How can we make so much money and still end up broke?


I’ve been meeting with too many broke people lately.

Not people without jobs, or homes, or savings and investments.

Just broke. They have good salaries, nice homes, much nicer cars than I have ever had in my life, generous pension plans, inheritances – broke.

They are upset.  One of them cried in my office – how can we work so hard and have good jobs and still not be making it?


There are lots of reasons which all end up reducing to one single thing – we are over committed.

In the old days it was called “over extended”, which seems a little judge-y now.  It’s not for anyone else to say we’ve over extended ourselves beyond our income.  We make our own decisions, we are adults, we know stuff. And if we are teachers or professors we know A LOT of stuff.

So I will use the term “over committed”.

Here are some things you may have “over committed” yourself to:

  • A house that cost too much
  • A cottage that cost too much
  • Two or three cars that cost too much
  • Activities that… well, you get the point

We do need a home, and we deserve to redecorate, and we need transportation, and we need to exercise, our kids need to play hockey or learn how to dance (do they, really? Maybe they just need to exercise – oops judge-y).

The difficulty is in justifying everything we need and committing to “the best”.

There are a lot of reasons why we can’t afford “the best”, even if our income is substantial.  We are trapped in a time loop between days gone by when people could afford the best, but the best didn’t cost as much (the sixties) and a time when people have borrowed far more money than they can ever pay off in their lifetime to achieve the best for themselves and their families, because the best is many times more expensive than it was 60 years ago. – relative to our income.

For example, my mother bought a home in the early 70’s.  It cost $4500 and her income was about $6000 a year.  It’s difficult to relate to those numbers (inflation IS a thing!) so the important take away is that her annual income was more than the cost of the home.

Younger clients with a combined income of about $90,000 recently bought a home for $360,000.  It may seem like a reasonable cost, or even low, depending on where you live until I point out that their home cost almost 4 times their income, compared to my mother’s that was less than her income.  In large cities, homes are selling for $1 to $2 million.  Even if you have Big City income, homes are still running at least 4 if not 10 times personal income – that is LITERALLY exponential!

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When the basic cost of living – a roof over our head – is out of whack compared to our income, and that cost mortgages us to a lifetime of debt, everything else we spend money on becomes part of that debt.  The definition of debt is buying something you don’t have the money for – something you can’t afford.

If we add to that a many-generations enculturated sense that we “deserve” the best, the stress on our income is exacerbated to a level that cannot be rescued.  While this young couple was careful in their choice, they probably could have found a home that cost less because it needed work or wasn’t in quite as convenient or comfortable a neighbourhood.

“The best” is good, of course, but I challenge you to start thinking in terms of “the best you can afford”.

It was “the best” in that it was move in ready with new granite countertops and refinished flooring.

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So when you are signing up for the latest gym opening, consider options because they don’t all cost the same and you can probably get as much out of the local community facility or Y.  Exercising at home costs virtually nothing given YouTube and if you can avoid buying unnecessary equipment and sports gear. Yes, you make a lot of money but there are too many areas of your life to commit to the best.


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