After last week’s monster post on choosing between a Roth or Traditional 401(k), I’m a bit tired of the writing. Thankfully, my fellow New Jerseyan, Mike, from Budget Kitty offered to share a personal story with us.

It’s important to remember that outward appearances are not always what they seem. Keeping up with the Joneses can be a dangerous approach to life.

Take it away Mike…

Don’t Let The Joneses Lead You To Financial Ruin

How many times have you heard personal finance experts advise you to stop trying to keep up with the Joneses?

It’s solid advice. After all, if you blindly follow people who have no idea where they’re going you’re apt to end up just as lost as them.

This is more obvious than ever in today’s world where it has become the norm to constantly post status updates and pictures all over Facebook, Instagram, and Snapchat.

But everything you see on those sites is an illusion. People only post what they want other people to see. They want their friends to be jealous of their oh-so-perfect life.

They want you to think they’re constantly going on exclusive vacations, that their kids are perfect little darlings who never argue or talk back, and that they somehow managed to prepare a restaurant quality meal in the five minutes between soccer practice and girl scouts.

Most people do it, and even celebrities aren’t immune to it. Britney Spears was once caught reposting a Food Network picture as her own.

What’s the Harm?

What’s the harm, you say?

Well some people get so wrapped up in what other people have that they forget to be grateful for what they have themselves.

That lack of appreciation can lead to some serious relationship issues if your loved ones start to feel like they’re never good enough.

It can also lead to financial troubles as you spend more than you can afford in a vain attempt to one up your friends.

Keeping Up With The Joneses Can Be Expensive!

Let me tell you a story about two of my friends so you can see what I mean.

Dom and Paul lived on either side of me in our old neighborhood. We all had kids about the same age so naturally we became friends and the families hung out together quite a bit.

Overall, they were both great guys. But the one thing about them that drove me nuts was the way they constantly tried to out-do one another.

One time, Dom bought a big screen TV and mounted it on his living room wall. Paul almost immediately ran out and bought an even bigger one.

Another time Paul bought a backyard swing set for his kids. A month later Dom got the more expensive, super deluxe version complete with swings, monkey bars, a climbing wall and a gigantic slide.

Whenever we went out to grab a few beers they’d fight over who got to pay the bill. “I got this!” seemed to be their favorite slogan.

Paul built a bar in his basement complete with bar stools, a wall-mounted TV, a dart board, and (most importantly) a beer fridge. Not to be outdone, Dom installed his own bar that was stocked better than your local pub and he always had two fresh beers on tap.

Both completely remodeled their kitchens within a year of each other even though there was nothing wrong with their old kitchens.

Hanging out with them could be exhausting. It got tiresome watching them constantly trying to one up each other.

It’s Easy To Be Jealous of Other’s Nice Things

There were times I felt jealous of all their cool new toys, but luckily I never fell victim to their spending insanity. Maybe I just never cared much about all the “stuff” they were accumulating.

Or maybe I just knew I couldn’t afford it.

Both of their wives worked full time while we were living on a single income and I was used to making some sacrifices and doing without things that other families could afford.

I didn’t know how much they earned but I just assumed they were doing very well and could afford to splurge if they wanted. Then one day something happened to make me realize it was all just an illusion.

The Letter That Changed Everything

I had come home from work and grabbed the mail on my way into the house. There was the usual junk mail, a menu for a Chinese restaurant, the electric bill, and my bill from American Express.

After tossing out the junk and briefly considering whether or not sesame chicken was in the budget, I tore open the Amex envelope.

I almost keeled over when I saw the balance due. I knew we were carrying a balance on the card but the amount on the bill must have been ten times more than I was expecting.

After a few moments of panic, I realized there must have been an error. And I was right.

My eyes scanned the bill again and saw that it was addressed to Paul, not me.

The mail carrier had delivered Paul’s bill to my house by mistake.

I felt horrible. Both for my accidental invasion of privacy and for the financial distress my friend was in.

When I dropped the bill off and explained what had happened, Paul looked as if he had been kicked in the gut.

He said, “Well the cat is out of the bag now.”

The Intervention

Over a good number of beers we sat down and talked man to man about money.

He had gotten into trouble the same way many people do. They bought a little more house than they can afford and a little more car than they needed. Plus some unexpected medical expenses and their credit cards had gotten out of control.

[Jason again – Buying too much car is a very common financial mistake. If you haven’t already, check out this post that breaks down the cost of always owning a new car.]

They ended up in a downward spiral and they were spending more than they were making.

It’s Never Too Late To Get it Right

They good news is “The Amex Incident” as it came to be called was a life-changing event for Paul. Having his secret debt brought out into the open changed his outlook and his family did a complete reversal.

They stopped trying to keep up with the Joneses and focused on what mattered to them. They trimmed their budget everywhere they could, sold a bunch of unwanted stuff, and started working side gigs for extra cash.

While they’re still working on paying down their debt, they are finally on the right path.

Not Everybody Turns It Around

I wish I could say the same about Dom.

Even after his wife threatened divorce he stubbornly refused to stop his spending. At one point he asked me to cosign a loan for him but I politely declined.

Unfortunately, he took that personally and has refused to speak to me ever since.

The last I heard Dom was sharing an apartment with his brother and working lots of overtime to cover his “entertainment” bills as he continues to spend like there is no tomorrow.

So, I ask you. If you’re currently in debt or spending more than you can afford, who do you want to be? Paul or Dom?

Mike Collins is a hard-working dad from New Jersey who spends his nights and weekends building Budget Kitty, a personal finance blog aimed at helping families take control of their finances. Mike is most happy when grilling burgers and drinking craft beer in the backyard with friends and family.

Thoughts From Jason

It’s Jason one last time.

Thanks again for sharing Mike!

People in debt are not the only ones that have to be careful about keeping up with the Joneses. Most of us want to retire someday. Being able to float the bills today, does not mean you’re saving enough retire or for your other high priority goals.

Unless you’re Warren Buffett (or whoever’s the wealthiest today), there’s always going to be somebody that has more resources than you. Chances are, you interact with someone that has more every single day.

Seeing Joe and Jane driving nice cars and going on international vacations may make you want to do the same. Maybe you can do the same while staying true to your goals. Or, maybe you can’t. Just because they have it, doesn’t mean you should!

Weigh In

What’s your keeping up with the Joneses story?

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