Broke People Afford Everything!
| November 23, 2011 | Posted by Roshawn Watson under Uncategorized |
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.
I'd rather sacrifice some of my comforts now when I'm able, than later. Saving when others are on a spending spree can be excruciating but as you so succinctly put it, there is no prosperity on credit.
My recent post A curious thing happened to my credit score when I took on some debt
This was very well said – "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!"
It is so true. If you want to live independantly then be financially responsible. If I had to rely on everyone and everything else, I would be so stressed. I hate that feeling. I am so glad that I can look after what I need on my own.
My recent post How to Save Money on Water Costs
You've got it, man. Nothing quite like looking fly in your $160 Jordan 6-Rings and Burberry leather jacket in the bad-ass Michael-Jackson-red color. Trouble is, you can't wear 'em to work and when you're done working the two daily jobs you have to have in order to keep up with your credit card minimums, all you want to do is go to bed.
Oh well, expensive closet decor I reckon. Signing up to be a financial slave is a beeyatch.
My recent post Kids Savings Accounts Increase The Chances Of Going To College
Bingo,
"Expensive closet decor" for sure, but they're still fabulous ROFL.
I think the big misunderstanding is that people think that you're against others having nice things, which isn't the point at all. You're just asking people to be reasonable with their expenses for their income!
My recent post Broke People Afford Everything!
"I think the big misunderstanding is that people think that you're against others having nice things, which isn't the point at all. You're just asking people to be reasonable with their expenses for their income! "
Right on. Live within your means. If you want something cool, well then, go ahead and get it. Life's short. But just know that you may have to cut back on something else in order to pimp in the Under Armour workout clothes down at the gym. 😉
My recent post Kids Savings Accounts Increase The Chances Of Going To College
Precisely. You can have it, but if you want it all at once, you got to make the necessary sacrifices. Otherwise, you're either setting yourself up for a rude awakening or you're knowingly being a fraud. Both are BAD!
My recent post Broke People Afford Everything!
The thing is I wouldn't care of it didn't affect me. But it affects everyone. The girls at the community college I teach at are wearing these expensive boots ( at least to me) that cost upwards of $250, no doubt charged by many of them. They proceed to financial assistance to get a government subsidized loan to pay for their text books!
The world is going broke. The advertisers and credit companies won!
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I never could understand how people could buy things and enjoy them when you have to pay all that interest.
My recent post Planning for Your Next Career
That's a good point that I somewhat shied away from. It's not that I'm scared to address it but am going into more depth about this in another post. The thing is this does rightfully make people mad: people don't like to subsidize bad decisions, but that's exactly what happens. If you suggest this though, the retort is that you are greedy, out of touch, elitist, etc. I believe most people who have this perspective are people who in their mind went out and killed it and want the same self-reliance for others. This is very controversial, and at the end of the day, I do think the advertisers and credit companies have sold us an awful bag of goods. That's the reason why elevating public discourse to such topics is so critical.
By the way, Happy Thanksgiving!
My recent post Broke People Afford Everything!
I'm with you, but out of sight (the payment is sometimes nearly two months away) out of mind. By that time, they are already enjoying their next "purchases." BTW, Happy Thanksgiving!
My recent post Broke People Afford Everything!
I've come to believe that many, many people do not understand the simple concept of interest and that getting interest to work for you rather than against you is one of the keys to financial success.
Taking $100 and earning 3% on it is a big swing over the years versus paying a credit card company the minimum payment.
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This is a great point. I always struggle with distinguishing from "not understanding," "not appreciating," or "not caring." I would love to believe that if people knew better they would do better. However, sometimes the data suggest otherwise.
My recent post Broke People Afford Everything!
It is amazingly odd that lower income folks, or broke folks as you put it can afford so much.
I don't feel I can afford a $1,600 MacBook, yet they were selling like pancakes yesterday at the Apple Store.
So perhaps people aren't really that broke? People who buy $30,000 cars do make over $300,000 according to my 1/10th rule. People who buy $1,600 MacBooks do have plenty more than $1,600 in cash sitting around. That makes sense, doesn't it?
Sam
My recent post What Are You Buying On Black Friday?
I would love it if we could use spending to determine prosperity. That certainly seems to be what marketers want us to believe. Who can argue with their logic: purchase the new shoes, this car, or this new tablet, and your life will change. You will gain or maintain social acceptance. It will have a marginal impact on your finances because it's so affordable.
In some ways, I love the anonymity of being different, as I am sure you appreciate to a much greater degree. Flaunting wealth via toys and doodads I guess could mean that everyone has his or her financial act together except for those who of use who choose to not make those purchases. Perhaps, anyone who feels financial misgivings is a financial outcast: he or she is destitute relative to his or her peers. It is certainly possible 🙂
Cheers for the interesting perspective.
My recent post Broke People Afford Everything!
Our kids have been haranguing us for cell phones — well, at least the younger ones have. Over and over, we have to explain the definition of need vs. want. Sounds like these folks haven't yet learned to make the distinction.
My recent post GET RICH WITH PENNY MINING STOCKS!! (not really, it’s just this week’s roundup of worthwhile links)
Yeah! There's so much pain that could be spared if people would heed the warnings of those who have seen this script play out before. Just because your social peers have something does not make that item a necessity. Popularity is not a requirement. Moving beyond this mindset is tremendous growth. Of course, I'm not against anyone having their toys as a part of a reasonable budget.
My recent post Broke People Afford Everything!
I could write a book about the frightful spending habits of the broke folk. You can rest assured they can always afford garbage they don't need, and can't afford what they really should be spending on. However, it is everyone else's fault and the success of others should be resented! Oh no, I better stop.
Great post.
Thanks so much Kris. I think there is a collective frustration amongst responsible individuals such as yourself for having to pick up the tab for people to look good with anemic finances.
Frightful spending habits is right!!! Thanks for the comment and social media and bookmarking help!!
My recent post Broke People Afford Everything!
When you watch a lot of TV, you want what is shown on those shows. Let's face it, most shows has people living in nice large home and driving luxury cars. It is tough to keep up with the Jones on the TV shows.
I think our school should really put more emphasis on financial education especially for the poorer kids.
My recent post It’s Time To Rebalance Your Portfolio 2011
Yeah, it is definitely tough to keep up with TV. TV doesn't typically represent where most people are at financially. Often, it doesn't even represent where the so called "stars" are at, which is why so many of the "Real Housewives" have filed for bankruptcy. The sooner people learn this lesson the better.
I echo your appeal for improving financial literacy. Young people definitely need to hear this lesson sooner rather than later. Cheers!
My recent post Broke People Afford Everything!
It's the difference between a lifestyle driven by consumption versus one driven by building capital. Of course, you're preaching to the choir here.
My daughter lives in a lower-income neighborhood where the apartments are all 1-bedroom units renting for about $450 per month. Most of her neighbors also have 2 or 3 kids all living in this small space. I look in the neighbor's windows (not that way you pervs) and see big screen TVs, WII game systems and other toys. I just don't get it.
My recent post Carnival of Wealth, miserable cold edition
Hi Betty,
Yeah, it's funny how priorities can differ so much. People seriously act like you are from another planet just for preaching responsibility. What sense does it make if you have a Benz but live in the projects? I can only imagine how sad the balance sheets look of those lead a "lifestyle driven by consumption" as you so eloquently put it. Cheers, and thank you for the comment!
My recent post Is it Possible To Live Without Debt?
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