Why I'm not richer than the other guy

[retire@40]

Today I was blown away when my son asked me why his elementary school friend's dad was richer than me. I asked him what brought that question on. He said that his friend said his father drives an expensive car (I think a Mercedes), and he lives in a huge house with a huge lawn, a 3 car garage, a huge pool, and he just bought this huge TV that "takes up half the wall."

I had to explain that having all that stuff doesn't necessarily mean that someone is rich, but it does mean that they spend a lot. I said there is nothing wrong with having all that stuff if you are living within your means and that's what makes you happy, but that material things don't make me as happy as spending quality time with my family. I told him it's great to make lots of money, but it's not great to worship money.

What I couldn't tell my son is that I know from his friend's father's ex-wife that he's living paycheck to paycheck, he's in debt up to his eyeballs, behind 2 years on his tax returns, lost his job and cashed out his entire retirement plan at age 40 and paid a 10% penalty, and also just paid a few thousand dollars for his girlfriend's new boob job. And, it's too bad that my son's friend can only enjoy that huge TV on the weekends when he visits his father. And that's just the part I know.

I also didn't want to tell him just yet that I could pay cash for a lot of the things the other guy has (except for the house), but I think it's smarter to have the money saved for the future.

I asked my son if he minds our family situation with our 27" TV, 5-room home, average car, having dinner together every night with his mom and dad, and going on vacations together. He said no, asked if he could have one of his Halloween candies, and off he went to play with his toys.

I just hope my son grows up to realize for himself why his dad was actually richer than his friend's dad (and not from a monetary sense).

 

[cute fuzzy bunny]

At least the guy made one...errr...two...good investment decisions...

It bothers me as a soon-to-be dad how kids (and adults) are programmed by advertising to become heavy consumers and measure themselves by their stuff.

Damn marketing guys.

 

[JWV]

My boys now say: 'They must be in debt up to their eyeballs!'

Judy

 

[brewer12345]

TH, that's why I am starting to think about busting up the sate;;ite dish within the next year. Don't want the marketers to sink their filthy teeth into my kiddo.

 

[ESRBob]

Retire@40-
This is such a great story of the Millionaire Next Door Prodigious Accumulator of Wealth versus the sad sack spend like a millionaire and live paycheck to paycheck.  The fact that you know some of the "rest of the story" makes it poignant.

I have kids asking the same sorts of questions, and the fact is that they do understand my synopsis of the millionaire next door and understand the difference between spending or saving-and-living-off-the-interest (how I have expressed SWR to them) and how we can be a lot richer and just not live that way.  And they know they get to have Dad around a lot more than the other kids.  (my kids are 9 and 13)

So don't despair, the kids will know the difference.  I am convinced every time I say "No, we can't waste our money on that" I am doing my real job as a parent and making them a little bit more ready for the real world.  In fact, I am seeking out more situations where I can get them to feel the pinch of material under-achieving, as I think it will 'build character' as my folks used to say.  

Currently I am determined to hang onto our 7-year-old minivan on principle, for several more years if possible, just so they'll have the experience of riding in an older clunkier car than their friends.  Can't think of a more cost-effective way to teach them something really valuable!

ESRBob

 

[azanon]

I have mentioned my dad before, and I can say i'm young enough to remember that I picked up pretty early on the virtues of my dad's frugality.  Even kids will hear of the various families that have it all, then suddenly lose the house, car, or whatever.  I think eventually I just figured out on my own without actually pursuing it that there was such a thing as living beyond your means vs living conservatively.  I knew long before my dad ever mentioned it that he was very conservative by choice.

Here's what's funny about small towns though.  Dad told me once, one of the reasons he doesnt drive a fancy car is because all of his clientel would see it, and think he's overcharging them thus quit going to his business.   The town's too small to be able to get away with living the life of luxury and everyone around you not knowing it. I imagine when he retires (which will be soon), he'll get that Audi TT he's been wanting.

 

[Nords]

Kids & money.

Kids get it. Tweens & teens are especially delighted to find consipiracies to be cynical & suspicious about with their peers.

