How are people able to spend more than what they make, without going into debt?
"That's just his base salary for last year.  Keep reading in the article: He also received $1.6 million worth of securit[ies]. Plus, he's probably earned plenty in salary, bonuses, and other compensation in previous years to more than keep up his lifestyle.  He can also sell (relatively) small amounts of the stock he already owns to get millions in cash without raising an eyebrow. how are people able to spend more than what they make, without going into debt? Well, people can't spend more than they have without going into debt. Certainly money can be saved, won, inherited, whatever without being ""earned"".  Other than that, debt is the only option. That said, MANY ""wealthy"" people will spend WAY more than they have by going into debt.  This can be done through huge mortgages, personal loans using stock, real estate, or other assets as collateral, etc.  I don't know about Bezos specifically, but it's not uncommon for ""wealthy"" people to live beyond their means - they just have more assets behind them to secure personal loans, or bankers are more willing to lend them unsecured money because of the large interest rates they can charge.  Their assumption is presumably that the interest they'll pay on these loans is less than the earnings they'll get from the asset (e.g. stock, real estate).  While it may be true in some cases, it can also go bad and cause you to lose everything." Rich people use debt for various reasons. The question should not assume that billionaires don't use debt. They also pay lower interest rates on that debt because they have enough collateral that their debt is safer than a typical mortgage. Many rich people will use interest only mortgages on their primary residences so that they can keep their stock earning at higher growth rates than the mortgage interest that they are paying all while writing off a portion of that mortgage interest on their taxes.  Taking an artificially low salary and receiving equity for the larger portion of compensation is also a tax strategy to limit the amount of taxes owed on that income. If paid directly in stock grants, that will count as income, but if paid in options, then the purchased stock will only be taxed at the lower capital gains rates if the stock is held for a year after the options are exercised. Every billionaire will have complicated tax avoidance strategies that will require multi-year planning for the best long-term minimization of taxes. Debt is a strategic part of that planning. Also consider that a major part of that upscale lifestyle (corporate jets, fancy meals, etc.) is on the company dime because the CEO is always on the clock. As long as he is meeting with business prospects or doing other company business, those expenses will be justified for the corporation and not attributed as income. I don't know about Jeff Bezos in particular but, in general, and with a a few other notorious exceptions like Warren Buffet, billionaires also have incomes (salary, dividends, fees to seat on various boards of directors, etc.) in the millions, not the tens of thousand. That's typically still much lower than their wealth but certainly enough to sustain a comfortable lifestyle. However it's still true that some billionaires have so much of their wealth tied up in a single corporation that they could not practically get it all out at once, if they ever wanted to. But they can still typically sell at least some shares, which is exactly what Jeff Bezos has done to buy the Washington Post for example. "Bezos made very little ""money."" But he is very wealthy because of stock grants and options, from his previous years. Banks or brokerage firms will lend him (or anyone else) up to half the value of his stock. In Bezos' case, we're talking about billions. So he could, if he wanted to, cash out half of those billions. If the stock continues to go up (as it has), he will be able to cash out more each year. Imagine a person earning $1 a year in cash with $1 billion of stock, on which he can borrow up to $500 million. That, in a nutshell, is Bezos (with larger numbers)." "If you make $10 in salary, $5 in interest on savings, and $10 in dividends, your income is $25, not $10. If you have a billion dollars in well-invested assets, you can take a loan against those assets and the interest payment on the loan will be smaller than the interest you earn on the assets. That means your investment will grow faster than your debt and you have a net positive gain. It makes no sense to do this if the value of your asset is static. In that case, you would be better off just to withdraw from the asset and spend it directly, since a loan against that static asset will result in you spending your asset plus interest charges. If you have a good enough rate of return on your investment, you may actually be able to do this in perpetuity, taking out loan after loan, making the loan payments from the loan proceeds, while the value of your original asset pool continues to grow. At any given time, though, a severe downturn in the market could potentially leave you with large debts and insufficient value in your assets to back the debt. If that happens, you won't be getting another loan and the merry-go-round will stop spinning. It's a bit of a Ponzi scheme, in a way. The U.S. government has done exactly this