What Are We Proud Of?

I heard someone on the radio today talking about Americans and what makes them proud.  That is a funny little word that has a tendency to have deep emotional and moral connections.  Another way to look at pride is one of its opposites, shame.  Both pride and shame have important applications to personal finance that I'd like to consider.

First, what about your money situation are you ashamed of?  Debt is something that makes many people ashamed.  But, not all debt!  The debt that you are ashamed of comes from those purchases that you know deep down you never should have made, or the times you splurged when there really wasn't any money to splurge.  I know that right now I am ashamed that I have about $10,000 in credit card debt.  How do I know I'm ashamed?  Because I've told "white lies" or understated the amount debt I have when talking about the issue.  I know that if I'm willing to lie about something it really means that I'm ashamed of it.

I am also ashamed that I do so little to help strangers or those in need.  Since leaving High School I have rarely volunteered my time for others.  I do not donate to political campaigns even though I care deeply about certain issues.  I do not give to the homeless or the hungry.  I see the importance of giving but have not made it a part of my budget.

I am sometimes ashamed that I do not save more or pay down my debt faster.  From my gross income I save 12.9% plus an additional 5% in 401(k) matching.  I know that there are many people out there that save more than twice as much as I do on a similar income, but I enjoy my lifestyle and don't want to sacrifice anymore.

I recognize that the thing that make me ashamed are weaknesses where I can improve.  Rather than beat myself up I made a plan to address these issues.  I am making steady progress toward getting completely out of non-mortgage debt and will be done by July 1, 2010.  I plan to give a significant portion of my estate, should I be lucky enough to have one, to charity when I die.  I also have plan to gradually increase my savings to 20% of my gross over the next few years.  I am not perfect, but I've realized areas I need improvement and set to work on it.

Now, what about your money situations are you proud of?  I am also very proud of many of my accomplishments.  I am proud that I pay my own bills and am off my parents dole.  I am proud of my education.  I am proud of my job.  I am proud that I own my own home.  I am proud that I have made great progress saving $17,000 in my retirement accounts by my 25th birthday.  I am proud of my wonderful wife and the life we have together.  All of the things I am proud of are the things that I've done right and enriched my life and put me on track to achieve my dreams. 

The things we are proud of can help you set goals for the future.  You want to continue to excel in the areas where you have already had success.  I would like to eventually start a family with my wife, that would make me proud.  I would like to finish a PhD, MBA, or CFP to further my education.  I would like to grow my investments to reach wealth and true financial independence.  I have set goals that relate to many of my proudest money achievements, and new goals will be created as I learn more about what makes me proud.

All of us should stop and take a moment to realize what in our lives makes us proud and gives us shame.  We should embrace what we learn from this exercise and use this knowledge to set goals and improve our personal finances.

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House Lust

This weekend we had some great weather, and so we spent a few hours yesterday afternoon gawking at the pretty houses. I nearly went into architecture, and even though I did not choose it as my career, I still draw floor plans and elevations as a hobby. There are dozens of open houses all over the area and if something really gets our attention we will stop and take a look.

Yesterday we drove through several neighborhoods where prices ranged from $280-500k. Of course in those price ranges we found a lot to like about the houses. One in particular really stood out and I immediately started running the numbers in my head. Could I ever afford it?

In our area basic housing will run around $80 per square foot. That will get you a house that is a little older (built in the 50's and 60's) and may need some touch ups but is in generally good shape. For $100 per square foot (the range for our house), you can get a mint condition house with some moderate upgrades. In the $115-125 per square foot price point you will find upgrades like granite counter tops, well manicured lawns, and real wood floors.

Our next house would ideally have four bedrooms and an office. In the perfect world there would be a basement or bonus room that would serve as the playroom for the (still hypothetical) kids. We can probably meet our bare minimum requirements for $280k but once we pile on a few items from our wish list it is more realistically a $350,000+ price tag. However, we don't plan to buy a house or move until our family has grown and will need more space.

Thus, cruising for a house is in some ways similar to going to the mall "just to look," but the key difference is that thankfully it isn't possible to simply plunk down the Visa and make an impulse purchase. There have been a few times that if it were that easy I may have been smitten enough to reach for my wallet.

I really enjoy these casual browsing sessions. It is great to learn more about the latest trends and get ideas for our own home. These dream homes also give me motivation to do more outside my day job to move toward achieving the dream. However, it can be frustrating to when I realize that it would take a massive windfall to make the "ideal house" fit our budget. I recommend spending an inexpensive afternoon taking stock of the local housing options but be sure to leave the pen at home. It isn't inexpensive recreation if you go off and buy a house!

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Wealth Porn!

I am completely guilty. I love to gawk at how the wealthy live. I love the TV channel Fine Living, the Forbes Life section of Forbes.com, and the Real Estate Journal section of The Wall Street Journal. I even recorded some episodes of MTV Cribs on my DVR the other day. To save a little face, I don't read People magazine or follow the tabloids, and what I get most interested are the parts about houses and real estate. But still, why-oh-why do I like this crap?

