Keeping up with the Joneses

[Jay_Gatsby]

Interesting article on the Yahoo Finance page entitled "When Status Has Too High a Price"

http://finance.yahoo.com/columnist/article/moneyhappy/1774

Here are a few highlights:

"It had never occurred to me that I needed to be empowered to throw a cheap, fun party. And, frankly, I could summon little empathy for a wealthy person who felt bad about her frivolous spending."

"Even a cheapskate like myself can appreciate the aesthetic pleasure of a $3 cup of coffee from time to time. But if I drink it to express how much more sophisticated I am than the folks who drink instant Nescafe, I've got a problem."

"She told me about a colleague in his late 40s who expressed some anxiety and frustration over the fact that, after so many years working on Wall Street, he had so little to show for it in the bank. She was able to identify three reasons pretty quickly: Manhattan apartment, country home, and children in the city's private schools (some of which rival Harvard in annual tuition costs). He saw these costs as necessities, standard among his peers."

 

[dumpster56]

Interesting article on the Yahoo Finance page entitled "When Status Has Too High a Price"

http://finance.yahoo.com/columnist/article/moneyhappy/1774

Here are a few highlights:

"It had never occurred to me that I needed to be empowered to throw a cheap, fun party. And, frankly, I could summon little empathy for a wealthy person who felt bad about her frivolous spending."

"Even a cheapskate like myself can appreciate the aesthetic pleasure of a $3 cup of coffee from time to time. But if I drink it to express how much more sophisticated I am than the folks who drink instant Nescafe, I've got a problem."

"She told me about a colleague in his late 40s who expressed some anxiety and frustration over the fact that, after so many years working on Wall Street, he had so little to show for it in the bank. She was able to identify three reasons pretty quickly: Manhattan apartment, country home, and children in the city's private schools (some of which rival Harvard in annual tuition costs). He saw these costs as necessities, standard among his peers."

As I sat on the interstate for a few hours trying to get 55 miles to work so I can pay the mortgage on the 4 bedroom 2700 square foot home and the two car payments and the 8.000 dollar a year real estate taxes, it came to me like a brick upside my head.

LEAVE!!

The children are GROWN and Married done with med school and gonna be fine!

Time to do something for myself, will bring the great wife along, and hey I guess my 220,000 purchase of the house which I have on the market for 540,000 and owe only 200,000, I never took home equity loans, gonna buy a house cash in NC and get a neat part time job selling Kayaks and tend bar. My teacher pension at age 50 is over 30K with medical bennies.

The heck with the joneses!!

 

[Mr._johngalt]

As I sat on the interstate for a few hours trying to get 55 miles to work so I can pay the mortgage on the 4 bedroom 2700 square foot home and the two car payments and the 8.000 dollar a year real estate taxes, it came to me like a brick upside my head.

LEAVE!!

The children are GROWN and Married done with med school and gonna be fine!

Time to do something for myself, will bring the great wife along, and hey I guess my 220,000 purchase of the house which I have on the market for 540,000 and owe only 200,000, I never took home equity loans, gonna buy a house cash in NC and get a neat part time job selling Kayaks and tend bar. My teacher pension at age 50 is over 30K with medical bennies.

The heck with the joneses!!

I was "The Joneses" It's way overrated.

JG

 

[Spanky]

Ine of the best way to avoid "keeping up" is not to visit the malls, deparrment stores or Besy Buy.

 

[HFWR]

Well, MAYBE Best Buy!!

 

[Gone4Good]

Last night my wife and I had dinner with a couple of friends who are of similar age and income. After dinner they invited us over to their house for after-dinner drinks. Having paid roughly triple what we did, their house is understandably much larger than our own and has quite a few additional amenities. On the inside their home is very well decorated and everything is new, making our decor seem a bit shabby by comparison. Looking around I thought to myself, "its very nice, but I don't want this. I could have it if I wanted it, but I don't want it."

Later in the evening my friends indicated they would like to get a "summer home". My first thought was that I'd be long since retired while they were busy paying the mortgage on a second house. My second thought was that I couldn't be bothered with the upkeep on another property. Certainly I could afford one if I wanted one, but I don't want one.

A thought occurred to me this morning, though. Right now I'm perfectly comfortable living below my means and I don't envy any of my friend's possessions. But in the back of my mind, I know that I could have those things if I wanted them. I wonder how much of my comfort is based on that simple fact.

When I retire I will essentially be making a conscience choice to cap my lifetime earnings. From that moment on, my resources will be decidedly more limited. A decade after retirement, I may no longer have the luxury of saying "I could have those things, if I wanted them." Will I still be comfortable maintaining a lifestyle below that of my friends (and perhaps increasingly so over time) when to do so is no longer a choice?