for a long time and has gotten away with it because the dollar has been the world's reserve currency. You could always get a loan against the value of the U.S. currency in the past. Those days may be dwindling, with more countries choosing alternative currencies to conduct business with and the dollar becoming comparatively weaker into the foreseeable future. If you have savings, you can spend more than you make, which will put you into debt, then you can draw down your savings to pay that debt, and at the end of the month you will be out of debt, but have less in savings. You cannot do this forever. Eventually, you run out of savings. If you have no savings, you immediately go into debt and stay there when you spend more than you make. This is simple arithmetic. If you have no savings, but you own assets (real estate, securities, a collection of never-opened Beatles vinyl records, a bicycle), then you could spend more than you make, and be in debt, but have the potential to liquidate assets to pay off all or part of the debt. This depends on finding a buyer and negotiating a price that helps you enough to make a real difference. If you have a car, and you owe $10 on it, but you can only find a buyer willing to pay $8 for the car, that doesn't help you unless you can refinance the $2 and your new payment amount is lower than the old payment amount. But then you're still $2 in debt on the car even though you no longer possess it, and you've still increased your debt by spending more than you made. If you stay on this path, sooner or later you will not have any assets left and you will be in debt, plain and simple. As a wrinkle in the concrete example, let's say you have stock options with your employer. This is a form of a ""call."" You could also purchase a call through a broker in the stock market, or for a commodity in the futures market. That means you pay up front for the right to buy a specific amount of an asset at a fixed price (usually with an expiration date). You don't own the stock, you just have the right to buy it at the call price, regardless of the current market value when you buy it. In the case of employee stock options, your upfront cost is in the form of a vesting schedule. You have to remain employed for a set time before a specific number of stocks become eligible for you to purchase at your option price (the stocks ""vest"" on a certain date). Remain employed longer, and more stocks may vest, depending on your contract. If you quit or are terminated before that date, you forfeit your options. If you stick around through your vesting schedule, you pay real money to buy the stock at your option price. It only makes sense to do this if the market value of the stock is higher than your option price. If the current market value is lower than your option price, you're better off just buying the asset at the current market value, or waiting and  hoping that the value increases before your contract expires. You could drive yourself into debt by spending more than you make, but still have a chance to eliminate your debt by exercising your call/option and then re-selling the asset if it is worth more than what you pay for it. But you may have to wait for a vesting period to elapse before you can exercise your option (depending on the nature of your contract). During this waiting period, you are in debt, and if you can't service your debt (i.e. make payments acceptable to your creditors) your things could get repossessed. Oh, don't forget that you'll also pay a brokerage fee to sell the asset after you exercise your option. Further, if you have exhausted your savings and nobody will give you a loan to exercise your stock (or futures) options, then in the end you would be even further in debt because you already paid for the call, but you are unable to capitalize it and you'll lose what you already paid. If you can get a loan to exercise your option, but you're a bad credit risk, chances are good that the lender will draft a contract requiring you to immediately pay back the loan proceeds plus a fee out of the proceeds of re-selling the stock or other asset. In fact the lender might even draft a contract assigning ownership of your options to them, and stipulating that they'll pay you what's left after they subtract their fee. Even if you can get a traditional loan, you will pay interest over time. The end result is that your debt has still cost you very real money beyond the face value of the debt. Finally, if the asset for which you have a call has decreased in value lower than the current market value, you would be better off buying it directly in the market instead of exercising your option. But you'll pay transaction fees to do that, and the entire action would be pure speculation (or ""investment""), but not an immediate means to pay off your debt. Unless you have reliable insider trading information. But then you risk running afoul of the law. Frankly it might be better to get a loan to pay off your debt than to buy an ""investment"" hoping the value will increase, unless you could guarantee that the return on your investment would be bigger than the cumulative interest and late fees on your debt (or the risk of repossession of your belongings). Remember that nothing you owe a debt on is actually yours, not your house, not your car, not your bicycle, not your smartphone. Most of the time, your best course of action is to make minimum payments on your lowest-interest debts and make extra payments on your highest interest debt, up to the highest total payment you can tolerate (set something aside in a rainy day fund just in case). As you pay off the highest-interest debt, shift the amount you were paying on that debt to make extra payments on your next highest-interest debt until that one is paid off, and repeat on down the line until you're out of debt, then live within your means so that you don't find yourself working at McDonald's because you don't have a choice when you're in your 80's."
