Travel to certain places in the world and speak with an American accent and see what happens. You’ll have throngs of people with their hands out because they think every American is super wealthy. Hah! Fat lot they know – the fact is that about half of us just barely get by, living paycheck to paycheck and praying that the car doesn’t break down and that we don’t lose our jobs.

So why is it that we live paycheck to paycheck and what can we do about it?

Even the ‘Rich’ Often Live Paycheck to Paycheck

A while back I wrote about why we all seem to be obsessed with keeping up with the Jones’s. Does it really make our lives so much better to have all that crap in our homes? I’m currently thinking about moving and dreading the thought because I have so much junk at home that has to be packed or better, tossed out like yesterday’s fish.

The fact remains though that even people with high incomes tend to throw their money around in a desperate attempt to keep up with the Joneses. These people are what I call the fake rich. They want everyone to think they’ve made it and their desperate to pretend that they’re not miserable and stuck deeply in debt.

I recently had dinner with a friend at the home of one of her friends. They live in a small McMansion with a coy pond, Jacuzzi and private sauna built into the bathroom. My friend, Jane, introduced me to these people, Ted and Diane, who are the daughter and son in law of one of her oldest friends, Cheryl. None of these are real names of these people by the way – hey, I’m not a jerk.

Jane lamented on the way home that these people, who seemed quite nice were nothing like her friend Cheryl. Cheryl grew up in Communist Russia and came to this country with nothing. She changed her name and started building a life for herself, eventually managing to put three kids through college and buying a very nice condo for herself.

Jane told me that whenever she needed help, Cheryl was always ready to lend a hand because she had learned the value of living within her means as a child in Russia. By comparison, Ted and Diane, both of whom are professionals who make a good living pretend that they can burn hundred dollar bills as fire kindling because the good times will just keep rolling.

In other words Ted and Diane are the fake rich. They desperately want everyone to see them as being well off so they drive nice cars and have a nice house while jetting off to Paris and Rome on a regular basis. The thing is, they’re being downright stupid with their money because they aren’t saving and are in fact deep in debt.

It’s the American Way – Spend Until You Drop

You know all those fights that break out on Black Friday because someone is trying to score a deal on a big screen TV? That happens because we are all conditioned to spend, spend spend. We all seem to have this ridiculous idea in our heads that the good times will keep rolling and that nothing is going to stop the gravy train from pulling into the station.

Smart people know that the big screen TV can be had just as cheap by buying last year’s model when the new one comes out and they know that if they want to see a fight, they can just watch it on their new TV instead of in person.

Those who are truly financially independent in fact know that they don’t need to buy everything in sight and act like lemmings. Joe in accounting doesn’t have to see our latest purchase every time we go out to eat together, does he? Suck it Joe – in the immortal words of Jackie Gleason, I’ve got financial security.

Bottom Line

You want to know why so many of us live paycheck to paycheck? It’s because we keep buying stuff instead of being smart with our money. Instead of buying yet another useless knickknack, put the money into an investment and watch it grow while others rush out to buy an X-Box for twenty bucks off on the day after Thanksgiving.

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