I realize that there are tradeoffs in everything, but one of the "costs" associated with a very early retirement that I had never really considered before was the prospect of a declining relative standard of living.

 

[REWahoo]

I realize that there are tradeoffs in everything, but one of the "costs" associated with a very early retirement that I had never really considered before was the prospect of a declining relative standard of living.

What you have come to realize is a cold hard fact of early retirment. Assuming the standard of living of those around you continues to increase (along with their credit card debt, mortgage, car loans, etc.), you may lose the ability to keep up, even if you never intend to do so.

If that's a real problem for you I recommend you keep working, delay retirement, and continue to contribute to the SS system and consumer fueled economy so that the rest of us can enjoy our retirement.

 

[frayne]

Keeping up with the Joneses is no doubt a concept thought up by the Madison Ave. types and bought into by 95% of the US population. It has taken DW and I fifty years to purge this silliness out of your systems. Sure does feel good too.

 

[haha]

A thought occurred to me this morning, though.  Right now I'm perfectly comfortable living below my means and I don't envy any of my friend's possessions.  But in the back of my mind, I know that I could have those things if I wanted them.  I wonder how much of my comfort is based on that simple fact.

When I retire I will essentially be making a conscience choice to cap my lifetime earnings.  From that moment on, my resources will be decidedly more limited.  A decade after retirement, I may no longer have the luxury of saying "I could have those things, if I wanted them."  Will I still be comfortable maintaining a lifestyle below that of my friends (and perhaps increasingly so over time) when to do so is no longer a choice? 

Hey this is pretty deep. My belief is that truly early retirement is only a good choice for oddballs, misfits, adventure travelers (including sexual adventure), sportsmen, and intellectuals. These people are mostly convinced deep down of their inherent superiority to the hoi polloi, no matter how unfounded that belief may be or how bizarre it may seem to most other people.

So you don't really rate the others guy's fancy home as being in any way meaningful. It just means he is a fool and a knave, wasting his precious time for meaningless and burdensome crap.

It could get harder if your wife or girlfriend starts to get kind of a shine in her eyes when she is around guys who are successfully traveling this more outwardly resplendent path.

Ha

 

[Mr._johngalt]

Hey this is pretty deep. My belief is that truly early retirement is only a good choice for oddballs, misfits, adventure travelers (including sexual adventure), sportsmen, and intellectuals. These people are mostly convinced deep down of their inherent superiority to the hoi polloi, no matter how unfounded that belief may be or how bizarre it may seem to most other people.

So you don't really rate the others guy's fancy home as being in any way meaningful. It just means he is a fool and a knave, wasting his precious time for meaningless and burdensome crap.

It could get harder if your wife or girlfriend starts to get kind of a shine in her eyes when she is around guys who are successfully traveling this more outwardly resplendent path.

Ha

Damn....a thoughtful post. I lost a lot of "friends" and
contemporaries when I went from "big spender" to
"dumpster diving". Left one wife behind also.
Was it worth it? Absolutely!

JG

 

[Mr._johngalt]

Last night my wife and I had dinner with a couple of friends who are of similar age and income.  After dinner they invited us over to their house for after-dinner drinks.  Having paid roughly triple what we did, their house is understandably much larger than our own and has quite a few additional amenities.  On the inside their home is very well decorated and everything is new, making our decor seem a bit shabby by comparison.  Looking around I thought to myself, "its very nice, but I don't want this.  I could have it if I wanted it, but I don't want it."

Later in the evening my friends indicated they would like to get a "summer home".  My first thought was that I'd be long since retired while they were busy paying the mortgage on a second house.  My second thought was that I couldn't be bothered with the upkeep on another property.  Certainly I could afford one if I wanted one, but I don't want one.

A thought occurred to me this morning, though.  Right now I'm perfectly comfortable living below my means and I don't envy any of my friend's possessions.  But in the back of my mind, I know that I could have those things if I wanted them.  I wonder how much of my comfort is based on that simple fact.

When I retire I will essentially be making a conscience choice to cap my lifetime earnings.  From that moment on, my resources will be decidedly more limited.  A decade after retirement, I may no longer have the luxury of saying "I could have those things, if I wanted them."  Will I still be comfortable maintaining a lifestyle below that of my friends (and perhaps increasingly so over time) when to do so is no longer a choice? 

I realize that there are tradeoffs in everything, but one of the "costs" associated with a very early retirement that I had never really considered before was the prospect of a declining relative standard of living.

Yep, I could have a lot of "things". Don't want to.
I want the time, and I have it. Nothing is more precious.

