Earning 6-Figures: Blessing or Burden?

If you're earning a 6-figure income - congratulations! Chances are you didn't start earning 6 figures when you began working, so it's a heady feeling now having exceeded what is for many people a lifelong earning ceiling.

Whether you're conscious of it or not, there is a change in how you think about things once you begin earning over $100,000. Your tastes gradually (or not so gradually in some cases) become more upmarket. When travelling you stay in better places and eat out in restaurants more (and I'm not talking about McDonalds restaurants).

With this I speak from experience. I never had credit card debt until I began earning 6 figures! I'd spent so many years scrimping and saving for everything, travelling on a budget, being frugal when going out. I even went through a phase where I'd eat at home before going out with friends for dinner, and then just order something small in order to keep the cost of the outing down. So, once I could afford to be less tight with money, I went to the other extreme.

One of the most difficult things in this day and age of cheap or easy-to-come-by debt is holding off getting the best item NOW, and instead building up to it. Credit cards and their increasing limits are so easy to get, that buying the best surround sound stereo system on your credit card, for example, is far more appealing than waiting a bit longer and saving up for it. Or, getting the much cheaper second best option.

Buying a house that's more than $100,000 beyond your budget, because it's so much “better”, is something I hear a lot. Of course we want our ideal, but working up to it can often be the best way to actually, truly get there. Rather than being buried in debt your whole life.

I had a reality check when I used a 0% balance transfer credit card to pay off my other credit cards! I was using credit to pay for credit, which is nuts! In this case I paid off the full balance within the interest free period, and never looked back.

I have 2 credit cards, but only use one of them. The second I keep as back up in case something happens to the first (this comes in more handy when I'm travelling overseas). My credit limits are deliberately low. I use my credit card to pay for everything - food, fuel, transport, etc., and at the end of the month I pay it off in full.

That's what now works for me. My dad was completely different. He told me he has no discipline with money, so he couldn't own a credit card. He used cash (not even EFTPOS) for everything. So, you have to figure out what works best for you.

I strongly suggest you do figure it out though, because once you do, your money journey will become much easier!