Keeping Up With the Buffetts

Keeping Up With the Buffetts

One thing that amazes me is the conviction of so many people that things will be about the same economically – or maybe better – in the future as they are today.

I’ve got bad news for them. They’re dreaming. For many or most Americans, things aren’t likely to be as good or as easy years from now as they are today. The cost of living will climb. Wages will stagnate or fall. Our standard of living won’t be as high. Today’s kids won’t have life as good as their parents did, and they won’t have a prayer of living the kind of life that their grandparents led just two generations ago. The American dream of things being better for our kids than ourselves has been turned on its head.

How can I say this? Well, for one thing, I was around in the 1960s, in a world where mom stayed home and minded the kids, while dad trudged off to the salt mines, punched a clock, and earned the shekels that kept the household humming. That was the norm back then. How many families like this do you know today? Almost none.

The reason for this sea change is that it’s become increasingly difficult to raise a family and manage a household’s finances on the income from just one job. Many households require two income streams, and based on the number of folks moonlighting, maybe three or four.

Do you think it will be easier 20 years from now? With globalization siphoning more jobs? With gargantuan populations in Brazil, Russia, India, China, and elsewhere clamoring for a slice of the pie long gorged upon by Americans? Assuming it will makes as much sense as seeking out Charlie Sheen for sage career guidance.

You don’t have a chance, unless…

Is this a bad thing? Are you kidding? It’s a good thing! Good in the way the scary events of 1942 were for galvanizing our efforts to take World War II. Good in the way the Soviets’ early lead in the space race ultimately propelled us to the moon.

There’s a silver lining in this reverse American dream. If folks stop assuming things can’t get worse, and that they’ll fund retirement by plucking dollars off trees, and that they can finance their kids’ educations by starting saving in the kids’ junior years of high school, and that they’re all entitled to a chicken in every pot and a Lexus SUV in every garage, then maybe we’ll all do a better job of shepherding our money.

And if we don’t? As Larry Bird used to tell the lesser lights that he matched up against on the NBA hardwoods, “You don’t have a chance.” Not when you consider how much higher health care, energy, food, tuition, transportation, and other life expenses are likely to balloon, especially when compared to our ability to pull down greenbacks.

So I hereby call for a new mindset to take hold and sweep the nation. Rather than embracing “keeping up with the Joneses” as our approach to consumerism, let’s try instead a mantra that might be called “Keeping up with the Buffetts.”

I’m not urging folks to try to out-earn Warren Buffett, a guy who’s commandeered every fifth dollar on the planet. Instead, I’m beseeching them to consider that almost as well known as Mr. B’s wealth is his apparent delight in living below his means.

Years after he’d earned the right to move to Park Avenue, he went on living in non-glitzy Nebraska. Long after he could afford a custom-built Taj Mahal, he stayed in the unassuming domicile that he purchased 35 years ago. Some say he’s been known to motor around his hometown in a sumptuous Chevy Cavalier. Maybe he even does anniversaries with his wife in a cozy, romantic booth at Old Country Buffet.

Being like Buffett

I maintain that we could all be a bit more like the Omaha Oracle without killing our consumer-driven economy. This doesn’t mean you have to give up your comfortable four-bedroom house for a lean-to under a viaduct, or that you need to scavenge for meals in dumpsters. You don’t have to make the Salvation Army thrift store you go-to spot for business suits, either.

But rather than crowing about landing that garage-door-sized big screen TV, maybe folks could boast about finding the best rates on CDs. Rather than trying to one-up each other with the latest combo cell phone-Swiss army knife, maybe they could flaunt the fact that they’ve learned how to save on life insurance, how to save on car insurance, or that they’re up on the latest mortgage or best savings account rates.

In pro sports, it’s said that the best trade is sometimes the one not made. Just as the best top-of-the-line, super luxury stainless steel kitchen range is the one not bought by someone whose culinary skills have never progressed much beyond making toast. Do yourself a favor, and starting living below your means.

12 Responses to “Keeping Up With the Buffetts”

  1. Anonymous

    Warren Buffett is clearly one of the greatest investors of all time but unless he’s also discovered the secrets to taking his wealth with him when he kicks the bucket in the not too distant future…….then he’s also taken the art of foolishness & pointlessness to new levels.

    What’s the lesson in living “below your means” when even if he were living a thousand times above the way he lives now…………it’ll still be living way below his means. None of us can take any lessons from that “lesson”. Buffett will also argue that accumulating wealth ceased being a goal for him many years ago & that he intends to give it all away when he dies. That’s a fair point………but then why should any of us look up to him as an example of anything, much less how to live?

    If i knew exactly when I was going to die, I’d live as way above my means as I could & I’d arrange things so I’d die with zero dollars.

  2. Anonymous

    What my 27″ TV isn’t big enough? I would have to get rid of my entertainment center cabinet to upsize my tv, uh uh, not gonna happen. Living within one’s means is easy if they take care of the big debts. Pay off the house early to free up money for living. It is easy to get by without house and car payments to make. I fear for our children’s future. Watch “The College Conspiricy” on youtube and see what bubble is going to burst next. We can’t sustain the ever increasing college debt and many colleges will shutter with highly paid employees seeing their standard of living fall drastically. I work with a guy that is a prepper. He stockpiles food, water, handtools, and guns and ammo for when the bad times come. Good article but we never went to the moon. Too much radiation outside of lower earth orbit. Read the following book to see the truth. Dark Moon : Apollo and the Whistle-Blowers
    by Bennett, Mary; Percy, David
    Example: The dimension of the life support pack on the apollo astronaut’s suit was larger than the lunar module’s access hatch. How did the astronauts fit through it to descend the ladder to the moon’s surface? Investigator’s measured the lunar module on display that did not make it to the moon and the astronaut’s spacesuits. Hmmm. Mock up sound stage?

