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Are You Trying to Appear Richer Than You Are?

Published October 13, 2021

8 minute read

David Ning

By David Ning

Readers, I need to tell you a story. It’s about a friend of mine, named Sam. I’ve known Sam for decades — since we were high school freshman together, actually. Unfortunately, Sam has never quite learned what it means to “live within your means.” Or, to say in inversely, Sam consistently lives well beyond his means. Anyone with some basic math skills should be able to figure out why this is a terrible idea in the long run. Sam, in his infinite wisdom, thought it was a good idea to buy a brand new $28,000 truck for his brother-in-law. You see, the relative worked in the construction industry and really needed a new vehicle.

Can you guess how poorly this will end? 

Then The Nightmare Started

Unfortunately, the brother-in-law got arrested for drunk driving shortly after. Even worse, he was deported from the country entirely. This meant that Sam was suddenly left with the truck — and the $600 monthly payment. He couldn’t even sell it, since the truck was already worth less than the remaining loan balance (aka it was underwater).

When Sam’s wife, Sandy, noticed that he was driving a relatively new truck, she got a bit jealous. She decided she also needed new wheels, so she snapped up a shiny Chrysler 300 for $33,000.

“But David,” I hear you saying, “people buy new cars all the time. What’s the big deal?”

Sam and Sandy live in an apartment, since they lost their home back in the last financial crisis. You see, they bought their house with an “interest only ARM mortgage.” According to Sam, nobody explained to him what an ARM was. They didn’t seek out anyone to help explain the difference between a fixed rate and ARM mortgage. (For those who don’t know, an interest only ARM means only having to make interest payments for stated term. You don’t actually pay off any of the principal at all.)

It Snowballed From There

A couple of years after they lost their house, Sandy signed up for a timeshare at her job. She thought it would be a great investment, something they could eventually pass on to their adopted daughter. They will have to pay $2,500 a year for 10 years for the privilege though. Sam and Sandy seem to think that having a timeshare makes them a cut above those who live in the same apartment complex. So, one lost house, two brand new car loans, and now an expensive time-share commitment. You can see the issues coming from a mile away.

Sam recently told me how they are in a financial bind. He claims they are getting behind on their car payments. Apparently, they took out a payday loan (which you should never do) to cover a bunch of recent vacation expenses. We’re talking airfare, rental car, and tickets to Disneyland and Universal Studios. They couldn’t skip the vacation entirely, of course, since they already paid for access to the timeshare. (Can you sense my sarcasm?)

The payday loan was only $5,000, but with a short-term interest rate that actually equaled almost 250%. When they couldn’t pay it all back on time, it shot up to over 400%. They had to use their entire tax refund and stimulus checks just to pay off that loan.

There’s Help (But Only If You Make The Effort)

I told Sam about Consumer Credit Counseling. Luckily, he took my advice and sought CCC’s advice. When I suggested to Sam that he sell the truck and timeshare, he simply wouldn’t entertain the idea. Sam is a good man with no real vice. However, he doesn’t quite have the willpower to say “enough is enough.”

Sandy is just as bad. If they would just stop worrying about how their life appears from the outside, they might actually be able to obtain some wealth — instead of just pretending to be rich. They really need to stop keeping up with the Joneses.

Are We Still Equating Money With Personal Worth?

It appears that our society still, to a certain extent, equates money with personal worth. If you have a lot of money, you are seen as more important. Or more powerful. And maybe both. However, how can you tell those who are actually rich apart from those who are merely pretending? Unfortunately, one of the primary indications of someone’s wealth is still the material stuff they have. As a result, it becomes important for those who want to feel important to try and look rich by purchasing a bunch of material goods. New cars, bigger homes, fancy vacations, and top-of-the-line electronics are all easy-to-spot things that scream “look at how much money I have!” Unfortunately, my friends easily fell into this trap.

In many cases, the items you have to buy for appearances are expensive. As you saw with Same, they are sometimes even bought with the express purpose of “proving” to others that they are indeed wealthy (and therefore worthy of notice and consideration).

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Keeping Up with the Joneses

Those with money – and those who flaunt it – seem to have status and power. And are maybe even considered to be somehow wiser than others. As a result, those who aspire to impress others want to at least look as though they belong. It’s a classic example of trying to “fake it until you make it.”

The problem with this approach is that not everyone who “fakes it” eventually “makes it.” If you keep buying things you can’t afford, you will probably never amass the money and assets necessary to actually secure your financial future. Instead, you’ll be stuck in debt, paying interest into someone else’s pocket. It’s a difficult situation to be in. It’s hard to improve upon, unless you change your mindset.

Who Are You Trying to Impress?

