I don’t like discussing financial matters. I’d rather not even think about money to be honest with you, but money is a key part of the downsizing equation. I prefer to focus on the time aspect, because I find that to be more valuable. I have to admit though, money was the initial motivator for us to consider downsizing, so it’s an important topic to bring up.
Today I am sharing two articles. One is a commentary on the other. I almost hesitate to share the second as the tone is rather negative, but even so, it’s a decent summary of the first article and there are some good points made. The first article is very long, but it’s worth the time to read.
The first article is: Many Middle-Class Americans are Living Paycheck to Paycheck by Neal Gabler and posted at The Atlantic.
Neal starts out discussing a recent survey by the Fed.
The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
Well, I knew. I knew because I am in that 47 percent.
I have been there as well, before we sold our first house and experimented with downsizing to an apartment.
So who is at fault? Some economists say that although banks may have been pushing credit, people nonetheless chose to run up debt; to save too little; to leave no cushion for emergencies, much less retirement. “If you want to have financial security,” says Brad Klontz, “it is 100 percent on you.”
Yep, unfortunately this is completely true. The good news is that you can make changes. It takes some frank discussions with your spouse or signifiant other, but you can make the changes needed to realign your life.
I don’t ask for or expect any sympathy. I am responsible for my quagmire—no one else. I didn’t get gulled into overextending myself by unscrupulous credit merchants. Basically, I screwed up, royally. I lived beyond my means, primarily because my means kept dwindling. I didn’t take the actions I should have taken, like selling my house and downsizing.
Downsizing is a great way to reboot your life. When we were in our first house, we followed the Dave Ramsey plan to get out of debt, and the one thing that struck me with him was that he never (or very rarely) recommended that people sell their houses. Sure, you might need to make other changes also, but downsizing your home can go further than almost every other change to reset your financial status. Even beyond the financial, it breaks you out of the keeping-up-with-the-Joneses cycle. (more on that in a minute.)
The fact is that emergencies always arise; they are an intrinsic part of our existence. Financial advisers suggest that we save at least 10 to 15 percent of our income for retirement and against such eventualities. But the primary reason many of us can’t save for a rainy day is that we live in an ongoing storm. Every day, it seems, there is some new, unanticipated expense—a stove that won’t light, a car that won’t start, a dog that limps, a faucet that leaks. And those are only the small things.
Another true statement that I have experienced and I’m sure you have too. It’s one of the reasons I wanted to sell the house and go back to renting. With renting, there are fewer emergencies as you remove the entire home-repair component.
The second article is: Parents are Bankrupting Themselves to Look Adequate, by Megan McArdle and posted on Bloomberg View. As I mentioned above, it has a rather negative tone, and I’m a bit bothered by the fact that Neal shares some incredibly difficult personal detail, and Megan analyzes it but shares nothing herself. I feel like if you are going to throw stones, or even discuss another’s personal plight, you should share yours as well. With that preamble, I want to share a few details from the article.
First, I think Megan misses the point a little, or at least doesn’t voice the point in this quote:
“I never wanted to keep up with the Joneses,” he (Neal) says, while recounting his decisions to live in Brooklyn, and then in the Hamptons, while sending his daughters to private school and expensive colleges. This is keeping up with the Joneses, of course.
I totally get Neal’s point that Megan seems to overlook. We never wanted to keep up with the Joneses either. Perhaps it would have been better worded if he said he never intended to keep up with the Joneses. We didn’t either, but it happened. It actually takes some conscious effort to avoid keeping up with the Joneses.
Also, Megan left out the latter half of Neal’s quote,
But, like many Americans, I wanted my children to keep up with the Joneses’ children, because I knew how easily my girls could be marginalized in a society where nearly all the rewards go to a small, well-educated elite. (All right, I wanted them to be winners.)
We want the best for our kids. As parents, we are constantly worried that we will scar our kids for life and they will resent us forever. I’m not sure if we do everything right, but we’re trying our best to instill in our daughter the self confidence to tread her own path. To know that stuff doesn’t equal happiness, and that it’s ok to experiment to find your path in life. These lessons will be more valuable than any you try to share while keeping up with the Joneses’ kids.
One final quote with a truth and another not-so-truth.
The truth is that your kids will care about how nice your car is, about whether they can be on travel hockey with their friends, about whether they can go to fancy schools like their friends. And if you were raised in a social class that regards any of these things as the basics of a decent life, you will feel horrible about denying them.
Your kids will not necessarily care how nice your car is. They certainly will if you care how nice your car is, but if you don’t value a nice car and instead value other things, share that with your kids. Talk to your kids. Share your reasons for owning an older or less popular car. People don’t talk to their kids enough. Kids “get it” more than you may realize. They have a great capacity for understanding. If you are leading by example, then share the reasons behind your choices.
They might, however, care about being on travel hockey with their friends. This is an activity that has value. It includes adventures and camaraderie, and the value of those intangibles far outweigh any amount of stuff you can buy. Another truth is that you will feel horrible about denying them. While downsizing from house to apartment we had a constant fear that our daughter would hate it. But, she didn’t. And without even realizing it, she learned some valuable lessons along our journey towards minimalism.
After reading through these articles, do some introspective exploring. Does any of this apply to you and your current situation? You don’t have to give up and accept this, you can make changes right now to reset your life path. Think about your options, including the ones that are frowned upon by the Joneses, like downsizing, simple living, and minimalism.