It’s very easy to slip into “keeping up with the Joneses” mode. Your friends have a new TV, or maybe they traded in their old car for a new one. Or perhaps you want to get a nice big house like they have, and take advantage of the homebuyer tax credits at the same time.
From personal experience, I can tell you that it’s not worth the stress and hassle of trying live within other people’s means. My husband is a frugal and savvy buyer, so he when he buys something, he thinks long and hard about it. Me? I’m a bit more impulsive, so living within our means has been harder for me. Fortunately, I’m learning to tune out ads as well as the preferences of others, and am thus more able to focus on what I really want and need.
Cell phones, TVs, and other electronics
It’s easy to get excited about the latest cell phones, MP3 players, game consoles, and flat screen TVs. New models come out so fast that you may quickly lose interest in what you already have. As long as it does the job, however, I’m happy with my electronics. Even though we have some nice items, we’ve thought carefully before making these big purchases.
My husband shopped for at least 6 months before he purchased his new cell phone and plan. Why? Because whenever he makes a purchase, he looks for long term value. He’s the type of person that weighs the pros and cons of the monthly plans as well as the specs for the phone. We bought our last set of phones three years ago, and they’ve served us well.
By planning our purchases carefully, getting a good deal, and not relying on debt, we’ve been able to make guilt free purchases.
Keeping up with cars
I have to admit that I’ve been a victim of car envy. After buying two cheaper cars with cash, I wanted to get a better (in my opinion) car. My friends have had some nice cars, and I wanted to fit in. In the end, I wound up borrowing money at 14% to buy a fancier car. The purchase price was already at the limit of my budget, and the high interest rate was a huge burden.
I would’ve been much better off if I had simple taking the few thousand dollars I had in my savings account and bought a more reasonable car with cash. The resulting car payments were a big strain on my finances, and the money we spent on the car could’ve definitely been used more wisely.
With my husband’s help, we took whatever spare money we could find and used it to pay down that car loan. In the end, it took me four years to pay off my KUWTJ problem!
Buying a house
We made numerous spreadsheets to see if buying a house was better than renting. In the end, we decided that it was a good move to buy (the tax credit was a bonus, not a deciding factor), and we focused on picking the right place for us. While we were house hunting, our friends were also looking for places to buy, but we were careful not to let their preferences influence our own.
When we looked at places, we stayed well below the amount our bank was willing to lend us. Instead, we looked at what our budget would comfortably allow. We carefully analyzed every place that we seriously considered, compiling a spreadsheet of the total costs for each. We included things like the mortgage payment, property taxes, homeowners insurance, home association fees, and a buffer for unforeseen expenses.
When our house deal fell through, we were disappointed, but not devastated. Within a week, we had another list of places that interested us because we realized that we’re buying a house and not a home. We’re planning on taking our time and not feel rushed just because many of our friends are taking the plunge.
Be honest with yourself
Instead of emulating the lifestyles of those around you, try being honest with yourself. Is buying more stuff, driving a fancier car, or living in a bigger house really going to improve your life? Or are you just pressuring yourself to adopt a lifestyle that someone else finds desirable, rather than doing what’s best for you?