I can’t talk about the attitudes of the typical European or Australian, because I am not from those places. I have a good understanding of the mentality of the average American, though, because I grew up there and lived there until I was 38 years old, except for a 2 year stint as a child when we lived in South Africa. A lot of what makes Americans tick is responsible for the financial situation that the country is in, and indeed the world. I suspect that people from other 1st World Nations are the same, but I won’t say that, because as I said, I don’t have first hand knowledge of their psyche.
Probably in the past 40 to 50 years, something that has become typically American is the whole idea of “keeping up with the Jones'” if you know what I mean. If you don’t understand what I am talking about, I am saying that if a family down the street buys a new car, you have to go buy a new car, and a nicer one than they did. You always have to keep up with the other families, even if it means pushing yourself into heavy debt, and ultimately to poverty.
Now, keep in mind, I am not saying that all Americans are like this, but it has become all too typical. There are Americans who are more mature with their financial situation, so don’t think that I am lumping all Americans together (I am American myself after all!).
I bring this up today, because we are at a point, financially, that people are going to need to get over this. In the last 6 or 8 months, the world has changed. Some people can still afford to set the trend on things like houses, cars and such, but many can’t. For those who can still fit these things in their budget, they need to be careful, though. I mean, they have money today, what about in a year? Situations have turned around dramatically quickly recently. People can lose fortunes overnight if they are not careful. Just ask those who thought they were putting money away safely when they sent it to Bernard Madoff, and others who are still being called out of the woodwork.
This thought came to me about a month ago when Feyma and I were talking about houses. I am not criticizing Feyma when I say that she has always enjoyed having a very nice house. She likes the best. I’ve been like that too. Last month when we were talking, Feyma told me that she “didn’t need that anymore” That’s where I am too, although I think that I was there a little before Feyma got there, but I can’t be certain.
One of the great things about living in the Philippines is that even if we go with a house (or some other thing in our life) that is not the best house, we can still have a nice house and count our blessings that it is very nice. If somebody moves in down the street and builds a mansion, hey, no biggie. I am happy for them. I just don’t need it.
At this point, when the world is in poor financial shape, I think it is time for all of us to re-evaluate what is important in our lives. Is having the latest model of car more important, or enjoying your family and being secure with your finances? For me, the choice is obvious.
Hi Bob- I think what you have said about keeping up with the Joneses has most to do with the economic situation we find ourselves in today. Just maybe in the future people will be able to differentiate their wants from their needs and buy what they can afford.
Just my two cents worth.
Regards.
Jim
'Keeping up with the Jones'' Is definitely what allowed much of this to happen in the US. But its not the whole cause. When you have a president that tells you its your patriotic duty to go shopping (Bush) as opposed to Carter who told people it was their patriotic duty to not use credit cards and run up debt, It really does add to the problem.
Even that is only a minor part though. Clinton eased credit qualifications to 'kick the can' of our financial problems past his tenure and started a snowball that Bush gave a really hard shove. If Bush had tightened credit when he got in office we would have had a minor recession that probably would have been over before the end of his first term. But fearing not getting re-elected he also 'kicked the can' only much harder.
After the real estate bubble got that big it was 'too big to bust' at least without causing a major recession or maybe a depression. So it was decided to keep kicking.
At the same time we had deregulation of banks and investment firms. The Glassteal (sp) act was repealed so that people would be allowed leverage just like in the 20s. Washington crony's were given special exemptions so they could leverage up 30 to 1 instead of 12 to 1 like people without friends in Washington. While the SEC and other regulators were apparently muzzled to keep them from even enforcing what regulatory laws were left.
If you look at who has those special exemptions on leverage now you will see a list of investment companies that have gone under, are in trouble or have been bailed out by Bush.
All the legal maneuvering still isn't the biggest problem though. It would take an army of special investigators to track down all the blatant fraud that has occurred in the last 20 years. The real problem is the general lack of morals for the whole population of the US. I am speaking in general we all know people who are honest Americans. I like to think of myself as one. But fraud and financial tricks have gotten so bad in the last 10-20 years that I would rather take may chances in many third world counties. At least the lawyers and judges are cheaper.
