'Good Income Is Not A Moral Statement' — Woman Making $36,000 A Year Is Puzzled By Dave Ramsey Calling Her Income 'Low'

In a January episode of "The Ramsey Show," a letter read by guest co-host Ken Coleman led to a discussion on the definition of a "good income." The letter came from a 23-year-old Kelly, from Ohio. She expressed confusion over the financial advice given by Dave Ramsey regarding what he deems good earnings. 

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Kelly works at a professional screen printing and embroidery shop and earns $36,000 a year after taxes. She works 45 hours a week and is free from student loan debt within just one year out of school. She saves $1,100 a month towards a future home purchase, having worked multiple jobs during her time in ministry school to stay debt-free. Despite her financial discipline and ability to save, she was puzzled and slightly disheartened by Ramsey’s previous comments suggesting her income was "low." 

In the episode, Ramsey clarified his perspective on what constitutes a "good income," emphasizing that this term should be viewed relative to the national average household income, which currently stands at around $78,000. Ramsey stated, "Good income is not a moral statement." He explained making $36,000, puts her considerably below the average, which would also make up the average. "And that's ok. It's not the end of the world," he added. 

He further explained that labeling an income as ‘low’ does not pass judgment on the individual; it’s merely a factual comparison to the national figures. He likened this to identifying someone who earns $160,000 as above average because they make double the average. "You're not a bad person. You're not a horrible income earner. You're not lazy. It's just that relative to the average, your earnings are low," he clarified.

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He continued by urging Kelly not to settle but to envision where she wants to be in the future, challenging her not to be complacent even if she is managing her current finances well. His advice resonated with the broader financial advice he often shares: aiming for financial growth and not merely getting by. He concluded with a pointed reminder, "Anything that isn't growing is dying."

Kelly's situation highlights a critical discussion in personal finance — balancing satisfaction with one’s current income level while planning ambitiously for the future. Her ability to save significantly more than the average American, who saves just 3.8% of their income, puts her in a stronger financial position than many. Her lack of debt gives her a considerable advantage over the average American, who carries an average debt of $104,215 spanning mortgages, credit cards, and other loans.

Although Kelly’s financial situation seems manageable now, her current income could become a limitation when she plans major purchases. With her income far below average, qualifying for a mortgage might be challenging given the average sale price of homes and the income typically required to comfortably manage mortgage payments. 

Retirement is often a distant concern at 23, but it’s important to remember that planning for the future is crucial. Saving even a small amount consistently over time can add up significantly thanks to compound interest. 

Consulting with a financial adviser can be beneficial for anyone in this situation. A financial adviser can create a personalized plan to achieve your financial goals, considering your income, budget, and risk tolerance. 

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