Are You Guilty of Trying to “Keep Up With the Joneses”?

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Avoid getting caught in the trap. If you’re already in it, get out!

I am certain you have seen a similar picture like this in your neighborhood before. Someone down the street just purchased an expensive brand new foreign sedan and a few days later, you see a delivery truck unloading a new living room suite along with one of the largest wide-screen HD televisions that you have ever seen to that same family. You find out later that no one won the lottery, got a promotion, and no one was bequeathed an inheritance.

You wonder, “How are they going to pay for all that?” It looks like they are living the high life. You feel like you’re missing out on something. You feel like you must have failed in life because you don’t possess the same materialistic things. Is it possible that I may have a small touch of jealousy? Who knows! Well, despite what it may look like and truth be told, more than like they’re barely making it!

 

Why do they do it? Some people need expensive items to feel good about themselves or prove that they have finally made it. Other just need to show off and fulfill a psychological need to be seen as better off than they really are, despite the costs.

Their attitude is that they want it now and will think about paying for it some time in the future.

Here are some things to help you avoid trying to “keep up with the Joneses” and possibly end up becoming the Joneses:

1)  Pay off credit cards – we live in a disposable society and we want instant gratification. We see it now, we want it now, and so we put it on the credit card. Look at it this way, if you can afford to purchase something, why wouldn’t you simply pay cash for it? Why would anyone use a credit card instead that generates interest charges when it can be avoided?

Pay off your highest interest rated credit card first and proceed to the next highest until you are finished paying them all off. By the way, in most cases you really only need to own two major credit cards to book a flight, rent a car, for hotel reservations, or for cash emergencies. So, cut up the rest of them.

2)  Push to save and invest more – after surviving thru a fragile economy, spending money on status symbols just for the sake of showing off should be a thing of the past. If you are still driving around in a Hummer but have nothing in your investment or retirement accounts, you might want to evaluate your priorities. As many of should of learned from the recent recession, try to save as much as 3 to 6 months in an emergency savings account.

Times are challenging, but try to pay yourself first by saving at least 8 – 12% of your monthly income. That should start with your employer retirement plans at work. You will retire broke if you continue to spend more than what you bring home. It is not how much you make that satisfying but it’s how much you save that counts.

3)  Cut down your spending – You will be highly surprised at how much money you are able to save by monitoring your spending. Do you really need all 300 channels on the Dish Network or most of Comcast premium channels? Can you survive by selecting basic cable services and possibly save some money? Do you have to stop past Starbucks in the morning for that $5 cup of coffee? Have you considered brown-bagging your lunch a couple days in the week? Is it possible to cook at home a bit more (healthier and less costly) instead of dining out frequently? Can you image how much you’re able to save and invest if you applied some of these principles? Take some time to write out a daily budget and monitor your activities; you’ll be able to see where you can cut costs and build a fatter investment account. You just have to be disciplined!

Success in today’s world is all too often measured by the number of things you have and what kind of car you drive. The true measure of success is the size of your bank account and your net worth. Many people fail miserably, declare bankruptcy, and risk living in poverty because they lived above their means in years prior. So, instead of trying to prove to people that you got-it-going-on, try paying off all of your credit card debt, increasing your savings and investments, and cutting down your monthly expenses on material things. And soon, people may be trying to keep up with you.