{"id":1713,"date":"2017-06-22T08:13:00","date_gmt":"2017-06-22T12:13:00","guid":{"rendered":"https:\/\/marriagekidsandmoney.com\/?p=1713"},"modified":"2020-06-15T04:08:39","modified_gmt":"2020-06-15T04:08:39","slug":"why-increasing-your-income-wont-solve-your-financial-problems","status":"publish","type":"post","link":"https:\/\/marriagekidsandmoney.com\/why-increasing-your-income-wont-solve-your-financial-problems\/","title":{"rendered":"Why Increasing Your Income Won\u2019t Solve Your Financial Problems"},"content":{"rendered":"

I remember the day I received my first job offer. A $38,000 annual income! For a young guy right out of college, this seemed like an absolute boatload of money. I felt like Scrooge McDuck swimming through his vault of gold coins!<\/span><\/p>\n

That same year, I leased an Audi Convertible, bought my first home with 10% down and traveled on a week-long vacation to Mexico using my home equity line of credit (HELOC). I was in my early 20\u2019s, I was living paycheck to paycheck but I didn't care. I was having a blast.<\/span><\/p>\n

<\/p>\n

A few years later, I was able to increase my salary to $48,000. I decided that if I really wanted to make the big bucks, then I needed to go back school and get my MBA. It would be a lot of hard work and it would cost me $40,000 over the years I would be studying, but I thought \u201chey, that\u2019s what you have to do to really increase your income, right?\u201d<\/span><\/p>\n

Around my 27th birthday, I received a promotion that increased my salary up to $70,000 per year. I was ecstatic! This was the most money I\u2019ve ever made in my whole life and I felt like I was on top of the world. <\/span><\/p>\n

Reality Strikes<\/h3>\n

Even though that $70,000 income number sounded like rock star status to me, I continually felt strapped for cash and I didn\u2019t understand why. How could I be making almost double my original income and have nothing to show for it?<\/span><\/p>\n

Around this time, the housing market crashed. My HELOC that I had been using as an ATM was no longer available to me all of a sudden. The bank told me that my home value had decreased so much that I no longer had equity in my home. What the heck is \u201cequity\u201d? You mean I can\u2019t get money to go to Coachella this year? WTF?!<\/span><\/p>\n

\"Coachella
No more awesome dance moves at Coachella?!<\/figcaption><\/figure>\n

Luckily, I had a stable job and I was able to keep my position despite the pending Great Recession. This lack of available funds got me curious though. I decided to read some personal finance books <\/a>to try to get a better understanding of my disastrous money situation. There was one phrase that continually stood out to me during my research \u2026 <\/span>Net Worth.<\/b><\/p>\n

Net Worth Vs. Income<\/h3>\n

Now, I had heard the term \u201cNet Worth\u201d before but I never quite grasped the concept. I thought since I\u2019m making $70,000 per year, I must be doing quite well. My net worth must be way up there. Nope. <\/span><\/p>\n

My net worth was -$50,000. (That\u2019s a negative symbol there, just FYI. So it was really my Net \u201cUnworth\u201d). <\/span><\/p>\n

Evidently, my accumulation of stuff over the years (including lease cars, an underwater mortgage, student loans and a HELOC) was a negative drain on my net worth figure. Who knew, right?\u00a0<\/span><\/p>\n