Saturday, May 17, 2014

Affluenza: Luxuries Become Necessities in Our Obsession for Entertainment

2012 Dodge Caliber Original MSRP $18,000
I recently was introduced to an article in the Washington Post written by Carol Morello and Scott Clement entitled "'Happy Days' No More: Middle-Class Families Squeezed as Expenses Soar, Wages Stall." It is an interesting write-up about a family of five whose household earns $90,000 a year, however, they are struggling to make ends meet. This really surprised me because my family of six earns half of that salary, but we're surviving just fine. There are the ups and downs of financial stresses that come with budgeting for any family, however, struggling on $90,000 seems unfathomable. So I decided to break the article into parts and address each issue not only in the context of the Johnsons' daily life, but also in the context of my family life and those families in my community. My goal is to take a realistic (and many times painful) look at exactly what is going on in America's middle-class families in regards to the meaning of necessity and our obsession to be entertained.

America the Theatrical

Americans must be entertained - it has become a God-given right to be upheld at all costs. Most homes have now become independent personal media centers customed designed with laptops, HD flat screen TVs, real life gaming systems, iPads, iphones, iPods, and I don't know what will be next. Every aspect of our lives has become tainted with this ideology and in many ways we are dumbing down our society because knowledge is in many ways defined either by your skills with technology or how many questions you can answer on trivia night. Furthermore, our customized worlds give us a false understanding of reality and creates a dysfunctional view of the world. People are defining their relationships through their technology (if you don't have what I own, you're not good enough) and they are quickly losing their ability to function socially because many are choosing to completely absorb themselves into their media-created "reality".

The middle class are the hardest hit when it comes to living up to society's expectations and actually being able to do so in regards to material possessions. The lower classes aspire to have the pricey entertainment, however, if it is not achieved, it isn't such a big deal. Remember, you are poor and those who surround you will totally understand. Folks making $50,000+ a year don't get the privilege of forgiveness and sympathetic acceptance by friends and neighbors. The pressure of keeping an image of affluence can force families to make decisions they really cannot afford. And if you could care less what others think, then perhaps your own drive to have the greatest and latest technology and things will still lead to poor decision-making. This is one of the biggest reasons why Americans have been racking up huge credit card debt for decades- they continually choose to live outside their means. And, for many, this is the only way of life they know how to live.

The Johnsons' Story

Scott and Robin are classic examples of upper middle-class living. They own their home, he is an IT engineer, she is an aspiring accountant, and they are raising three children on $90,000 a year. They live outside the Washington area which has a good enough school district that their children do not have to attend private school. They both have struggled in this economy with their jobs because, honestly, there is no job security any more. The ups and downs have forced them to make some lifestyle changes and, according to the Washington Post article, this family deeply suffers from their struggles. The article builds upon this pathos with Scott stating, "'I don't know how the working class, anyone below the middle class, how they can survive.'" They claim to live paycheck to paycheck and now, with the purchase of a new vehicle, they cannot even pay their electric bill. Their daughters, who are by now high school age, are looking at college options. "Robin's advice to her daughters: Study hard enough to get scholarships, because we can't help." For the Johnsons', the solution to their dilemma is simple: "'If we had an extra $60,000 a year, we'd have some breathing room. I'd like to have some extra things. Not just look at them and drool.'" This "drooling" that so many Americans get caught up in is the primary cause of our affluenza problem. We now have justified our actions to satisfy this "drooling" by altering our perceptions of what defines a luxury or what constitutes a necessity.

Maslow's Hierarchy on Needs

In 1943 Abraham Maslow introduced the world to a concept which defined how humans fulfilled their overall needs. He created a model in the shape of a pyramid with the most basic needs (food, shelter, water, air) on the bottom and running up to the top where the self-actualization needs (personal growth, self-fulfillment, personal potential) exist. In a standard representation of any human, the needs are met first on the bottom and then build their way up the pyramid. Really only 1 in 100 people achieve the top level stage, like Ben Franklin did.

With affluenza, the pyramid tends to be upside down. The needs which would normally be at the bottom somehow lose significance and the stress is placed on the upper levels. As an example, the Johnsons own 3 flat screen TVs, 3 iPads, a laptop, at least 3 personal computers, 4 cell phones, and they recently purchased a vehicle that cost between $12,000 and $18,000. They claim that because of all of their expenses that now they cannot pay the electric bill. A bit topsy turvy?

