Keeping up with the Joneses

[ladelfina]

Mr.Galt and others are right about the dubious nature of "new and amazing stuff". Almost all of it is designed not to improve your direct comfort, but to show off your buying prowess.

Back at MIT in the late 70s the toy to have was a CD player ($1000 in 1970s dollars, too). Now you can get one for what? $20, $30, $50?

I would laugh up my sleeve at the Joneses running out to Best Buy to buy a 50" HDTV for a "low monthly payment". I merely chuckle at those who'd pay cash for it. At a certain point in your life, you just do not need these things. I'm only in my forties and already I sound like an old fart.

As far as health care is concerned, I remember someone telling me several years back about an Economist article that said all the increased spending and new high-tech developments in health care in the 20th c. accounted for a miniscule percentage in improved health and longevity, and that better nutrition and sanitation (cheap, low-tech) were responsible for the lion's share.

My luxuries?
A fur coat (hand-me-down from my mom). Great in winter, and in Italy no one throws paint at you for wearing fur.
A down comforter.
Expensive pots & pans for slow-cooking those beans & lentils (cook more evenly and they're less likely to burn).
A smallish, oldish Honda CRV for those muddy back roads and to haul firewood and the dog.
A 'detached' house with a yard (in Italy most everyone lives in apartments).
Satellite TV and DSL to keep up with American culture, for better or for worse.

When someone shows me their latest cell-phone, or Blackberry, or PDA, or PlayStation I just feel sad for them. There should be technology clinics like they have methadone clinics, to wean people off of this stuff. 


And talk about being a Luddite.. I was just in CT visiting my sister who just bought a house with a fridge that has (gasp!) an in-the-door ice dispenser! Man, do I love that thing! I know they're extremely common and have been around for years, but we just never had one, nor did I ever know anyone before who had one (small NE kitchens prob. to blame rather than lack of funds).

But still I don't need it.
I could get one here for 1800 EUROS if I wanted it 

You may not have control over inflation, but you do have control over your own personal inflationary impluses.

 

[grumpy]

In our case we got to ER by living WAY below our means. Now that we no longer have to accumulate assets, we find the living WITHIN our means provides a more affluent life style than we had before ER. We still can't completely shake the LBYM attitudes but we really appreciate the things we can now afford that we used to consider luxuries. Since we already feel like we can have what we want we feel no temptation to try to live up to others' standards. It's just that what we want does not include a lot of the things that other people feel are essential and that they deserve.

Grumpy

 

[haha]

I am inclined to agree with this.  This might also explain the mystery of why some spouses are still working when the family clearly has enough assets for them to retire early.   

Ha

 

[Michael Moore]

There's nothing inherently wrong with keeping up with technology.

But, it often doesn't pay to be an "early adopter". Wait a bit until the bugs get worked out and the prices come down. Then shoot for about the 80th percentile on your purchase.

That saves you from buying new tech at high prices, only see even better stuff come out in the next generation for less money. If you go for 80% you'll get something pretty nice, and you'll probably have no trouble with it lasting for 5 or more years.

In fact, that might be a better way to plan the purchase: "what should I get so that I'll have no problems with being satisfied with it for a minimum of 5 years while technology marches on?"

With computers I generally prefer to skip two generations between purchases. That way when you get a new system you are likely to see a pretty big performance jump. And of course, the prices keep dropping on the technology. I generally spend about the same money each time I upgrade, but what the money gets tends to increase.

I think it is also good to plan ahead and get the major purchases that you are sure that you want done and paid for before you RE. That way, if you find that the finances are squeeking a bit from the pressure you can delay RE a little until the bank account is feeling more comfortable. This may not be a concern for many people, but if you have a hobby that can absorb some serious amounts of money you want to tool up for that hobby while you can comfortably afford to spend, rather than finding your hobby being held back for lack of infrastructure after you've RE'd.

cheers,
Michael

 

[trixs]

Ah I think it will be very easy to outpace inflation and surpass the joneses

Heres what would have happend had you invested 1million in Vanguards Wellesley in 1990 and only withdrew 3% of the dividends/interested. Also invested the rest of the dividends, should there be more.

Your yearly SPENDING money:
2004 $83,896.92
2003 $79,883.90
2002 $74,758.57
$73,214.53
$69,437.20
$61,857.54
$66,499.90
$60,427.74
$51,512.87
$47,770.00
$38,260.03
$41,154.67
$36,565.25
$34,038.73
$28,713.00


Also you would end up having $2,796,564.04 invested at the end of 2004.. THis all from an extremely conservative fund!

 

[WhodaThunkit]

Trixs -- not to be a wet blanket ( I love the Spanish word "aguafiesta") but . . . we may not see a market like this again anytime soon.  Would be interesting to know what FireCalc says for other time periods of the same duration.

 

[Nords]

I am inclined to agree with this.  This might also explain the mystery of why some spouses are still working when the family clearly has enough assets for them to retire early.   

It would certainly explain why they married us in the first place!

