Hey everyone! Today I have a great guest post for you by Sami from EatPrayBudget.com. I know a lot of you are like me and drive old cars, live below your means, and avoid debt whenever possible. This is an awesome message a great reminder for all of us that are grinding to get ahead right now. Enjoy! ~ M$M
Things don’t equal wealth – I read this statement in Rachel Cruze’s latest book “Love Your Life, Not Theirs”. To be honest, the statement hit me on the forehead. Having just climbed off a mountain of debt, which I talk about here, I’ve felt for the last year or so that almost everyone around me must be thriving financially.
It seems like new is in and people are buying up new cars or going on vacations like it’s going out of style. Slaying debt required us to live a very frugal life so there has been no new car or mega vacations for this crew.
In a world where it seems like we’ve been going down a completely different path than the rest of society, perspective can be crucial to keeping your sanity!
We all do it. We visit a friend’s home and pine after their newly remodeled kitchen or immediately start planning the purchase of that epic car we saw at the grocery store the day before. I guess it is human nature or maybe a product of the constant stream of content we see on social media every day.
But we all tend to watch the Jones’s and even try (or want to try) to keep up from time to time.
A recent study by Career Builder states that nearly 80% of folks in the U.S. are living paycheck to paycheck. That is staggering! It’s no surprise to anyone that we live in a consumer-driven society. Now I’m not saying that anyone taking exotic vacations, driving flashy cars or living in expensive homes are doing something wrong.
Now I’m not saying that anyone taking exotic vacations, driving flashy cars or living in super expensive homes are doing something wrong.
It just seems that if the study is accurate, the majority of folks we compare ourselves to are not really affording their lifestyle. In other words, they’re just making payments each month.they’re just making payments each month.
Our financial journey has changed my definition of the word afford. I, like many of you, thought that if I could afford the monthly payment then I could afford the purchase. What’s a $600 car payment, right? A few years ago I would have thought nothing of that car payment.
I was part of that statistic, living paycheck to paycheck.
Now, my definition of affording means I can pay cash for it. That means no more auto loans, no more throwing a new wardrobe on a credit card. To clarify, my definition of affording means I can pay cash for it. That means no more auto loans, no more throwing a new wardrobe on a credit card.
To clarify, I’m not talking a mortgage here. We definitely plan on taking out a 15 year fixed mortgage once we have a healthy savings account and down payment saved. Yes, we could save up the cash for a house but that’s another blog post…
So what do my new definition of affording and the statement “things don’t equal wealth” have to do with each other? Everything. Our human nature to compare ourselves and want what the next guy has is tough to crack.
I am constantly reminding myself when I see that flashy Benz roll down the road or as I stroll past my dream home that those things do not equate wealth in my world. Yes, they’re lovely and maybe one day I can afford to buy them myself but wealth is more than the car we drive, the house we live in or the clothes we wear.
Wealth could definitely be defined by each person individually.
It is after all personal finance. Wealth could mean a healthy savings account, diversified investments or a real estate portfolio. For some, wealth could be a positive cash flow.
Heck, it could mean that tomorrow you can walk into your 9-5, quit, and still live for the next six months to a year on your savings account. Maybe it does mean you’re driving that Benz or living in some extravagant home.
All I know is that it does not mean living paycheck to paycheck, it doesn’t mean driving a vehicle (a depreciating asset) that you’re making payments on. And it definitely doesn’t mean keeping up with the Joneses.
Right now, wealth for us is driving around cars that are over 15 years old with over 100k miles on them.
It means that we’re living in a rental home right now so that we can build a decent savings account and save for our next home.
Wealth means budgeting each month, remaining frugal even though we’re out of debt. It’s us being extremely intentional with our money and having a positive net worth for the first time in our adult lives. Now, clearly we’re by no means wealthy but we’re working toward that.
Now, clearly we’re by no means wealthy but we’re working toward that. We’re making tough decisions now so that later we can have some fun.
My point to all of this?
The next time you struggle with the things you see and want or even if you struggle with keeping up with the Joneses…remind yourself; those things don’t equal wealth. That person may look wealthy but seriously question, are they really wealthy?
For 80% of us here in the United States, those things equal the chains of debt and the stress of making it each month. I encourage you to define what wealth looks like for you and pursue that. Since you’re reading M$M you’re definitely in the right place.