If you are familiar with what happened in the 20s and 30s you will see a lot of similarities. Roosevelt prosecuted large numbers of fraud cases. And it took a few years for all the bubbles to burst. That was with someone at least by appearances attempting to do the right thing. He certainly made mistakes but I have my doubts about the people in Washington now making a real effort to clean this mess up. Of course their will be some high profile cases in the news but will they really prosecute all their buddies?
Bob – I have always been self employed and much like you I suppose make my living off of my creativity and talent mixed with business saavy. I have more or less been able to buy what I felt like yet I have never been extravagant. I like trucks so I never bought the Aston Martin or Benz when I could afford to. A good ol dodge ram for me everytime. Now I drive a Starex. I also had a boat but I bought it for practicality not to show off. The point is this all comes back to security in ones self. Those that are secure in themselves don't need impress others with their money. They need to do it with thier personality and humility. Of course when you are super rich buying cars and planes and huge houses is a fairy normal thing and again not necessarily to impress. I personally like to live in a nice house becase that is where I have a business. But funny enough I have never owned a house more than 1500 sq ft. I don't like taking a road map to get from one room to another. But the houses were beautiful inside with all the artwork I like to collect and look at on my walls. You could buy another whole house with my collection.
Getting to the point. I ilke to live good and I will buy what I want when I want but I do it for me….not the Jones. Presently, my wife and I have many properties around the country and plan to buy even more. We are doing it for our childrens future and for their security along with other investements.
We are fortunate to be able to live our dream now and not have to wait like so many others who blow it trying to keep up with the Jones.
One exception is I plan to build a 3500 sq ft 3 level glass house in Tagaytay overlooking Taal. What the hell, it's for the kids LOL
Morning Bob,
You havn't seen me for two months but I now have satellite broadband on.
It must be our age, Bob. I am also at that stage and am happy in the little cottage I presently have. It's a bit rough but I'd rather have the extra money to try and make more with it. Money makes money as the saying goes. Most sensible people of our vintage are trying to work towards having sufficient investment income to be able to live on it in perpetuity. I'd be content with a regular philippino home so long as it kept the water and the bugs out.
Another thing too Bob, is that a lot of the people that seem to be doing really well (big house, flash car, extravagent lifestyle) are in reality worth nothing because their debts may exceed the value of these assets presently.
Have a good one Bob.
hi bob,
my husband and i were house shopping about 2 weeks ago. we were seriously considering buying a new house to take advantage of foreclosed houses. looking back now i'm glad we didnt. we would have been burried in debt again for 30 years as oppose to 2.5 half years. i'll take the cash, instead of a new, big house that way i can visit the philippines every year.
Hi Bob!
When I first brought my wife to the U.S. in 1996, we took a walk past all the big houses nearby with the 3 cars, boat, RV etc.. I told her the only difference between us and them is that they owe more money for the things they have. We live moderately and comfortabley and, I'm proud to say, we have been totally debt free for almost 2 years now; no mortgage, no car payment, no credit card balance.
Having everything you want can never match the piece of mind that you get when you have everything you need and it is paid for!
Mark C.
Hi Bob, I have to agree with what you said in this article and most of the points you raised are the stuff that made me really confused and partly culture shocked when I first moved here in the US. I couldn't understand how people could afford to buy a lot of the same stuff over and over when the ones they had previously purchased were still in good condition. Whenever I pass by peoples' houses and their garage doors are left open, I was appalled at the amount of stuff (junk?) people accumulated when there would only be two people living in the said houses. More commonly now too, you see tv shows of people who have to undergo therapy for being compulsive and obsessive shoppers. Their houses are filled to the brim with purchases, mostly unopened, unused items with only spaces in between enough for one person to walk by. Heard about the old lady who died when a mountain of her possessions fell on top of her?
I hope people (including myself) start reassessing their lives and identify what is really more important in life. Great post.
