Six Figures and Still Struggling
Written by Louis Barajas
I first heard about “earning six figures” when I was in college at UCLA. I remember the day clearly. I was having dinner with a new group of friends who lived in the same dorm complex – Dykstra Hall. It was 1979, I had just turned 18, and I was a country bumpkin from East Los Angeles. The guys around the dinner table were discussing the types of careers they would need to have to earn six figures. I asked naively – what do you mean by earning six figures? They said – “Don’t you know? It’s earning over one hundred thousand dollars a year. That type of income will put you on easy street my friend.” Honestly, I couldn’t imagine then that it was possible to earn that much money in any given year. It would have taken my dad 4 to 5 years to earn that much money back then (and I knew this because I used to prepare his tax returns). To be quite honest, I didn’t know anyone or have access to anyone earning six figures.
Now, let‘s move to the year 2006. I’m driving home from work one afternoon listening to a Los Angeles talk radio show, when I hear the host say – “Are you earning six figures and still having a hard time making ends meet? I earn over six figures a year and just the other day I drove through a Taco Bell and had to look for change in my car to buy a couple of tacos. Call me if you earn six figures and are living paycheck to paycheck. I earn six figures and I don’t feel rich.” Call after call, people were complaining how they were earning six figures and were barely making it.
I usually see that most people struggle with money no matter what amount of monthly income they bring home. In an average week, I’ll hear a couple say – “We only make $45,000 a year and we can barely make it financially” and then I’ll hear another couple say, “Oh Louis, we only make $120,000 a year and can barely live on that.”
What I have found over my career is that people will tend to spend the amount of income they bring home. Earning a better living doesn’t mean you are living a better life, it just means that you have more expensive things. What is important is that you create a financial plan to live within your means and align your plan with the critical core values that you desire most – like creating financial freedom or having peace of mind. Aligning your money with your priorities and values is the best way I have found to get your finances in control so you can live a worry-free and stress-free life. Because in the end my friends…I have yet to see a U-Haul behind a hearse. I have found that the person with the most toys still dies and ends up leaving their family with a lot of debt.