The hardest part for me about making smart financial decisions on a day-in, day-out basis is fighting my feelings of jealousy.  I don’t have entitlement issues, and I’m grateful for what I have.  I’m also happy to work hard and save money and fight to get ahead.  But it’s hard for me to look at people who are in my peer group, both in terms of education and income, and see all of the nice things that they have that I want, and to continue to tell myself NO.  In a vacuum, I would be fine.  If cars and houses all looked identical and people didn’t talk about their luxury vacations or their fancy belongings, I wouldn’t be the least bit disappointed with what I have.  But in reality, it feels like my peers’ cars, houses, vacations, and perfectly coiffed hair are all being shoved in my face, and it makes it hard to keep up the good fight and to keep making good financial decisions when I want what they have.  But my rational brain knows that I have to conquer jealousy to get ahead.

My Goals

My financial goals have always involved making enough money to live really comfortably.  I’ve never been interested in being super wealthy, and I don’t understand (or look up to) the people who buy multiple mansions and fly around in private jets.  I just wouldn’t be comfortable burning through that much cash on a regular basis.  But neither is it my dream to retire at age 35 and live out the rest of my life in a modest ranch home in the Midwest.

Instead, my ideal standard of living involves having a nice big house, done up the way I like it, with a decent amount of space between my house and the neighbors.  I want a good sized pool in the backyard, and ideally, it would be on the beach.  I want at least a 3 car garage, or maybe even double that, so I can fit my car and motorcycle in there and maybe a second “fun” car or a project car, along with my rolling toolbox and air compressor and work bench, and everything will all be neat and organized because there will be enough space to store things properly.

I have a long way to go still, but so far, I feel like I’m on the right track.  I certainly won’t be able to retire at age 40, or even 45, but if I can work my butt off and make smart financial decisions until I’m 50 or 55, I should be able to make it happen.  But boy, is it hard to say no to the things that the people around me are buying.

Bad Habit: Looking at What the Joneses Have

When I was in college, I really started noticing all the nice things that other people had.  I was grateful for what I had, but that didn’t make me less jealous of all of the people around me driving really fancy cars and living in big, fancy houses.  Here in Orange County, California, we’re surrounded by that fancy stuff all the time.  Throw a rock in any given direction and you’ll hit a BMW, and probably a Porsche on the second bounce.  This county started that Real Housewives crap, not to mention The OC and The Hills and there are probably a few more TV shows that I’m forgetting, but you get my point.  Those shows make me cringe.  The scary part is that so many people around here buy into it all.  They know who Lauren whats-her-face is and they spend more in a single shopping trip than I spent on my used motorcycle.

I’ve always been good at math.  I got a perfect score on the math section of the SAT.  But looking around me, it didn’t make sense.  You know how much money you have to make to be able to afford a Porsche 911?  And I don’t mean financing it for 6 years, I mean having the cash, walking into a dealership, and plunking it down on the table and driving off.  That’s an insane amount of money.  But I saw so many people driving them, and Bimmers, and Mercedes, and all of these gigantic tricked-out SUVs, that I started to think “how the hell is everyone around here so rich?”

Even at school, it was pretty bad.  I went to UC Irvine, and while most of the students there had normal-ish cars, there were still plenty of kids whose parents bought them a brand new shiny thing that the kid could barely drive.  It was crazy.  Law school was even worse.  There was literally one student who drove a brand new, tricked-out Bentley to class every day.  Seriously?  Even if I owned a Bentley, there’s no way I’d drive it to school and park it in the same parking lot as a bunch of kids who have trouble getting their compact cars into a normal-sized parking space without bumping into anything else in the process.  My own little compact Subaru got hit in the parking lot when some jackass couldn’t navigate a turn properly.  Why the hell would you bring a Bentley into that environment?

Now I’ve graduated college, graduated law school, moved out of my tiny hellhole of a condo and into a just-okay modest house on a fairly small lot that I bought at a short sale and have been gradually fixing up.  I did get a new car in 2009 (a nice Toyota Venza), and I’m still driving it, and within a week or so I should be crossing the 100,000 mile mark on that car.  I earn a good income, I’ve been working hard on socking away money for retirement and increasing my investment assets, and I want a newer, nicer car and I want a newer, nicer house.