We’re really blessed, because we don’t have car payments (don’t like flashy cars), no credit debts. My husband retired in AF @ 42, now, he works for AFleet Company as a civilian. The only thing we have to focus on paying is our mortgage. Next week Bob, we’re going to move to our new house. (Our first new home in US) 30yrs mortgage. Oh, gosh. I hope I’m still alive. 😉
I told my husband, that’s why I want to live in Phil, because almost everything you build is fully paid for. He said “in due time.”
Great post MBob.
I've been debt free for 3 years now. I use the credit cards a little when I'm in the states but I pay them off when the bill is due. Venice and I recently moved into a nice 2br cottage in Buhangin and I am far happier here than I was in El Rio. For now my job is secure, they are actually bringing me up to Ak a month earlier this year so I must have made an impression last season. When I come back Venice and I plan to buy some land in Indangan and next year hopefully we can build our house. Heck I even scaled back the house design I had to a 2br arts & crafts style cottage. I've never "kept up with the joneses" actually I rather enjoyed laughing at people who did as they took on more and more debt. I've been arguing for years now that a depression was coming, but like the guy in Times Square who shouts about the end of the world I was not taken seriously. You know what Bob? Sometimes I really hate being right because now the world has a hard line to tow for the next 5,10, 15, who knows how many years. It saddens me that the Ivy league taught economists who run things can only come up with one solution to the problem… throw money at it. I fear with all the extra money we are inviting a Zimbabwae situation in the future.
Yes Bob. We really have a great deal… In spite of paying 30yrs we’re happy…. I hope it won’t be that long “per hubby”. He wants to enjoy life in Pinas too. I mentioned to him that am planning to buy a land in Samal, his up for it… He said “make sure it’s not a front beach property I’m afraid of Tsunamis’’’ I said simbako”…
Nope I'm not like the jones's .. I have a hard time keeping up with myself nowadays hee hee …..Phil n Jess
I enjoyed your article and perspective Bob. I have never been able to live with the Jones so its not something I miss. Serving in the Marine Corps never made me rich and now working as a public school teacher-well lets just say I am not the envy of the Wall Street crowd. I am debt free other than month living expenses and we are able to save a considerable amount of money each month. We have food, we laugh a lot, we smile, the water in the shower is hot and the eight year old car has gas in the tank. We also have a great family and good friends-life is good and we like living simply. Ron
I have been living in Canada for 18 year now but I still could not motivate myself to buy a house. I'm still renting and yet I save more money. With the collapse of property values, owning a house is a lot more expensive than renting not to mention that substantial amount of equity has been wiped out. I always pay my credit cards in full. Buying things I do not need does not give me any satisfaction. I live simply but I'm debt and stress free.
We are all aware of dept when we first accumulate it but only a few have a good understanding of what good and bad dept is.
Some believe that all dept is bad no matter what the source of the dept, and others don’t care as long as they get the instant gratification of enjoying the item that made them accumulate the dept.
Shopping has been associated with being an addiction like some drugs are, it brings the same level of satisfaction to the individual and it can have the same level of destruction if not managed with intelligence.
I have been guilty of living a lifestyle that was well above me income level but fortunately I have had the opportunity to see the error of this and have taken steps to move forward and eliminate the dept that I accumulated over my lifetime and I am on a path that will eliminate all my bad dept within 12 month if all goes well.
Keeping up with the Jones' is never a good ideal.
Hi M-Bob,
I read in the newspaper that " keeping up with the Joneses " and " shop till you drop " is no longer considered " cool ".
Visiting Grandma in the nursing home and asking her how she survived the Great Depression is the new " in thing ".
I don't have an HD tv, I don't subscribe to cable or satellite tv, I drive a '99 Honda Civic, I buy pre-paid cell minutes (cheaper considering my usage), I have a mortgage within my means (and I pay extra to draw down the principal every month), I do have DSL, I enjoy purchasing music, I travel, and I make a bunch of other lifestyle decisions that make sense for ME. It doesn't bother me if people have better / more, or if many live beyond their means – but it does bother me when I have to pay for their poor choices – and now I'm rewarded with a big fat bill from the bailout committee.
