackson still has trouble managing money, and he recently called into the "Dave Ramsey Show" to discuss his situation. "I get my paychecks and I pay my bills with it and then I don't look at my account all that much," he said. "I feel like I make too much money to not have some sort of a plan, and I don't want to feel like a fool who squanders a fortune," he continued. Ramsey told Jackson he was already further ahead than many of his contemporaries. "Just asking the question puts you in the top 5%, dude," said Ramsey. Acknowledging a problem is the first step towards solving it, and Jackson's problem isn't unique. It's tempting to believe that much money will always flow in and spend it accordingly. Family is another consideration. People earning $200,000 per year are often perceived as "rich" by relatives who lean on them for financial support. It creates a situation where someone like Jackson can lose track of their money. Trending: That's why Ramsey advised Jackson to set a budget and stick to it. Ramsey believes it's essential to have a plan for how to spend the money before it hits your bank account. "We're going to write it down — before the month begins — where every dollar is going to go," he said. "Give every dollar an assignment. Contract with yourself. If you have a spouse, do it with your spouse." Ramsey is also notoriously debt-averse. He is a firm believer in getting out of debt as quickly as possible and staying out of debt. Avoiding high-interest credit card debt can be difficult for high wage earners because lenders and credit card providers inundate them with offers. While it's good to have some credit, it's important not to use all that rope to hang yourself. Spending money on high-interest credit card payments never helped anyone retire comfortably. By contrast, setting a budget that includes money to be put aside for emergency expenses, investing, and retirement is a time-tested formula for successful money management. However, some people may require assistance in doing so. Many people would benefit from the advice of a financial professional in creating a budget and recalibrating it as necessary. If it worked for Ramsey and it could work for you, worst thing you can do is nothing. Earning a six-figure salary does not guarantee long-term financial health. Look no further than the ranks of retired NFL players. Despite a minimum salary that pays well over six-figures, the American Bankruptcy Institute reports that 15.7% of NFL players will file for bankruptcy after retirement. Although it's true NFL careers can last only a few years, many players look back and lament the fact they never made their money work for them. That's the essence of Ramsey's advice. When you have a mission for every dollar, you're much less likely to squander it on indulgent purchases like jewelry and cars that have no long-term value. By contrast, some wise investments in real estate or dividend stocks can generate passive income that can be a lifesaver when the big checks stop rolling in. Read Next: Here's what Americans think you need to be considered Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Man Calls Dave Ramsey For Guidance Because He Has No Savings Despite Earning $200K Annually originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
16-05-2025
- Business
- Yahoo
5 Ways To Become Financially Secure on a Middle-Class Salary
Defining financial class isn't just based on the income you make. If it was then, by the Pew Research Center's definition of 'middle class,' you'd be firmly in that category if you earn between two-thirds and twice the U.S. median household income (which is $80,610). That means you'd be considered middle class if you earn $53,740 to $161,220 a year. Read More: Find Out: But income is only part of the bigger picture. Here are some of the top ways to become financially secure on a middle-class salary in the U.S. Your salary is a good starting point to determine your financial well-being, but you need to consider the bigger picture. Things like household size, where you live and your other financial obligations also matter. 'A big misconception is that a six-figure salary automatically means financial security,' said Melissa Murphy Pavone, Founder at Mindful Financial Partners. 'I work with clients making $150K+ who feel like they're barely treading water, especially in high-cost areas like New York.' Imagine a family of four living on $161,220 in New York City. The average home costs about $796,000 there. Tack on other common expenses like childcare, credit cards or other debts, groceries, healthcare and transportation, and you're looking at a potentially tight budget. Now, imagine someone with no kids or debts living in Columbus, Ohio where homes cost an average of $253,000. Assuming they have solid budgeting skills and pay attention to their spending and savings, they could be doing quite well for themselves on that salary. High earners live paycheck-to-paycheck or struggle with debt all the time. Take a California couple who recently called in to the Dave Ramsey Show as an example. They earn about $300,000 a year and owe $119,000 in debt (not including their mortgage). They also spend roughly $5,000 a month on their housing payment and are struggling to lower their expenses and pay off what they owe. No matter how much you're earning, one of the best ways to become financially secure is to make a spending plan or budget. You can keep things simple. For instance, you could follow the 50-30-20 budgeting rule wherein your income goes into the following categories: 50% for needs 30% for wants 20% for savings or debt Or you can break down your spending into larger categories like: Mortgage or rent Utilities Transportation Gas Clothing Food Insurance / healthcare Debts Saving and investing Miscellaneous Whatever you do, find a budget that works for you. If you find yourself spending too much in certain categories, try to back off a little and put that money toward more important things. According to Experian, the average person carries $6,730 in credit card debt. That might not seem like much if you're earning twice the median income, have no other debt obligations and are keeping other costs reasonably low. But if you have that much credit card debt, chances are you've got a spending problem — or you haven't prioritized paying off your balances. And considering how high credit card interest rates are (nearly 23% on average), that just means you're spending more than you ought. If you want to become more financially secure, start by tackling those debts. You can always use the debt snowball method, which focuses on paying off the smallest balance first before moving on to the next-smallest balance and so on. Many financial experts suggest having at least three to six months' worth of expenses in an emergency fund. If you're self-employed or have kids, you might want to shoot for a higher amount. A lot of middle-class households don't have an emergency fund at all. What this means is that even the smallest financial hiccup — like a surprise medical bill — could be detrimental to their monthly budget. It could even mean taking on a new debt to cover that bill. 