Custom fit

Common misconceptions about success are rampant. Why are we always seeking externally what we observe to be success in others. Never mind the possibility that what we see on the surface isn’t really a reflection of the truth. Is debt an underlying contributor to the observed perception? Is it even accurate to make observations based on what we see on the surface? I like the word; neutral. I despise the concept of “keeping up with the Jonse’s.” Everyone will make assumptions about what we aspire to be someday and we can’t help but make subtle observations or presumptions about someone else’s situation; it’s in our nature. Standing in line behind the woman sporting the “rock” on her left hand at the local Starbucks or pulling into a parking lot at the gym and spending just a few extra seconds checking out the new BMW parked away from everyone else.

I guess for the benefit of everyone, I’ll admit to being one in the group who’s not immune to being an observer from time to time. I will in the same breath admit to putting way more thought into this topic than the average person by admitting, for starters, that I’ve done it. I would also like to state the obvious in that when we are engaging in this line of activity, we are usually stepping outside of ourselves even just for a few seconds, starstruck and usually our thoughts are summed up with a simple 3 letter word going round and around in our heads; Wow! It’s a break from our own reality, ok I get it. I think most people who I know who are really guilty of this habit are almost to the point of unconscious deniability. They do it without thinking, and would never in a million years admit they do it. Never mind the car in the driveway (we can’t afford) or the swimming pool (we use 4 months per year) or the fact that our savings account doesn’t really have anything substantial in it (nobody knows this dirty little secret) or the credit card bills that are getting bigger every month (my wife only knows about 1, not the other 4 accounts in trouble.). As long as we are able to prove to others that we are “successful” the facade is much more important than the reality. I just love it when my neighbor gazes at my new ride when I’m out mowing the grass. Never mind the fact that it’s been 25 years since I’ve actually owned a vehicle outright, that’s not the point. We do have the nicest home in the neighborhood, I know, we’ve re-financed so many times we owe more than the house is worth (again, only we know about this dirty little secret, so don’t judge).

Don’t want to come across as a cynic. I enjoy success stories just as much as the next person and enjoy speaking with successful people which is probably why I don’t really have many friends, I’m ok with this, trust me. The irony in this entire phenomenon is the truth. We are creatures of habit, inundated and consumed by societies influences to buy, buy and buy more! Buy it, it’s on sale, buy it before someone else does, buy it because it’s only available for a short time only. What did you buy the most of last year? The answer may surprise you. Was it cloths, food or rent? Was it spent on basic necessities or luxury items or a nice healthy mix of both? What is the rank order of priority for the top ten expenditures from last year? Has the list evolved for the better or perhaps has it gotten worse!

Would you borrow a pair of shoes from your neighbor and expect them to fit perfectly? They might, if you get lucky. You may stumble into that “perfect house in the neighborhood” and find that it appreciates so fast in value in an up-trending market that creates a rapid equity scenario for you. The question is, did the purchase fit for you at the time or did it fit the persona of someone else? I’m often fascinated at the deliberation people go through prior to a purchase being made especially large purchases and for the sake of entertainment, I’ll speculate for a moment. “We need a place live,” equates to spending all $575,000 of loan cap we are approved for. “I need to get back and forth from work” translates into a Mustang GT 5.0 to fill the need. Hey, “you only live once, right?” The distinction between needs and wants is the key takeaway and it’s a discipline that takes years to control.

I would love nothing more for everyone in the world to have a 500K home. The decision to buy a home is probably the single most important decision one will make and for many of us it could potentially be made multiple times over the course of our lives and not everyone gets the chance. Needing a place to live means something different for everyone. I contend that home buying isn’t a linear evolution meaning it’s not guaranteed you’ll be able to just step from 100K to 250K to 500K and beyond although in a utopian society I would suggest this phenomenon happens quite often. I don’t have a lot of faith in society to be able to articulate purchasing decisions based on conservative deliberation rather than always defaulting to one’s personally defined “need.” It’s pure entertainment to me to speculate what their idea of “living within their means” looks like in reality and I am even more intrigued by my in-ability to observe any real level of pure satisfaction. Again, maybe I’m wrong and they dance around the house with mimosa’s in their bathrobes singing at the top of their lungs, “we’re winners!” but I would dare say it’s probably much less obvious than what the reality of the situation truly is.

The golden parachute in all this specific to home buying is that we are talking about an appreciating asset (one of very few in this life) which I presume most homebuyers are at least aware of hence the statement, “it’s a good investment, honey.” I’ll leave this alone for the time-being as the factor of timing in the purchase could have a huge impact on wether or not you are a hero or a zero in deeming it to be a “good investment.”

I’m sitting in my perch overlooking a parking lot comprised mostly of military families who’ve justified purchasing their modest transportation. I see, Tesla, Range Rover, Porche, Mercedes Benz and hey who am I too judge “why not splurge a little?” I think what takes the cake is the 4X4 trucks that start at 75K and conservatively sport another 25K in upgrades, what a marvel! I am so impressed by the fact that you need a ladder to crawl into the vehicle (which is somewhat cumbersome) but if you ever needed to drive through a river or a bog of mud you could do so without issue. Unlike a home, a vehicle is a depreciating asset. Some would disagree with me on this, ok no problem, everyone’s entitled to their opinions but for the most part as time passes autos go down in value; inevitably. My observation is one that questions why it is so socially acceptable to constantly make purchases of this nature? People are convinced entering into an equities position in the stock market and having it temporarily go down 25% is like being in bed with the devil. Yet, the 100K 4X4 example I outlined above, where it’s only a matter of time when the potential of that investment will be realized as value continues to deteriorate towards zero is completely acceptable. Market fluctuation won’t help you, neither will the demand for a jacked-up Chevy help you either. Over time the purchase will prove itself to be a failure and a costly one.

Life; and self worth. Is it fair to say that the potential to sell ourselves short is super easy especially in the U.S. Statistics back me up on this presumption, and until personal savings rates increase, retirement savings increases and household debt decreases, I’ll continue to make my assumptions as I see them; because I’m right. Not everyone needs a 500K home and not everyone needs a 75K dollar truck, they may want them, but they don’t need them. Now I do think over time you can conservatively reward yourself but not before fiscal discipline has a chance to weave its way into your personal decisions. Until you are able to find that “custom fit” in all of your purchases to the point where it becomes blatantly obvious that you are in control, I’d recommend living below your means and learning how to say, “no.” Incorporating a budget means saying no to things you would have previously justified for purchase. It means re-racking your priority list and rendering it the potential for improvement into the future. See, personal finance and budget goes both ways and where for most people it has a slippery slope to the downside, money does have a bright side (although much more difficult to achieve because it requires sacrifice). But sacrifice isn’t a forgone conclusion because if done correctly the sacrifice has the potential to pay off 5X, 10X, 50X into the future and the need to sacrifice will ultimately dissipate.

Stop paying attention to the neighbors, it’s not important. What fits them in all reality probably won’t fit you anyway. Spend your time finding that custom fit in your life. If you determine the 500K house and the 75K truck is necessary, read this article again, you don’t need it. If you are already in over your head, become defensive in your strategy and find that one thing you can draw back on. If you can afford those luxuries, congratulations, hopefully you are in that rare class of folks who’ve either become financially disciplined or have been extremely lucky. In either case, you are not immune to hard times either. Fiscal responsibility feels good no matter what your situation and the personal satisfaction you’ll get from controlling your money will put you in an exclusive group regardless of what’s parked in the driveway.

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