Joneses

10 Common Financial Blunders

September 11, 2013 By Jeffrey Strain 6 Comments

There are plenty of steps that you can take to help you become financially successful, but all your hard work will end up being for nothing if you’re undermining the financial success you’re seeking to attain. The financial steps to success are important, but understanding the actions that’ll ensure financial failure are just as important. It usually only takes a single financial blunder to wipe out much, if not most, of the financial progress you’ve made. Here are ten of these blunders that you want to avoid or resolve as soon as possible to ensure the long-term health of your finances.

Spend More Than You Make

This is the foundation of all personal finance. If you can’t live within your means, you’re going to find yourself in financial trouble no matter how much money you make. While you may be able to get way with spending more than you make for a while, it’ll eventually catch up with you. At some point you’ll have to make up the difference and when that point arrives, your finances will not be happy.

Live Paycheck to Paycheck

While living paycheck to paycheck may seem better than living beyond your means, it still ensures failure in trying to meet your financial goals. Again, this applies no matter how much you make. Paycheck to paycheck living fails to take into account unexpected expenses that are a part of life. While you may be able to pull off the paycheck to paycheck game for a while, it’ll only be a matter of time that something unexpected puts you into debt which is a difficult hole from which to escape.

Trying to Keep up with the Joneses

The Joneses aren’t who you are competing against. In fact, what they’re doing and buying likely has very little to do with your own financial goals. The reason that what the Joneses are doing may look appealing is because you have failed to understand your own financial goals. By adopting the goals of the Joneses (who may not know their true financial goals because they may be trying to keep up with the Smiths) instead of figuring out what financial goals are truly important to you, you’ve guaranteed that you will never reach them. Forget the Joneses and take the time to figure out what’s important to you.

Not Knowing Your Financial Goals

If you don’t know where you’re driving, the chances of you getting there are slim. The same holds true with your finances. To succeed, you need to know where you want to be financially. The way to achieve that is by knowing what they are and then creating a map to reach them. Not knowing your financial goals is like wanting to get to a vacation spot using a blank map.

Letting Money Control You

It’s not about how much you make, but if you make enough to do the things that are most important to you. Money is a means to an end, not the end itself (after all, it’s nothing more than pieces of paper printed with ink). Financial success isn’t dependent on how much you have, but rather whether you can you attain what’s important to you with the amount you have.

Failing to Improve Yourself

Your education doesn’t end when you graduate from school. If you’re unwilling to improve yourself, you and your finances will stagnate. Improving yourself is a never-ending process (who do you know that is perfect?) and it’s an essential part of keeping your long-term financial well-being.

Relying on Others to Take Care of Your Money

Rarely do those who take care of your money have the same interest in what ultimately happens to your money as you do (they’re probably more focused on making money for themselves, not for you). While it’s perfectly acceptable to rely on others to give you suggestions and help you think through financial decisions, you should always be an integral part of the decision process. If you rely on others to take care of all your financial interests without you having any oversight, you shouldn’t be surprised when money is invested and lost in ways that you may have never allowed had you known.

Invest in Things You Don’t Understand

If you’re goal is to quickly lose the hard earn money you’ve made and start from square one again (or even in the hole), start investing in things you have no idea about. The problem isn’t that the investments are bad in themselves, but most investments have risks and the only way to evaluate them is to understand the investment. When you have no clue what you’re doing, that usually means that others who do have a clue will make money at your expense. No matter how much uncle Joe talks about what a great investment it is, place your money elsewhere until you are confident you understand everything about it.

Being Financially Afraid

Just as being to aggressive can ensure financial failure, being afraid to take any risk at all will also almost always ensure it. To grow your money to meet your goals means taking calculated risks that bode in your favor over time. Not doing so will result in your finances treading water, if not sinking, and falling short of your goals.

Ignoring Your Finances

It seems that many people believe if they simply ignore their finances, then things will get better or somehow take care of themselves. While it’s a nice hope, it’s nothing more than a fantasy. Reality says that ignoring your finances will lead to all types of trouble that ultimately ensure you fail to reach your financial goals.

These are some of the more common blunders that people make that end up hurting their finances. By avoiding these financially destructive steps, you’ll greatly increase the odds that you’ll meet your long-term financial goals.

(Photo courtesy of Nick Allen)

10 Clues You Are Trying to Keep up with the Joneses

May 15, 2012 By Dana O. Crandell 8 Comments

It’s far easier to fall into the “keeping up with the Joneses” trap than most people believe. You look at your friends and all of the cool stuff that they have. You like what you see, so you begin to buy all that cool stuff as well. Before you realize it, you’re surrounded by the latest and greatest model of everything and working 3 jobs to pay for it all. The easiest way to stop the madness is to recognize the signs and break the cycle before it gets too far. Let’s look at a few of the possible signs that you might be trying to keep up with the Joneses, and the steps that you can take to avoid falling into this trap.

