The True Cost of Luxury (or why the Joneses suck)

True Cost of Luxury

My wife and I had a small money argument the other day. I opened a newly delivered Amazon box in my name, and it turned out to be a hiking bag she bought and already owns. We’ve been spending many of our weekends and holidays in the Appalachians lately.

“Didn’t you buy the same backpack a month ago?” I inquired.

“Yes, but that’s in a different color,” she countered.

I thought to myself, what is it about women, and their bags, shoes, and other stuff? There is something about women that I will never understand. As one popular book is titled: Men are from Mars, Women are from Venus!

“When I buy things, I go for function, not fashion,” I quipped, “Your other bag can carry the same amount of stuff like this new one.”

Visibly annoyed, she replied, “Hun, it’s only $25.”

“Not $2,500 luxury handbags many of my friends flaunt on Facebook and Instagram,” she added.

I asked no further questions. $25 is not worth arguing over unless you’re broke as a joke— we are not. For me, it’s certainly no big deal. I just wanted to make sure she didn’t suddenly turn into the shopaholic she never was. Check and balances in a relationship are healthy.

But she went on and showed me endless pictures of a pseudo-friend on FB in a wide variety of cute poses. Sure enough, each photo “innocently” showcases a prized asset.

And the argument instantly turned into a game of “The Price is Right.”

“Chanel Vintage Classic Double Flap Bag Quilted… Guess how much?” She asked.

“$2,500!” I replied. I had no idea, but that’s what she said earlier.

“HIGHER!! It’s $4,780!”

“Louis Vuitton Keepall Bandouliere 40… Guess how much?”

“Just tell me.” I reluctantly answered.

“$7,238 brand new!”, she exclaimed, “Sheesh, you’re lucky I’m not high-maintenance.”

Holy cow!! That’s more than the resale value of our cars. I quickly grabbed her phone to look at the FB profile.

I don’t see skinny women, but scrolling through her acquaintance’s timeline felt like turning the pages of a fashion magazine. From the Coco Chanel earrings, Gucci, Prada and LV bags, to Christian Dior beach sandals worn under a perfect Hawaiian sunset: everything looks so fancy, expensive, and picturesque. Every single photo of the middle-aged couple seems to make a “We’ve made it!” statement.

How did the Joneses do it? They’re in debt up to their eyeballs!

Nothing wrong with engaging in indulgences you truly can afford, I’m just convinced what we saw was all smoke and mirrors. Call me nosey, but I love telling stories, especially if the goal is to educate as many readers out there, financially. Just like the box of pizza your coworker left in the break room, what you post on social media is all fair game.

If you know the person’s name, county, and the state they live in, it’s easy to perform a deed and mortgage search. They’re all public records. And since most Joneses own their home and love showing off their mansions, you can effortlessly spy on their finances even without performing credit checks.

Curiosity got the better of me, I googled, and found the following about the Joneses:

  • 2004: Borrowed $290K and $90K to buy a $401K home with $21K down.
  • 2010: Refinanced the 1st mortgage into a 15-year loan.
  • 2017: Applied for a $100K home equity line of credit.
  • 2019: Refinanced $265K into a 30-year loan.

15 long years have passed and they barely paid any principal! Sure there was some recent price appreciation, but having bought the home at the peak of the housing bubble didn’t help much.

According to Chris Hogan, who studied the habits of 10,000 millionaires, the average millionaire paid off their house in 11 years, and 67% of the millionaires he studied live in homes with paid-off mortgages. Conversely, those who drag their mortgages to more than thirty years (and don’t make other real-estate investments) are likely very broke.

And since the Joneses are not getting younger, this means they will have to work until they are in their 80’s to pay off the loan!

Could it be because they love working?? I don’t think so.

What luxury indulgences can cost you

Let’s say you work eight hours a day, and after taxes, make $15 an hour— you’re earning $120 a day. You then stumbled upon this super nice Tory Burch mini bag that costs about $1,200. That moment when you click Buy, you essentially spent ten days of your life working for that bag.

And when you start thinking about larger purchases, like a freaking $19,500 Hermes Ostrich Birkin bag (that will anger many PETA activists), and you’d start asking yourself, “How much of my life did I trade for this? Is it worth it?” It’s either your money or your life!

Sure, you can argue that “You Only Live Once,” and you are buying what you really love that can make you happy.

But time and time again, studies show the level of happiness wouldn’t last:

Happiness vs Time

Don’t believe the lies that these luxury bags are great financial investments either. They can quickly go out of fashion and need to stay in pristine condition to retain their original resale value.

To those of us mere mortals who work nine to five for a living without six-digit bonuses, these luxuries are nothing but a drag to reaching our financial goals.

Unless the goal is to work until we’re ninety, we can’t afford paying for the true cost of luxury.

I think every person has their own luxury weakness. Men’s version of luxury are gadgets–whether an expensive PC build, nice leather shoes, watches, cameras, drones, etc. As long as the amount spent is a drop in the bucket in relation to one’s net worth, why not?

But your couple friends are surely doing things wrong, prioritizing looking rich over being rich.

Very true, guys love gadgets. I once spent $2,000 for a Toshiba laptop when I was worth like $6,000. Funny that I can’t spend that amount on a laptop now even if it’s a small fraction of my NW.

Toshiba laptop is so durable. Mine is still working for almost a decade now. Not complaining just wondering why my gadgets are still in good condition. But once they retire, I’ll have an excuse to get a replacement like a wireless mouse, iPhone, and Macbook Pro. So while waiting, I keep on saving and investing in stocks instead of luxury bags.

But I do like bags such as urban and backpacking bags. My backpack can fit books, hoodies, and cantaloupe. However, I like gifting bags for my relatives but not luxury bags. I like gifting simple yet branded bag for special occasion like Mother’s Day or birthday.


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