Keeping up with the Joneses

A few weeks ago I was invited over a buddy’s apartment for a little poker game with a few guys I went to college with. One of the guys, we’ll call him Lenny, had just recently married and bought a house with his wife. Lenny had told me about the house and where the neighborhood was. Sounded like a nice place, a newer construction home in a development right near a golf course in the greater New York metro area. On the way back home to Manhattan one of the guys was telling me how he feels bad for Lenny, as he is having trouble paying his bills with the wife and the big mortgage.

So obviously as soon as I got home I Zilllowed the neighborhood where Lenny and his wife bought their house. What I found was a neighborhood where the houses start around $500k, 2,500 square feet, and $10k per year for property taxes.

What ever happened to the starter home I thought people bought when they were young and just got married? Lenny and his wife are in their late 20’s, don’t have any plans of little Lenny’s in the near future I believe (and hope for their sake), and Lenny was complaining about his student loans as well. What gives!?!?

I don’t know Lenny all that well, but besides the ginormous mortgage payment and his student loans, who else knows what he is dealing with. Maybe a car payment? Most likely not contributing a healthy amount to his retirement with all those bills to pay, and probably is lacking in the emergency fund department as well. But who am I to judge? Everyone is different and have different goals and aspirations, risk tolerance, backgrounds, personal finance knowledge, etc. Lenny has a degree from a good undergrad business school, and therefore I can’t understand why he didn’t figure out his budget before he made the big leap into a large mortgage? If you’re having trouble paying the bills when you are DINKs*, maybe you overreached… just a little.

-FF

* A DINK is “dual-income, no kids”

22 thoughts on “Keeping up with the Joneses

  1. Mrs. Maroon

    Wouldn’t it be nice if an undergrad degree in business actually set you up to make good personal finance decisions. Of all degrees, you’d think you could get that kind of information from the business school. But sadly, most folks have NO idea what they are doing in that arena.
    Mrs. Maroon recently posted…Are You Too Chicken…My Profile

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    1. Fervent Finance Post author

      Exactly. Most think that the two go hand in hand but they really don’t. People usually in these fields attribute the decent salaries they will earn in finance, accounting, marketing, etc. to being able to spend more, and not save and build their net worth.

      It’s amazing how even simple personal finance lessons aren’t taught at the high school and college level, especially in a business school nonetheless!

      Reply
    1. Fervent Finance Post author

      Don’t say the “k” word!! But yes, even though they may be 5+ years away for Lenny, they’re going to really have to boost their income, if they want to keep that house and mortgage, and have kids someday.

      Reply
  2. Brian @ Debtless in Texas

    I think each person hits that stage where finance becomes super important at different times for different reasons. This poor guy sounds like he is in way over his head and this might be the catalyst for change that he needs to get out of this kind of debt and start making better decisions. It is easy enough to think you can afford it while still living paycheck to paycheck, but when something happens (job loss, illness, etc.) it will be a jarring wake-up call…
    Brian @ Debtless in Texas recently posted…Preparing for a Baby Without Breaking the BankMy Profile

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    1. Fervent Finance Post author

      I couldn’t agree more. Sad thing is I think his wife is a Mrs. Spendypants (as Mr. 1500 would say). So for that reason if he decided to downsize, I don’t think she would be on his side of the court, so he’d lose his big house and his significant other perhaps. Tough spot to be in, yet I would have never gotten into that position in the first place 🙂

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  3. Mrs. PoP

    That’s tough for Lenny. We have friends that live in places with high housing costs and some of them really stretched (like Lenny) to buy that starter mansion thinking that in 5-10 years when the (yet un-conceived) children are in school it will have been worth paying those crazy taxes and all that mortgage interest. Instead what we hear is about them fighting about money all the time and feeling trapped in jobs they’re not happy in because they don’t feel like they can risk being without a paycheck for a few months while searching for a new one. Not a fun way to spend the early DINK years of marriage, I imagine. =/
    Mrs. PoP recently posted…Happy Friday – Happy Valentine’s Day EveMy Profile

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    1. Fervent Finance Post author

      I totally agree. I think people get really caught up in the whole “dream home” mentality and then sacrifice happiness in the process. I’m happy I’ve learned that I do not need a McMansion to be happy, and when I do take the plunge and buy my first home, it will #1 be a DIY project and #2 not be more house than I need or more than I like paying for. Thanks for stopping by.