We live in a community, and as citizens we all have the right to shop in public shops and eat in public restaurants. If that right is abridged, then freedom is abridged. And the freedom to enjoy the public services of one's community is far more important than the freedom to deny services due to one's prejudice. Either way someone loses a bit of freedom. Which is more important? According to you the freedom to do what you will with your property outweighs any and all possible consequences of exercising that freedom. This is a very extreme viewpoint. I know because I once held it.  &gt;Go start a business and get back to us  Yeah I did that. 15 years ago and still going. And I actually hire people. You may not want to make too many assumptions about the person you are debating. As a business owner I would happily choose a world in which I had to hire the best qualified candidate regardless of my prejudices over one in which other business owners could arbitrarily refuse me services that are offered to the general public just because of who I am.  &gt;If a person is refused service for any reason, they can find another store, shop, or vendor.  And what if all the stores in your town have similar policies? Am I to drive to the next town every time I need to go shopping? What if all the shops within 1000 miles have discriminatory policies? How am I to live? The only reason you can make this argument is because of the success of the civil rights act. If it was repealed today you would likely be able to avoid racist restaurants and shops by going elsewhere. If it had never existed that would not be the case.  &gt;THERE IS NO EQUAL OPPORTUNITY IN LIFE FOR SUCCESS  That is why I very specifically said that all citizens must have a REALISTIC opportunity for success, and NOT that there should be EQUAL opportunity (impossible) or equal outcomes (ridiculous and counter-productive). What must be avoided is the creation of an economic status quo that ensures the poor remain poor and the rich remain rich. Such a status quo is just slavery without the whips. Even if the government is not enforcing the status quo, it can be just as hard to break free from.  &gt;Forceful acts by government are ALWAYS far worse than forceful acts in the private sector  It is the results of the act of force that matters, not its source or methodology. This once again is an argument from pure ideology. Because you believe that government force is always worse than the private sector, you are unable to see examples of how the private sector can limit our freedoms in even worse ways. Simply stating that government acts of force are always worse does not prove it so.  &gt;that's exactly where your collectivist sewer leads  I would argue that the centers of poverty you listed are much more a symptom of the systematic undercutting of education, social services and other support systems that once gave the underprivileged a realistic way to improve their lot in life. Now, with blue-collar wages on the decline and public education gutted, poverty gets more entrenched and harder to overcome. You really think it's going to get better for these people if we take away the minimum wage? Do away with public schools? Food stamps? Medicaid? Is there any point at which lack of social mobility becomes a more damaging than minor economic regulations? Is it OK to effectively return to the feudal system if it means nobody will ever have one penny taxed from them and given to someone who wasn't born rich? Nobody made you get born poor so there's no force and therefore everything is right and good? Such a shallow view of our moral obligations as members of a society.  We live in a society. Extreme individualism will lead only to self-destruction just as fast as extreme collectivism. The only rational view is to analyze the facts, weigh the benefits and consequences to any given policy, and make decisions without any preconceived notion of what the solution should look like. In the case at hand, I, and the vast majority of people, think the minor inconvenience of not being able to make discriminatory hiring decisions is far outweighted by the benefits of not having large segments of the population chronically unemployed and impoverished because their race.  The only effective argument against this would be to posit a way in which the benefits of this policy could be achieved (or bettered) without the use of government coercion, and that I haven't seen.  &gt;You'd better grow up fast on this one  Remember, you are talking to someone who thought and argued exactly the same viewpoint you are now espousing for 10 years. I was even a delegate to the national Libertarian convention once. I was a true believer. I did grow up. "I agree that cutting spending is generally a bad idea in a bad economy. However, we cannot sustain deficit spending forever. Our government has been spending money it doesn't have for decades. Now that we need spending to boost the economy, we've started to run out of ammunition. Years of stupid spending have caught up with us in the midst of a major depression. It's bad, but reality.  