Now this is a group I can relate to Bob
I have always been different because I do not like to borrow money. A friends father told me when I was a teen that you should never borrow money for anything that does not make you money and lest face it, keeping up with the Joneses does not make you money. Personally I would rather compliment someone else on there new car than spend the money for mine. With my goal of moving to the Philippines I have more reason than ever to save money while here in the states since the dollar buys you 2 to 5 time as much in the Philippines.
Actually Bob there is another glass house in Tagaytay but not for a minute will I try to keep up with that Mr. Jones. His tri-level house is get this 120,000,000 million Pesos. Mine will be about 7- 8 million LOL
Kamusta ka Bob,
This is a good point Bob, but I guess I have never been one to "keep up with the jones". I mean, I just got a cell only about two years ago, it took me so long to give up my music cassettes and video tapes for cd's and dvd's.
I guess I get that from my parents though, we always lived comfortably, but were definitely not spoiled, and we never were the ones that cared if the Jones got a new car. In fact, the first brand new car my father ever had was in 1987, when he retired from his U.S. Government job after 38 years of service to them.
Take care,
Danny
To the LIP Readership – If you would like to read a great Article on what we are really going through and our financial future go here http://online.barrons.com/article/SB1233965459103…
Died ka jan! I have to pay by the hour for internet right now so I limit my time. I've been downsizing ever since we moved over to the new house. I will be leaving for the US in late march/early april and I AM NOT looking forward to it. I think now more than ever the reverse culure shock will be worse.
Hi Bob.
I couldn't agree with you more. I just sold my Harley and also one of our cars and paid off the mortgage. I realized that we only needed one car between the wife and I, and I also went and brought a 100cc scooter for commuting. So Ive downsized and paid all our bills in one go. We live in a modest 1940's weatherboard home, which is comfortable. I know personally and have heard of other people with 200k – 400k mortgages on their newly built or upgraded homes with there brand new cars(s) in the driveway. I do not see nothing wrong with that as long as you can afford to pay for it, but sadly I can see a lot of these people going under in the near future.
My hours at work have decreased dramatically since Christmas(I am a casual) to an average of 20 hours per week. Before the Christmas break I was averaging around 35-45 hrs PW. They say the financial crisis has not impacted here in Australia yet, but as far as I am concerned it is well and truly upon us. Interesting times ahead! cheers
Hi Bob
For me I want to build while the finacle opertunity is there, once I stop working in the Middle East the money will be just eneogh to be comfortable, and thats all I need, and not having a house payment will be the first time in my life, and I hope to stay there for a long time
Hi Bob,
I see this phenomenon here as well among small business owners in the Philippines. After some initial success, I quite often see small business owners rush to get all the latest gadgets and other assets that ultimately do little to improve their core business operations. It is a real shock to many when cash flow slows and they still have debt obligations outstanding. Many wish they hadn't offered a whole bunch of extra bells and whistles to their products and services after the fact. There's nothing wrong with adding value to your business operations, but it usually works out better if any additions are introduced in a measured pace and in line with what your business plan has made allowances for.
Cheers!
Oh, just got a gravatar, hopefully this works!
Yeah i think a lot of people will be in for a rude awakening very soon. A lot of my friends think I am overreacting by selling up some of my assets, and they laugh at me for buying a scooter! but we will soon see…..
Cheers!
Great post, Bob. Dave and I have these kinds of talks often. And we echo your thoughts exactly.
Another thing that may have exacerbated things in the US is how so much wealth is going to so few people. The gap between rich and poor is enormous now and the middle class is shrinking – kinda scary for a great democracy like the US. Then there's all the hype about moving up, upgrading, luxurious things very few could actually afford but so many felt they "deserved". I'm glad we're back here where life is simpler, more real. We "deserved" and got a pretty good break and a great deal.