JG

 

[robert]

It's all about the choices we make. I want lots of things, but I can't have them all. Do I want a nice house -- why not? Do I want a shiny new car -- sure! Does a stroll though the mall trigger a little lust here and there -- you bet. But, we have to make choices. And everytime I chose one path, I have given up others. My time has just become too precious to sell any more of it to acquire any more of these nice to have, but altogether unnecessary, things. I will retire in 12 months at 57. I could work more . . . there's certainly nothing preventing me from doing so. However, I've made a choice to spend more of my time doing the things that I think really matter. That choice necessarily means that I'll have to give up some of the trinkets that selling my time could buy. Letting go of them isn't always easy, but that's what choice is all about.

Robert

 

[brewer12345]

Last night my wife and I had dinner with a couple of friends who are of similar age and income.  After dinner they invited us over to their house for after-dinner drinks.  Having paid roughly triple what we did, their house is understandably much larger than our own and has quite a few additional amenities.  On the inside their home is very well decorated and everything is new, making our decor seem a bit shabby by comparison.  Looking around I thought to myself, "its very nice, but I don't want this.  I could have it if I wanted it, but I don't want it."

Later in the evening my friends indicated they would like to get a "summer home".  My first thought was that I'd be long since retired while they were busy paying the mortgage on a second house.  My second thought was that I couldn't be bothered with the upkeep on another property.  Certainly I could afford one if I wanted one, but I don't want one.

A thought occurred to me this morning, though.  Right now I'm perfectly comfortable living below my means and I don't envy any of my friend's possessions.  But in the back of my mind, I know that I could have those things if I wanted them.  I wonder how much of my comfort is based on that simple fact.

When I retire I will essentially be making a conscience choice to cap my lifetime earnings.  From that moment on, my resources will be decidedly more limited.  A decade after retirement, I may no longer have the luxury of saying "I could have those things, if I wanted them."  Will I still be comfortable maintaining a lifestyle below that of my friends (and perhaps increasingly so over time) when to do so is no longer a choice? 

I realize that there are tradeoffs in everything, but one of the "costs" associated with a very early retirement that I had never really considered before was the prospect of a declining relative standard of living.

Yrs, I think that the problem can largely be avoided. I intentionally picked out a ho-hum middle class area to live in even though I could have bought bigger. I get along with my neighbors and have very little temptation to keep up with them, since mostly they just work on paying the bills rather than constantly trading up. Some of my colleagues are decamillionaires, OTOH. I don't feel any temptation to keep up with them since they are clearly in another league. So if you consciously choose your frame of reference, it is easier to avoid temptation.

On the whole thing with possibly having a declining relative standard of living: based on the historical record, sticking to the SWR methodology is more likely to result in mammoth portfolio growth over time and with it the potential to greatly increase your standard of living. Just food for thought...

 

[Brat]

I intentionally picked out a ho-hum middle class area to live in even though I could have bought bigger.

Absolutely stay in a ho-hum middle class area.  Having lived in both ho-hum and fancy neighborhoods in the same primary/HS school service area I assure you there is NO DIFFERENCE in the success of kids.  In fact, the more money the parents spend on "stuff" the less likely the children to well IMHO. 

What we all look for is bottom line results.  Do our children achieve their potential, do we have enough when we retire to do the things we want.  Invest in your children and in your future.  "Stuff" has 0 ROI.

 

[Nords]

I wonder how much of my comfort is based on that simple fact.
When I retire I will essentially be making a conscience choice to cap my lifetime earnings. 

That's one way to look at it. From my perspective, I've made the choice to cap my lifetime Social Security & Medicare contributions. If your comfort comes from vicariously keeping up with the Joneses, then you're still keeping up with the Joneses. That's going to make it tough for you to get in the ER frame of mind!

A decade after retirement, I may no longer have the luxury of saying "I could have those things, if I wanted them." Will I still be comfortable maintaining a lifestyle below that of my friends (and perhaps increasingly so over time) when to do so is no longer a choice?

I realize that there are tradeoffs in everything, but one of the "costs" associated with a very early retirement that I had never really considered before was the prospect of a declining relative standard of living.

Instead of saying "I could have those things if I wanted them", you'll be saying "I could have those things if I wanted to go back to work!" When you frame the options that way, you'll be pretty comfortable with the ER choice.

Another (much grimmer way) to look at it is to accept your current standard of living (because I sure hope you're keeping up with inflation) in exchange for having your life back. It may not be quite the same standard of living as the Joneses, but you'll live a much happier, healthier, & longer life without them.

