I know someone who is seriously in debt, to the tune of at least 6 figures. I won’t get into details since it’s not my story, but she has been very open about it. She hates the fact of the debt, but has gotten so used to it that she also doesn’t seem to want to reduce any spending in order to pay off more than the minimum payments required. That is unbelievable enough to me, but is actually just the background to this story.
At least a few times a year, she’ll mention to me that someone she knows is going to Europe/China/somewhere and she’s thinking of tagging along. I’ll ask how she’s going to pay for it, she’ll dance around the topic, mention that her friends found great deals and it’s a once-in-a-lifetime experience (funny how often those come up), and usually end up vocally upset that she’s the only one who can’t go. And then, at least a third of the time, she’ll go anyway. A large portion of her debt is simply due to years of trying to maintain the same lifestyle as her richer friends.
The idea of ‘keeping up with the Joneses’ isn’t just a cliche; it’s a fact of life and a major driver behind a lot of the reasons that people I know make big purchases. Hey, full disclosure: I’ve been guilty of it myself many times. When we bought our current house, we wanted it to be within walking distance to my office. Half of that radius was in a more impressive neighbourhood; guess where we ended up buying?
I’m learning to move beyond that instinctive desire to compare lifestyles and statuses by finding a better focus point: my end goal and beginning point.
I keep a spreadsheet that I update in a monthly basis that summarizes all my assets and debts. It also shows my end goals, and how far I have to go to reach them. If I’m ever tempted to make big splurges, or if I catch myself feeling jealous of someone else, or even if I’ve simply caught a case of FOMO, I open that spreadsheet and see where I am. I can see how fat I’ve come since I started, and what I still need to accomplish. Seeing those plain black figures usually reminds me of what I’ve decided are my really important goals, and everything else seems less important.
It’s another reason why tracking your spending and saving is so important. If you can’t see that you’re on track, or how splurges will cost you, it’s a lot easier to justify them.