How to Screw Up Making $100K (Hint: No Budget)

When I originally posted this column on, there were a lot of comments and questions about how a guy that made some much money could muck it up so badly.

What follows is my response:

In my last post, I monitored reader comments on Facebook.

It seems a few of you took issue with the amount of money I made and the wildly lousy way I spent it.

I don’t disagree with the latter sentiment (at least how I did it five years ago); however, let’s go a bit deeper with the numbers. After all, I purport to be a financial coach on top of a motor officer.

Yes, in 2009, I made six figures.  For the first eight months of 2009, we operated without a written budget.  My outlook on the budget was much more reactive than it was proactive.  For example, when my wife would ask me, “How much money can I spend at the grocery store?”  My response was akin to “Can you keep it under $400?” (which was for a two-week period) and then we’d notate in Quicken how much we spent.

But let’s look at the reality of my salary and my personal budget when I started to take it seriously in August of 2009.

Actually, before we do that, allow me to offer this disclaimer:

The Wife and I are open books when it comes to our finances.  I will tell you exactly what I get paid and where we allocate our money.  (Please note the use of the words “we” and “our”.  I may be the bread winner, but the money that is earned is “our” money.  Pronouns and your use of them have power and a HUGE impact on your marriage.)

So, 2009.  Yeah, I made a shit-ton of money (I assume that is an accurate use of the term “shit-ton”).  A lot of you didn’t get past the first few sentences of my last column.  That’s a shame. You made assumptions about that amount of money and forgot (or simply aren’t aware) what life is like here on the Left Coast.

Let’s get real.

My base pay in 2009 was about $81,0000/year.    That included my advanced certificate (which adds 5% to my salary) not to mention, I reached top step pay quite a few years ago.  The amount of OT I worked was, again, an average  of 35-40 hrs per month.  There are some important factors to keep in mind.  First, I contributed about 17% of my salary to my retirement pre-tax to the tune of around $1200/month.  My mortgage (first and second combined) was about $2400/month.

The average mortgage payment in the SF Bay Area, according to, is $2111.  The average mortgage payment in the United States, according to is $1061.  I live in one of the most expensive areas in the country.

So, my base pay (after retirement contribution and before OT) pay was about $5600/month. I am in the 25% tax bracket.  After taxes, that means I’m bringing home $4200.   Now, subtract my mortgage and I’m left with $1800/month upon which to support a family.

How much money you make isn’t the issue.  It’s what you do with what you how much you make.  Prior to 2009, I wasn’t doing well despite making six figures.  I was overextended.  I feel confident in saying I’m not the only one who has ever felt that way.

Don’t look at someone’s bottom line and make assumptions without looking at ratios.  What do I mean by ratios?  The amount of money one brings home versus the amount of money one spends on one’s mortgage, for instance, will give you a percentage or ratio of how much of your income you are spending in any given area.

The average income in the US is about $50,000.  When you divide that by 12 months, you get about $4166/month.  When you divide my base income ($81K) by 12 months, you get $6750/month.  Dividing the average monthly mortgage payment in the bay area ($2111) by $6750 is 31.2%.  Dividing the average monthly mortgage payment of the rest of the country ($1061) by $4166  is 25.5%  The point is simple: our ratios are closer than you think.

So, to you doubters and nay-sayers, my reply is this: Look at your percentages and your cost-of-living.

Are you whining or are you projecting uncomfortable issues onto someone else?

Question: Are you working for your money or are you making your money work? You can leave a comment by clicking here.

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One thought on “How to Screw Up Making $100K (Hint: No Budget)

  1. More people need to live within their means.My husband was the bread winner in the family, a retired cop. I personally hated a budget and didn’t use one. But everything we had including our $350,000 + house was paid for in 8 years. Keep up the good work to get he word out about living within your income.

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