Next time you make a purchase, it’s a good idea to stop beforehand and ask yourself why you want it. In many cases, the reason might actually be that you’re trying to impress someone — not that you need it, or that you truly believe it will substantially increase your quality of life or your enjoyment of life.

Our society places a stupidly high value on the status symbols that go with wealth. As result, many of us try to appear as though we are just as wealthy — or just as “good” — as everyone around us. Sadly, this type of mindset actually results in widespread debt. Frankly, there’s a lot of posing going on these days.

When you see that someone else has something cool, you should that you “should” have it too. It’s almost a sense of entitlement, really. You don’t want others to think that you “aren’t rich enough” to afford the same things. The crazy part is that you might be keeping up with someone who can’t really afford those things either. There’s a good chance that the Joneses themselves are also buying on credit to appear richer than they are. In reality, you are only keeping up with their debt!

It’s Especially True With Younger Generations

Unfortunately, according to a Credit Karma survey, it appears that many millennials are falling into the trap. According to the survey, 39% have made purchases they can’t afford just to keep up with their friends. Plus, 73% of those who go into debt to keep up with their friends will actually try to hide it.

Even within those who aren’t quite in debt yet, 36% doubt they will be able to stay debt free for another year and still keep up with their peers. Let that sink in for a second. It highlights a somewhat significant reality. Appearance is a big deal, especially for millennials (and even younger generations). Financial wealth is still seen very much as a measure of worth, rightly or wrongly.

Don’t Compare Yourself to Others

Rather than comparing yourself to others, only compare yourself to yourself. If you want to use credit cards as part of a frugal lifestyle to earn points, that’s fine. Just make sure you can pay off the card each month. However, using the credit card to buy something just because so-and-so down the block has one is folly. For one thing, your neighbor might have unwisely gone into debt to pay for it. Even if they didn’t, what does it matter?

Consider your own priorities and your own preferences. For the longest time, nearly everyone in my neighborhood has owned a TV that is at least 60″ in size. Meanwhile, we’re still getting by with a 15-year old 32″ model. Watching TV just really isn’t a priority for us. We certainly didn’t feel the need to rush out and spend a couple grand on a fancy new TV, just to match our friends.

On the other hand, we do to eat. We routinely pay an arm and a leg to get a USDC prime cut of meat to grill at home. We would rather spend more on food and keep the smaller TV and the old couch that we seldom sit on. Our neighbors, though, might have different priorities. And that’s completely fine.

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Focus On Your Financial Freedom

Instead of worrying about what others think and trying to impress them, it makes more sense to focus on your own financial freedom. Instead of worrying about buying impressive gadgets and pretending that you’re wealthier than you are, consider what would actually make you happy in your life. These are the things you should be using your money for. Not everything is worth the cost, after all. Don’t end up becoming a slave to your image.

Rather than trying to impress someone else, focus on achieving personal financial freedom. You’ll be able to do more of what you want without jeopardizing your future. As a bonus, you also won’t end up surrounded by a bunch of outdated items that you didn’t really need in the first place.

Back To My TV Example

Remember that small TV I kept for 15 years? By not repeatedly trying to upgrade my TV every couple of year, I was able to invest more money. That pot is now big enough to fund a brand-TV 65″ TV every year, just from the dividends it’s throwing off. If my neighborhood’s spending habits are typical, statistics show that some of my neighbors will still have to spend their active wages on a new TV whenever they want a new one. This means that they’ll have to delay their retirement just a bit more every time they upgrade their TV.

In fact, they are far from the worst of the bunch. Some of my neighbors are likely still paying off the credit card debt they accumulated because of those TV purchases. They may never be able to retire.

Are You The Millionaire Next Door?

One of the most important lessons learned from books like The Millionaire Next Door is that you might be surprised at who is actually wealthy. Indeed, the point of the book is that many of the people we think of as “ordinary” might actually be quiet millionaires. However, they don’t look or act like what our idea of a millionaire should be.

That’s an important concept to grasp as you live a frugal lifestyle. Instead of trying to look as though you have more money than you do, you should be striving to live within your means. In fact, try to live as though you have less than you really do. It will pay off in the end.

The Bottom Line

Sam and Sandy were seemingly living the good life for a while, but they obviously weren’t rich. Instead of building wealth, they have a money sucking timeshare and spent much of their income paying off high interest loans for cars or other debts.

Your spending needs to be based on your own needs. Rather than buying items to look richer than you are (and racking up debt), be content with what you have. Just focus on purchasing the items that are most important to you. You might not “look rich”, but you will have true wealth eventually.

What do you think? Are we too concerned with looking rich?

David Ning

Experienced Finance Writer

David is a published author, entrepreneur and a proud dad. He firmly believes that anyone can build a solid financial foundation as long as they are willing to learn. He runs MoneyNing.com, where he discusses every day money issues to encourage the masses to think about their finances more often.

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