They start to understand marketing when they're about kindergarten age. Ours was in tears at the "Must be 18 or older to call!" tagline because she couldn't understand why all these great toys were just for the grownups. It was a great springboard for discussing slimy marketing tactics.

So now we watch the typical Nickleodeon stuff together and nitpick the tactics-- Name-Calling, Glittering Generality, Transfer, Testimonial, Plain Folks, Card Stacking, and Band Wagon.

Caution for parents of tweens & adolescents: this life-skills training blows back bigtime if you don't self-censor your own speech. If you're trying to crank up a classic parental admonishment, it's hard to channel your parents onto your kids when they keep interrupting with darling phrases like "Dad, that's a glittering generality" or "I'm not hopping on that bandwagon."

So it's best on the neighbor's kids!

http://www.propagandacritic.com/articles/intro.ipa.html
(Hopefully TH's old marketing-research team didn't sponsor this site...)

 

[ESRBob]

Nords,
Good to have you back; i'll spend some time with the kids on the propaganda-analysis site -- i'd rather have them call me on my b.s. first than run the risk of getting out the door with it. good practice and worth the extra effort as a parent!

i have found them pretty ready to spott the con games going on around us: i have found myself having to say, (in France!) "come on guys, McDonalds isn't _that_ bad! We can have a burger every now and then -- " (They hate the ads in the US and have an unofficial boycott of the firm as a result...) oh boy, the coming decades are going to be interesting...

ESRBob

 

[daystar]

Mr. Retire@40,

Your story reminds me of the stories in "The Millionaire Next Door." I'm amazed at how some people can spend all of their wealth. I'm starting to think more and more that the epitome of upper-middle class life is being a fake. You've got to pretend you got money and show off to all your upper-middle class friends. I see so many people driving their luxury cars around here and I used to think that they are rich. Wrong!

I used to think my good friend in my MBA program was making a lot of money. Wrong! He's a financial advisor, so I asked him what he invests in. He doesn't invest in anything because he only makes $44K a year and he can barely afford his $1200 a month mortgage, car payments, and tuition. He lives in the nice area of town with all the other upper-middle class people. I live in a middle class area and I pay $600 a month rent. I make less than him and I manage to save 15% of my money through my 401K. I should be giving him a lecture about investing!

 

[John Galt]

During the last half of my working life, people thought I was rich. It would come back to me in various ways,
mostly through things my kids friends said to them.
I had all the trappings, no doubt. However, I always knew I was not rich (at least in monetary terms) right up to the time I
"saw the ER light".

John Galt

 

[Berkshire_Bull]

comeon, noone would enjoy AT ALL being the big-swinging-dick with all the toys? i certainly would if it meant i had financial independance as well, but most of the time you can't have it both ways. i think thats why we come here, to patch each other's egos from the abuse of living like paupers since most don't indulge in the material things that will stroke most people's fancy!

 

[wabmester]

comeon, noone would enjoy AT ALL being the big-swinging-dick with all the toys?

You'll find that the younger you are, the more you're driven by short-term thrills. A lot of that is probably biological. Adrenaline, testosterone, etc. A lot of it is marketing. A lot of it is peer pressure.

You'll feel much better when you are free of those drivers. Really, your lust for meaningless toys will diminish. And then your lust for REAL toys will take over. I'm talking whole-house fans, PV panels, and, of course, dryer sheets.

 

[John Galt]

wabmester is right (as usual ) Hey Wab..........still on
your diet but cheating a little more maybe. Will get tested again in a few months.

Used dryer sheets will be enjoyed.
In ER they're quite dear.
And in a pinch can be employed
to wipe our nose and rear.

T.S. Eliot, eat your heart out

John Galt

 

[Nords]

comeon, noone would enjoy AT ALL being the big-swinging-dick with all the toys?

Well, OK, maybe just one more longboard. But I'm running out of room to store the quiver; I might have to actually use up some of our dryer sheet stash to make room for the boards.

