Keeping up with the Joneses

The new Jones family just moved into the neighborhood. They live in the huge house down the street and always have at least one luxury car parked in their driveway. Mr. and Mrs. Jones are usually wearing a fancy Rolex watch, and even their kids dress in designer labels. They have good jobs with high incomes and are considered rich (not wealthy). Rich means a high income, while wealthy means steady income from assets. Yet, the flashy American dream family hides an American financial secret. The Jones family may be house and car rich, but they cash poor and actually not wealthy at all. They are leveraged in the wrong direction and use all of their income to service the interest on their debt. They are not leveraged on assets and earning interest returns. The rich Jones family actually lives paycheck to paycheck and constantly wonders where all of the money goes. On the other hand, they never think twice about buying the latest iPhone or other “necessity” item.

The desire to appear successful together with a lack of understanding about money leads many American families into this never-ending debt spiral. They are simply playing the part of a millionaire without any concept of how the majority of millionaires actually live. The truth is that most millionaires have a lifestyle that is much different from that of the Jones family.

I’d like to recommend a book that demonstrates what the lifestyle of the real millionaire in the neighborhood looks like. Although the lifestyle is boringly conservative and frugal for my tastes, the book does a great job of turning the common perception of the millionaire lifestyle on its head.

The Millionaire Next Door

Thomas J. Stanley Ph.D

William D. Danko Ph.D