Riches do not equal Prosperity
A few weeks ago, when I learned our house and truck have devalued quite a bit, a personal friend of mine who calls himself “Realist” here a guy called “JiggyPete” who commented as “Realist” (NOT my personal friend “realist” who refuses to punctuate and capitalize) left the following comment:
Ok, the economy sucks. You live in a nearly $400,000 dollar house, own three cars, and are working on a Masterâ€™s Degree. Poor you. I donâ€™t honestly think you know what a poor economy is like. Quit whining!
That comment really irked me and I left a harsher reply than I probably should have. However, the comment reminded me of a George Lopez quote that I’ve been saving for the perfect moment…and this one is it, oddly enough:
If you don’t know, George Lopez is an incredibly funny comic who takes Hispanic stereotypes head on in his stand-up acts, TV show and movies. Unfortunately, the TV show was canceled in 2007, but is currently in reruns. So, in one of the episodes, George Lopez said the following to his wife during an argument about money (which they often argued about):
We have a house and 3 cars. Would we be in this much debt if I wasn’t successful?
It fit our situation perfectly. We also had 3 cars and a house, but we also had a huge amount of debt. We overspent on home and car alike, and we’ve finally gotten the latter down to a reasonable loan amount, while selling off our third car recently.
So if you couldn’t guess from the article title, the intent here is that just because we have material possessions, doesn’t mean we are prosperous or successful. One of the 3 cars wasn’t ours, nor is the house. They both belong to the bank.
Putting things into perspective
I do recognize that Realist’s point was to be happy with what we have because it’s so much more than 99% of the world. But I didn’t write the article complaining about the falling values because we want to upsize. Rather, I wrote it to point out that we are not as liquid as we would like. That means if I lost my job, or if we needed to move to another job location, that we can’t sell our house very easily, and we probably couldn’t sell the truck without taking a slight loss.
Also, just because we own a $400,000 home doesn’t mean squat when you see that the main difference between his home in central PA and my own near D.C. is our pool and a different layout. They’re both Cape Cod styles from the 40-50s. While we paid $400k for our home, his cost him around $100,000. So our home is almost the same, but because of its location, cost 4x as much.
I won’t guess too much at salary, but I know we don’t make 4x in combined income compared to him and his future wife, but I’m pretty sure it’s at least double. So Realist definitely has the better deal in this situation, but one thing to remind ourselves of is why we’re in the D.C. area. Realist has very few job opportunities that still pay well in his location (my hometown), while I can easily find a comparable replacement (or better) in under a month if needed. And THAT’S why we’re sacrificing our family connections: mobility and job security. We have to keep reminding ourselves of that because otherwise this area is killing us.
Even more perspective
Ok, so we have 3 cars and a $400,000 house. We’ve illustrated that most of it isn’t even ours. But to put it in even more of a stark contrast, let’s look at comparable homes of some of our neighbors.
While none of our neighbors has a pool, I can still compare our home to a neighbor’s who has a similar lot size and square footage. We bought our home about 4 years ago; they’ve been in theirs for 30 years. And while we paid hundreds of thousands of dollars for our home, they paid $50,000 for theirs (30 years ago). So I can think “We’re doing so well because we have such an expensive home”, but in reality, the guy across the street is living in the same house, but paid an eighth of the price. It’s not a $400k house until they sell it. Until then, it’s just a $50,000 house.
So we have 3 examples of basically the same house, but for 3 widely differing prices: $50k, $100k, $400k. How can I feel prosperous when I’ve paid the most for the same house compared to my friend and my neighbor? I don’t. I just feel blessed that I can still make the mortgage payments.
As you can see, our “$400,000 house” means nothing because it’s all relative to where we live and the average salary in our area. We probably have the same after-tax disposable income as Realist, even though we make more in salary. Someone in Vietnam could say the same thing to him about his $100,000 house and 2 cars (counting his future wife’s). Someone in Zimbabwe could say something about that Vietnamese guy’s “expensive” house. It’s all relative.
What matters is if you’re enjoying yourself. The Zimbabwean could love his life, while I’m very discontent with my own right now. Even the Realist enjoys his life more than I enjoy mine because he’s close to all his friends and family, while we’re at least 2.5 hours away from any of them. Possessions mean nothing if you can’t enjoy them.