#218: The Cost of Keeping Up with the Joneses (Friday, March 4)

If you compare yourself with others,
you may become vain or bitter;
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.
Keep interested in your own career, however humble;

-Max Ehrmann, Desiderata

Earlier this week my cousin and I were talking about keeping up with the Joneses. A few hours later, I got this article in my newsfeed, so I thought it was a sign that it should be the topic of this week's Good Friday.

Many people use those around them as the benchmark for how they live their lives. The result of trying to "keep up with the Joneses" means that many people are living above their means. Even something as simple as maintaining your lawn could get you into financial trouble. The reality is that the Joneses are broke:

• Nearly half of Americans spend more than they earn each year.
• Over 1.5 million people filed for bankruptcy in 201o, a 9% increase over 2009.
• 26% of Americans (and 51% of African-Americans) admit to not paying all of their bills on time.
  

It's important to enjoy your life and the things you've worked hard for, but we can all use a few tips on how to keep ourselves in check:

• Keep your credit card debt between 25% and 30% of your credit limit.
• Keep your debt-to-income ratio at or below 36%. If your DTI is between 43% and 49%, financial difficulties are imminent. If your DTI is over 50%, you may need to get financial help (credit counseling) to get your finances under control.
• Build your net worth with real assets. A fancy car may be nice, but the value of cars depreciate quickly. Consider assets that will add value to your net worth over time.