It’s hard for me to look around at my peer group of attorneys, all relatively high earners like me, and the vast majority of them living in much nicer houses and driving newer, nicer cars than mine.  They have gardeners and housekeepers, and they get their hair cut and styled and dyed and Brazilian Blowouted on a regular basis, and they take fancy vacations to places that I want to go, too.  Meanwhile, I’m working as hard or harder than they are, I got the same education, I earn roughly the same pay from my job (and have a couple of side hustles, too), but I’m living in my modest house with popcorn ceilings and driving my same car that’s getting up there in years and miles.  In my worst moments of jealousy, sometimes I wonder what the heck I’m doing wrong.

How I Conquer Jealousy: Running the Numbers

And then I have to take a step back.  I have to acknowledge that just because others have fancy cars and nicer houses, that doesn’t mean they’re doing it right and I’m doing it wrong.  I take a look at my finances, and play the “what if” game.  What if I got the new Lexus RX450h that I’ve been drooling over?  There’s $58,000 out of my accounts.

Lexus RX450h

I’d be violating my own personal 8 1/2 year rule for car replacement, which means I’d be losing my 25% automatic “discount” on car purchases.  Plus the additional costs of higher insurance premiums (newer cars are more expensive to replace, so insurance goes up), higher registration fees, and the use tax on the purchase.

And what if I upgraded my house to what I could “afford” based on my income?

house affordability calculator

Are you kidding me, Zillow?  My property tax bill alone would be over $12,500 a year, and that’s assuming I found a nice house in a low tax area without additional Mello-Roos taxes.  Not to mention HOA dues, the HUGE increase in monthly interest payments on a mortgage that size, and having to pay the extra costs to heat, cool, and maintain a much bigger house.

After figuring out the costs of those high-priced items, I look back at my income, expenses, and net worth for the last year, I see that I ended up saving about 55% of my after-tax income by sticking with my current car and my modest house, with my 10 year mortgage that I’m quickly chopping away at because my mortgage amount is small.  If I took on the $900,000+ mortgage that Zillow thinks I can “afford”, I would be paying down only a tiny, tiny fraction of the principal each year.  My net worth, which is currently moving forward with strong positive momentum, would slow to a much smaller trickle.

Reevaluating my Happiness Based on My Goals

All in all, I’m pretty happy where I am.  And when the feelings of jealousy come charging toward me, I know how to beat them back.  I just have to look at what it would cost to get those things that I want, and look at how it would slow my progress. It’s exceedingly rare for me to decide that spending the extra money in the short run will be worth the cost to me in the long run.

There will come a time, of course, when it will make sense to upgrade with some of those things.  I’ll know when the right time is by doing that financial analysis and determining that I’m on track for where I want to be, and that the temporary setback of upgrading is worth the extra money and won’t derail my long term goals.  I’m just not there quite yet.

Another Way to Conquer Jealousy: Change Your Comparison Group

Another way to conquer jealousy is to look at what poorer people have, and let your feelings of gratitude outweigh the feelings of jealousy.  I think this is generally a good approach, but there’s a bad side to it, too.

First, I think that comparing myself to others is a problem to begin with.  By comparing myself with richer people, I might get discouraged.  By comparing myself to poorer people, I might feel grateful (and I do!).  But if I didn’t compare myself with others at all, I would be happier.  So I try not to compare at all, whether upward or downward on the socioeconomic scale, because I’d rather make my own path and stick with it regardless of what others do.

Second, comparing yourself to people who are worse off can sometimes lead to a feeling of superiority (there’s a great TED talk on it here), and that’s a very bad thing.  Some people are immune from these feelings, being driven by an innate humility that can’t be shaken.  But for a lot of people, constant comparison to those who are worse off can backfire.  In addition, if your attitude ends up shifting toward that feeling of superiority, you could also end up justifying your extravagant spending based upon that.  Such as “I’m better off than those guys with the crappy car, but that’s because I got a college degree and a good job, so of COURSE I should be driving a better car than they are.”  Yikes.  Not pretty.  The takeaway from this approach is just to be careful, and examine your own thoughts and behavior over time to make sure you’re not turning into THAT guy.

Do you find that jealousy makes it difficult to stay on track with your financial goals?  How do you conquer your jealousy?