By: Roshawn Watson

“Hello Baller. I need to holla at you for minute.”

I got a question for you because I just can’t figure out how you do it all. Your clothes and toys are nice. Everyone’s envious of your whips. You frequently eat at restaurants that most people only dine at on special anniversaries or birthdays. We always appreciate your twice annual post cards from the likes of Paris andBora Bora. Your lifestyle is pretty impressive, except for the fact that you’re a financial fake. I just want to know one thing: how do broke people afford EVERYTHING?

Different Priorities

This bankruptcy thing is too stressful, so I’ll deal with it when I get back from vacay!

It’s tough work being broke nowadays. The broke used to be able to proceed through life unnoticed (or at least with limited social pressure to overextend themselves), but now they’re expected to keep up with the Joneses, who are broke too by the way! I guess it’s always easier to display artifacts denoting financial superiority than to actually be a financial champion.

One of the biggest challenges is prioritization. Apparently, financial security, comfort, and abundance are secondary to social acceptance and lifestyle elevation. While interesting, this is not surprising because building wealth generally takes significant work and time. It’s using the crock-pot approach rather than ordering fast food. Thus, when the new Ipad comes out, one may not think to check his budget. Doing so would crimp his style. Marketers love him. His friends and family think he’s the most fun and generous. The problem is long-term: how does one get ahead financially if he is always focused on immediate desires?

Priorities (goals) determine the direction of your life. One way broke people are seemingly able to afford everything is that they have different priorities, so their is no internal pull to do things that you may deem financially responsible.

Prosperity On Credit

“Your labels may say you are rich, but your accounts tell a different story!”

There is no prosperity on credit, yet one would never know it by looking at people’s lifestyles. This is the very reason when I see most Mercedes or BMWs, my first thought is not “what a nice car!” but rather “what is the payment?”

Researcher and author Thomas Stanley noted that fancy zip codes are typically a better predictor of large credit availability than net worth. It is no wonder that the average millionaire lives in a neighborhood where his net worth dwarfs that of his neighbors by 6-fold. It would be prudent to realize that the only people who get rich from most loans are the lenders: how do you think they are able to be the lender in the first place?

Also, keep in mind that using credit to support lifestyle often extends the cycle of poverty, especially if you are broke. That’s because the debtor is obligating tomorrow’s income today. Thus, someone who makes the same income but lacks the debt will have more means to achieve his or her goals than the person in debt. I see this all the time with people on tight budgets. They are working hard and have very little room for error. That’s why they live paycheck to paycheck: they never can “afford” to build an adequate buffer because they are too busy “affording” everything else.

Broke People Depend On Support From Others

It really doesn’t matter whether it is the bank of mom and dad, legal protection (i.e., bankruptcy), or the government, someone IS paying the bill. There are so many adults who are almost completely economically dependent on others nowadays. We surely live in strange times. Because of higher unemployment, adult children are more likely to return home after school. Such children are known as the boomerang generation, but how long must parents provide for their capable adult children? I ask this not be be mean, but at some point, one has to be concerned about enabling misbehavior. For example, I’m a huge believer in second chances, but one of the biggest limitations of bankruptcy is that all too often, people don’t learn the necessary lessons. In these cases, the filers are not helped. The bankruptcy has just delayed their day of reckoning rather than helped them move past it. Their freedom is temporary, and they are likely to repeat their past mistakes. Requiring education is a step, but more is clearly needed if the goal is truly to encourage proper money management. That’s why it is okay to feel financial pain. As I told my Tweeps recently…,

If you only learn by hitting bottom, the faster you get there the sooner your salvation.

Final Appeal To The Savers

If you are a frustrated saver, take heart that your efforts are not for naught. Think of the cautionary tale of Teresa Giudice, of the Real Housewives fame. In the Phony Rich, I highlight how she and her husband were almost $11 million in debt with an annual household income of $79,000 according to CBS News. She was in the public eye selling their lavish lifestyles and couldn’t keep up the facade. I heard that she recently withdrew her bankruptcy petition. Bravo! [excuse the pun] I hope she will use her next season to display some growth rather than flaunting fake status.

In short, many broke people can afford the good life because they have decided to allocate their money and credit to different priorities and enlist the help of others to support their lifestyles. If you are financially responsible, don’t be grieved by the pace of your progress. The tortoise wins the race every time!

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Copyright 2012, Roshawn Watson, Pharm.D., Ph.D. All Rights Reserved.