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  4. Felix Money

    Sad story about your acquaintance… I think it’s so important to marry the right person. I wouldn’t be on this FI journey without the invaluable support of my spouse. If you don’t have the same mentality about money, don’t get married until you sort out those things! I know people who’ve divorced their spouses because they couldn’t support their wasteful lifestyle anymore.
    Felix Money recently posted…My 2015 MoneyfestoMy Profile

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    1. Fervent Finance Post author

      Yeah this reminds me of Suze Orman (guilty pleasure). People will call her asking if they can keep their finances separate once they get married because their fiance is in credit card debt and has no plans to stop. She’ll give it to the caller, telling them the real question is why are you marrying someone like that, that doesn’t value their money and will most likely rely on you once they cannot support themselves anymore. Thanks for stopping by!

      Reply
        1. Fervent Finance Post author

          She has to give advice that is suited for the masses which kind of is a detriment to the show. I get aggravated by the sheer stupidity (I know this sounds mean, but I’m nice – I promise) of some people and lack of accountability for their own life and personal finances. But she is trying to help people which I can’t knock, so I show my support.

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  5. Andrew@LivingRichCheaply

    Hopefully Lenny and his wife will learn that keeping up with the Joneses isn’t good for their finances. Unfortunately I know a couple who also share many similarities. Their income is pretty good but have significant student loan debt…and consumer debt. No kids yet but they want to have them seem which makes sense since they’re about 10 years older than Lenny and his wife. They’ll really struggle if they don’t get their act together.
    Andrew@LivingRichCheaply recently posted…Ode to My Frugal WifeMy Profile

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    1. Fervent Finance Post author

      Hello LRC. Living in Manhattan, it seems like this type of couple is almost the majority, which is sad and scary. Spending a significant amount of their take-home pay on a updated apartment in the nicer neighborhoods, going out to eat all the time, taking taxis and Ubers everywhere.

      I think people get stuck in the fact that they’ve seen some decent raises since they graduated college (at least my age group of mid to late 20s) and think they can increase the lifestyle every step of the way. Whereas some of us in the FI/RE community use these raises to boost our savings percentages and speed of the financial independence date! Thanks for stopping by!

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  6. Vivianne

    Well we can’t judge from afar, but people’s parents can bail them out from time to time. I know some of my coworker budge their paycheck to the penny. What I meant is they spend their paycheck to the penny, some months they went into negative, and all of a sudden their parents bailed them out 🙂 the northeast is full of people with old money. A friend of a friend, their parents would give out $10k and a new car as Christmas gift, just like that. Ehhehehe

    And my friend, the one who struggle to pay bill each month, is in line to inherit $500k, and she is struggle to pay bills but have no problem spend a couple hundreds dollars on alcohol at thanksgiving dinner.

    The point is we don’t really know what really their mind set, if they know they’d inherit a bunch of money, their mind set would be like “why not live a little?” Hehe, they would be less careless about money. For that bill gate and warrent buffet both commit to only give $10 mil to their kids, the rest to charity. Rhea eh

    As for me, I won’t have any inheritance, so I better work hard and smart to keep whatever I mark and save.

    Reply
    1. Fervent Finance Post author

      Great points. Personally I take 100% responsibility for my financial health and if I were to ever inherit something, I would be extremely grateful, but it is definitely not part of my plan to achieve financial freedom. I personally only know one person who has bought a place in NYC, and their parents made the down payment 🙂

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  7. DivHut

    Clearly a finance or business degree doesn’t replace common sense. In our consumer, material driven society we often judge others and ourselves through our possessions. The more flashy you are with your home, cars, and clothing the better person you are perceived to be. Obviously, this is a very backward mentality and many people suffer through life constantly worrying about their bills and simply existing instead of living. Thanks for sharing.
    DivHut recently posted…Regret Is My MotivatorMy Profile

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    1. Fervent Finance Post author

      Well put DivHut. Unfortunately societal “norms” and what is actually a financially responsible life are not similar. Maybe someday that will change, but for the time being I’ll have to get my fix through the stories of other people with similar goals as mine in this personal finance community. Thanks for stopping by!

      Reply
    1. Fervent Finance Post author

      A trap is right! I think people think that they will always make more money later, and save later, but the problem is that job may go away, the raises may go away, you might leave that job for a lower paying job but that debt is there to stay. I hope he figures it out too!

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