 

[Jay_Gatsby]

Notwithstanding my various posts to this board, I must admit a strong desire, not to keep up with the Joneses, but to at least appear "successful". Living in Washington, D.C., the pressure to appear successful is rather extreme, particularly in the professional circles to which I belong. Being in my mid-30s and a lawyer creates an expectation on the part of colleagues and professional acquaintences to demonstrate some modicum of financial wherewithal, primarily in the form of a nice house (single-family home in the 2,000+ sq ft range) in a good neighborhood, a near-luxury sedan (Lexus, Acura, Mercedes, BMW, etc...), a well-fitting wardrobe of high-quality clothing, and weekends of entertaining colleagues at home or at higher-class restaurants. Those individuals in Washington, D.C. who I've met that don't have or do those things are looked down upon as not being as successful as those who do.

Consequently, I wonder whether buying/doing some (but perhaps not all) of the foregoing would be a worthwhile "investment" in my future. As they always say, you only get one chance to make a first impression

 

[Martha]

Jay, get the nice suit at most and forget the rest.

Develope a reputation as a "character." I know a number of very wealthy people who drive old cars and live very modestly. They might come into our office in ratty jeans and Sorrel boots, yet have a 100 million net worth.

I know a lawyer in the same line of work as you. He works for 3M and used to be a shareholder in a major firm. He has always dressed kind of shabby, his hair is kind of wild. He successfully has become a character. And I think he and his wife's net worth is pretty healthy.

 

[Jay_Gatsby]

Jay, get the nice suit at most and forget the rest. 

Develope a reputation as a "character."  I know a number of very wealthy people who drive old cars and live very modestly.  They might come into our office in ratty jeans and Sorrel boots, yet have a 100 million net worth. 

I know a lawyer in the same line of work as you.  He works for 3M and used to be a shareholder in a major firm.  He has always dressed kind of shabby, his hair is kind of wild.  He successfully has become a character.  And I think he and his wife's net worth is pretty healthy.

What you describe might be deemed a "caricature" rather than a "character". Nonetheless, you're probably right when it comes to clothes and first impressions.

 

[unclemick]

Re Max in MO - didn't believe me when I walked in in my flip flops, Jimmy Buffett shirt and cutoffs - said I was a refugee from LA and wanted to buy a house.

They also got a little upset - when I told them - I didn't want to look at it - given my RE judgement - I had a 'step daughter in spare room' type with a cam walker who worked a great deal of construction in her 'healthy' prior life and would pick the 'proper digs'.

They seemed to think that qualified me as a character.

For the life of me - I can't imagine why.

 

[Eagle43]

UncleM, you funny!  They gonna run you off.   

 

[Nords]

What you describe might be deemed a "caricature" rather than a "character".  Nonetheless, you're probably right when it comes to clothes and first impressions.

Bob Dylan & Jack Nicholson have been run out of many fine establishments... eventually to everyone's regret.

 

[haha]

Ah I think it will be very easy to outpace inflation and surpass the joneses

Heres what would have happend had you ....

Ha

 

[Jay_Gatsby]

Figured I'd ressurect and old thread based on a personal finance blog entry I recently read:

http://www.everybodylovesyourmoney.com/?p=204

The most poignant sentence of the blog entry to me was:

"When others offer their input, it’s really just them putting their nose where it doesn’t belong."

The author makes a valid point. When someone else criticizes your saving habits, even if s/he is well-meaning in advising you to "live a little", that's putting one's nose where it doesn't belong. If I considered spending my money to be "living a little", then I would do so. Clearly I don't.

 

[flipstress]

It can be annoying to be criticized, especially if the critics are not good with their own money anyway, as the blog describes.

But if it is indeed well-meaning advice from good-hearted people that I respect and trust, then I listen, even if I do not implement the advice all the time.

 

[bosco]

Being in my mid-30s and a lawyer creates an expectation on the part of colleagues and professional acquaintences to demonstrate some modicum of financial wherewithal, primarily in the form of a nice house (single-family home in the 2,000+ sq ft range) in a good neighborhood, a near-luxury sedan (Lexus, Acura, Mercedes, BMW, etc...), a well-fitting wardrobe of high-quality clothing, and weekends of entertaining colleagues at home or at higher-class restaurants. Those individuals in Washington, D.C. who I've met that don't have or do those things are looked down upon as not being as successful as those who do.

Sure makes me glad to be an engineer working in Alaska. Nobody seems to care what I wear, drive, or live. Only that I do my job. Just the way I like it. I drive a 5-year-old Mazda 4wd pickup and dress in slacks, nice running shoes (learned the hard way not to cheap out on the shoes--nothing to do with the Joneses, rather the podiatrists), and whatever extra clothes I need for the weather.

I spend the off-season at my modest house in Canada and the same clothes I work in seem to work fine in B.C. (except I do need ski clothing...).

I don't make as much as a DC lawyer, but have enough and save a lot.

in no way am I putting down anyone--to each his own as it should be

this works for me

 

[HFWR]

Who are the Joneses, and why would I want to keep up with them...

 

[Jay_Gatsby]

Who are the Joneses, and why would I want to keep up with them... 

Very good question. As with many things, they are figments of our imaginations and egos. My question is a little deeper.

If we're trying to keep up with the Joneses, who are the Joneses trying to keep up with?

 

[JonnyM]

DW and I are such loners (read Hermits) that we are not aware of any Jones... Works for us. 8)