So many people (including many people here on Reddit) have ideas that our debt-GDP ratio isn't a problem. Many people have pointed out that other countries have survived with much higher GDP ratios than ours. That is true, but we can't make that comparison based on that one variable. Those countries seemed to be on the brink of a major economic expansion as they conquered market shares in the global economy or developed new industries. As their economies started booming, they were able to pay down their debts. People argue that when our economy improves we can do the same.  The problem is that after spending $5 trillion, we are still in a terribly stagnant economy after three years of recovery. How long do they think it is going to take before the recovery kicks in? It's inevitable that sooner or later we need to cut debts. Even if we do see a sudden economic rebound, the amount of debt it would take to get there would be extreme at this rate. That would require major cuts in spending which would send us right back where we started.  Some people say that paying the debt is similar to paying down a mortgage. By those standards we are doing fine and it is more than affordable. That is a bad argument. For one thing, the revenue we generate in taxes is coming from economic growth developed by that spending. If you cut one, you cut the other. The way our economy is working right now, in order to generate more revenue to pay down the debt, we need to take on more debt. Also, unlike a mortgage, we are at the mercy of the financial markets. When investors decide that we have too much debt, the rates will rise or they stop buying altogether. Then we have to rely on the federal reserve to finance it, which can cause serious inflation. If we lose our reserve status (anyone who thinks this isn't possible is sadly delusional) then we are basically going to end up like Greece because we wouldn't be able to pay off our debts to foreign investors with our printing press.  It's also important to note that America has a very big advantage it doesn't really deserve. We have the world reserve currency. People say that we deserve to have that because our economy is stronger. That is circular logic, because so much of our economic strength is due to the fact we had the reserve currency in the first place. Where would we be without it? Would we still be the strongest economy in the world? I think that's an impossible question to answer, because we have had it and given a free pass for so long that we don't know what life would be like. We can sit and chastise Europe for not doing as well as us, but the truth is we have a huge advantage so it's not a valid comparison. Also, we may be doing better for now. But if our sovereign debt bubble bursts (either due to the loss of world reserve currency status or otherwise) we won't be any better off.  I don't believe in austerity in a depression, but this unsustainable deficit spending seems equally reckless. I think we need a more strategic plan that rests somewhere in the middle ground. Cutting spending on wasteful projects and redirecting that money into areas that are going to have a high return on investment in the form of GDP growth. Obama's roads don't qualify. Otherwise, if we keep wasting money we will someday reach the point where deficit spending is no longer an option and we have to cut it regardless of how stagnant the economy is. That would be really bad and we need to change gears before we reach that tipping point.   To answer your question, I think the people you speak of are wrong, but not stupid. They certainly have good points. The problem is that everyone looks at it as an ""either/or"" situation rather than seeing a continuum where the real answer may lie somewhere in the middle." The essential (and obvious) thing to avoid getting back into debt (or to reduce debt if you have it) is to make your total income exceed your total expenses. That means either increasing your income or reducing your total expenses.   Either take effort.   Basically, you need a plan. If your plan is to increase income, work out how.  If the plan is to increase hours in your current, you need to allow for your needs (sleep, rest, etc) and also convince your employer they will benefit by paying you to work more hours.   If your intent is to increase your hourly rate, you need to convince a current or prospective employer that you have the capacity, skills, etc to deliver more on the job, so you are worth paying more.    If your intent is to get qualifications so you can get a better paying job, work out how much effort (studying, etc) you will apply, over how long, what expenses you will carry (fees, textbooks, etc), and how long you will carry them for (will you accept working some years in a higher paying job, to clear the debt?). Most of those options involve a lot of work, take time, and often mean carrying debt until you are in a position to pay it off.     There is nothing wrong with getting a job while studying, but you have to be realistic about the demands.   