Live On Less And You'll Never Be Stuck

Live On Less And You’ll Never Be Stuck

Live with less

Hey everyone! Today I have a guest post for you from Financial Panther (it’s a Simpsons reference if you were wondering). He is a lawyer that paid off $87,000 of student loan debt, and also took a $50,000 pay cut to have a better quality of life. Enjoy! ~M$M

Do any internet search and I’m sure you can find articles telling you that switching jobs is a great way to increase your salary. This isn’t one of those articles. Instead of getting a raise, I switched jobs and rewarded myself with a $50,000 pay cut. Yes, if making more money is the goal, then I’m pretty much a fool.

It’s not often that someone voluntarily chooses to take a $50,000 pay cut. Most people are trying to figure out ways to get a job making more money, not less. But for me, after spending three years working as an attorney at a big law firm, I was burnt out and needed a change of pace.

That isn’t to say that there’s something inherently wrong with working at a big law firm. It just wasn’t a great fit for me. This past summer, I finally made the jump, leaving private practice and going into the public sector. As you can imagine, a government job doesn’t pay quite as well.

You’d think that a huge pay cut like that would mean that I’d have to drastically cut down on my lifestyle. But to my surprise, I found out that I was able to save just as much as I was saving in my previous job!  And I didn’t have to change my lifestyle at all. I basically took a pay cut as big as the average salary in the US, and I didn’t even blink an eye.

Not everyone would be able to do what I did.  Most of the people that I worked with got their first big paycheck and then suddenly needed to have all the nice things that came with it. Instead of spending my money on a fancy apartment and expensive clothes, I spent it all on my student loans. I coupled that by living on far less than I earned.

By the time I made the big job switch, I had wiped out $87,000 of student loans, built up a little bit of savings to my name, and most importantly, had gotten completely used to living on much less than I earned.

Being able to make a job change, just like that, was a real eye opener to me. I always understood that it was smart to live on less than you earn so that you can save more money. But it never really occurred to me that spending less than I earned also meant I’d have much more freedom to do what I wanted to do.

Living On Less Gives You Choices

When you spend less than you earn, you obviously can save more money. But a corollary is that you need much less money in order to live. You gain a ton of flexibility from this simple act.

An easy way to think about how spending less gives you choices is to think about the type of jobs you can do based on how much you need to live. If you need very little in order to live comfortably, then the entire world is yours. You can literally do anything you want.  Start up a business. Work as a bartender. Or go for the highest paying, most baller job you can get. The world becomes your oyster!

Just look at Bobby. Do you think he could’ve quit his job and gone all in on this blog if he was spending a ton of money every month? <– No, I couldn’t have! ~M$M

On the other hand, if you’re a big time spender, by necessity, your choices will be limited. Someone spending six figures a year has to have a job making six figures a year. If you previously had 100% of the world of jobs at your disposal, you’ve now drastically cut down your choices. If you find yourself needing to make a change, your choices are either stick it out or find a similar job paying you the same amount of money. You better hope you like your job.

The majority of my colleagues got really used to the money they made. I definitely wasn’t the only person who was unhappy with my job, but not everyone could afford to switch jobs like I could. All they could do was stick it out or hope something better came along.  They were tied to their paychecks. And they needed those paychecks to pay for all their stuff.

Your Income Won’t Always Go Up

I think most people have a general belief that they’ll make more money in the future. That’s not a bad thing to believe and it’s probably true over the long term. The problem though is that there’s no guarantee that your income at any particular point in time will be higher than it is today.

When most people chart their income on a graph, they probably think of it looking sort of like this:

In reality though, your income will probably look more like this:

Like the stock market, your income is probably going to trend upward over time. But it won’t necessarily be a smooth ride. One year you might be crushing it. Another year, something unexpected might happen and you make much less. Maybe you’re not happy with your job. Maybe you get laid off. Or you go back to school. Or any number of things that throws a wrench in your plans.

Just because you make a certain amount now doesn’t mean that you’ll make that same amount next year.

It’s a bumpy ride to the top. And the ability to live on less is your lifeboat. You never know what tomorrow might bring. I would never have been able to switch jobs and take such a big pay cut if I had spent like I would always make more tomorrow.

You Won’t Save More Later

Even if you’re right and your income always goes up, you’re probably fooling yourself if you think that you’ll just magically start spending less later. How often have we told ourselves that we’ll figure out a way to save more once we start making more money?

The problem is, money has a funny way of buying things without you even realizing it. When you were in college or grad school, you probably didn’t have that many expenses, simply because you didn’t have the money.

I know when I was in law school, most of my classmates lived with multiple roommates in shabby apartments. I rented a room in a rundown, four bedroom house. We were broke students. We didn’t have the money to live a baller lifestyle.