The truth is that the activities we enjoy don't require much in the way of toys. Well, except for Wab's home improvment supplies...

i think thats why we come here, to patch each other's egos from the abuse of living like paupers since most don't indulge in the material things that will stroke most people's fancy!

Living frugally, yes. Like paupers, no.

Last weekend I was listening to the 9-12 year old girls cleaning tack after their dressage practice. One kid's father just sold his used Vette to buy a used Jag. (To be fair, the Dad works insane hours for huge $$ and understands his consumptive choices.) She likes the car but she doesn't get to ride in it much because it's always at work.

That really revved up the competitive juices in the other kids. One wants a Hummer, the other wants a Tacoma. A third whipped out her cell phone, called her mother, and announced "Mom, I've changed my mind. I want a Jaguar instead of an Escalade for my 16th birthday!"

I pointed to our '94 Ford Taurus wagon and said "That's going to be our kid's car. We bought it used and put the savings in the stock market."

Silence. Finally one of the kids asked "What's that?"

Our kid took the floor. "Stocks are shares of companies that you can buy and make money if the company makes money, or you can buy mutual funds that invest in lots of companies. I've made money in stocks but I like mutual funds better and I'm putting my birthday money in them."

More silence. One kid asked "What are you going to do with the car?"

Our progeny announced "I'm going to sell it and buy a used Mini Cooper."

I think she gets it.

 

[Bob_Smith]

comeon, noone would enjoy AT ALL being the big-swinging-dick with all the toys?

No, and that may be what separates us from the masses. And besides, most of us live better than the masses anyway.

i think thats why we come here, to patch each other's egos from the abuse of living like paupers since most don't indulge in the material things that will stroke most people's fancy!

No, most of the people here do not need ego stroking. That's a misread of the group. People here don't need anyone's approval. I have never seen a more independent-minded group of people anywhere. That's why this is such an interesting place. Most of the ERs here swam upstream; all alone. We found each other in the 9th inning.

 

[MJ]

One kid asked "What are you going to do with the car?"

Our progeny announced "I'm going to sell it and buy a used Mini Cooper."

I think she gets it.

I luv it.
Sounds like your kid could retire b4 he graduates college.

Great parenting.

MJ

 

[ordway]

comeon, noone would enjoy AT ALL being the big-swinging-dick with all the toys? i certainly would if it meant i had financial independance as well, but most of the time you can't have it both ways. i think thats why we come here, to patch each other's egos from the abuse of living like paupers since most don't indulge in the material things that will stroke most people's fancy!

Honestly, not really. I mean, if I wanted to, I *could* go buy a Jaguar or whatever kind of fancy car people like. I *could* go on expensive cruises or tropical island vacations. I *could* buy designer clothes, or what-have-you. I'm not held back by not having the money; the money's there. I'm not even particularly held back by knowing that the money is serving me better by being saved and invested for the future (though of course it's true). Frankly, I just don't *want* any of that stuff. It's not a temptation that I have to resist... it's just junk that doesn't interest me.

Sure, there are some "toys" I enjoy having (like a nice home theater setup) but it doesn't have anything to do with what anybody else has. It just has to do with what *I* enjoy. For those things, sure, I balance cost vs. value when deciding whether to get them (and how much to spend) but for the most part I just have honestly really simple tastes. I imagine that I'm happier than most "more toys than the other guy" people because I focus on what makes ME happy, not what impresses other people!

 

[retire@40]

comeon, noone would enjoy AT ALL being the big-swinging-dick with all the toys?  i certainly would if it meant i had financial independance as well, but most of the time you can't have it both ways.  i think thats why we come here, to patch each other's egos from the abuse of living like paupers since most don't indulge in the material things that will stroke most people's fancy!

Maybe the reason I put myself in the top 10% of wealthy Americans is because I never cared about material things. I don't need to spend $80K for a car and I don't need to live in a million dollar home. I can buy lots of big-ticket toys for cash today, but I just can't give myself a good reason to buy them. I certainly don't want to buy high priced toys just to impress my friends and neighbors because I don't know what impressing them will accomplish.