You drive a Cadillac, but can’t make the rent payment

One of the most common status symbols is a car. Don’t go overboard just to look good in your wheels. New car payments can easily break the budget. Better to drive a Saturn than to have to live in your new BMW. Find an affordable car that meets your needs rather than one that keeps your bank account empty.

You have to have the newest smart phone as soon as it hits the stores

New cell phones, tablet PCs and other personal electronic devices are as much about fashion as function in today’s society. Consumers will stand in line for hours when a new model is released, even if there are very few new features. If you’re one of those people, train yourself to wait a few weeks or even months to buy the new version. Chances are it’s going to have bugs that need to be fixed, anyway.

You’re a VIP at the rent-to-own stores

With the high price tag on new electronics, home furnishing and such, it’s almost impossible to purchase them without financing. If you’ve over-extended your credit, the rent-to-own alternative is a seemingly easy solution. These rental centers fill an important niche, and even though interest rates are extremely high, it’s even possible to improve your credit score through your purchases if you’re careful. However, if you have accounts with more than one store at a time and you’re receiving phone calls to let you know about new merchandise, you’re probably in way over your head.

Your total credit card bill is as high as your mortgage payment

Most middle-class households have at least one major credit card. Credit cards have many advantages such as making buying easy, and in emergencies they can be invaluable. The down side is that credit card debt has a nasty way of piling up. Don’t get caught in the loop of paying only the monthly minimum on your credit card bill. If you can’t afford to pay off the balance at the end of the month, don’t make any more purchases on the card until you do.

You have TVs you don’t watch

That’s a bit of a generalization. It’s nice to have stuff, but stuff you don’t use is a waste, whether it’s televisions, furniture, electric corkscrews – anything, especially hi-tech, expensive gadgets. If you have things just to have them, it’s likely that you’re on your way to being in the trap.

You purchase what you see the stars wearing or using

If the items on the top of your to-buy list include the fashions you see on reality shows or kitchen gadgets you saw on your favorite daytime drama, you might want to consider why you’re buying them. If the answer is simply that you saw it on Days of Our Lives and had to have it, consider not buying them at all.

The savings account is empty, but the closet is overflowing

If you’re spending enough on clothes and nice things that you’re not building any savings, it’s time to take another look at the budget. Set yourself a minimum payment to your savings account every payday and stick to it. Have a rummage sale and bank the proceeds. Don’t let your spending whittle away the emergency or vacation fund.

You eat out every payday even if you have to let a bill slide

We all enjoy a night out and dinner and/or with the boys or the girls on payday is a great way to unwind when you collect your pay. If you’re juggling bills in order to have that night out, you’re starting a cycle that’s hard to break. Skip the night on the town and cover the rent, or you may find yourself eating at the soup kitchen.

You put more emphasis on name brand than fit or quality

Ladies, if you’re carrying a Gucci bag, but can’t fit everything you need in it, maybe you should have considered the one you saw at Target. You know, the one that was just right, but now you can’t remember the name? Guys, Calvin Klein isn’t going to care if you buy store-brand slacks; in fact he isn’t going to know.

You don’t know your debt to income ratio or credit score, but you know where to find the best price on Prada

This is a question of priorities. If you worry more about the state of fashion than your own financial state, it’s time for an intervention.

Don’t let your social status become more important than your wellbeing. Living beyond your means is a downward spiral to a very, very bad place.

(Photo courtesy of kennethkonica)

When You Have to Keep Up With the Joneses

November 5, 2010 By Jennifer Derrick 8 Comments

We often talk about keeping up with the Joneses. When we accuse someone of keeping up with the Joneses, we usually mean that they are buying cars, clothes, or other tangible items because their friends and neighbors have those items. They want to fit in with their peer group, so they try to mimic their lifestyle. Generally, this is not a good thing. Not only is it expensive, it kills your individuality and creativity. I’ve always told people to stop keeping up with their friends and just have and do whatever they can afford and that they enjoy. Why be a slave to the desires of other people?

Recently, however, a friend came to me with a twist on the keeping up with the Joneses problem. He just got a new job and at a company where most of the employees are very well off. They don’t just look well off, they are well off. Old money, it’s called. My friend knew going into the job that there would be an image to be matched and he was okay with that. He was prepared to deal with the clothing, cell phone (gotta have the latest), and car (gotta drive a nice one to chauffeur clients) aspects of the job. He wasn’t too worried about fitting in appearance-wise. He’s not wealthy, but he is comfortable and he knows the secrets of bargain hunting for clothes so he can at least match their apparel choices without damage to his budget. He already drives a nice car and has a new cell phone. What he wasn’t prepared for was the fact that his frugality would be stymied in other ways.