But after we received those first big paychecks, suddenly, we needed to have all the things we didn’t have before. The same people who were living perfectly fine before, now suddenly needed to live in a luxury apartment in the hip part of town. They needed to try all the fancy restaurants around them. And they definitely needed to start shopping at the Whole Foods down the street.

If you think you’ll start saving more later, just remember how little you used to need, and how much you suddenly need now. It’s easy to increase your lifestyle. It’s not so easy to decrease it.

Pay Off Your Debt, Live On Less, And You’ll Never Be Stuck

When it comes to the make more versus spend less debate, I’m firmly on the side of spend less. Making more money is great for sure, but if you’re making a ton and spending it all, it really doesn’t matter what type of money you bring in. You’ll just end up in the same position as everyone else.

I look back at a lot of the folks who I used to work with.  There are people still there who I know aren’t happy with the job. But they can’t just switch jobs like I could.  They need the paycheck because they have bills coming in from all directions – rent, student loans, credit cards, food, whatever. All they can do is stick it out or hope something better comes along.  They don’t have a lot of choices. They’re stuck.

Take it from me – spend less than you earn and pay off your debt quickly. Do what you can to rely on as little of your paycheck as possible. Even if you love your job, you never know what the future will hold. Live on less so that you’ll never be stuck doing something you don’t want to do.

You don’t have to take a $50,000 pay cut like I did! But it’s nice if you can do it and not have to change a thing.

Question for you:

What could you reasonably cut out of your life that you haven’t?


Live differently. Your bank accounts will thank me later. ~M$M

Don't miss another M$M post.

Sign up for the M$M newsletter to get new posts sent directly to your inbox when they go up on the site. As a bonus - I'll send you reviews of my favorite free personal finance tools and ways to make extra money with a side hustle!

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit

23 comments… add one
  • Mrs. Picky Pincher Jan 4, 2017, 9:06 am

    Good point! And good for you for taking a pay cut to be happier. I’d argue that the $50,000 pay cut saves you money in the long run–you feel less compulsion to buy big cars, take expensive trips, etc. when you’re satisfied with your life.

    We currently spend way too much money on food, which is something we’ve been working on for a while. I’d also love to eliminate our $300/mo car payment, but the numbers just don’t work out in our favor to pay that off instead of our student loans (interest rates and whatnot).

    • Millennial Money Man Jan 4, 2017, 9:08 am

      I’d agree with that – as I’ve started to make more money, it’s REALLY tempting to spend more. Such a weird thing.

    • Financial Panther Jan 4, 2017, 9:15 am

      I totally never thought about it making me less compelled to buy the big cars, but you’re totally right. When I made more, my colleagues also made more, and that meant a lot more pressure to keep up with everyone else (everyone’s living in a luxury apartment, wearing nice clothes, talking about all the cool stuff they did and the fancy dinners they ate). I’m working in a much more humble working environment now.

      Food is also my huge weakness. I go out to eat way too much.

      • Bryan Jan 5, 2017, 11:57 am

        Maybe it’s because I have a simple mind or because I love the Simpsons (or probably both), I laughed out loud (at work) when I saw your FP name and immediately thought of that Simpson’s Episode.

        Regardless, this was a great article.

  • Mike B. Jan 4, 2017, 9:28 am

    Strong article, FP. I really like your perspective on mastering your money, and not letting it control you. Money will definitely buy things itself, without the buyer’s permission sometimes. I’m really impressed that you could comfortably live on so much less than you were previously accustomed to. A lot of great takeaways from this post. Thumbs up!

    • Financial Panther Jan 4, 2017, 9:49 am

      Thanks Mike! I was surprised as well. I really thought there’d be some adjustment period, but I must have spent so much time living on less that I never even realized it!

  • Mrs. Mad Money Monster Jan 4, 2017, 9:49 am

    What is the common argument? After you hit a certain salary and cover the basics (I think around 50k in the US), more money doesn’t make you happier. That is especially true if you’re spending all the excess! I always encourage people to increase the gap between their income and expenses and invest the rest. It’s basically another way of saying, live below your means.

    Congrats on being able to take the pay cut and become happier. If we can’t be happy, there’s no point in having the high salary. This post is making me want to sell my already reasonably-sized home and move into a mobile home/travel trailer to increase my gap.

    Thanks for the inspirational post!

    Mrs. Mad Money Monster

    • Financial Panther Jan 4, 2017, 10:17 am

      I think there’s a big diminishing return after you hit around $70k per year income.

      And thanks! There are a ton of people who go with the tiny home living and I bet you could really make a huge gap between your expenses and income by doing that. I think I’d probably try staying in a tiny home on Airbnb for a little bit first, just to see what it’s like.