I think that we are fascinated with both how similar and how different from us these super wealthy people seem. I've rationalized to myself that there is no way that Donald Trump is any smarter or talented than I am. So why are our lives so different? Then I'm honest with myself and say, "Well, he went to Wharton for an MBA and has used debt, leverage, and risk to build wealth in real estate." The stress and difficulty of that path would make my stomach do back flips. You see, we are so similar, but yet so different.

I think we all have a little bit of class and wealth envy in us. I think it is one of the things that drives us to take risks and achieve more. We see the good life and work hard to get there. We innovate, invent, and invest our way to a better life. If we never knew something better existed we may never have aspired to do more. This of course can also lead us to do some very foolish things.

Dante defined envy as "love of one's own good perverted to a desire to deprive other men of theirs." By this definition, we watch wealth porn not to inspire us to achieve more, but instead out of a desire to see others fail. If I were to give into envy I would think about how Donald Trump does not deserve his wealth. On some level I would desire for him to falter, rather than consider constructively how I might learn from him and better my own situation. It is important that we aspire to do better and not to bring others down.

I have chosen to highlight Donald Trump because I can relate to him. When I watch MTV Cribs I see the opulent homes and cars of musicians, athletes, and celebrities with which I have nothing in common. There is very little to learn from watching that type of show other than to see how it is on the 'other side of the tracks' so to speak. It seems more and more that this may lead to frustration rather than to realistic aspiration. I know just how few people achieve that level of financial success, but do the teens who spend hours every day practicing free throws or power chords rather than doing their homework? But again, if I want to bring them down in order to bring myself satisfaction, I am guilty of Dante's envy.

One of my excuses for some of my wealth porn habit is that, "What I really care about is the beauty of the house itself; the architecture, rather than the lifestyle it represents." I nearly went into architecture so this makes some sense. Of course underneath that explanation I am internally figuring how much wealth I would need to responsibly own a house like that. $10, $20, $30 million? I aspire to own these types of luxurious homes. Is that greedy? I hope to own what most would call a McMansion of around 5,000 sq ft one day; is that because of the wealth porn or because of a natural drive to succeed; to be King of my own castle?

Wealth porn (or actually even the guy down the block) has the ability to push us into spending more than we earn or buying things we don't need. I have a feeling that keeping up with the Jones has been a part of our society from the beginning, but has it gotten worse because of TV, magazines, and movies? Certainly the availability of large amounts of credit to the masses has compounded the problem. All I know is that, despite aspiring to increasing my standard of living, since founding this blog I have committed that I will get my debt in check and be cautious about how the greed, envy, and desire for immediate gratification affects my spending. If I do it right, the time may come when I will have earned the luxuries, and I can live a lifestyle that would, to outsiders, qualify as wealth porn.

It seems that with this post I have asked more questions that I have answered. It has been an interesting philosophical journey for me to write this. Please leave some comments and let me know what you think about some of the issues raised.

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Today Was A Great Day

I had a nice pop in my traffic today from being included in the Carnival of Personal Finance. I was very pleasantly surprised. I'd like to thank everyone who came by the site, and I hope you subscribed to my RSS while you were here.

A couple days ago I came across a neat article about Aspirational Finance on the blog Don't Mess with Taxes. I thought it was particularly on topic for my blog by cause of my emphasis on aspiration. The article describes the Living Large Index which was developed by Citigroup to track the spending of the affluent. It includes stocks of high end retailers, luxury goods makers, and travel and entertainment companies such Nordstrom, Callaway golf, and Wynn Resorts. The problem I have with this theory is that I think the true wealthy aren't the ones that spend their money on these things. It seems to me the true wealthy put their money into assets that appreciate or follow the philosophy of the Millionaire Next Door. IMO, the real people the Living Large Index tracks is the wanna-bes and the debt laden "Jones" that will cut back drastically when the economic tide changes. These seem to be exactly the goods that would be first to go from my life (if they ever show up at all). What do you think?

Today I also found out that an old college roommate and one of my best friends was offered a job in my city. When we finished our undergrad he went off to grad school at a very good institution and I took a job and entered grad school 200+ miles from my alma mater. As luck would have it we both finished grad school and the job market has landed us both jobs as cubical monkeys within a few miles of each other. It is also great news for him because he was starting to stress out about finding a job that pays enough for him to set up a homestead and make the student loan payments. He's even going to have a 401(k) and full benefits which will be a first for him. I might have to get him hooked on financial blogs like I am so we can be old rich guys together too.

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Let's Go!

I am Adfecto. Ha. My new nickname seems a bit goofy and maybe even pretentious when I say it. What it means is "aspire to." I want to go out into the world and get myself a big piece of the proverbial pie.

Welcome to my new blog. Aspiration (and one day achievement) is what this new blog is all about. I want to create wealth for myself and those around me. I am going to chronicle my thoughts (and the thoughts of others who share my aspirations) on saving, investing, taxes, jobs, and other wealth related topics. I also plan to detail the real world successes and failures I encounter.

Today I am launching Aspire2Wealth and a new chapter in my life. I am ready. Let's go!

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