A lot of people are feeling discouraged by the current economic situation. The unemployment rate is at 9% and the underemployment rate is at 17%. A lot of Americans are feeling like their chance at the American dream is slipping away since wages are not growing. Since 1980 wage growth for middle income Americans has been tepid at best. All of these circumstances are causing people to believe that they will never be financially well off.

The truth is that you do not have to make a ton of money to amass a lot of money. Your salary does not have to be $400,000 or $500,000 a year. You can get rich over time off of a much smaller amount of money using the following tips:

Reduce your debt load

Most people do not understand that making more money is not always the solution to their money woes. Here is a perfect example of this situation.

James makes $35,000 a year.  He buys a Honda Civic that has a payment of $350 a month and lives in a home with a monthly mortgage payment of $1,000 a month. He has credit card and student loan debt totaling $50,000. James believes that if he can just increase his income that his money problems will end.  James gets a raise and winds up doubling his salary. Does James save the extra $35,000 a year?

Of course not! Instead James buys a BMW M3 which increases his car payment to $700 a month. He buys a newer home that is commensurate with his new income level that has a mortgage payment of $2,000 a month. James has higher utility, maintenance, and repair bills plus he still has the original loan debt. Although James is making a lot more money, he doesn’t save any more money because he increased his expenses right along with his salary.

That is the problem. The average person spends every dime that they make. They always find new expenses to eat up any salary increases that they may earn. That is why celebrities go broke so easily. They may make millions of dollars a year but they increase their living expenses to the same amount.

The only way to keep more of your own money is to reduce your existing debts. Paying down your debt allows you to hold onto more of your own money. A person that makes only $35,000 a year and is debt free is in a better financial position than someone who makes $70,000 a year and has $70,000 in annual  debt.