Even among top earners, “most people think ‘rich’ is more than what they have,” says Mr. [Ronald] Wilcox.
It’s natural to compare our lot with that of our neighbor. But we tend to fixate on the most obvious signs of status and success, while turning a blind eye to other telling details.
I think about this kind of stuff a lot. We have a great tendency to measure our financial success by how our possessions compare to the possessions of our neighbors. Here’s an example from my life. I think people sometimes laugh at me for the car I drive. I drive a gently used, 1995 Civic, and I absolutely love it. It’s not perfect. The steering wheel squeaks a bit when you turn it in freezing temperatures. The trunk has a small dent where I accidentally bumped into the bumper of a truck in a tightly packed parking lot. But it runs great. It has never broken down in the 8 years it has been in our family. It gets around 40 mpg on average. Because it’s small and can’t do all that much damage in an accident, the insurance is very affordable. People probably see me in it and think I’m poor. And that’s a shame. Because this amazing little car is one of the big keys to my financial success. So I really don’t care what people say about me behind my back when they see me drive by in my little wonder car.
When I see someone driving an expensive car, living in a big expensive house, etc, I don’t envy them. Far from it. Rather, I pity them. Pity, you say? How can you pity the guy in the $60,000 Mercedes? Easy. I know how he got that car. He financed it of course. So, instead of his car showing me his great “wealth”, it shows me how indebted he is. And I find it sad that he is in debt. Do you have debt? Is it good? Does it make you feel great inside, knowing that you owe money and that others have power over you because of it? No! Being in debt does NOT feel good. I can’t even imagine owing as much money as the man in the Mercedes. So I feel bad for Mercedes-man. He doesn’t have wealth. He has debt. He is a slave. He is owned by a bank, a credit union, or a dealership. I, in my cheap car, am free. Which would you rather be? Do you want to LOOK rich, or BE rich? Truth to tell, I want both, don’t you? I would love to drive a Mercedes or a BMW or a Ferrari and know that I actually own it. I mean, how cool would that be? The truth is that you can have both. Really. Just not right now. Can you be patient? You have to not look rich for a while now, so that your wealth can have a chance to grow. Once it grows and reaches a certain stage of financial maturity, then you can cut loose if you want, and you will both BE and LOOK rich, if you wish. Just wait. Live on less now, save your money, earn that interest, and become rich. I think it’s much easier to look rich when you actually are rich, wouldn’t you agree?
I think, though, that when you get to that point, you will find that looking rich is over hyped, and you won’t care if you look rich or not. Maybe I am wrong, but I think a life of thrift is great for showing us what’s most important to us, and it’s usually not money (if money was most important to us, then we wouldn’t be thrifty because then we would not LOOK rich). Yes, I would like a Mercedes. Do I think I will ever actually own one? Probably not. When I get to my financial freedom point, I think I will use my money for other things. What things? The same thing I have always spent my money on, the things that are most important to me.
Posted on 18 Feb 2009