Meet the (Real) Joneses

By now just about everyone knows about the Joneses. That prototype consumer family that we are told that we shouldn’t try to keep up with in our consumption habits. Everyone seems to have this lesson down and will repeat it faster than Bitcoin can lose 45% of its value: “We don’t try to keep up with the Joneses!” So if everyone knows who the Joneses are and are successful at not modeling their wasteful spending patterns, why do we have a society with miserably low savings rates and financially destructive hyper-consumption habits?

One reason is that as individuals we are awfully good at knowing and saying what we should do, and awfully bad at actually doing it. So that’s at play here, but that’s a discussion for another post.

The other culprit is a different issue: I think we may have mis-identified who the Joneses really are. Most of us consciously or sub-consciously mis-identify the Jones family, thereby setting the bar for not keeping up with them terribly low.

In my former peer group of ultra-highly compensated attorney types, the Joneses were fairly easy to spot. Expensive cars, (multiple) high-end houses, custom wardrobes (with pocket squares), and luxury tastes in general. The high income of this group ratcheted up the consumption level. It was easy to spot Mr. Jones as the thirty-something attorney driving a $100,000 Range Rover or Porsche, carrying $900k of debt on his $1 million in-town abode, paying $1,200/month for the country club membership that he barely used (except for client lunches), and of course the modest $850k condo in Vail. This isn’t the profile of the Jones family that most of us need to be aware of.

The more worrisome and common Jones family is not nearly this shocking and ostentatious in its consumption habits. We’ve all read about the stealth wealthy—those that look poor (or at least average) in their earning and consumption habits, but in reality are high-net-worth—but the typical Joneses are the opposite. They’re stealth poor. You have to have a trained eye to pick them out of the crowd—in large part because they are everywhere. The typical Working Joe toiling away in his 8-to-6 entrapment chamber job has no problem identifying the fancy-pants-ultra-high-income Mr. Jones described above, and doesn’t have much problem not trying to keep up with him. Instead it’s the stealth-poor Mr. Jones that presents the real problem.

A Detailed Profile of the Joneses

I’ve recently had reason to spend some real quality time with the stealth-poor Jones family. There will of course be variations in the Joneses that you may encounter on a daily basis in your neighborhood and peer group, but the core traits will be fairly consistent. Here’s a portrait:

–The Jones Family annual income is likely in the $100k to $190k range. This is enough money to really feel like you’ve “made it,” and that you deserve to spend good chunks of it on creature comforts and luxuries that signal your status. This amount may be earned by two workers or, as in my case study here, by the husband who works while the wife manages the kids and the procurement of boat-loads of sh*t they don’t need.

–They spent somewhere between $400 to $600k on their personal residence—before substantial upgrades to kitchen appliances and counter-tops.

–They have two automobiles, of course. How else would they get Little Lord Fauntleroy to junior lacrosse practice three times a week? (The coach says he shows great promise; fingers crossed for a scholarship to Brown!) One of the autos is quite reasonable; maybe it’s a 5-year old Volvo or SUV that originally retailed for around $35k or so. But the second car befits their status as six-figure earners: probably a tricked-out $75k SUV (think big-ass Tahoe or Lexus). In my recent encounter it was the Lexus variety, and Mr. Jones was very proud of the fact that he got it used for only $40k! A steal! Oh, and it replaced a four-year-old Tahoe that he had spent at least $50k on. We didn’t discuss that fact in great detail. (Note here: don’t even mention the fact that the Joneses could have purchased a minivan that would be imminently more practical and functional for much less than this; I’ve seen first-hand that this makes them somewhat angry.)

–The Joneses have three kids in private school. Not the fanciest in town that might run $60k per year total—that would be just wasteful! No, it’s the mega-church private school variant, where tuition runs them about $8k per child for a total of around $24k per year. They “highly value” education, you see, and they just feel like the much lower teacher/student ratio is well worth it. And they totally dig the big magnets that they get to put on the back of the new Lexus SUV.

–The Joneses follow every single trend that pops up on the Facenotes. More accurately: they buy every trend that pops up on the Facenotes. They’ll have every version of the new iPhone within six months of release (they waited!). And curiously you’ll hear them start to use the same language as each other: “Oh, Lord Fauntleroy is just being beastly today because he’s hangry!”) Right, so you combine “hungry” and “angry” to create a new word that explains away why your child screams when you tell him “no” at any time. Got it. (Seriously, if you don’t have a Facenotes account it takes longer to learn these things.)