There is nothing sacrosanct about studying that means you shouldn't have a job.   However, you need to be clear how many hours you can work in a job before your studies will suffer unnecessarily, and possibly accept the need to study part time so you can work (which means the study will take longer, but you won't struggle as much financially). If your plan is to reduce expenses, you need a budget.    Itemize all of your spend.  Don't hide anything from that list, no matter how small.   Work out which of the things you need (paying off debt is one), which you can get rid of, which you need to reduce - and by how much.   Be brutal with reducing or eliminating the non-essentials no matter how much you would prefer otherwise.  Keep going until you have a budget in which your expenses are less than your income.   Then stick to it - there is no other answer.    Revisit your budget regularly, so you can handle things you haven't previously planned for (say, rent increase, increase fees for something you need, etc).    If your income increases (or you have a windfall), don't simply drop the budget - the best way to get in trouble is to neglect the budget, and get into a pattern of spending more than you have.   Instead, incorporate the changes into your budget - and plan how you will use the extra income.   There is nothing wrong with increasing your spend on non-essentials, but the purpose of the budget is to keep control of how you do that, by keeping track of what you can afford. This is a slightly different reason to any other answer I have seen here about irrationality and how being rationally aware of one's irrationality (in the future or in different circumstances) can lead you to make decisions which on the face of it seem wrong. First of all, why do people sometimes maintain balances on high-interest debt when they have savings? Standard advice on many money-management sites and forums is to withdraw the savings to pay down the debt. However, I think there is a problem with this. Suppose you have $5,000 in a savings account, and a $2,000 credit card balance. You are paying more interest on the credit card than you get from the savings account, and it seems that you should withdraw some money from the savings account, and pay off the cc. However, the difference between the two scenarios, other than the interest you lose by keeping the cc balance, is your motivation for saving. If you have a credit card balance of $2,000, you might be obliged to pay a minimum payment of $100 each month. If you have any extra money, you will be rewarded if you pay more in to the credit card, by seeing the balance go down and understanding that you will soon be free from receiving this awful bill each month. To maintain your savings goal, it's enough to agree with yourself that you won't do any new spending on the cc, or withdraw any savings.  Now suppose that you decide to pay off the cc with the savings. There is now nothing 'forcing' you to save $100 each month. When you get to the end of the month, you have to motivate yourself that you will be adding spare cash to your $3,000 savings balance, rather than that you 'have to' pay down your cc. Yes, if you spend the spare cash instead of saving it, you get something in return for it. But it is possible that spending $140 on small-scale discretionary spending (things you don't need) actually gets you less for your money than paying the credit card company $40 interest and saving $100? You might even be tempted to start spending on your credit card again, knowing that you have a 0 balance, and that you 'can always pay it off out of savings'. It's easy to analogize this to a situation with two types of debt. Suppose that you have a $2,000 debt to your parents with no interest and a $2,000 loan at high interest, and you get a $2,000 windfall. Let's assume that your parents don't need the money in a hurry and aren't hassling you to pay them (otherwise you could consider the guilt or the hassle as a form of emotional interest rate). Might it not be better to pay your parents off? If you do, you are likely to keep paying off your loan out of necessity of making the regular payments. In 20 paychecks (or whatever) you might be debt free. If you pay off your loan, you lose the incentive to save. After 20 months you still owe your parents $2,000. I am not saying that this is always what makes sense. Just that it could make sense. Note that this is an opposite to the 'Debt Snowball' method. That method says that it's better to pay off small debts, because that way you have more free cash flow to pay off the larger debts. The above argues that this is a bad idea, because you might spend the increased cash flow on junk. It would be better to keep around as many things as possible which have minimum payments, because it restricts you to paying things rather than gives you the choice of whether to save or spend. Pro tip (I'm a financial advisor): some people aren't lucky enough to have rich parents or relatives who will pay for their education. Those who aren't poor or wealthy are caught in the middle, unable to pay their way and unable to get enough grants to pay their way. Scholarships are never a given. Using debt to increase your intrinsic value is a wise investment. "Noted... the tricky thing is that some people are quite literally living paycheck to paycheck, even without any extravagant spending.  