America the Fake

We’ve all probably heard the expression. “Live within your means.” If I’ve heard it once I’ve heard it a million times! Such a simple statement. Right? Well, in theory yes, however, following such a simple guideline is nearly impossible for most of our society. Let’s play a quick game. Open up your contacts on your phone and start scrolling until you come across someone you know who has spending habits that are out of control. How long did that take you to find a name? 3 seconds? My point is that we all know a person (or many people) in our lives who has a lifestyle that’s well beyond what they can financially support for the long term. One of my favorite authors, Chris Hogan, recently tweeted, “You’ve probably heard the expression ‘keeping up with the Joneses.’ I’ll tell you what I call it: fake rich.” I think Chris might be onto something here. How many of us are living beyond our means? How many of us are fake rich? Are you?

I run across so many quotes regarding personal finance, so remembering a particular one usually means that it struck a chord with me.  A couple months ago I ran across the following piece of advice, “The point isn’t to look rich, the point is to BE rich.” If you don’t think there’s a difference then you’re probably one of the fakers.  Every day when I’m cruising to work in my Ford Escape with 125,000 miles on it I see all sorts of fancy cars around me. BMW, Mercedes, Porsche, Lexus, etc. How many of these people driving these cars can actually afford them? How many of these people are faking it? Some can afford them sure, but there’s a pretty good chance that I’m surrounded by people with lease and car payments that are anywhere from $500-$1,000 a month! Gross! According to Experian, the average monthly payment for a new car auto loan in the fourth quarter of 2015 was $471. Keep in mind, this is the average. Roughly half of the payments are more than that (I know the average isn’t technically the median but it’s usually fairly close). Wouldn’t life be nicer if we all had an extra $500 a month? What if you invested that $500 a month? If you know anything about compound interest you know that investing $500 a month for 20 or 30 years will turn you into a very wealthy individual.

So why do people fake it? Why do people dig themselves thousands of dollars into debt purchasing things they can’t afford? I suppose the easy answer is that people are so caught up trying to one-up each other that they will do ANYTHING in order to impress people around them. Radio personality Dave Ramsey always says, “Why are you buying a bunch of stuff you can’t afford with money you don’t have to impress people you don’t even like?” It’s a valid question that most people can’t answer.

Here’s my advice: make your financial decisions based on what’s best for you and your family. Who cares about what your neighbor, co-worker, brother-in-law, or best friend has. Why does it matter? Are we all that insecure about ourselves that we need to buy fancy toys to gain acceptance from those around us? We need to start doing what’s best for us and not what we think makes us look good to everyone else. You will be amazed at what happens to your personal finances when you live within your means. Do yourself a favor by making a budget, spending less than you make, and always remember, nobody likes a faker.