The low-cost, low-debt approach
According to the Bureau of Labor Statistics, the median annual wage for all U.S. workers in 2023 was $48,060. Rachel’s salary is slightly lower than that, but her financial situation and cost of living are much better than many Americans.
Rachel told Ramsey and Warshaw that in 2024 she paid off $12,000 in debt and was on track to clear the remaining $7,000 as well. “According to my figures I’ll probably be debt-free by June or July [2025],” she says.
Meanwhile, she’s single, has no children and lives outside the city where she says homes on her wishlist cost between $80,000 to $120,000. “That’s very doable on your income,” says Ramsey.
After paying off her debt, Warshaw encouraged Rachel to secure an emergency fund with three-to-six months worth of expenses. Warshaw also suggested Rachel try the home affordability calculator on the Ramsey Solutions website to work towards her goal of homeownership.
Based on the Bank of America’s home affordability calculator, Rachel’s purchasing power could be as high as $140,000, which easily meets her requirements.
As for retirement, both hosts believe that’s achievable as well. Although Rachel's current income is modest, there’s scope for growth in the future.
“Here's the thing: the probability that 15 years from today you're 50 years old and you're doing this exact same thing making this exact same income is zero,” says Ramsey.
With some growth in her income, eliminating debt and a disciplined saving plan, Rachel could certainly achieve her goals of homeownership and a comfortable retirement. Her situation highlights the benefits of a low-cost, low-debt approach to achieving financial goals.
Retire richer: The secret to building wealth faster
Most people miss out on key opportunities to grow their wealth. Partnering with the right financial advisor can help you secure a brighter future. Learn how to make your money work harder for you today.
Discover the secretThe easy path to retirement
While Rachel earns less than most people in the U.S. make in a year, her path to retirement is a little more clear than that of many Americans.
As of 2022, only 46% of American households had saved for retirement, according to the Survey of Consumer Finances (SCF). Meanwhile, 20% of Americans over the age of 50 have no retirement savings at all, according to a 2024 AARP survey.
As of November 2024, the average personal saving rate — which represents the percentage of disposable income that people save — was just 4.4% in the U.S., according to the Federal Reserve.
For many, a lack of income plays a key factor in their struggle to save for retirement. However, many Americans also struggle with excessive spending and debt, which is likely keeping them from saving for their golden years.
According to Clever Real Estate, 37% of recent homebuyers said they purchased a home that was more expensive than they had initially planned. Meanwhile, the average American household in 2023 had accumulated $104,215 in debt, according to Experian.
Despite her modest income, Rachel has a clearer path to retirement than many other Americans because she’s proactively working towards a debt-free lifestyle and targeting a home she can truly afford. Your income is rarely (if ever) high enough to offset the impacts of bad spending habits, unsustainable borrowing and overconsumption.
So, can you achieve modest financial goals with a modest salary? According to the Ramsey Show hosts, you can — and the low-cost, low-debt approach employed by Rachel is a great way to start.
Meet your retirement goals effortlessly
The road to retirement may seem long, but with Advisor, you can find a trusted partner to guide you every step of the way
Advisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.