In fact, I try to downplay my wealth and financial status because I don't want my friends and family to know how wealthy I really am. Some of them have noticed that I have a lot more free time to do the things I want to do when I want to to them, but I just tell them work has slowed.

I have lived a well balanced family life, have eaten good quality foods, taken fun vacations, and have done other things paupers can't do. I don't mind spending my money on practical things, but I do mind wasting it on things I don't feel are necessary.

 

[Jarhead*]

Maybe the reason I put myself in the top 10% of wealthy Americans is because I never cared about material things.  I don't need to spend $80K for a car and I don't need to live in a million dollar home.  I can buy lots of big-ticket toys for cash today, but I just can't give myself a good reason to buy them.  I certainly don't want to buy high priced toys just to impress my friends and neighbors because I don't know what impressing them will accomplish.  

Hey Retire@40: Appears you're on the right track.
One thing I've figured out, not that I am that smart, but just having time on the planet is that what you would accomplish by buying high priced toys to impress your friends and neighbors is "resentment".
The truly wealthy people that I know personally in my area, (mostly huge ranch owners), all try to "out-poor" themselves. Drive old p/ups, etc. etc. They aren't depriving themselves, that's just the face they show to the public at large. (They know what they're doing).
Don't know if Bob Smith will happen to read this post, but beings he lives in Iowa, my guess is that he could chime in about the wealthy land-owners in his area, and the way they keep a low-profile for their benefit.
In any case, I think you've got a pretty darn good handle on it.
For me personally, I am a fly-fishing and golf nut, and like you, have never really been interested in expensive toys. What i purchased (18 years ago), when I retired, was the time to pursue these activities as much and as often as I could.
Regards, Jarhead

 

[Bob_Smith]

The truly wealthy people that I know personally in my area, (mostly huge ranch owners), all try to "out-poor" themselves.  Drive old p/ups, etc. etc.  They aren't depriving themselves, that's just the face they show to the public at large. (They know what they're doing). Don't know if Bob Smith will happen to read this post, but beings he lives in Iowa, my guess is that he could chime in about the wealthy land-owners in his area, and the way they keep a low-profile for their benefit.

Exactly right Jarhead. Rich folks who show off their stuff and act like big-shots are generally considered to be weenies here. Multi-millionaires can generally be found at the coffee shops in their seed-corn caps. My Grandfather was one of them.

 

[Martha]

Exactly right Jarhead. Rich folks who show off their stuff and act like big-shots are generally considered to be weenies here. Multi-millionaires can generally be found at the coffee shops in their seed-corn caps. My Grandfather was one of them.

My husband has always been like that too. He goes around in his shirt with holes and old faded pants, driving his ratty old truck, talking like the sailor he used to be . When he was a landlord tenants though he was the help. He never goes to fancy lawyer events. He doesn't have a suit and he would never behave himself anyway.

 

[John Galt]

Yep, 25 years ago people thought I cut the grass in a 3 piece suit. Right now I am sitting here in a "WISCONSIN" cap which is covered with oil stains and fish splatter, a dirty 10 year old coat full of holes, and a
'Corona Extra' Tee shirt and sweat pants (with holes)
snagged at the "free table" where my wife works.
I have gone from Beau Brummelly master to
raggedy disaster
in one quantum leap. I still clean up pretty good
though

John Galt

 

[Jay_Gatsby]

I'm going to disagree with the general trend of answers here. It would seem that not caring what others think can be taken to an extreme. You can still dress nicely (e.g., inexpensively) and yet not give any hint about how much money you really have.

 

[Martha]

I'm going to disagree with the general trend of answers here. It would seem that not caring what others think can be taken to an extreme. You can still dress nicely (e.g., inexpensively) and yet not give any hint about how much money you really have.

Hey, Jay, I dress up really purdy.

 

[Jay_Gatsby]

Hey, Jay, I dress up really purdy.

But you're not doing it to impress your clients, are you? I've always followed the idea that I shouldn't dress demonstratively better than my clients.