If you're in this boat, and something comes up, like a broken tooth, or a transmission, or something else, and you think, ""Well, I can pay this big bill today, then my check get deposited in 2 days, so I can pay my phone then, even though it'll be a little late, and so on and so on. You weren't going to bounce anything, true, but then the bank took an extra day to deposit a check FROM ANOTHER BRANCH OF THE SAME BANK... and now you owe them $35.   I'm not saying we shouldn't all be financially responsible, we should. It's just that things can be really, really tight for people. ""Just don't spend it,"" literally isn't an option.   I honestly have been the best about money when I only had an account that I had to deposit by mail... I had to plan enough ahead that I couldn't get too low. I'm thinking I may go back to that system, just for that reason." "You have a few options, none of which are trade off free: Apply for a credit card, and live off of that.   Here, of course, you will go into debt, and there are minimums to pay.  But, it will tide you over.  In any case, you are getting unsecured credit, so your rates will probably be very, very high.  You don't want to build up a lot of 20% per annum debt. An alternative to this would be to go to any bank and ask for an unsecured loan.  Having no income, it will be difficult, though not necessarily impossible, to secure some funds.  When I was in between houses, once, for example, I was able to borrow $30,000 in unsecured debt (to help me construct my new house!), just based on my income.  Grant you, I paid it 2 months later, in order to avoid the 10% / year interest, but the point is that unsecured debt does exist.  Credit Cards are easier to get.  Arrange for personal financing through your parents or other relatives. If your parents can send you remittances, the terms will most likely be more generous.  They know your credit and your true ability to repay.  Just because they send you money doesn't mean you have to live with them.  As a parent, I have a stake in ensuring my children's success.  If I think that tiding them over briefly is in their best interest and mine, you better be sure I'll do it. A variation on this is Microfinance - something like Kiva.  Here, if you can write up a story compelling enough to get finance, there are people who might lend you money.  Kiva is normally directed towards poorer countries and entrepeneurs - but local variations exist. UPDATE: Google-backed 'LendingClub.com is far more appropriate to this situation than Kiva.  Same general idea, but that's the vendor. Find freelance, contract, or light employment. Your concern about employment is justified - you don't want to be in a position where you are unable to travel to an interview because Starbucks or McDonalds will fire you if you don't show up for a shift.  (Then again, do you really care if McDonald's lets you go?)  As such, you need to find income that is less bound by schedule.  Freelance work, in particular, will give you that freedom - assuming you have a skill you can trade.  Likewise, short term contract work is equally flexible - usually.  Finally, it may be easiest just to get temporary pickup work in a service capacity.  In any event, doing something will be better than doing nothing.  Who knows, you might want to be a manager / owner of a McDonalds some day.  Wouldn't hurt to say, ""I started at the bottom.""" "I agree with JoeTaxpayer's answer.  The question you should be asking is not ""how do I spend more"" but ""how do I become happier"".  From what you say, it may be that you could increase your happiness simply by cutting back on these aggressive attempts to save a few bucks here and there. At the same time, if you do this, on some level your personality is probably not the type that would allow to simply ""forget it"".  I think many frugal people are somewhat as you describe: they don't like wasting money.  In such cases, often what matters is not so much the actual saving money as the feeling of saving money.  Therefore, I'd suggest that you take a look at which of the ""money-losing"" activities you mention are really worth it. The easiest ones to drop would be things like the home-improvement project, which even you acknowledge does not save you money.  If you like saving money, give yourself a pat on the back when you hire the contractor.  If you want, run the numbers so you can ""prove"" to yourself how much money you are saving by not doing the work. For some of the other things, it may be that spending time to save a small amount can ""gamify"" an everyday experience and make it more interesting.  For instance, comparing products to save a few bucks is not necessarily bad unless you actually don't like doing it.  If spending a few hours comparing two toaster ovens on Amazon or whatever makes you feel good, go for it; it's no worse than spending a few hours watching TV.  By acknowledging that you get something out of it --- the feeling of getting a bargain --- and savoring that, you can feel better about, and also potentially ""get it out of your system"" so that you won't feel the need to do it for every little thing.  We all have our little pet obsessions, and it's possible to acknowledge that they're irrational, while still accepting them as part of your personality, and finding a way to satisfy them in a controlled manner that doesn't stress you out too much."