Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
If I earn $240k/year, but owe $750,000 it would cost me about $6000/month to pay it back over 20 years at 6.8%, which is a pretty high interest rate.
However, my take home would be about $12,000/month, so that is only 50%, leaving me $6,000 every month to work with. Certainly not the best scenario because of the debt, but I think it is better than earning $50,000/year, where your take home is only about $3,000/month.
So I reject the premise of the OP, and would prefer low debt relative to my income level, rather than the more simplistic high debt vs no debt.
I can't think of a situation where I'd choose low income but no debt over higher income but significant debt, especially in a country that has extensive bankruptcy laws and where you can negotiate with lenders. Even with the problems that significant debt can cause--and noting that there is good debt and bad debt--the higher income provides you with more options to both tackle the debt and for when you emerge from under that debt.
For context, I've been low income and low debt and don't want to ever live like that again. Today, I am high income and have high debt, but most of my debt is mortgage debt, followed by student loans. My student loans are federal loans and I'm on an income driven repayment plan, so don't pay that much each month (and haven't been paying for the past 2 years due to Covid forbearance). I much prefer living with a high income/high debt than I did with low income and no debt. Low income and low debt left me living far wore off and with far fewer options than I have had since I had a high income.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,577 posts, read 81,186,228 times
Reputation: 57813
It seems that higher income but lots of debt is far better, because with a high income one can afford to make the payments on the debt while still paying for whatever else is needed, and enjoying nice things and vacations.
High income and no debt seems the best of all possible scenarios.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