By obtaining material possessions that you cannot afford (usually just to impress) at the expense of the electric bill places their needs on the esteem level over the safety level. Sure, Scott and Robin need their technology to maintain the biological and safety levels, however, all of the other items are luxuries which they could do without. The problem lies in the fact that middle class families truly believe all of this stuff is a necessity. Is it really? It is within this kind of perception that the definitions of necessity and luxury collide and create financial despair. It's easy to blame the economy, inflation, and rising costs. But perhaps it simply comes down to money management. Not the way Mr. Obama defines it. More like Suzy Orman.

A Look at the Figures

I thought it would be a good idea to run a comparison of the actual figures it takes to run the Johnsons' household versus my own. But first, to give you a little context of how my family lives.... We embrace the couponing and money saving concepts of Crystal Paine (Money Saving Mom) and others like her. We also apply many of Dave Ramsey's guidance principles (Gazelle Budgeting) on money management. Basically, we try to live within our means and make good money decisions. My wife does a wonderful job of managing our income using a budget plan. We rarely eat at any kind of restaurant, choose not to have cable (instead the kids watch Netflix or DVDs from the library), use what we do have to its fullest extent, and keep one another from jumping onto the trend wagon. We could care less about keeping up with the Joneses and are very happy to be blessed with the richness of our marriage, family, community, and activities we do together to make memories. We believe that the reason so many families struggle in this country is simply because of a lack of knowledge on how to manage the money you do earn and what in reality is a necessity. Yes, times are tough. No doubt about that. But when your priorities are skewed, life becomes impossible.

St. Louis, Missouri and Culpeper, Virginia are somewhat similar in their cost of living according to (,+va-vs-st.+louis,+mo/). Overall it is 14.2% cheaper to live here than in the Johnsons' neighborhood. However, by looking at the expense breakdown, we find some surprising results. In Culpeper the housing expenses far exceed the costs in St. Louis - a whopping 44%. The Johnsons, however, were able to refinance their home which now brought their mortgage down to the same amount my family pays here. All of the other cost categories are either about the same as St. Louis or lower. True, home insurance and electric bills are higher in Culpeper, but again, they live in an area where their children attend public schools. Schools in St. Louis are terrible and so our family has the huge burden of monthly private school costs. (By the way, we're still raising 4 of our 6 kids, 3 go to private school). Yet, we survive just fine on half of the Johnson's earnings. So, if we were to adopt the Johnson's financial solution, we could continue to live the way we do, and then have another $100,000 left over each year to invest or whatever we wanted. Intetesting contrast, isn't it?

Concluding Thoughts

From reading the Washington Post article, I do believe the Johnsons are good people who honestly think they are struggling, and in many ways they are. No one is perfect and I know my family falls into the financial traps occasionally. It's not easy to live within your means when the status quo screams at you to join in the fun and mocks you when you don't. Money management skills are not taught in our elementary and secondary schools. When people think about a course on this subject they envision someone on a stage with a microphone hanging from his/her ear preaching to them like an evangelist. Our country is solely driven by the dollar and most companies do not want you to properly handle your money because that means less for them. Entertainment has become a number one priority. I might even suggest that it has replaced the role of God in many families' lives. But then again, money is a god or idol too, right?

The tough part to chew on is the fact that Americans have altered their perceptions of what is a necessity and what is a luxury. In my own community I see lots of examples of this behavior. One person goes to the local pantry in order to provide food for the family. That same family is sitting on the couch watching a TV that is plugged into a cable service costing $160 a month and complaining there isn't any food to eat. Another person has had the electric shut off in the apartment for two months, but still grocery shops at Whole Foods Market (currently I work in the culinary industry and we call that store "Whole Paycheck").

The newest trend I'm seeing are the families who make 6-digit salaries but claim they struggle just as much as a family that makes $20,000. They eat fast food 2-3 times a day, nearly every day. They go on shopping sprees every weekend to purchase anything from shoes to the latest phone, TV, or gaming system. They take expensive vacations regularly because these are the only times the family can connect, never mind whether or not they can afford it. Some of these families have moved back in with their parents just to maintain their lifestyles. And then when it comes to true medical or tuition expenses, they scream poverty. These folks truly believe they are struggling just like the rest of us because their concepts of necessity and luxury are deeply skewed. Managing the blessings that you do have is the key to a happy life. Don't let the status quo tell you otherwise.

What do you think?

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