  3. Anonymous

    Thank you for the fantastic post. My husband and I keep things simple; he has a job and I stay home with our toddler. We have one car, a 529, no debt. We have cheap cell phones and a 32″ television. Though we loved California, we moved to a more affordable State. We save money by shopping for groceries at Trader Joe’s and for household items at (where the prices are lower AND there is no sales tax). We’re happy, healthy, and debt-free. Life is grand!

  4. Anonymous

    I definitely hope to give our kids as good or better a start in life than where I came from and I think we’re off to a great start. The 529 plan is going great (they didn’t exist when I was a kid) and my wife isn’t even back to work yet. When she’s back in the workforce, all that dough goes toward college too…

    I think a good deal of Americans don’t have the same good ole’ days life their parents may have for reasons that are self-inflicted though. No doubt, the economy’s tough and there are millions of unemployed – so excluding the unfortunate situation now, even go back even to say, the 1990s when things were great. You still had two working parents, divorces, bankruptcies and other maladies you cited above. Of course it requires two incomes when your mandate is a 4,000 square foot home and leasing 2 new cars every two years. It’s all about choices. Americans have been on this trajectory of keeping up with the Joneses for decades now – while our government’s been spending more than it takes in as well – not much of a role model.

  5. Anonymous

    A false sense of scarcity can lead to better decisions. I’m going to pay off a debt next month, but the cash is going to be a little short to make it happen. I’m not willing to slow down on my $400+/month going into savings so I’m going to try and cut my daily costs more than normal in order to keep my savings and debt payoff goals met. By the Jones’s standard my money is going to get moldy on me, but by the Buffet’s standard I’m still not saving right.

    There needs to be a happy place in the middle that depends on the individual. If Warren Buffet is happy about his frugality, then that’s just fine for him. My financial efforts will allow me to choose my discretionary items as I can easily afford them. I can look at my motorcycle that is 7 years newer than my daily driver pickup, discern what it costs for me to own it and ride it, and be content with the entertainment value I get for the investment.

  6. Anonymous

    An great article that gets to the point on saving is important. But people will not choose to live lean or below their means.

    If the individual can see that something that costs $1 now costs $1.10 as 10 percent and not just 10 cents more then they can understand costs are really rising.

    Getting the ‘free’ cellphone when getting a plan or having no cable or Internet is considered the odd way of living. Everyone and I mean everyone I know as friends or people I just know do not follow the statement I just made so it may be good to live lean but its a shame to be considered odd.

  7. Anonymous

    I am starting to believe our problems are with entertainment. We are entertaining ourselves into poverty. If you work 40 hours per week and sleep 56 hours per week (8 per night) that leaves you with 72 hours of extra time. Even if we take out 12 hours for traveling and whatever that leaves us with 60 hours. What are you doing with your 60? Are you watching extreme couponing? Or are you spending time making sure you aren’t overspending on Cable and cell phone service?

    I think the difference back in earlier times is that we did not have the options to waste time like we do now.

  8. Anonymous

    The question is, what would happen to your retirement savings’ growth if everyone started saving?

    If everyone skimped debt, how are you going to make money lending to them, directly or indirectly?

    Americans will eventually save out of necessity. I’m not going to lose sleep over it, nor am I going to bother thinking about it. One thing that Buffett did really well was to completely ignore the macro picture and focus only on what he could control.

  9. Anonymous

    I have to say that I don’t share your pessimism regarding the future.

    I was lucky enough to be born to a mother who was raised during the Depression in a cold water flat, with a family of 7 in a one bedroom apartment. My own small children are lucky to have a 2K+ sq. ft. house to live in, each with their own bedroom. Grand? Hardly. Better? You bet.

    My parents’ ethic lives on, and growing numbers of people are making do and getting through, and having a good time of it. Who’s crowing about big screen televisions anymore? Who’s assuming they deserve an SUV?

    Perhaps, as my Mom would say, you’ve been hanging out with birds of the wrong feather.

  10. Anonymous

    We’re a one income family. No cable. No cell phone. No daycare. Bare bones internet. One car. A kitchen in need of an update. PLUS I live in a house that is attractive, we eat fresh vegetables from our garden and I’m home for my children. Vacations are camping and spent together as a family. It’s all about where your priorities lie. Maybe more and more people will see this, and there will be a bright future.

  11. Anonymous

    My DH and I lived on one income for a year and in that time bought a duplex and slowly paid off debt. Often now both people come into the marriage with student loan debt as well as credit card debt. The cost for daycare is insane as well. Just counting those could be an entire person’s salary. When I was not working I looked for deals, planted a garden and cooked from scratch. When I started working again we went out to eat more, I have not put in a garden this year and we eat “easier” meals. This does not include the fact that people nowadays expect cell phone, internet, cable etc. People make the choice to spend on wants even if that means both people working.

  12. Anonymous

    Excellent post!

    I just wrote about the topic myself – everything we buy, we have to replace sooner or later and it is additional burden.

    I agree that it is harder to live on one salary, but then again – try to compare spending in 60-x and today.

    where do the money go? Cable, internet, mobile phones, two cars, expensive vacations, etc… if you wipe them of your budget, perhaps the things will look brighter.

    As for the means I do not understand human nature – how could you borrow money on the things you do not need?

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