How We Are Our Own Saboteurs

by Little House on 4 June 2010 24 comments

Ultimately we control our destiny, meaning we have some say in the decisions that affect our personal finance in our adult lives. Yet the three biggest life decisions we make may be sabotaging our ultimate financial goal, saving enough and being financially independent come retirement. Those three big choices include where to live or settle down, who to marry, and what profession to choose.

Where to Live

Many of us choose to stay put; we remain close to where we grew up, our family and friends. There are definitely some benefits to remaining in the city where we've spent the majority of our lives in, such as familiarity with the city, where to shop, eat, visit, and work. Other benefits include potentially low cost baby sitting if grandparents are willing and able to help care for young children. Living near relatives may also be cost effective for DIY home projects, holiday gatherings, or transportation needs.

Yet, choosing where we live, whether we stay near home or move out of state, can negatively affect our personal finances if the cost of living in the chosen city is extremely high. Take Los Angeles or New York for example. Living as an independent adult costs much more in these cities in the long run than choosing to live in a city where the cost of living is half the price. Even though it may mean moving out of our comfort zone, choosing to move to a less expensive area may be more financially sound.

Making a choice on whether to rent or purchase property becomes important in an expensive town. Renters have more freedom on when they can move, they aren't tied down by a mortgage and can make good financial decisions based on rent prices. Renting may not be a terrific long-term financial strategy, but could work in the short term if mobility is important.

Who to Marry

Love is blind, so they say. Unless your date wears his FICO on his sleeve and “I’m a saver” is stamped on his forehead, you may be entering into uncharted spending territory. Many of us plunge into a relationship head over heels, only to find out later that our beloved can't balance his checkbook to save his life. Few first dates reveal an individual's personal finance. Discussing personal finances should be on the agenda the moment a relationship becomes serious.

Finding out after you’re married that your spouse has an affinity for fancy sports cars and expensive habits are hard to change (though not impossible). If you find your spouse is definitely leaning more toward the spender's side, there are ways to rein in their expensive habits, like sitting down and budgeting out monthly income and expenses.Strict budgeting and open discussions on spending behaviors and goal setting can accomplish this task.

What Profession

Some professions are almost always guaranteed a high paying salary, usually in the ball park of six figures: doctors, lawyers, financial analysts. Some professions are almost always guaranteed a low paying salary, traditionally under $50,000 annually: teaching, non-profit organizations, retail positions.

Though the lower salary professions may be more rewarding, the amount you have each pay period towards saving or retirement is lower. Saving 15% annually of $150,000 equates to an annual savings of $22,500 versus 15% annually of $50,000 which equals $7,500. This may affect your total net worth down the line. A thrifty lawyer over a 30 year period can potentially save $675,000, add 4% interest to this amount and it comes to almost $16 million! A just as thrifty teacher, whose max salary caps out at $50,000 may only be able to put away $180,000 over the course of 30 years. Add in 4% compound interest and the retirement amount is $5 million. That's a difference of $11 million dollars! (Thanks, Bankrate for your nifty calculators.)

Does this mean everyone should become a lawyer? Of course not. Some research has shown that the lower paying salaried folks are usually better at saving money than the higher salaried folks are. So maybe there is more true compensation for less compensation. Given that lawyers, doctors, financial analysts must look like they are wealthy, they may be more apt to spend more money on clothes, cars, and homes than those that haven't as strong a need to "look the part" so to speak. Teachers, in particular, are more likely to live within their means than doctors or lawyers. In the long run, they may be more capable of saving 15% of their income.


We may or may not have control over some aspects of our lives such as who we fall in love with, however we can adjust our personal finances to better fit our current choices. Starting with weighing the pros and cons of big decisions is always helpful in determining what best fits your financial goals.

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Guest's picture

Big life decisions like these do have huge impacts on our financial lives. Too often people rush into these types of decisions on a whim, or without too much forethought. It's good to get a reminder from time to time that we need to take our time, think things through and realize the consequences of our actions.

Guest's picture

Unforunately, sometimes a mate can pull the wool over one's eyes {way too long} before you realize what is going on. I may of ended up broke, but not as bad as the other girl. She lost her inheritance {that her parents worked hard for} to a 6-month swanky condo rental and a 65 mustang {in his name} that was totaled. Ouch!

Little House's picture

That sounds painful! Discussing finances early in a relationship is important. Had I sat my husband down earlier than I did, things would have been less bumpy. ;)

Guest's picture

$22500 saved per year for 30 years at a 4% return isn't even close to 16 million. It's the same thing with the $7500 per year example. It would take 86 years for someone saving $22,500 per year to accumulate 16 million at a 4% return.

Little House's picture

Sorry about the screwy math skills. I had gone back and edited that part, but it looks like I missed a number. Yikes! Bad, bad sorry.

Guest's picture

I think you could have better called this post "Affairs of the Heart".
If every decision we made was ruled by our heads and not our hearts, I think we'd all be rich.

Guest's picture

Great article and congrats on your first Wisebread piece :).

I live in Egypt right now and it is a hell of a lot cheaper than UK where I am from!!

