Beating the Joneses

May 23, 2016 by

fashionable kitchenI’ve written here before about my like/hate relationship with the House Hunters series on HGTV (see Granite vs. a View, for one). Since Ms. Money Counselor and I spent two February weeks on The Big Island,  I’ve added Hawai’i Life to the list of HGTV shows I’ll watch on occasion to re-live for a while our fun trip. But I had to turn off a recent episode, disgusted by the same antics that caused me to quit watching the continental U.S. House Hunters.

Why I Turned Off an Episode of HGTV’s Hawai’i Life

Hawai’i Life follows HGTV’s usual house hunting formula: a party, usually a couple, tours three properties, pretends to bicker and be difficult (to add drama), but ultimately unifies to choose one property to buy, and of course live happily ever after.

In the episode I had to abandon, the couple appeared to be in their mid-20s. I mention this only because their young age implies that they were likely just getting started in the adult world and understandably have modest savings. (At a similar point in my life, I lived in a run-down apartment with a one-inch-vertical-for-every-5-feet-horizontal-slope in the floor, furnished (to use a generous term) with garage sale and thrift store purchases. But I was saving about one-half of my decent but modest salary.)

While touring properties, this couple’s commentary comprised exclusively negative remarks about what were essentially aesthetic issues.

  • The male of the couple made clear his life would be hideously incomplete if he lacked stainless steel appliances. One house in particular had what looked like new kitchen appliances, but they were white. “We’ll have to update these to stainless, of course,” he remarked. Of course.
  • The woman said she could not live with “popcorn ceilings.” I’ve lived in my home since 2009, but when I heard this declaration, I had to look up to learn, for the first time, whether our house has popcorn ceilings. (It does.)
  • Needless to say, no countertops could possibly do, for either member of this couple, except granite. “These will have to be updated.” Naturally.

And so it went. I couldn’t stand it after a couple of properties and so tuned out. Or perhaps I feared further humiliation than I now felt due to the revelation that our vintage (white) appliances, laminate countertops, and popcorny ceilings should be sources of embarrassment. How could we ever again entertain guests in our home, sigh.

What Underlies the Obsession with “Updating”?

After the show, I got to thinking: Why are these people—and so many others—obsessed to the point almost of ‘money is no object’ in assuring their house is fully “updated,” as they perceive fashion? Why, exactly, is it that some would find it so torturous to live beneath popcorn ceilings that they’ll spend thousands of dollars to smooth out those hideous bumps? I mean, they’re just little bumps, after all.

Here’s what I think: For many, it’s not that they, on their own, find so wonderful and aesthetically pleasing smooth ceilings, stainless appliances, and rock countertops that they’re irresistibly compelled to reject very good, already installed and paid for alternatives. It’s that they know these alternatives will not impress visitors to their home as much as the costly, fashionable options they say they absolutely must have, cost be damned!

In short, what’s motivating many of these house hunters is that classic and age-old destroyer of net worth statements: keeping up with the Joneses.

To give one, brief example: Let’s say it costs $5,500 (the maximum IRA contribution for those under age 50, incidentally) to hire someone to scrape the bumps off all the ceilings in a house and repaint. If that $5,500 were instead contributed to a Roth IRA and grew by an average of 6% for 30 years, it would become nearly $32,000. That’s what those de-popcorned ceilings really cost: $32,000. You gotta really hate bumpy ceilings—or, more precisely, fear what others will think of your bumpy ceilings—to make that choice. At least do the work yourself if you cannot live except under smooth ceilings.

How About Keeping Up With the Joneses’ Net Worth Statement?

Then I had another thought. What if we converted this historically destructive (of personal finances) competition with the Joneses to a constructive comparison? What if everyone made their net worth statements as easily visible as their kitchen appliances or the car in their driveway, say by posting net worth statements on Facebook and in our homes?

Allow me to illustrate the effect of public net worth.

This is the sort of post-house party dialogue between guests on their way home that classically Jones-motivated people with secret net worths seem to fear:

Person A: “How about those countertops? I wonder why they haven’t updated those?”
Person B: “Yeah, I don’t know. And I haven’t seen a white refrigerator since, like, my grandmother died.”
Person A: “And those ceilings—OMG.”
Person B: “I could hardly take my eyes off of them. I wanted to grab a ladder and start scraping off those bumps, like right in the middle of the party!”
Person A: “I thought they were making, like, good money. Too bad.”
Person B: “Me too. Guess not.”

Now imagine that the host kept a poster-sized net worth statement on an easel in his or her living room during the party.

Person A: “Can you believe they’ve got $22,000 in credit card debt! Just imagine the monthly interest expense—must be three or four hundred dollars a month! That’s insane!”
Person B: “Yeah, that’s crazy. What got me though is how little they’ve put in their IRA. $12,000, and they’re, what, 28 years old? But I guess when you’re paying that much in interest every month, saving is tough.”
Person A: “That’s for sure. And I’m guessing that $15,000 home equity line of credit balance is how they paid for the granite, stainless, and de-popcorned ceilings.”
Person B: “More debt, when they don’t have $5,500 to max out their IRAs each year. I just don’t get that.”
Person A: “Well, maybe it’ll pay off when they sell their house one day.”
Person B: “Maybe. Still, I feel kinda sorry for them.”
Person A: “Me too.”

No one wants to be subject to this sort of ridicule. So making net worth statements public would have a wonderful effect. Sure, at first you might be a bit embarrassed. But that would quickly fade when you saw that nearly all of your friends also have too much debt and too little savings, a fact previously masked by the stainless and granite in their popcorn-less homes.

Now imagine a specific decision you’re thinking of in this world of shared net worth statements: financing a new, $40,000 car. With traditional Jonesian thinking, you know that car’s going to impress and make jealous your friends and neighbors.

But note how that thinking changes if, say, you’re the party host with the net worth statement being critiqued in conversation #2 above. In this case, you know when your friends see that car, they’re not going to think “Wow, Fred must be doing all right!”. Nope, they’re going to think, “I can’t believe Fred took on even more debt to buy a car he can’t afford when he’s not even maxing out his IRA!” Now Jonesian thinking is helping, not hurting you.

And after you’ve spruced up your net worth statement over time while your friends and family watch, instead of being embarrassed about your white appliances, you can rest easy after hosting a party, knowing you’ve inspired this sort of exchange between your guests as they drive home:

Person A: “That vintage fridge really must be on its last legs. Wonder why they don’t replace it?”

Person B: “Yeah, maybe. But did you get a load of that retirement account balance?!? Holy crap.”

Person A: “And no debt except a half paid off mortgage.”

Awkward silence…

Person B: “Maybe we shouldn’t have done that cash-out refinance to pay for Europe last summer.”

Person A: “Yeah.”

You won’t be able to help but make better money choices once the veil is lifted on your net worth statement.

To Save More, Post Your Net Worth Statement on Facebook

Do you really, really want to save more? Post your net worth statement in your home and on your Facebook page, for all to see. And recruit friends or family who want to save more to do the same.

Making public your net worth statement will transform your commitment to saving, and you WILL make better money choices. Then, after your net worth statement puts the Jones’ to shame, maybe you can truly afford stainless, granite, and de-popcorning! ☺

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