Keeping Up with The Joneses Will Keep You Broke!

Many people are unaware of this (I was before researching for this post), but the term “keeping up with the Joneses” dates back to a 1913 comic strip by the same name.

The comic strip is about a middle class suburban family that experiences “adult peer pressure” when a family by the name of Jones moves in next door. The Joneses are a very accomplished, worldly family who become the envy of their neighbors.

Whenever the Joneses do something or buy something, their neighbors feel pressure to follow them. If the Joneses take a vacation to an exotic destination, the neighbors will take one as well. If the Joneses buy a new car, the neighbors feel compelled to buy one.

“Keeping up with the Joneses” is one of the biggest financial mistakes that people make.

One of the traits of the wealthy is that they tend not to care what others think of them. Sam Walton, the founder of Walmart, for instance, drove a beat-up pickup truck until he died – and he was one of the richest men in America!

The inspiration for this post comes from a conversation I had with my brother the other day. He told me that someone we both know had recently purchased a new BMW.

The reason this guy made the purchase is classic “keeping up with the Joneses”.

He holds an upper management position within his organization. Every so often, he has to attend meetings with other executives within the company. The car he’d been driving to these meetings was a modest Toyota Camry that was more than a few years old.

He began to notice that the other executives would arrive in much fancier cars. He started to feel very self-conscious.

He was so bothered by the thought of what his peers might think of him that he financed a new BMW – even though he is still paying off the Camry.

The combined monthly payment for the two cars is $1400 a month. This doesn’t include insurance, gas, maintenance or repairs.

This gentleman is leasing a vehicle that he doesn’t need for $7200 annually over a three year period – shelling out over $21,000 in the process.

A much better and wiser use of this capital would be to invest the $21,000 in the stock market – and give his grandchildren a head start in life! $21,000, invested over a three year period and allowed to compound over the next 20 years of the grandkids’ lives, could grow to a substantial amount of money.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

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Leverage Your Financial Freedom!

Like many words in the English language, the term “leverage” has more than one meaning. It can be used to describe something good, as well as something potentially scary.

Leverage, while negotiating, means that you are negotiating from a position of strength. That’s the “something good”.

Leverage can also mean that you have a great deal of bad debt – because “leverage” is another word for debt. We don’t want that kind of leverage!

Leverage is not a word we use daily. But it’s more important than most people realize…and believe me, it can impact your life without you even realizing it.

In order to build wealth or become financially free, you need leverage. Creating leverage is an extraordinary thing. Why? Because it allows you to generate income without you directly having to do something.

Here are some examples of leverage:

1. Income generated from owning real estate.

2. Income generated from writing a book. Once you write a book, you can generate sales 24 hours a day, 365 days a year.

3. Income generated from a website, blog or YouTube channel. There are a good number of influencers that generate a substantial income from each of these sources of leverage. When you create content, you have the potential to make money from it while you’re sleeping!

4. If you work at, or invest in, a startup, you have a great deal of leverage. Your net worth can increase significantly when the company you work for or invested in goes public. People in this position usually become very wealthy literally overnight.

5. Buying and holding individual stocks is another great way to gain leverage. (It’s also, of course, my favorite.) When you buy shares in a company, you are putting the management team of that company to work for you. Over time, you will share in the company’s profits as well as the losses.

Here’s a real example of how leverage with stock works. If you invested $5000 in Starbucks (NASDAQ: SBUX) when it went public in 1993, and held it until today, your investment would have grown to over one million dollars. Over a 26-year period, you would have earned $40,000 a year of unrealized gains without lifting a finger.

That is leverage.

And that is why you must have leverage in order to generate wealth or financial freedom.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)