This article is by staff writer Holly Johnson.
In late 2004, Kim Parr and her family upgraded their lifestyle with a brand new home in a rural area. As an optometrist with a higher-than-average salary, it seemed like the natural thing to do. After all, Kim’s husband had a secure (albeit lower-paying) job in education and their combined household income was finally in the six-figure range. They had earned it.
Unfortunately, the Parrs soon found that their new home needed much more than a roof and four walls. In fact, it desperately needed landscaping — things like sod, trees, a sprinkler system, and fencing. Of course, their new yard required a certain amount of upkeep so they had to buy all kinds of lawn-care equipment, including a John Deere riding mower.
Those empty rooms needed furniture too, but garage sale finds weren’t going to cut it in their brand new home. Of course, other expenses began to crop up as well, including things like hardware, curtains, and decorations.
But that wasn’t all. Once they bought their new house, they splurged for shiny, new cars and chose to upgrade into a newer, shinier model every few years. Then there were things like mountain bikes and skis and trips to Las Vegas or Denver, along with whatever else the family wanted. From a distance, it looked like the Parrs were living the dream.
When the Joneses are broke
Despite outward appearances, the Parrs had a dirty little secret. In addition to perpetual car payments and $70,000 in student loans, they had managed to rack up almost $30,000 in credit card debt in just a few short years. “We just financed everything because we thought we could afford the payments,” said Kim.
At a certain point, according to Kim, they had so many payments that all of their income was going toward them. They knew they had to change, so they did. Kim and her husband sat down together and created a plan to tackle their debts one by one. It all started with Kim taking a second job and funneling every cent she earned toward each balance until it was gone. They also created a budget and cut out any extra expenses that weren’t furthering their goals.
The Parrs paid off every cent of their consumer debt over the course of a few years, and now they’re debt-free aside from a small mortgage. She now blogs about her journey toward early retirement at EyesOnTheDollar.com (get it?), and says she’s much happier than she was when they had all the “stuff.”
“Life is so much better without consumer debt,” said Kim. “We worked hard to earn a good income. The difference now is that we have a purpose for that money, and it feels so much better to watch our net worth grow instead of seeing all the money go toward debt.”
The high cost of keeping up with the Joneses
The Parrs’ story is only unique because they took drastic action to fix their troubling situation. Other than that, people like the Parrs are everywhere. They’re the reason we have McMansions and Hummers, and a new iPhone seems to come out every time I turn around. Someone, somewhere has to be paying $69.99 for a pair of slippers out of those Sky Mall magazines you always see on airplanes, right? And unfortunately, it isn’t always the people who can afford it.
But that’s the thing about credit. It makes you feel like you can afford it. That new car only costs $299 per month, after all, and the minimum payment on your credit cards barely budges when you add to your balance each month. It’s so easy to go through the motions — buying the things your neighbors buy and taking your family on vacations like everyone else does. That’s why easy credit is a curse for some people, and why many experts like Dave Ramsey suggest avoiding it altogether.
“There is no positive side to credit card use. You will spend more if you use credit cards.”
High-earners keep up with the Joneses too
Even rich people get in over their heads while trying to keep up with the Joneses. That’s why 60 percent of NBA players and 78 percent of NFL players file for bankruptcy within five years of retirement, according to an article on Mint.com, and stars like M.C. Hammer and Mike Tyson end up broke after earning more money than most of us will ever see.
And don’t get me started on the women who star in the Real Housewives franchises. I think it’s time for someone to do an official study on how many have endured a foreclosure or bankruptcy while wearing designer clothes, vacationing in the Hamptons, and pretending everything is hunky-dory while their whole world falls apart. Sure, it’s entertaining to watch, but it’s mind-blowing to see someone travel to NYC for a spa day when their house is up on the chopping block. Call me crazy, but I don’t think I would be in the mood to celebrate.
How to stop keeping up with the Joneses
The truth is, we all have our Joneses. It doesn’t matter how much you earn or what you have; there’s always someone who has more. Sometimes it’s hard to go without when it seems like everyone around you has everything — but that doesn’t mean it’s real. In fact, the Joneses are often broke or living a paycheck-to-paycheck existence like the Parrs and so many others. What I’ve found is, what we so often emulate is an illusion to begin with. In fact, the cost of “having it all” is often a lifetime of debt, stress and, of course, work.
If you’ve been keeping up with the Joneses and your pocketbook shows, it’s important not to beat yourself up. So many people have been there themselves, and we all know how hard it is to go against the status quo. But, if you want out, there is always a way. Here’s how:
- Stop comparing yourself to others. Since you never know what anyone else’s financial picture really looks like, it’s important not to see their “apparent success” as “your own failure.” Remember, you don’t know their story and it’s highly possible that your peers are living beyond their means as well.
- Learn to live within your means. No matter how much you earn, it’s important to spend less. Any other strategy is a recipe for failure. Start by tracking your spending to figure out where your money is going. You might be surprised at what you find.
- Stop enabling yourself. If you can’t stop spending, be prepared to cut yourself off. Cut up your credit cards if you need to or ask your spouse to do it. Something has to give.
- Commit to your own financial well-being. One of the basic tenets of Get Rich Slowly is that “nobody cares more about your money than you do.” That’s why it’s important for you to take action to improve your situation. Commit to your own financial well-being, because no one is going to do it for you.
- Find value in yourself and in others. Material possessions cannot fill an empty heart. Instead of spending mindlessly, put your energy into your family and your relationships. That’s where the real value is.
No matter how much you earn, the Joneses will always be there. They’ll have nicer clothes than you and send their kids to better schools. They’ll have better parties and seem happier than most. Just remember, keeping up with the Joneses is not only impossible, but also a complete waste of time.
No matter how hard you try, the only way to win against the Joneses is not to play the game to begin with.
Have you ever tried to keep up with the Joneses? What did you learn?