  • Akemi Jan 4, 2017, 11:56 am

    Hi! Thank you for sharing your story! I’m working on the final $70k in student loans for a physical therapy degree. I’m lucky enough to be able to have a profession that will always have jobs- and I’m looking forward to a time when I won’t have to worry about the loan payment every month. I’d like to spend more time on creative pursuits like jewelry making- I know it might not make me as much money, but I feel that I would be more fulfilled.

    • Financial Panther Jan 4, 2017, 2:59 pm

      No problem Akemi! I hope my story helped you out in some way, and thank you so much for reading. Keep on that hustle and do what you can to get rid of that $70k of loans! You’ll really have so many more options once you’re done. The great thing is that with a PT degree, you should hopefully have no problem finding some good gigs.

  • Matt Spillar Jan 4, 2017, 11:57 am

    Great post FP! You make a lot of good points throughout, I definitely agree that the flexibility and freedom that comes with living on less is such a huge key. I loved the income graphs you included. Whenever it comes to earning more money, saving more money, losing weight, etc. most people have the attitude of “eventually I’ll get to that point.” It’s a big wakeup call that it’s not always the case, you need to start establishing those habits now and you also can’t count on your income always going up.

    • Financial Panther Jan 4, 2017, 2:02 pm

      Thanks Matt! So true. I think if you say I’ll save more later, that’s just asking for trouble. Much better to cut back early on when you’re not used to the money, then rest easy knowing you don’t “need” the paycheck.

  • Heidi Jan 4, 2017, 5:08 pm

    I love this! My husband has never had a desire to “climb the corporate ladder”, but he has a good income and has been with his company nearly 22 years and we’ve found ourselves in a position where our only debt it our mortgage (which we have less than 13 years left on a 15yr mortgage). Because of our financial choices (living below our means, having a fully funded 6mo emergency fund, being mostly debt free, driving older cars, etc.) we’re considering leaving “corporate America” and buying a small house with the equity we currently have so he can reduce his stress level considerably and go get a job he enjoys instead of one he *has* to have (We live in an expensive part of our city because it’s 5 minutes from his office so the lack of a commute means we pay more per square foot. If he doesn’t have this job we can live in a less expensive suburb and pay cash for our house). This wouldn’t be an option if we were “keeping up with the Jonses” or if we still had our student loan and car debt.

  • Go Finance Yourself! Jan 4, 2017, 7:01 pm

    Great point on “You won’t save more later.” When you get used to having the money at your disposal for so many years, starting to save it will feel like a huge pay cut. I’m thankful that I learned to pay yourself first when I first started working. I’ve always saved a good portion of my paycheck from day 1. I set up automatic transfers to my investment and savings account. You can’t miss what you never had! Had I not done this from the start, I’m not sure I would have been able to transition to higher savings rate later on.

    • Financial Panther Jan 4, 2017, 9:47 pm

      The automation part is key. Once its gone, you just don’t notice it. It’s so much harder to have to cut back later then it is to cut back before you even know what its like to live on more.

  • Chad Burkholder Jan 5, 2017, 3:00 pm

    Great Post! I’m amazed at how many people think that making more money is the answer. I got myself into a little bit of a pinch financially in my younger years and have found that living on less is WAY better. There is WAY less stress and more joy coming from doing what makes you happy.
    Thanks for the good read!

    • Financial Panther Jan 5, 2017, 3:10 pm

      Glad you enjoyed it Chad. And happy to hear that you’ve got less stress in your life. That’s definitely something that’s underestimated too. When you’re living off a lot of your income, you just put so much more stress into your world.

  • Mrs. COD Jan 6, 2017, 6:56 am

    So true that living on less opens up so many doors! We paid off student loans and some other stupid debt last year and discovered we could live on one income, so now I get to stay home with the kiddos! That was a choice previously unavailable to us. Now we are still saving quite a bit even on one income. Glad you like your new position! Thanks for sharing.

  • Adam Mollica Jan 10, 2017, 2:45 pm

    LOVE THIS! Bobby, I’m using your guide to start my own blog. I’m going to be blogging about living minimally and ethically. In an effort to fuel some posts, I watched the documentary “Minimalism: A Documentary About the Important Things;” and what this post is about was one of their main points.

    Here’s a quote from the documentary:

    “We’re living our life depending on the space we’ve got, rather than creating our space to fit our lives.”

    I think that can so easily carry over to finances as well.

    Thanks for sharing!

    • Millennial Money Man Jan 10, 2017, 3:42 pm

      Glad to hear it Adam! People keep telling me to check out that documentary – I really need to do it soon!

  • Mike Jan 15, 2017, 10:17 pm

    Excellent post. It’s amazing to me how many people live on exactly what they make or a little more. The lower your living expenses, the more options you have.

Leave a Comment