Rethink your money rules

Does a high salary mean you're wealthy?

The first week of the year usually means opportunity, but here in New York City, no one wants to take the opportunity to leave their apartments given the freezing temperatures:

You know it’s cold when even the prewar apartments in New York City are cold. If you’re not familiar with a prewar apartment, they’re controlled by radiators that not only make random high pitched noises on and off, but emit what seems to be the same amount of heat whether it’s 15 or 50 degrees outside. So when it’s 50 degrees outside, it’s very hot in my prewar apartment, but on some of these 20 degree nights, it’s actually been a little cold.

Personally, I’ve been spending a lot of time indoors, but when I step outside, I feel like I’m really getting my money’s worth from my full length parka.

With the new year just last week, I’ve spent some time thinking about money philosophies for the year. I’ve seen quite a few people embarking on no-spend or low-spend challenges, and many others on smaller versions of those (like myself, with a no-Amazon and low-new clothing spend challenge).

This also got me thinking about money philosophies that I find controversial—philosophies that people can think are true (and might be part of your new year financial resolutions!), but have some nuance to them.

Debt is bad

I’ve heard this one prefaced with “all” debt is bad, and there are a few kinds of debt that have various judgements placed on them: mortgage debt (usually considered “good” debt), student loan debt (varies with how high interest it is), and credit card debt (usually very high interest).

Instead of thinking all debt is bad, especially based on these categories of debt, I think it’s better to think about it as a math problem—if a debt is 0% or 1% interest, it’s not mathematically better to pay that off than saving that money in an account with a 3% interest rate.

And while paying off debt is an exciting goal, I hate the phrase “bad debt” because it has a connotation that you should feel bad about the debt, when there are lots of reasons for getting into that debt in the first place. Instead of categorizing large groups of debt as “good” or “bad,” I think it’s better to look at the specific interest rates more thoughtfully and tackle a plan that helps improve your finances (whether that’s aggressively paying down debt or not!).

Buying is always better than renting

I especially have beef with this one since I live in New York City, where it is mathematically not always better to buy than rent. And even in a few cases where it is, there are so many other benefits to renting—you don’t need to deal with repairs when your ceiling leaks water from your upstairs neighbor, you don’t need to buy a new fridge when yours breaks, and you can move out if your building gets covered in scaffolding and becomes a construction zone.

If you’re undecided on buying vs. renting, I recommend using a buy vs. rent calculator like this one, but then also consider things that aren’t always monetary—is there a chance you will want to move sooner? Do you like doing repairs? Do you want to personalize the space more in ways you can’t do when you’re renting?

A high salary means you’re wealthy

Yes, a higher salary can unlock the ability to buy more things—a nicer car, nicer house, fancy dinners. And that means lifestyle creep—you can make well into the six figures and still live paycheck to paycheck.

Getting a new job or promotion with a raise is exciting, but I’ve taken extra care to prevent lifestyle creep in my life—yes, I’ve upgraded some things (my apartment now is a little nicer than the flex room¹ I had in an apartment with roommates when I first graduated college), but I’ve taken care to not let lifestyle creep take over too much, and that’s a value I want to keep no matter what my salary is.

My biggest takeaway when thinking about money “rules” is that most rules don’t fit every situation, so it’s better to reflect on your personal situation than follow them strictly. Do you have other money rules you used to follow that you question now? Drop them in the comments!

Thanks for reading Ten Dollar Latte! I’m not a financial advisor, just a 20-something living in NYC writing about my journey to spend, save, and live more intentionally! Subscribe for free for weekly posts empowering you to spend your money and time more intentionally. You can also join at the paid tier for access to the Backwards Budgeting spreadsheet and more insights into my monthly budgeting practices.

A very snowy Union Square (looking north from 14th St) earlier this week

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1. A flex room is a newly constructed wall (often with a gap at the ceiling) built into an apartment’s living room to create an extra bedroom and make living with roommates cheaper.