The "Joneses" Are Broke... and We're Next!

Transcription: We’ve all heard about “Keeping up with the Joneses,” a phrase that refers to a lifestyle notable for its measurement of success against our neighbors’ achievements and, unfortunately, their possessions. You may be surprised to learn that there really was a Mrs. Jones, who happened to be the author Edith Wharton’s aunt. That Mrs. Jones made up for her years of isolation spent battling serious illness by splurging later in life. In 1852 she built a 24-room villa in Rhinebeck, New York, that quickly became the envy of her well-to-do neighbors, who began to build equally opulent mansions of their own. “Keeping up with the Joneses” can produce positive results, that is, if we’re striving to earn the same good grades in school, or to advance within our profession the same way our neighbors are. But if we’re merely struggling to duplicate our neighbors’ lifestyle, and purchasing the trappings of that lifestyle with money that’s not really within our budget, that’s a style we won’t sustain for very long. In that scenario, Keeping up with the Joneses will lead to predictably disastrous results. The desire to live beyond our means and keep up with the Joneses is one of the genuine root causes of America’s current financial woes. As our neighbors buy newer and better and bigger things, the temptation to keep pace is irresistible for many of us. When we engage in this kind of spending, it’s not the possessions we’re after, of course. It’s social status. Unfortunately, most people can’t actually afford to live that way forever. As they increase their social status, they also increase their debt beyond their ability to keep up with the monthly payments that result. Credit card delinquencies, lawsuits, foreclosures, and bankruptcies are among the penalties that people pay for this kind of lifestyle, but the good news is, if things haven’t gotten that far yet, we don’t have to wait for an economic recovery to stabilize our situation. If you suspect that you’re trying to keep up with the Joneses, there are a few steps you should take right now to begin turning things around. One of the first things you need to do is determine precisely what it is that motivates you to spend the way you do. Begin by journalizing your spending for a few weeks – that is, create a list of everything you buy over that time. Next, examine your list and ask yourself whether each particular product or expense was entirely necessary, or was that specific product bought just to have it? And please understand that we’re not talking only talking about expensive cars or appliances. People who spend to achieve social status will often pay more for every item in their budget – for sneakers and shampoo and lawn services, for hot dogs and household cleaning products and wrist-watches, even when perfectly acceptable, less-expensive items are readily available. Look again at each item on your list and put a check mark next to each that you may have bought without considering