–They rotate membership at the hip fitness club du jour. One month it’s a boxing-bad-ass-themed gym, and the next it’s yoga crossed with Far-East spirituality and Yanni pan-flutes. And don’t presume that they sign up and don’t go. They must be there each week long enough to snap the pics that they will post on Facenotes and Instachat.

–They have dogs. At least one, but probably two. Two looks much better than one on the glossy Christmas card that they’ll send to all of their 800 friends on Facenotes. It’s probably a designer breed like a jet-black Labrador that photographs particularly well (color should match the big-ass SUV in the driveway). The in-breeding will ensure that they will spend thousands of dollars in just a couple of years trying to extend the life of the pet for six months or so. (It’s worth it; just imagine how hangry Lord Fauntleroy will be when the dog dies.) (Disclaimer: I love dogs. But the cost-benefit analysis just doesn’t make sense to us. So no angry dog-defender emails please.)

–They have at least one Yeti cooler (or bag or other beverage-chilling apparatus) that costs more than a year of my law-school tuition. But it does keep their double-dry-hopped  IPA (they don’t know what that means; don’t care) really f*cking cold. Ah, and they wear Yeti baseball caps (his and hers) and have Yeti stickers on the big-ass SUV (next to the school magnets). (Question: why does anyone want a sticker commemorating their beverage-temperature-preservation device on their car?)

–They know about all the bargains related to all the sh*t they buy. And it works against them. Rather than saving by not consuming so much, they feel frugal by buying everything that they want at some form of discount. Any discount of the sticker price—any discount at all—justifies the purchase. There’s a big difference between a philosophy of “everything we need we wait and buy on sale” and “we buy everything that we want as long as it’s on sale.” And they’re not shopping at Tiffany’s after all. But they fail to appreciate that $500 spent on sh*t at Wal-Mart has the same impact on their financial situation as $500 spent at Tiffany’s.

You see, the Real Joneses are professional consumers masquerading as professional savers. There is a big difference between avoiding superfluous spending (pro-saver behavior) and habitually engaging in superfluous spending at “bargain” prices (pro-consumer behavior). Pro savers don’t buy $80k SUVs; pro consumers do, and they take time to learn the best deal on every one for sale within a 50-mile radius.

The Joneses are the most professional of the pro consumers. And their sub-conscious attempt to disguise spending as saving is a total Freedom killer.

–The Joneses love to talk casually about their investing exploits. They’ll drop into a conversation a bit about the movement of the price of precious metals, and the many industrial uses of gold and silver. They get all this information from Barry their “financial advisor” who was a college fraternity brother of Mr. Jones. Now to be clear: the Joneses don’t invest much with Barry, but everyone else in their social group had a “financial advisor” so they wanted one too. They gave him about $15k to manage at some point—even though they didn’t max out their 401(k) contributions that year. He initially put it all in a junk-bond fund that charged 2% in annual expenses (on top of the hefty commission that old Barry earned for the transaction), but it has now been churned almost annually through a series of other investment “products” . . . whatever is hot at the moment (hence the knowledge of shiny, precious metals). They probably bought a bit of Bitcoin, but you won’t hear about that right now.

–The Joneses have never funded an IRA. They have heard of a “Roth” but don’t really know what it is or what it does. They have a good 401(k) plan at work, but they don’t max it out regularly. They contribute sporadically, whenever it feels good. Just enough to feel like they’re doing what everyone else is doing. You know . . . keeping up with the Joneses.

In fact the Joneses don’t have anything resembling a real retirement plan. Why worry about that now? They work and consume, work and consume. And nothing indicates that this merry-go-round will stop any time soon. Mr. Jones recently revealed to me that his retirement plan, if you want to call it that, is an expectation of a windfall from an uncle who intimated at some point that a large inheritance may be coming one day.

Are you on the right path? If you don’t know who in your peer group is the Jones family, it may be you . . . and everyone else.

The Silent Tyranny of the Influence of the Joneses

The Joneses are nice people. They’re fun to hang around. They have some cool toys, and they always appear to be doing cool things. They may not have a lake house (yet), but they know another Jones family that does. They appear quite, well, normal. That’s the problem: they are normal. That’s why they’re so dangerous. This normal has become the new normal. The baseline. In fact, they have no idea that they are the Joneses. And they typically surround themselves with multiple other Jones families, each of which is unaware that they are all sub-consciously keeping up with the Joneses.

Now that your eye has been trained to spot the real Joneses, you will be better equipped to avoid trying to keep up with them. As you behave differently in your consumption habits, you might even have the opportunity to share with them why it is that you’re a pro saver rather than a pro consumer. You can explain to them that while pro consumers have lots of stuff, pro savers are planning to have lots of wealth.

And eventually, lots of Freedom.