Guest's picture

I think the decision as to where to live can go beyond whether or not to live in an expensive city. Even cities that are expensive have areas that are less expensive (but still safe). I'm glad you brought up renting vs. owning too. Even though I have almost always owned (except for one 6 month period) there is one place we're considering moving that we would probably rent in even if we could afford to buy. That's because it's an area that's at a (relatively) high risk for natural disasters. I imagine insurance costs on top of the high property costs would be nuts.

Guest's picture

I thought your writing sounded familiar! I had no idea it was you Little House until the very end, but I knew I had read your style before!

Thanks for sharing your thoughts and congrats for making it as a staff writer!

Best, Sam

Guest's picture

We have made some choices that have really helped us, like:
*selling at short sale and moving closer to the job, instead of holding on to the big "dream" house that became a financial nightmare for us
*following a customized and flexible financial plan that has helped us to forecast spending and to save (when we've followed it, which we usually do).
*using cash only -- gave up using credit cards, even when paying them off monthly

Thanks for this article ... definitely good food for thought

Little House's picture

Sounds like you made some very smart decisions! I think it's important to revisit budgets now and again. It's terrific that you realized that sometimes a large "dream" house is more of a headache than a true dream. Good for you! Thanks for commenting.

Guest's picture

This is very sound advice. I think we all struggle from time to time with big decisions. I don't consider a 50K salary to be "low" but that's probably because I've spent much of my life dwelling in small cities where the cost of living is very cheap. I will pursuing a career in teaching and naturally, I'm a very frugal person. Saving money is something that everyone should do whenever they can, little by little it all adds up. Our household currently has a "wishlist" fund and a "rainy day" fund. That way we can still have the things we want but can also be prepared when life throws odd curveballs. Great food for thought. I look forward to reading your future posts.

Guest's picture

I don't know about you but where we live the teachers are making 6 figure salaries (with bonuses..not to mention time off for the vacations and tenure even if they shouldn't BE teachers) and the latest news is the LIRR people are too!
Starting teachers have to live within their means to survive the summer vacation, I suppose that's good training for later on when they ARE making the high pay.

Guest's picture

I think you made an error in your calculations.

$7,500/yr over 30 years @4% = not even half a million dollars.

I used the calculator at

Little House's picture

Looks like my edits didn't go through before the article go published! Whoops. Yes, bad calculations on my part. I forgot to change the calculator to annually not monthly, that's how I got those inflated numbers. Maybe even wishful thinking?!

Guest's picture

Great post Little House! It's definitely all about "living below your means". The blurb on doctors and lawyers and financial analysts having "lifestyle inflation" instantaneously (needing to look rich even if they're in debt up to their eyeballs from med school, for example), really makes sense!

Guest's picture

With respect to choosing a spouse, perhaps other countries that have arranged marriages are better! As an american, we learn that arranged marriages isn't the optimal solution, but we also have a high divorce rate (50%)... India (which use to use pre-arrange marriages) has a divorce rate lower than 10% (I've seen numbers from 1% to 5%). Just food for thought...

Good points...

Guest's picture

When two people are forced together out of family obligation in a society that looks at a divorced woman as a pariah - yeah the divorce rate will be small. Societal pressure is what keeps these arranged marriages in check. Not bliss.

My wife is India, a place where more marriages are arranged, Her sister has a high school friend who was shipped off to Pakistan to me married to her cousin - the day AFTER she graduated high school. They live in the US. Her husband verbally abuses her and generally ignores her. I'm sure she's NOT loving here arranged marriage. She won't divorce him as she is financially dependent on him and her family would disown her.

Guest's picture

I am a lawyer. I assure you it's not the surefire way to a high, steady income.

Guest's picture
Len Penzo

Great article, Jen! Making the mistake of marrying a financially irresponsible person may be THE biggest financial mistake anybody can ever make. Trying to stay happily married in such a scenario is often futile. People that find themselves unable to turn their spouse around really need to "cut bait," as the old saying goes, as soon as possible.

(And, no, I'm not a licensed marriage counselor in real life, but I like to occasionally play one on the Internet - when I'm not blogging about personal finance, that is! LOL)


Len Penzo dot Com

Guest's picture

If things don't work out you can move, you can get divorced, and you can change careers.
But what you can't do is discharge student loans in bankruptcy.
Big student loan debt is the big white, self-sabotaging elephant in this room.

Guest's picture

Little house-Really creative. I like the approach. Apart from a stint in graduate school in San Diego, my husband and I have always considered cost of living when moving. Choosing lower cost of living locations has really upped our ability to amass assets and maximize our standard of living. Thanks for an interesting read. Barb Friledberg

Guest's picture

I know this is an old saying but..."if you knew then what you know now..."

I could have planned things so differently and instead of going out with my friends all the time drinking beer when I was younger, I could have become an accountant like my geek friend Adam and always been in a job!

Guest's picture


But one can also argue that there may be more opportunities for work/education etc in those cities that in " a city where the cost of living is half the price.".

I agree there is no advantage to buying (really mortgaging) a house versus renting. But ... not all decision in life is about what is logical. I mean what is the point of life is you live it based on finances alone? Those decision of heart may be costly but they may bring you a life that money can't buy.

I chose my profession (Engineering and Information Management) based on my ability and my love of the caraft. Could I make more money as a lawyer or doctor? Sure. Would my life feel more fulfilled? Absolutely not. Choosing your profession based on what it pays is a recipe for unhappiness in life. Do what you love and the money will come. Just be frugal with it.