Keeping Up With The Jones
Have you been buying things you don’t need or can’t really afford? Is our culture overspending because we are trying to impress those around us? Looks like it is time to get back to the basics. What changes are you gonna make?
Given the state of the economy for the last couple of years, people have begun to make some changes in their lifestyle. Whether the change was forced or just a conscious decision to reduce or eliminate some expenses, people are spending less. Part of the reason that our country is in its current state is because people were living beyond their means and easy access to credit fueled the movement of “spending more, saving less”. The sad reality is that a lot of us wanted to have a certain lifestyle, despite the consequences (like if we could truly afford it.) We can refer to this trend as “keeping up with the Jones” and “living beyond our means”.
When the housing market was on fire, many people qualified for a house that they traditionally couldn’t afford because the availability of alternative financing made it easier, (i.e. interest only loans, stated income). Personally, I had an interest only loan because it got us a large house in Atlanta - something we had dreamed about but didn’t think we could have in our mid 20’s.
What I didn’t realize at the time was that it was a horrible type of loan and our hope of refinancing before the market tanked was very risky. I know people who were so busy trying to show the world that “they made it”, but in reality they were barely making ends meet. I recently read an article entitled “The Work and Spend Cycle” that explains what happens when we get that long awaited (and well deserved!) raise. We finally have some extra money and a lot of us pick up more expenses; we upgrade to a new car, spend more in entertainment, or buy whatever big ticket item we think we can now afford.
Things are slowly adjusting to the way they should be from a personal finance point of view. Access to credit is not as easy anymore, and the focus now is on savings and living within our means. It is much better to minimize expenses and budget accordingly, than to live like you are on a never ending shopping spree. Saving up for the things you really want and buying them with cash is a much better option than charging on a credit card, dealing with high interest rates and slowly paying down the balance.
Question: What kind of changes have you made to your lifestyle recently so that you are able to live within your means? Do you have any tips you want to share?
Source: http://www.mdmproofing.com/iym/cycle.shtml
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About the Author
RobynI am originally from Queens, New York and recently relocated to the Raleigh area. I love talking to people and giving them information about dealing with their personal finances. I find that I have alot in common with my clients and am able to relate to them with my personal experiences dealing with money management.
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Comments
On 03/01 at 06:12 PM,
Lisimba Tafirenyika said:
Very good .I think we all need to be more careful that we are buying and consuming what we really need ;not what the herd says we need.
On 03/01 at 10:35 PM,
Patrick St.Amand said:
Your article on financial education was very informative and enlightening. Yes, many of us do have lifestyles that mirror entertainers like Jay-Z, Beyonce, or for that matter Earl Graves, Jr (Black Enterprise) but don’t really have the sustainable financial means to keep up with the so-call aforementioned Jones. One must think long-term, e.g. retirement, college costs for kids, etc. Not short-term, which only leads a person to having to continue working way pass the typical retirement age, e.g. 65-70yrs because in their younger years keeping with the Jones was the short-term mission.
Again, great article and keep on schooling these knuckleheads. Peace out!
Patrick with Aflac…
On 03/02 at 09:03 AM,
Ann Allen said:
So many of us can relate to this article because many of us made the mistake of trying to “keep up with the Jones” and not understanding that the Jones were probably consumed with debt too. Why? Like you said access to credit was so easy. Two tips that have helped me, especially since I am recently re-employed and get paid once a month are: write out your budget before you spend and set aside savings every paycheck. You are never too young or too old to learn how to manage my finances.
On 03/03 at 11:52 AM,
Ebony Evans said:
Great article! You are absolutely correct on this. We do need to focus on spending wisely and living below our means. This may sound so cliche, but if we would actually let those words sink into our minds, the country would probaly be in a better financial situation than its current. I too was a victim of what they call predetory lending with an 2-1 arm mortgage loan with my rate adjusting 6% more after two years. I can attribute that to not being educated on the mortgage ins and outs. We should educate ourselves on the different financial avenues available to us to prevent things of this nature. We could all live the dream we want in an affordable way by paying ourselves (saving) and doing a financial analysis and some planning!
On 03/10 at 12:14 PM,
A. Allen said:
Newton’s third law states “Every action has a reaction equal in magnitude and opposite in direction…”When the economy was doing well no one ever thought we would be in this situation. All good things must come to an end however that was not the thought process when we talked ourselves into buying those shoes, cars, or homes. Quickly we blamed the banks or government officials for not protecting us, our families and money. In reality the love affair with credit is to blame. Ultimately the consumer is to blame. Did the banks force any of us to hand over our credit cards or sign for loans both conventional and inventive financing? Credit went from a business tool to an addictive drug. Maybe this situation will drive home the fact that wealth is built over time. There is a silver lining. Families have re-connected and living within their financial means. Our cups are full but they don’t have to runneth over to be happy.