My friend, although comfortable, is frugal with his money. He bargain hunts, buys used cars, and doesn’t spend frivolously. It’s why he is financially comfortable. As part of this frugality, he always brought his lunch to his old job and saved a bundle. At his new job, his coworkers eat out. Every day. At expensive places. Very expensive places. My friend can afford to keep up, but it will mean three things:

1) Less money for savings,

2) Less daily spending money and,

3) Weight gain from all the rich food.

To keep up with the old money lunch crowd will mean that he has to readjust his budget and spend less in other areas that are important to him like his hobbies. Over time, he’ll also have to decrease his savings. He won’t go broke, but it will mean pushing back his timelines for some of his goals.

My friend tried keeping the eating out to a minimum for the first few weeks of the job. He only went with the crowd two days a week and brought his lunch the rest of the time. The problem is, when he doesn’t go out, he feels left out. He’s missing out on the chance to bond with his new coworkers. Also, they talk about work a lot while at lunch so they come back having made decisions without him. He’s out of the loop and has to catch up. His eating in brands him as strange and not a team player. He feels like he has no choice but to go out and keep up, even though he doesn’t want to. This job is a great career move for him and he doesn’t want to quit or get fired before he gets where he needs to go.

He asked me what he should do. In his case, much as it pained me, I told him that I didn’t see much choice but to keep up with the Joneses. If he eats in, he’ll miss out on important “shop talk” and decisions. Not being seen as a team player can be disastrous to a career, particularly in this economy. He can’t afford to hang out in the break room while his coworkers and bosses are making important decisions and plans at lunch. He really has no choice but to eat out and hope that his team playing leads to a salary increase soon so he can get his budget back where it used to be.

His is an extreme situation. While he might have foreseen that this old money crowd might eat out more often than his old coworkers, he couldn’t have known that every lunch would be a working lunch before he took the job. Had he known, he might have kept his old job or looked for a different job. Most people don’t feel this level of pressure, but many people do find themselves in situations where their coworkers eat out often and being left behind because you’re frugal can be isolating. You can try to limit your eating out to a one or two days per week, or you can try to interest your coworkers in pot lucks or some other in-office entertainment to make them want to stay in more often. Unfortunately, though, if eating out with your coworkers means fitting in and being seen as a team player, you and your budget may just have to keep up with the Joneses so you can keep your income.

Keeping Up With The Joneses Kills Your Individuality

March 29, 2010 By Jennifer Derrick 7 Comments

I’ve always had many reasons for refusing to keep up with my peers, but the other day one of the main reasons came into clear focus for me. (Quite literally because it involved buying glasses. That’s my attempt at humor today, folks.) Anyway, I had to buy new glasses so after my eye appointment I went into the optical shop to look around. The lady came out and offered to help me choose some new frames. After we went through a few pairs, she pulls one out and says, “This is the one that everyone gets. It’s very popular. You’ll fit right in with everyone else.” (As if I were fifteen and seeking to fit in in high school.)

I tried it on and guess what: It looked exactly like every other pair of glasses I’ve seen around town lately. Dark and heavy frame, square cut, big earpieces, you get the idea. Now, I understand the power of trends but I’ve never been one to follow them, particularly when they are as unflattering on me as these frames were. They were also the most expensive pair I looked at that day. Coincidence? I doubt it.

I ended up choosing a pair that is slightly funky looking and looks nothing like anything I’ve seen before. They flatter my face and they were reasonably priced. They were also shoved in a dusty corner of the display. Clearly everyone else went for the trendy frames and left these alone. Once again, I was not going to be keeping up with the Joneses and their trendy glasses. What’s funny is that these overlooked, ignored, sad little frames have received more compliments than any other pair I’ve owned. People tell me how good they look, how unique they are, and they want to know where they can get them, too. Heaven forbid I should start a trend.

The point of this tale is that, because I don’t keep up with everyone else, I not only save money but I remain true to my personality. I bought those glasses because I liked them and they looked good on me. They suited my unique style and personality. Had I bought the popular pair I’d have ended up looking just like everyone else. I bought my home because I loved it and I furnished it with things that I love. I may not have granite or stainless steel, or the right paint colors, but I have a home that is a unique expression of my personal taste, not a home that looks like every other model home in the world. My clothes are not trendy, but they suit me and my personal style. My car isn’t one of the popular models or colors, but I like it and it’s paid for. When I buy things I don’t ask myself, “Will the neighbors like it, or will my coworkers approve?”, I ask myself, “Do I love it and is it me?”

I’ve never understood the fun in looking like everyone else and owning the same things as everyone else. Once we leave high school our of days trying to hide our true identity in order to fit in ought to be over. I don’t think you can have a happy life until you can acknowledge and embrace who you are and what you like, even if that goes against what is popular and trendy. When you try to fit in too much, you lose touch with your own individuality. It’s like that scene in the movie “Runaway Bride” where the main character has to sit down with plates of eggs made every way possible to determine how she really likes her eggs. She’d spent her life matching her egg tastes to those of others and she’d forgotten how she really liked her eggs. When you own things just because everyone else owns them, you forget what products, colors, and styles really bring you joy.