Also, I was surprised to read Mia's comment, I could have written it myself!
I'll text you tomorrow Bob and we can certainly meet at Blugre for some coffee. It's so easy for me to hop on a jeepney from where I live now 🙂
Hi Bob,
Been lurking your sight for a few months – maybe someday moving to the phils will be a reality, but for now just a pipe dream.
Anyway – thanks for your article – about a year ago I started downsizing and paying off debts – I could see what was happening around me and knew I didnt want to get caught up in it. As a retired AF enlisted guy and now a public school teacher, keeping up with the Joneses has never been very realistic anyway – glad now that I didnt try! In my grandparents generation, using credit was always considered a bad idea. In my parents generation, it became a means to an end, but usually done with care and planning. In my generation (I'm 52), it has become the standard for living. Its a sad situation currently in the US (and I guess for much of the world) but I think it was inevitable – and now the Joneses and their groupies are going to experience some major life-style changes . . . and at a very dear cost. I've tried to explain some of this to my students, but they are so entrenched in the credit mindset that they just dont get it . . . I'm afraid they will have to learn their lessons in the school of hard knocks.
Hi Bob,
This might be controversial, but don't you think the quest to fulfill the American Dream is also partly to blame? After all, much of the focus of the American Dream is (unfortunately) centered around material wealth? Doesn't chasing this dream lead to excessive risk taking?
Hi Bob
Yes, we having “keeping up with the Jones” here in Canada too. Fortunately, I never caught the bug, but my wife had a small case of it when we first got married. I think many Filipinos get a case of it when they first come to North America. A lot of them seem to think that once they make it here, everything is easy and they can have it all. Many are very disappointed.
Many Americans and Canadians have that same idea. Now look at what has happened. I think many people have learned a hard lesson. At least I hope they have learned it.
But, I think everyone should remember one thing. There is good debt and bad debt. Good debt is with careful thought and minimal risk with a goal in mind. Bad debt is buying whatever you want, if you can really afford it or not, regardless of the risk
We have no debt other than our mortgage. Good debt. Our house is still worth double what we paid for it. In Canada, when you sell your principle residence, no capital gains taxes. So, not only is it our place to live, it is our retirement fund. We just have to move to a location we like where property is cheaper. That is not hard, because we live in the most expensive place in Canada.
Fancy houses and new cars do not make a happy life. Family, goods friends and pastimes you enjoy do that. It is good to have a dream. It just must be a realist dream. What is it they say? Learn to be happy with what you have.
hi bob,
Credit/Debt is the modern day slavery, isn't it wonderful sleeping every night without anything to worry about debt? I lived my entire life credit free, not a single centavo!, I don't buy what I want, I only buy what I need. living beyond your means is like choosing to live like a slave.
The American dream has changed in the last 50 years. It used to be a modest house, car and 4 kids. Now its a mansion, 3 sports cars, 2 SUVs, a Harley a… You get the picture. And to do this most are willing to lie on their mortgages, barrow way more than they can ever expect to repay falsify financial documents leverage beyond what they can really risk etc…
A couple of people really nailed the problem today.
Karl Denninger (one of my favorite writers on the economy) http://market-ticker.org/archives/809-On-Our-Frau…
The American dream has changed in the last 50 years. It used to be a modest house, car and 4 kids. Now its a mansion, 3 sports cars, 2 SUVs, a Harley a… You get the picture. And to do this most are willing to lie on their mortgages, barrow way more than they can ever expect to repay falsify financial documents leverage beyond what they can really risk etc…
A couple of people really nailed the problem today.
Karl Denninger (one of my favorite writers on the economy) http://market-ticker.org/archives/809-On-Our-Frau…
And Santelli http://www.cnbc.com/id/15840232?video=1039849853
And
Bob
It's a little more complicated than keeping up with the Jonses, although that's part of it.
