Forget about keeping up with the Joneses. Here’s why.
The phrase “Keeping Up with the Joneses” was created by Arthur R. “Pop” Momand in 1913.
The comic strip ran until 1940 in The New York World and various other newspapers.
The comic strip depicts the social climbing McGinis family, who struggle to “keep up” with their neighbors, the Joneses of the title.
That fancy house, car or glamorous picture on Instagram might not be a great as it looks.
According to the latest quarterly report from the Federal Reserve Bank of New York credit card balances now total $1.08 trillion. A new record!
“Over the past two years, Americans’ credit card balances have skyrocketed 40%,” according to Ted Rossman,a senior industry analyst at Bankrate.
The Joneses it turns out are likely leveraged to the hill and in credit card debt up to their necks.
Here’s the math with $10,000 on your credit card with a 20% APR and paying the minimum monthly payment:
Your minimum payment would be $266.67 per month and it would take 346 months to pay off $10,000 at 20% interest.
That’s 28 YEARS!
You would pay $16,056.59 in interest over that time for a total of $26,056.59
$25,000 at 20%:
Your minimum payment would be about $666.67 per month and it would take 437 months to pay it off.
That’s 36 YEARS!
Borrowing money isn’t a bad thing. You can use leverage to make a lot. BUT, when you can’t afford that leverage you’re going to get yourself into some REAL trouble, don’t!
We all want nice things, but it’s better to live within and below your means and sleep well at night, than having that fancy car, big house, or expensive shoes that keeps you up at night with stress and anxiety of how you’re going to be able to make that next payment.
If you’re new to the newsletter you should read my past article on The Best Investment Advice I Ever Received which explains my investing philosophy and why it’s so boring compared to watching CNBC. You can also listen to it if that’s easier in a 9 min episode on The Brandon White Show podcast.
Disclaimer: I am NOT a financial advisor. My results may differ from yours because of timing, amounts or other factors. You should do your own research and/or consult a professional before you make any investing decision mentioned in this newsletter. I relied on Investopia for the stats on the S&P 500 for this article.