Soak in the epic information Bobby provides here. Maybe collectively we can work to flip that statistic and live by our own definition of wealth.
Question for you:
What does wealthy mean to you?
For me, happiness is the King of Wealth. Above all else, the happiness of me, my wife, the rest of my family, and others around me is the most important thing.
Of course, I’m not going to deny that I like nice stuff. Obviously I do and I like feeling a sense of accomplishment with owning a nice home, even though I know it’s a bigger home than we need. Our home is one we can easily work into our life plans, though, that lets us meet all of our goals on our targeted timelines. It’s a home that we’ll create a life in, and have fur babies in, close to good friends.
Sometimes nice things are nice, but at the end of the day if you aren’t happy, it’s all for naught.
I love this!! Happiness is key and as the saying goes, “money can’t buy you happiness!” There really is much more to life and happiness is critical!
Thanks for the positive reminder!
Wealth – having the time to pursue your passions without the need for a financial reward.
Its great to earn money, but wouldn’t it be nice to be able to work simply for the value you create both for yourself and others.
I had a great time this past summer, refinishing some furniture, and building a patio, neither of which paid any money but both made me feel just a bit more wealthy as I added to my skill set.
Excellent points!! It’s always fulfilling to build your skills and create something in the process! Definitely a different kind of wealth!
Wealth to me means being able to enjoy life without any stressors. Being healthy, having time for your family and financial independence is the absolute meaning of wealth to me.
Years ago, I was a little envious of people that “had it all.” I always wondered how they did so well to obtain everything such as nice homes, nice cars, designer clothes, etc. Then I read Millionaire Next Door, it was eye opening. People that had money didn’t really flaunt it, and people who were flaunting it didn’t really have money!
I no longer was envious because I knew that I was going to do better. There’s no reason to keep up with the Jones’. You gotta live your own life how you see fit for your lifestyle and family, you can’t live it for the others.
Things don’t equal wealth! I love it, great job Sami!
Yes!! You’ve gotta live your own life unapologetically! And less stressors is so important to your health. It amazes me how much more relaxed I am without financial burdens hanging over my head!
Great post Sami!! My idea of wealthy is pretty much your same idea. Being free from the chains of debt, driving my 11 year old [paid in full] truck with over 100,000 miles on it, saving for an emergency fund and down payment, and having the freedom to make decisions based on what I want instead of what I have to do because I’m in so much debt. Also, to me, wealthy means making the sacrifices now for my future that most of my friends are unwilling to make.
You nailed it lady!!! Sacrifice now and later reap the benefits! I love it!!
People truly have wealth when they either have no debt or are able to pay off all debts. They also have to be able to live for a significant amount of time without a paycheck. Otherwise they are just a layoff away from being poor.
Isn’t that the truth! Having some savings is such an important piece of the puzzle!
I love the concept of not comparing yourself to others and worrying about things! It is so true though, you feel like you are taking a step back but everyone is struggling to afford their lifestyles!
Three cars in my household, two 12-year-olds, and a 15-year-old.
Wealth for me is being healthy and able to do what I like to do in my own terms with enough money to live my dreams.
My idea of wealthy is basically the same as yours – which sounds like following the Dave Ramsey plan.
This is a great post on the realities of comparing yourself to others. I recently had an unusual experience with this. After buying a 3 year old car for $16k cash on a $145k income last year, a friend of mine recently bought a $10k car on a $250k income and I found myself feeling dumb about my car buying decision even though I have no non-mortgage debt, a 9% DTI ratio on a 15 year note and am diligently saving for retirement. It is funny how the comparison game works out sometimes.
Wealthy
———-
1. No fear of losing the income from a 9-5 job
2. Absolutely indifferent to the shiny possessions of the neighbors
3. Net worth enough to last a lifetime
4. Kids’ college education expenses completely saved up /paid for
5. NO debt (mortgage included)
6. Credit cards are used only to earn awards or cash
7. 2 years worth of savings for emergencies
Like others have said, comparing yourself to the Joneses can be very deceiving. For example, many people buy nice clothes and jewels on credit cards for which they just make the minimum payment. Or lease cars that they could not afford otherwise. Or even do things like fail to pay their taxes.
Seeing my investments grow makes me feel like I’m much more ahead than wearing high-end designer clothes or driving a Mercedes.
Wealthy means the ability to buy what you need and want, save money for emergencies, and paying debts in full — all at the same time.