 

[trixs]

If you really want to keep up with those damn Joneses just move to an area that has cheaper living expenses.. Then perhaps you could be the Joneses!!

 

[MJ]

With my LWBYM (way below) lifestyle which I am trying to slowly change to LWIYM (within), I barely stay ahead of the Homelesses.

 

[Mr._johngalt]

Now here is an odd thing. Even though we used to be
"The Joneses", my (2) older kids.......... raised 100% during
that period (and so spoiled rotten) seemed to avoid
acquiring KUWTJ disease. OTOH, my youngest had
the misfortune to be 8 years old when the ER bug bit.
Yet, she is the most upwardly mobile/acquisitive of the
bunch. Could it be that her mother was the cause of this
as my influence was reduced post-divorce?? Nah.........

Just kidding. They all turned out great. Yeah, and I know
what y'all are thinking.

JG

 

[WhodaThunkit]

My belief is that truly early retirement is only a good choice for oddballs, misfits, adventure travelers (including sexual adventure), sportsmen, and intellectuals. These people are mostly convinced deep down of their inherent superiority to the hoi polloi, no matter how unfounded that belief may be or how bizarre it may seem to most other people.

I think you are exactly right. I fit into several of these categories, but even at that I'm not completely sold on ER (although I really value FI).

 

[Martha]

This is a most excellent thread.

As time goes by for the very early retirees, the difference with the Jones may increase as worker's income outpaces inflation. Retirees are generally happy keeping up with inflation. Are you going to want the new and amazing stuff that is invented 20 years from now? Did you imagine having your cell phones, computers, and HDTV 20-30 years ago? How about those new and amazing medical treatments?

My belief is that truly early retirement is only a good choice for oddballs, misfits, adventure travelers (including sexual adventure), sportsmen, and intellectuals. These people are mostly convinced deep down of their inherent superiority to the hoi polloi, no matter how unfounded that belief may be or how bizarre it may seem to most other people.

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.

 

[REWahoo]

My belief is that truly early retirement is only a good choice for oddballs, misfits, adventure travelers (including sexual adventure), sportsmen, and intellectuals.

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.

So, Martha, which category does Greg fall into? Let me guess....

 

[Gone4Good]

As time goes by for the very early retirees, the difference with the Jones may increase as worker's income outpaces inflation.  Retirees are generally happy keeping up with inflation. Are you going to want the new and amazing stuff that is invented 20 years from now?  Did you imagine having your cell phones, computers, and HDTV 20-30 years ago?  How about those new and amazing medical treatments?

I think this is what gives me pause. It is especially worrisome for someone thinking about retiring at, or around, 40 as I am. For this reason it may make sense to strive for a lower initial withdrawal rate to allow for some income growth above inflation.

 

[Eagle43]

My rule is no debt. No living paycheck to paycheck. Been there, done that, and although it was decades ago, I don't want to return. I know people in debt, hopelessly in debt, whose every intention is to keep up.  It's sad to see them so desperate, but they will not consider lowering their lifestyle.  I have never wanted to keep up with the Jones; not even Jerry Jones!  That usually leads to despair and a lose-lose outcome.  OTOH, it probably drives the economy, so please be my guest.

 

[Mr._johngalt]

My rule is no debt.  No living paycheck to paycheck.  Been there, done that, and although it was decades ago, I don't want to return.  I know people in debt, hopelessly in debt, whose every intention is to keep up.  It's sad to see them so desperate, but they will not consider lowering their lifestyle.  I have never wanted to keep up with the Jones; not even Jerry Jones!  That usually leads to despair and a lose-lose outcome.  OTOH, it probably drives the economy, so please be my guest.

Hello. Wish I was in Texas right now, although it's pretty here this morning.

"No debt" is my rule also, but I make a couple of exceptions.

1. A reverse mortgage when and if I need it.

2. If I can borrow money, reinvest it and pocket the spread.

Otherwise, like you, I try to stay far away.

There is no doubt that it "drives the economy".

JG

 

[Mr._johngalt]

This is a most excellent thread. 

As time goes by for the very early retirees, the difference with the Jones may increase as worker's income outpaces inflation.  Retirees are generally happy keeping up with inflation. Are you going to want the new and amazing stuff that is invented 20 years from now?  Did you imagine having your cell phones, computers, and HDTV 20-30 years ago?  How about those new and amazing medical treatments?



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.   

I agree with Martha,. "excellent thread".

Being a closet Luddite, I can live quite easily without a cell phone, computer
or HDTV, or even some of the medical "advances" , which in some cases
I am not too sure are really "advances". I can also live quite easily
without a lot of the stuff we already own. This is a huge advantage in
making ER work IMHO.

JG