'Middle class isn't just about income, it's about lifestyle sustainability. Can you cover your needs, enjoy some wants, save for the future, and absorb a financial curveball without falling apart? That's the heart of middle class,' said Pavone. Secure your household financially. Build an emergency fund. Your net worth is essentially the value of all your assets minus all your liabilities (or debts). If you owe $200,000 on a house valued at $500,000, then your net worth is $300,000 (assuming no other debts). If you also have $100,000 in retirement savings or investments, add that to your total net worth. Knowing your net worth is key to understanding how financially secure you are. It gives you a more accurate picture of your overall financial health than income alone. But middle-class households often have a negative net worth — they just don't always realize it. 'In reality, many middle-class families are quietly carrying debt, juggling rising expenses, and struggling to keep up appearances,' said Pavone. 'It is more important to measure how much you save versus how much you make.' More From GOBankingRates What $1 Million in Retirement Savings Looks Like in Monthly Spending Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck 5 Little-Known Ways to Make Summer Travel More Affordable 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses Sources: Melissa Murphy Pavone, Founder at Mindful Financial Partners Pew Research, 'Are you in the U.S. middle class? Try our income calculator' 'Income in the United States: 2023' Zillow, Columbus, OH Housing Market: 2025 Home Prices & Trends' Zillow, 'New York, NY Housing Market: 2025 Home Prices & Trends' Dave Ramsey Show, 'Where The Flip Are You People Spending Money?' Experian, 'Average Credit Card Debt Increases 3.5% to $6,730 in 2024' Consumer Financial Protection Bureau, 'Credit card interest rate margins at all-time high' Ramsey Solutions, 'Emergency Fund: Why You Need One and How Much to Save' This article originally appeared on 5 Ways To Become Financially Secure on a Middle-Class Salary Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-05-2025
- Business
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59-Year-Old Sold Her $518k House To Pay Off Debt —But Dave Ramsey Warns She's Now Facing A 'Major Problem' Heading Into Retirement Without A Home
Most people dream of entering retirement debt-free and set for the golden years. Mary, a 59-year-old from Florida, thought she was making all the right moves. She sold her $518,000 home, wiped out nearly all her debt, and called the "Dave Ramsey Show" feeling optimistic. But what seemed like a financial win quickly turned into a reality check. "I just recently sold my home and paid off almost all of my debt," Mary told Ramsey. "But I'm 59 and I do not have any money in retirement." Don't Miss: Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Her plan? Use the remaining $290,000 from the sale to either buy another home or beef up her investments. She hoped Ramsey would greenlight putting most of it into an investment account and maybe taking on a small mortgage. That's when he hit her with the truth bomb. "If you do not have a paid-for house when you're through working, you're going to have a major problem," Ramsey warned. "It destabilizes your whole situation." Mary's instincts were understandable. According to the Nationwide Retirement Institute's Advisor Authority 2024 study, about 26% of retirees still carry a mortgage—a number that's steadily rising. And the Federal Reserve's most recent Survey of Consumer Finances found that retirees aged 65 to 74 carry an average debt of $134,950, including mortgages, credit cards, and car loans. Experts widely agree that entering retirement without a paid-off home can stretch limited retirement income dangerously thin. Trending: Many are using retirement income calculators to check if they're on pace — Ramsey's advice? Skip the mortgage entirely. He proposed Mary buy a modest $200,000 home outright, pay off her car lease, and use the remaining funds to kick-start her retirement investments. "I would live in that $200,000 house for three to five years while I got my nest egg roaring," he said. Ramsey also stressed a broader point that many retirees—and even financial advisors—emphasize: housing stability is just as important as retirement savings. Without a paid-off home, even a solid nest egg can quickly drain under the weight of monthly mortgage payments. And while Mary's $70,000-a-year income from her small business bookkeeping isn't bad, Ramsey noted she had to prove to herself she could save aggressively going forward. "You've not saved a dime in 59 years on the planet," he pointed out bluntly. "So you got some proving to do to yourself—not to me, but to yourself—that you can do this."His long-term plan? Get her to $500,000 in retirement savings over the next decade or so. Only then, he said, should she even consider moving up to a more expensive home—paid in full, of course. The irony of Mary's situation wasn't lost on listeners. What looked like a smart, debt-free move—selling the home—actually put her at risk of financial instability in retirement. As Ramsey put it, retiring with "zero money or close to zero money and a nice paid-for house is not a plan." And selling your house without a retirement plan? Well, that's just trading one problem for another. Read Next: Shark Tank's Kevin O'Leary called Missing Ring his biggest mistake — Don't repeat history— Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article 59-Year-Old Sold Her $518k House To Pay Off Debt —But Dave Ramsey Warns She's Now Facing A 'Major Problem' Heading Into Retirement Without A Home originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
