Keeping up with the Jones’

Everyone loves getting something new. That new car smell, or the feel of brand new shoes, it all makes us desire new stuff. What adds to the desire is seeing friends or family accumulate new things that we might want too.

This is the Covet Effect, and it makes the term Keeping up with the Jones’ a reality.

It is also one of the tactics that advertisers use to illicit a want response from you. They will show someone enjoying the item or a celebrity that uses said item, and POOF the desire is created in our minds.

We wanted to take on this Covet Effect head on and show you some ways to avoid it, and some ways to see that you are falling into the trap.

Come with us Dear Reader, and don’t let that new post smell distract you, we’ll guide you through the troubled waters of desire.

What is Luxury?

We wanted to kick this off with the illusion of luxury and what it means to people. When we think luxury, we generally see unobtainable items with either a higher quality or a certain amount of scarcity.

What we need to determine is why we desire these things.

Truse scarcity can lead to things being more expensive, but there are things that we desire just because they are scarce. Take caviar for example, and you see an item that because it is scarce it demands a higher price tag.

However, I would argue that it’s “quality” doesn’t demand the extra cash. It just doesn’t taste good to me. So caviar becomes an item that is purchased “because I can”. It’s these types of frivolous purchases that us common folk wish we had the means for.

Luxury isn’t always about scarcity though. That luxury car you desire isn’t scarce. Well, not the normal ones anyway, there are rare vehicles out there, but we are focusing on the more obtainable.

A $50,000 BMW is not scarce. I think you would also be shocked to see what the markup on these vehicles are. The higher the price tag on cars, the higher the margin for the automaker and dealer.

This means that you are paying a premium just for prestige.

This is loony bin type behavior, let us explain.

Cost vs Value

I don’t care how much money you have, or if you’ve “earned” a treat for yourself, buying very expensive items when there are cheaper or better alternatives is crazy.

Ask yourself if there is anything that item does that the cheaper alternative doesn’t.

Looking at the car example again, what does that car do that an inexpensive one will not. Why not find a used BMW for 1/3rd the price?

We see these items and Covet them, but is the cost really worth the amount of blood, sweat, and tears that poured out of us to earn that money?

This should be a regular occurrence in your mind, asking whether the cost equals the value.

This can also be applied to whether you need a specific item at all.

For example, let’s say you have a fully functioning smartphone and a laptop. Why are you eyeing a brand new tablet? The other items already do everything that tablet will be able to do, and you already own them!

I know you want 10 inches of screen space, but let’s invest that $500 and buy something more powerful later on, time!

The Story of Them

Some very good friends of ours live the American Dream. They have 2 brand new vehicles, 2 brand new motorcycles, all new appliances for their home, and recently a $1500 brand new treadmill. Ironically, they have very little savings except for a 401(k).

They work hard for their money and have excellent credit. If you are on the frugal side of the fence, then you are cringing right now. You are wondering what would happen if disaster struck and they lost their jobs. You’re wondering why they need all brand new items.

If you’re a normal person though, you are wishing you were in the same spot they are. You’d love to able to afford an $850 a month car payment and still have enough leftover to buy a motorcycle. Then to buy your wife a motorcycle too.

When I discuss frugality with these friends, they just don’t care about saving money. They feel that with hard work comes wonderful toys. They don’t see the future as the time to play, that time is now.

Ask yourself, Dear Reader, are these the folks you’re trying to keep up with and why?

Because if you think that is the best way forward, then you are reading the wrong blog.

How Much is Enough?

We always seem to take things day by day as a society. We live check to check even if we have the means to save money, because we want “stuff”. We budget for the week instead of the month, or we use money to fulfill short term desires like eating out or “luxury”.

You must find your threshold of enough. You must find your level of comfort that is well within your means and stay there. Stay there at least long enough to save more money and question whether more “stuff” is needed.

There is no perfect answer for everyone. Maybe you are extra frugal in other areas so that you can buy that BMW. That is for every person to decide what their priorities are.

What I am striving for, is a world of responsible spenders that are not worried about their future because it is planned for.

I want to see you succeed and have everything you want, but you need to concede some luxury now to make that happen.

Less stuff now for a better future tomorrow.

Be Frugal 

We’ve spoken often of frugality on this site, and we strive to do the things that we preach. Being frugal is not the easiest path to take, but it can be the most beneficial.

Here are a few tips to keep you from financial ruin:

• Save at least 30-50% of your income.
• Buy things when needed, not when wanted.
• Teach your children not to waste and how to spend.
• Don’t splurge just because you can.
• Budget your butt off until you know where all your dollars go.

It’s not an end all be all list, but it will keep you out of trouble when trying to navigate through the wants we all have.

Conclusion

Those friends that spend as though money is no object and flaunt their new things in your face, are not who you think they are. They are probably stressed, anxious about bills, and living paycheck to paycheck.

All for “luxury”.

We don’t want you going down that path. Keeping up with these folks will drive you insane, plus you’ll have less to show for it than you envisioned.

Stay the course of frugality and when you retire way early, you can flaunt that to your friends as they attempt to pay the mountain of debt that has accumulated.

We’ll help you get there.

Do you have “those” friends that act as though it is a race to the highest mountain of debt? Do you ever discuss being frugal with them? Have you ever felt the Covet Effect?

We want to know what you think!