What Makes A Home, A Home?

As mentioned in a previous post, one of my favorite books is, "The Millionaire Next Door". One of the highlighted messages of the book is, you can't spot a millionaire, by appearances. The majority of self made millionaires, are hard core savers and tend to be frugal. They live in modest homes and drive used cars. More often than not, the owners of luxury automobiles and extravagant houses, live paycheck to paycheck. They may have high incomes, but they are no different than the average American. They spend everything they make, and then some. The authors of the book, call this the hyper consumption lifestyle.

The baby boomers, were perhaps the last generation to be raised by frugal parents. Their parents lived through the depression, and really understood the face of true poverty.

The baby boomers were raised by frugal parents, and many of them became frugal themselves. However since WW2, we have lived in a season of plenty. Even the poorest among us, have government programs to fall back on. When I am in line at a dollar saver type store, it is not uncommon to watch a customer pay for their goods with a foodstamp card, then walk into the parking lot and get into a $30,000.00 dollar vehicle. No one fears poverty in this day and age, so as a society we put nothing back for a rainy day. When you walk into a new car dealership, the price is discussed in monthly payments, not final price. Banks are still making loans on houses, with no money down. People are spending their money, as soon as it hits the bank.  It's no wonder we put so much value on material possessions, the entire country is spending instead of saving. its almost as if its a competition to see who can spend the most money.

We have reached a point in our society, where our social status is defined by a house and a car. From day one of public school, the classification starts. If children ride the bus, they must be the poorest, right? The majority of today's parents, drive their grade school children to school. The children then spend the morning, watching their classmates get out of mom and dad's car. Even at that age, I remember thinking how much better the lives of my classmates must be, when their parents drove new cars. School children are exposed to classmates who have hyper-consuming parents for 13 years.
Inevitably there is always some gated community kid, whose parents have more money to spend than everyone else, so no one is safe from looking over the fence syndrome. It's is not uncommon to drive through high school parking lots, and see $50,000 dollar vehicles with student parking stickers and shoe polish hearts over the drivers side window. Parents are conditioning their children and the children, their children attend school with, to become hyper-consumers.

The data speaks for itself. Only half of all Americans invest in the stock market. U.S. household debt rose from nearly zero in the 1950s to $12.9 trillion by 2012. The average credit card dept for a US household, is over $15,000. As a nation, we live on credit. It is unheard of for people to buy a home, purchase a vehicle, or even go on vacation without going into dept. What is all of this spending buying us? It sure is not happiness, only 1 in 3 adults claim that they are, "very happy" and we are working longer and longer to buy this unhappiness. The average retirement age is 61, and it is on the rise. I believe that we are trying to buy, status in society. To separate ourselves from the have-nots, even though we only appear to separate ourselves from the have-nots. What we are actually doing, by spending everything we make, is making ourselves into have-nots. My question is why does it have to be this way, and is it possible to live comfortably without spending all of your earned income?

This is a four bedroom 2300 square foot double wide, on 20 acres of land. We paid $65,000 for all of it, and paid it off in 5 short years. The land appraised for $2500 per acre, so I had $15,000 invested in the house, before I updated the flooring. After the updates, I had about $22,000 invested. What would a stick built, keeping up with the gated community, same square footage house cost on the same 20 acres? In my area they range from $175,000 to $300,000. A $200,000 fixed rate 30 year mortgage, will cost a person $440,000.00 Couple this with a new car every five years, financed vacations, and a boat or two, and its easy to see that the average American family, easily makes a million in their lifetime. Invest just half of that million, or 16,500 per year at the stock market average of 7%, and you will have a fat 1.5 million at the end of 30 years. Guess what, you never have to touch the principle either. Take out just 4% a year, and leave in 3% so your nest egg keeps up with inflation, and you have a very comfortable $105,000.00 per year to live on.  Could you live out the remaining 30-50 years of your life on $105,000 per year? All you have to do is stop playing the game. Stop judging yourself, and the people you know and meet, by the things they own. If you can do this one thing, you will be free to live a lifestyle that is simply about relationships and providing food, shelter, and dependable transportation. Instead of a lifestyle that seeks to live up to an image that some kid from grade school, burned into your deep psyche, with his Escalade driving parents and designer jeans.

A house is a place to keep your stuff, and a car is a slightly better solution than a bicycle. If we could just see these two things for what they really are, we would not judge people who choose to drive 10 year old Honda's and live in mobile homes.

Paid $3500 for it. 4 years and 50,000 miles later, still trucking.

 Maybe those people driving the old Honda and living in the mobile home, make way more money than us. Maybe they are sitting on a nest egg of 1.5 million, and about to retire in Cozumel. Maybe they got out of the competition, with the kids from gated community high and started to focus on their relationships, and not their meaningless status among people they don't know.

I know I said 30 years earlier, but that was referring to the average investor. If you could become a extreme investor. By that I mean live on 25% of  your earned income, and invest the rest. If your house and vehicles are paid for, you can spend most of that 25% on food, utilities, and insurance. If you could invest 75% of the average household income in the US, retirement could be reached in 10-20 years. If you are one of those people who say, yeah but I want to provide a nice home for my family, not myself. First I will say, pop on over to www.mobilehomeliving.com and see how nice some mobile homes can be. Secondly, do you think your grown children will remember the house they were raised in, or the father and mother who raised them? By that I mean, time is the most important factor in any relationship. Time will be remembered by your children, not the gated community.

http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx
http://en.wikipedia.org/wiki/Household_debt
http://www.huffingtonpost.com/2013/06/01/happiness-index-only-1-in_n_3354524.html