Wednesday, March 22, 2006

If I Had A Million Dollars

If I had a million dollars - if I had a million dollars
Well, I'd buy you a house - I would buy you a house
And if I had a million dollars - if I had a million dollars
I'd buy you furniture for your house - maybe a nice chesterfield or an ottoman
And if I had a million dollars - if I had a million dollars
Well, I'd buy you a K-Car - a nice Reliant automobile
And if I had a million dollars I'd buy your love...

Lyrics by Bare Naked Ladies

Or if you were most Americans I would just assume that you would absolutely spend every penny of that million dollars on junk. And then there are those that spend dollars, evenwhen they don't have them. Credit card debt is soaring. Debt consolidators are springing up everywhere to help Americans to get a handle on their rising debt. Record numbers of Americans are signing up for interest only mortgages, or mortgages with very little money down. So what gives here? Why is our culture so bent on having "stuff"? Why is the message in rap videos so blatant - the message is "I am successful, I have money, therefore, I have diamonds and cars and bling". Those diamonds and cars and drugs may get you laid today, but tomorrow you are just another MC Hammer or Mike Tyson, begging for handouts.

Don't people understand that there is a future? That it may be nice to actually own substantial things like houses and cars and be rid of debt someday?

This is a tough one. It seems from my viewpoint that Americans, mostly NON upper class are totally obsessed with immediate pleasure. There are plenty of upper class non rational people that buy cars and boats and vacation houses just because they can. But I see and hear of normal middle class people every day of my life making 100% irrational financial decisions based on immediate pleasure. It is almost as sitting down and thinking about purchases is a thing of the past or something that is taboo. An example:

I was considering purchasing a vacation property in the Wisconsin Dells area. You can't really get anything worth a damn for less than $250k. So I did a very simple cost/benefit analysis. My family likes to stay here when we go to the Dells. The place has everything we need, great food, a huge water park, and lots of stuff for kids to do. We go there approximately two or three times a year for a day or two. For the money I would have invested in a vacation property in the Dells, I could stay at one of the largest rooms at the Kalahari 500 TIMES. That is Five Hundred Times. And that isn't even figuring out all of the time I would spend fixing up the place, paying people to mow (or spending MORE time doing it myself), and property taxes. To me this is a no brainer in the most obvious sense. Sure it is expensive to stay at the Kalahari, but if you look at the big picture, which way would I be more ahead? Obviously staying in a large room at the Kalahari.

But others seem to have a basic need to "keep up with the Joneses". If person x has a vacation house why don't I? If person Y has a boat, why shouldn't I? Never mind that those luxury items go unused 90% of the year. Never mind in the long run you are out thousands and thousands of dollars. Americans want to feel good - and now.

Hollywood and popular culture doesn't help. Over and over we see stars (who many people emulate) wasting their money on bling. This is especially pervasive in the rap world. Wouldn't it be refreshing to see a rapper on a talk show speaking of how he is investing his money in the stock market or getting an IRA or other savings plan? Why don't stars ever reach out to youngsters to teach them financial responsibility? It isn't cool, I suppose.

But on we go, consuming luxury items as if they are going out of style. I chuckle a bit to myself when I see people who make much less money than me driving around in cars that cost a lot more than mine (probably the worst investment you can make except diamonds) and imagine how good they feel - to themselves.

I also wonder why poor people own Nintendo's, smoke cigarettes and purchase cell phones, but I suppose that related topic should be saved for another post.


Anonymous said...

Did you factor in the benefit of owning vs. renting? After all the years of vacationing, you'd have a property that you could sell.

Not to mention never having to worry about who'd slept on your pillows before you .....

Dan from Madison said...

In the post you can see how many times we actually go up there - four or five times a year max. Still, lets say we went 20 times a year just for arguments sake. I can still go to the Kalahari 500 TIMES and not have to worry about anything like maintenance, property tax, etc. 500 divided by 20 is 25 years. In 25 years I better not still be taking my kids to the Dells. Still a no brainer for me.

Frank Borger said...

We bought a vacation home in Delavan in 1986. Paid $35k then. It was only a 1.5 hour drive, (outside rush hour.)

10 years later, the wife and kids were spending all summer there, and I was lonely as hell. I absolutely HATED going back.

In '97 we sold the Chicago house, added a two bedroom wing, garage and deck here (it cost about as much as the initial purchase,) and moved up to stay.

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