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  • Writer's pictureRyan Luby

300K a year and still broke

No this is not a personal story, more of a clickbait title to get a point across.

Everyone focuses on increasing income, but no one wants to face the factor which really moves the needle in personal finance.. Spending.

The thing is you can increase income 2x, 5x, even 10x.. but if you haven't mastered spending then you will still live paycheck to paycheck.. Even if you do make $300k a year.

Our spending habits remind me of Parkinson’s law..

"work expands so as to fill the time available for its completion".

Ever notice how your income follows the same principle?

We'll call it.. Poor Man's Law - Personal spending expands so as to spend every dollar available until total depletion…


No matter what amount gets deposited into your account every week or two, you still end up spending just about every dollar.

And until you figure out how to live on far less dollars than you earn consistently, your income is truly irrelevant.

See, the richest looking people, are not rich..

Oftentimes they still haven’t managed to live on less dollars, they just learned to earn more.

They might be the ones who mastered income.. but that doesn't tell you anything about their spending.

The truly financially rich people, are those who live in the same neighborhood as you, and don’t look very different than you. In 2017 Money magazine published a story explaining the most commonly owned car by the financially rich is a Ford F-150..

Which may be less expensive that what you’re driving?

It’s so common to hear people talk about their desire for more money, how they wish they could make more money, and how it would solve this and that.. But you never hear people talking about, “If only I didn’t spend so much money on ridiculously unnecessary things, gezz my life would be so much easier if I didn’t have absurd spending habits.”

Even though addressing the spending issue would really solve the problem, while increasing income just makes the problem bigger. Literally.

Obviously there is a limit to how much you can limit your spending, so it isn’t like you need to sell everything you own and starve yourself. Nor is it about depriving yourself of what you need and love. Though both of those might be better strategies than what most of us are currently employing.

The point is most of us spend money on things we really don’t even care about, that don’t even make us happy.

For example you might love going out to eat at restaurants. But the difference in satisfaction from eating out 1-2 times a month, versus 5 days a week is not noticable emotionally, but debilitating financially.

What you and Snoop need to have in common

In my post Mind on my money, and my money on my mind I talked about the first step in mastering your personal finances being to just review your spending. Start doing this by printing out last 3 months statements on all accounts, and go through every transaction. It’s best to categorize into 3 categories:




Use three separate highlighters and categorize every dollar spent. Needs for something you can not lose or decrease the payment of. Wants for things you did not need to buy, and or items you could have gotten much cheaper, and greed on anything that was just down right unnecessary and didn’t even make you happy or feel better. After you do that.. Try to hold it together and log into to link all accounts you have and use all of Mints free tracking resources. Don’t worry, you don’t have to review your statements anymore if you don’t want to. But from now on review spending once a week on Mint, and once a month from your personal online banking.

Now for the fun part.

Living on less.

But I know it’s difficult and you save as much as you can, you can’t possibly save another dime.

If you have TV, and rent a box every month. Cancel immediately. (There’s at least $40-$100+ of savings/ month)

You can still get your favorite shows, just buy your own modem, and router, and pay for a streaming service.

But that’s just one example.

If you like eating out with friends, stop eating out with friends.. But start having friends over for dinner and drinks and make everyone bring something and you will end up having more fun and saving money.

Notice not one suggestion was about stopping something that truly makes you happy. You can still watch tv, and eat out. But be smart about it.

The point is not deprivation, the point is happiness.

Truly evaluate what makes you happy. Here’s a secret.. It will not be new cars, bigger TV’s, fancy shoes, or dining out weekly.

Most of what we spend our money on, is a waste. We can get the same satisfaction for far less cost.

That is the point.

But enough philosophy, here’s why your spending is far more important than your income.

Why live on less?

Based on a few assumptions using average rate of return on index funds, retired software engineer & personal finance blogger Mr. Money Mustache found you need to save roughly 25 times your annual spending to be able to retire forever. That’s it. And since you already tracked your spending you can determine your annual spending and find out your retirement number.

If the number looks absurd, you’re getting closer to realizing my point.

If you live off of $55,000 a year, then you need to save $1,375,000 to retire and literally never work again.

But if you can learn to live on less..

Say you increase your savings rate, pay off high interest debt, , sell your financed car to buy a cheap used one, maybe pay down your mortgage, or even buy a rental property.. You do enough great work to get yourself and your family down to a luxurious $35,000 a year of annual spending.

That means you only need $875,000 to retire forever!

Don’t get me wrong that’s a lot of money. But if I asked you what you needed to retire forever you probably would have given me an absurd number well over 1 or 2 million dollars.

And the trick is.. I know you. You’re not going to never make a dollar again, so the number is probably even lower. You will have the freedom to earn money still, but it will be by doing something you enjoy.

You can invest your massive savings solely in index funds and live off the dividends forever.


In general, we should all be working to live on around 60% of our take home pay, or less.

I know that’s extreme (it’s not) and I’m not asking you to do it today, but maybe start today just living on 90%.

And each month decrease that number by 1%. It will be a small barely detectable nudge to your savings rate.

With your savings you can pay down high interest debt, your auto loan, mortgage.. Whatever. With your excess you should keep $2k in an emergency account, and put the rest in index funds. Orrr if you want to accelerate your savings and speed towards your retirement you can buy real estate investment properties to earn much higher returns than possible in any stock, bond, or index fund.

People seem to forget two things.

Number one, your happiness is most important.

And two,

In life we acquire money, to earn freedom. So every dollar spent on buying stuff, directly subtracts from the freedom you earn.

Thus, delaying your freedom.

Don’t forget that.

Learn more on this:

Blog: Mr. Money Mustache

Podcast: Living Beautifully on 25k/ year

Article: 3 tricks to live better on less

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