A Higher Salary Won't Fix Your Debt — Redditors Say Housing Is a Major Blocker
The biggest challenge to your fiscal solvency isn't your paycheck but your biggest, unavoidable expense.
You might think that earning a higher salary automatically solves financial stress. Unfortunately, that’s not always the case. Even people earning six figures find themselves strapped for cash. One Goldman Sachs report even found that 40% of those earning over $300,000 live month to month (though that might be more of a lifestyle issue than anything).
So, then, what does solve financial stress? What actually fixes debt? According to this Reddit post, a lot of it comes down to housing — though that’s still not the only thing.
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Housing Costs Are a Major Problem
As per RentCafe, the average apartment rental costs $1,750 in the United States. The U.S. Census found that monthly mortgage payments for people who moved in 2024 hovered at around $2,225, far above the national average of $1,521 for all mortgage-holders.
Now, compare this to the real median personal income of $45,140 from the same census. Not accounting for taxes, that breaks down to roughly $3,762 a month. If you’re living alone covering all the bills, that means you could be spending nearly half of your income on rent alone.
Of course, you might have cheaper housing costs depending on where you live. You might also benefit from splitting the rent or mortgage with a partner or roommates. In either case, you’re freeing up money for your debts.
Reddit Says To Look at the Bigger Picture
Housing isn’t the only issue, though. In the Reddit post, the original poster (OP) said that their income is roughly $42,000. Redditor “tboneotter” broke this down into the following:
$22 per hour at 40 hours per week
15% tax rate
Take-home pay = $3,000 monthly
Tboneotter then broke down the OP’s expenses:
$1,300 in rent
$300 in debt (roughly)
$750 in essentials (car, insurance, phone, utilities)
Total fixed costs: $2,350
Leftover funds: $650 (or $150 per week)
As you can see, the OP’s rent is lower than the average. But even so, it doesn’t leave much space in their budget since they have other bills to pay. And sometimes, even that extra money can disappear into seemingly little things — like a subscription plan or insurance premium — without you realizing it.
Would Increasing Income Help?
It certainly can, but it’s not always enough on its own. Sometimes, the best first step to getting control over your finances is to cut down on your expenses.
Referencing the OP’s post, Redditor Tboneotter asked, “What's up with that phone plan? $150/mo? I have the Mint Mobile 15-gig plan for $25 a month, but even if you splurged and did their worst value plan …it's still $50 a month, one-third the price of yours.”
As you can see, it’s easy to overspend on something as simple as your phone plan. But other expenses can also get in the way of paying down your debts.
Take groceries as an example. The USDA estimates that the average family living on a fairly tight budget spends $1,002 a month on food. The average single adult spends closer to $250 to $300.
But it also depends on where you shop. Places like Aldi and Lidl are known for having generally cheaper groceries than, say, Wegmans or Target. Dollar stores might seem cheaper, but that depends on what you’re getting and the quantity.
Other costs — like eating out more than expected or leaving unused subscriptions on autopay — can also add up. Even if you earn a little more money each month, you’ll still need to audit your own finances to make sure you’re not spending more than you ought.
“The biggest thing is netting positive at the end of each month,” said Tboneotter. “If you're trending in the right direction, then you're in good shape. The important part is to be in a better financial position in [the future] than you are now. So keep applying, keep an eye on your wallet and keep your head up.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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