Your friends and coworkers are buying new cars, taking vacation after vacation, and seem to afford anything they desire. You, on the other hand, struggle to find the money even for affordable items.
Why are your friends and others around you able to afford these luxuries while you can’t? Some of these people aren’t even employed, so where do they get the money from?
No, I’m not feeling any jealousy or envy when I see others buying things I can’t afford. It’s simply a matter of curiosity. I want to know what these people are doing to afford these items when I’m unable to.
After doing some asking around, as well as some online research into the topic, the results were a little disappointing. Most of these people couldn’t actually afford what they were buying—they simply put it on their credit cards, lines of credit, or worse yet, refinanced their homes! Yes, sounds shocking, but people financed their lives in exchange for some insta-boating, instant gratification and immediate pleasure.
You see, it’s not worth feeling envious of what they can afford when you can’t. They’re simply borrowing to buy, and eventually, they’ll have to pay that money back—with interest. In other words, they can’t really afford what they’re buying, but they don’t care—even if they have to borrow to get it. Call it ‘impulse buying on steroids.’ So who is the real winner here, you or them? The answer is clear. They might be enjoying the moment, living by the mantra of “YOLO,” but you’re building a solid financial foundation for the future. This foundation will allow you to enjoy life and retire much earlier, while they’re still busy saving for retirement in their 50s and paying off their debt. YOLO aside, I prefer the second approach: work a bit harder now, and enjoy a much better and earlier financial independence than those who are putting their debt on steroids.
In our ‘5 Principles of Finance and Budgeting,’ we emphasize the need to be ‘patient and disciplined,’ and this couldn’t be more relevant than in this situation.
Today’s culture of instant gratification and wanting things right away isn’t ideal and can’t be sustained forever. The financial meltdown of 2008 – and many other recessions since – can be attributed, to a large extent, to all the reckless borrowing and spending on things people couldn’t truly afford.
This is why you need a budget—to allow you to save for the things you want so you don’t have to borrow and end up in long-term debt.