We’re back! A couple weeks off was great, and sometimes the most important part of taking a break is to reinforce that the world does in fact keep spinning if you disrupt your routine. I need this reminder more than I care to admit.
Having some time away to think is good for you. And I’ve been thinking about two personal finance trends which seem like they won’t be going away any time soon. Maybe they’ll never go away in my lifetime. I’ll write about one of them this week, and the other next week.
They’re interrelated and both act as a double-edged sword. You might think these trends are terrifying or terrific, though the truth is probably somewhere in the middle.
The first is making a good living will forever 1) leave some people still feeling like they’re “barely getting by” and 2) leave others feeling pissed off that someone could say that.
The perfect way to stoke this flame can be seen in the following WSJ article:
It feels like every few weeks the internet gets riled up about these types of articles with one camp shouting “how could they be so stupid with their spending?!” and the other camp responding with “have YOU tried to raise a family in a high cost of living suburb?!”.
The article actually begins with a couple who makes $350k per year, and here’s their situation:
3 kids who all play club sports, and the family “grabs takeout after games”
Own a vacation home they rent on Airbnb
Oldest son will need to take out student loans and hunt for scholarships when he heads to college next year
We can nitpick so many angles here, but only one thing matters…they don’t feel rich. Far from it, it seems.
In another world where takeout restaurant money and the down payment funds for their vacation home were used to fund 529 Plans for their children, maybe student loans aren’t needed.
But it’s a reminder that life isn’t lived in a spreadsheet, and maybe they would make these same decisions all over again if family meals and spending quality time at their vacation home are worth more than the cost of student loans and not feeling “rich”.
I was listening to my favorite Podcast this week and one of the co-hosts talked about putting an offer in on a house where his monthly mortgage payment would triple because of a better location with increased property values and trading in his 2.8% mortgage.
It’s idiotic on paper, but how do you quantify the joy that living on the water could bring you? You can’t, and I can relate to both arguments that say it’s a financially irresponsible decision on one hand, and on the other hand life is too short and living on the water can bring immense joy well beyond spreadsheet calculations.
It’s worth mentioning that I think you’re no better off being in the “I’m pissed off because they make more than us but are still complaining” camp because comparison cuts both ways. The success of being able to play your own game financially is probably 60% commitment to your game and 40% having the ability to not get flustered when others play their game differently.
Here’s a Morgan Housel quote I always come back to:
A big problem in investing is that we treat it like it’s math, where 2+2=4 for me and you and everyone – there’s one right answer. But I think it’s actually something closer to sports, where equally smart and talented people do things completely differently depending on what game they’re playing.
What you want might not be what I want. What’s fun to you might be miserable to me.
Your family’s different from mine. Your job’s different from mine. You have different life experiences than I do, different role models, different risk tolerances and goals and social ambitions, work-life balance targets, career incentives, on and on.
So of course we don’t always agree on what’s the best thing to do with our money. There’s no world in which we should.
Adam Singer wrote about the topic and you can get the gist from his tweet below, plus a bonus appearance from Morgan Housel in the comments.
A big reason why I think this concept of making a great living, feeling financially behind, and pissing people off who make less is because the comparison game is now endless.
Over the last 3 decades we have gone from only being able to compare ourselves to our neighbors to comparing ourselves with anyone who has a smartphone.
It’s an awful thing for society and self confidence, but it’s downright incredible for GDP and the stock market.
We’re never satisfied, for better or worse.