Keeping up with the Joneses not only costs you money, it can cost you something more precious: Your uniqueness. Keep up for too long and you may just lose touch with what you really love and what makes you special. When you have the chance, don’t just follow the herd. Break out and be yourself. It will probably save you money and make you happier.

Turning Financial Envy into Inspiration

February 4, 2008 By Cortni Marrazzo 8 Comments

I think all of us have been guilty of financial envy at one time or another. “I wish I could afford a car like that” or “I wish we could live in a house like theirs.” It’s not as much of “Keeping up the Joneses” as it is simply envying the Joneses. If I see someone driving down the road in a new BMW I don’t run out and buy one to keep up with them, but sometimes I secretly wish I had one of my own.

Growing up and being poor or middle class can often lead to envy for those who are “rich,” “well off,” or “wealthy.” (I put those terms in quotes because they are relative.) And envy isn’t a positive thing. In fact envy often leads to a sour attitude. It can lead to distrust and dislike of a person, and in worse cases it can lead to hopes that that person fails at something. After all, if something goes wrong in their life, then you won’t have as much reason to envy them. Sounds rotten, I know, but some people actually think this way and I can bet most people have thought this way at least once in their lives (I know I have).

So how do you know if you have financial envy? Watch your attitude when you think people around you have more money or when they have nicer things. I used to be an administrative assistant at a real estate office and during the summer it always seemed like people were taking off early to go to their lake houses or go on their boats. They would come in with their “vacation” clothes on to take care of some last minute items and then drive off to their lake house in their convertibles. Meanwhile, I was stuck at work because I had no lake house or boat, I couldn’t afford to rent one, and didn’t even have vacation time to take off if I wanted to. When those people would say goodbye, I would mumble a goodbye and think to myself “must be nice!” My underlying attitude was envy and jealousy, which kept me from being happy for them and made my attitude sour.

Or I’d see a lady at Starbucks who was getting into her huge, incredible nice and decked out SUV with her latte in her well manicured hand, wearing the latest fashionable clothes. I’d drive by on my way home from work thinking about how it would be nice if I had unlimited money and no budget. I honestly have no idea if these people were wealthy or over their heads in debt. Frankly it’s none of my business. They choose to enjoy the finer things in life and I simply wasn’t able to at that time.

So what’s so wrong with financial envy? There is a proverb that says “Envy is rottenness to the bones.” Literally, envy can destroy you from the inside out. First of all, it keeps your focus on what you don’t have instead of being able to celebrate what you do have. That can make some people depressed, causing them to spend money they don’t have on things to make them feel better. Secondly, it can cause rifts in your relationships if you are secretly wanting your financially accelerated friend to fail. Beyond that, it simply doesn’t help you get any further financially.

The fact is that financial envy comes from the thinking and mindset that rich people are not nice people and they don’t deserve what they have. It may not be what you think consciously, but it’s a subconscious thought. Many times if you feel that you can’t ever have what that person has or become the kind of person they are, you will begin to dislike them so you subconsciously feel better about being different from them. And if you don’t like wealthy people, then you will do things that will prevent yourself from being wealthy because, after all, you don’t want to become one of “those people” that you don’t like. What we think influences our subconscious, which in turn very powerfully influences our daily decisions, which influence our life’s direction. It’s an interesting process and can be very positive or very negative.

While I do occasionally find myself envying people who have more money than I do (or at least appear to), I used to have a lot bigger problem with this. I always wished I could be rich and have all the money I wanted. I knew that wouldn’t make all my problems go away, but I thought it would certainly help. That envy wasn’t changing anything though. So I decided to get smart about my finances and get things in order. I read books and researched and found that if I make wise decisions and take care of my finances today, I can have tons of money later in life. If I work hard and invest and don’t waste my money, I’ll be able to afford a lake house and/or a boat someday. Not today, but someday. This revelation caused me to start looking at wealthy people differently. I’m no longer envious of people who have more than me; I’m actually inspired because I can be like them someday. It really helps me stick with my financial goals. Being able to buy those things isn’t the only reason I want to be wealthy someday, but they will definitely be an added benefit.

So now when I see someone leaving work to go to their lake house, I tell them to enjoy themselves and I find joy in the fact that some day I will be able to enjoy myself at mine, but it’s their turn right now. And when I pass a BMW or Mercedes or Lexus on the freeway, I don’t scowl at the person driving the luxury car; I look forward to the day when I will be able to drive one. But I hope when that day comes that people won’t be scowling at me!

Image courtsey of Corvair owner