The economy of the US as well as, I assume, any capitalist country runs on consumerism. As long as the people keep buying, whether using cash or credit, people keep jobs and the economy keeps sputtering along. When people get into debt up to their chins and can't afford any more payments, that's when things suddenly turn south. The loosening of credit helped extend the ability to go deeper in debt until the rubber band snapped, and nothing will really help until people are able to reduce their debt. In the mean time jobs are being lost, because people are not investing in the products/services that those jobs produce.
A big example that I see is the auto industry, which the government is pumping billions into to, but all I see coming from that is paying workers to produce more inventory that the public can't aford to buy. I won't get into the import/export area of the economy. That's another part of the problem.
As for myself and my wife, we're better off than a lot of people, in that we live modestly, with no debts other than food and utilities, and are able to save more than we spend. Also being a disabled veteran means that we have a guaranteed income,and neither of us has to work, at least until the government completely collapses. But then, that's another story.
Sorry about the double post honestly it was a computer glitch back on my machine now hopefully it wont happen again.
Hi Bob
I won't mentioned any names but some people on here want to blame the President who was in power for the last eight years but they must realize that this has been coming much longer than the last eight years and I believe it will take much longer than eight years to fix. Ok away from the politics, when we bought our house in the Philippines we could have built bigger but usually a big house means bigger problems such as more room for visitors and we know how that goes.
Hi Bob,The situation in the Uk is similar to the US and probably similar in most of western europe.I won't labour on as most replies have covered this subject.
While reading your post an old adage came to mind "A fool and his money are soon parted".
Recalling an interview a few years ago with Warren Buffet,he stated "We still live in the same 3 bedroom house we bought in the 60s,we have never needed anything bigger" also "I have never felt the need to buy a yacht or private plane,i have many friends who own those, that i can borrow or hire anytime i wish to" regards Chas.
Hi Bob, I live in Oz. Last year I sent a photo of myself and the family and my Kia Spotage SUV. My brother in the PI laughed at me. He asked why I bought a Kia. I said it was cheap and it serves the purpose of taking me to work and back and carrying my groceries and picking up the kids. He said no one in the Phil buys Kia and that even Toyota's are frowned upon. I said how could Filipinos afford more expensive cars? Apparently they do, I assumed they would borrow or have an OFW relative. Now it has come back to bite us. The irony of it was, my cousin drives an Opel (a German car) and was proud of it. Well my husband was a mechanic and he said Opel, though German made is a third rate car anyway. While I growing up as a little girl in PI I've witnessed how neighbours turn their noses on local products, and admires anything American. When I visited last year, I see nothing's changed.
Hi Bob,
I really enjoyed reading every ones responses to your Post. Being dept free is so important for us with economic times struggling the way they are. I have been dept free for a lot of years now and can thank my dad for raising me that way even though I didn't listen to him in my younger years. But I believe that if you put the right foundation in your child when they are young they will come back to it someday. I guess my favorite response was Larry's about his thoughts on being dept. free and dreams of moving to the Philippines because that sounds like me. I really enjoyed every one them because most of them made so much sense and it is so encouraging for me.
I take my hat off for all of the military personal that I read about here that served our country for our freedom.
God Bless,
Dale
Hi All,
Quote by ex US President Jimmy Carter just before he lost re election.
"To many people worship self indulgence and consumption,if we succumb to a dream world we will wake up in a nightmare".
Very few people took any notice of him,but it looks like he was right.
regards Chas.
HI BOB
I just wont to say a little ok mate and i dont think it is just australians that wont to keep up with jones ok and i hate to say this mate but i know a lot off filipina think this way ok i dont know about filipina livng in the php but i know it is like that with filipina now living here at home and to me this is not a good think ok and too say dave and kate as a big new tv we must have one two and a lot will go in the det to just get it tooo Bob ok and i wont u to know mate i dont care what u have in ur home as long as my wife and i are happy that is all that matters too me ok and who as a new car who cares i dont as i cannot drive lol so what good is a car too me and so and so has a new wife who cares i dont as i love my own wife and dont wont to give her up for some one i dont know lol …..peter martin tassie
Yes, Peter, people all over the world get into this kind of competitivness.