How to Avoid the FALSE PROMISE of the Madison Avenue Lifestyle
The Madison Ave lifestyle is everywhere. You know what I’m talking about … Fast paced … Beautiful homes, beautiful new cars, two new motorcycles in the garage, a poolside hot tub, fine dining every night … Everything you ever want right there, at your entire disposal. Advertisers are experts at harnessing our dreams of having the ability to live like this. (The glamor of a shiny new car on wet pavement at night is a sure sell.) But there is a group of advertisers who are especially good at making us believe that the Madison Ave lifestyle is possible for all of us … Credit card companies.
Let’s look at just a few of their ads. There is an important credit card that everyone is familiar with. Your TV advertising slogan? “It’s where you want to be!” And it usually shows people who are traveling the world, enjoying all that life (with credit cards) has to offer. Now what is this company trying to say here? They are trying to make you believe that this credit card will take you anywhere and anywhere you want to go in life.
I just received a pre-approved credit card application in the mail. The headline read “Get the credit you deserve!” Makes you feel great, doesn’t it? … Knowing that you deserve something. It makes you want to stand up and fight, because it implies that right now you are not getting what you deserve. After all, credit is a constitutional right, isn’t it?
Here is an excerpt from another I received in the mail the other day. Part of the sales letter read: “Only a select group of people will carry the gold card. It instantly identifies you as someone special, someone who has achieved a higher degree of financial freedom (emphasis added), and someone who expects higher levels of financial freedom. financial flexibility, convenience and service in all your dealings. “
Sounds great right? Especially the financial freedom part. After all, isn’t financial freedom what we all want?
All of these ad campaigns are based on one premise: “You can achieve a better lifestyle by using credit than by spending cash.”
Here’s a problem … This premise is a lie!
Here’s the reality: You can live better for a few years using credit, but then you’ll spend the rest of your life living below your means trying to pay it all back. Everything is an illusion.
Credit makes you believe that you are doing well (or at least doing quite well) because you have all these “things.” But here are the facts: If you make a credit card purchase of $ 2,000 at 19.8% and make only the minimum payments, it will take you 31 years to pay it off and you will pay $ 8,202 in interest! That means that by using credit, you are paying five times more than using cash.
Go ahead. Buy all those nice things on credit and I’ll use only cash. Let’s see what happens. In the beginning, you will have a nice car or two, a nice boat, nice furniture and a great stereo, etc. And I’ll drive older cars. I will have “early American yard sale” furniture and clothing. And I will probably deprive myself of that motorcycle that I would really love to have, because I have no money to buy it.
From all appearances, it will appear that you are much more successful than me … At first. But what is really going on here? In a few years I will not only catch up with him, but I will pass him by and leave him in the dust financially. That’s because when he paid $ 10,000 for a $ 2,000 purchase with his credit card, I saved until I had $ 2,000 to pay in cash. Then I was able to invest the additional $ 8,000 you spent on interest. You had compound interest working against you, but I had compound interest working for me! (And that’s where you want to be!)
Ten or twenty years from now, I’ll be in debt up to my earlobes, still trying to live the illusory Madison Ave lifestyle. But I’ll be driving 4-5-year-old cars instead of new ones, silently watching my wallet of investment increases to millions, literally!
By then, I’ll be working because I want to, not because I have to. And I can afford to buy almost anything I want … Cash! … While the economy sweats and the next downsizing or looking for the next $ 50 raise, just so you can stay on top of all the credit card payments you’re making for things you bought years ago and Probably I have already forgotten everything.
Are you starting to get an idea? Credit is of no use to you. Promises (and delivers) short-term profits. But it always brings long-term pain. By pursuing the Madison Ave lifestyle using credit, you are actually drifting further away from it. Rich people understand this principle. That is why they are rich. There is a fascinating book called “The Millionaire Next Door” written by Thomas Stanley and William Danko. (Published by pocket books, a division of Simon & Schuster inc.) The authors spent many years interviewing the wealthy. (Those with a net worth between $ 1-5 million). And some very interesting things have come out of your study.
Let’s look at the car buying habits of the rich. What kind of car would you expect a millionaire to drive? An expensive and luxury car or a fashionable foreign sports car? Well, Stanley and Danko have discovered that this is not the case at all. They have discovered that the most popular brand driven by the wealthy is Ford. And the most popular models are the f-150 pickup trucks and explorers!
Here’s what Stanley and Danko have to say: “How do millionaires buy vehicles? About 81% percent buy their vehicles. The rest lease. Only 23.5 percent of millionaires own new cars. Most do not. have purchased a car in the past two years. In fact, 25.2 percent have not purchased a motor vehicle in four or more years. How much do millionaires pay for these vehicles? The typical millionaire (those in the 50th percentile ) paid $ 24,800 for their most recent acquisition.Note that 30 percent spent $ 19,500 or less.
Also keep in mind that the average American buyer of a new motor vehicle paid more than $ 21,000 for its most recent purchase. This is not much less than the $ 24,800 millionaires pay! Also, not all of these millionaires bought new vehicles. How many indicated that their most recent vehicles were used? Almost 37 percent. In addition, many millionaires indicated that they recently traded lower, that is, they bought vehicles at a lower price than before “(pp. 112-113).
in other words, millionaires drive average vehicles! Why do they drive average old cars instead of fancy new cars?
1. They’re rich * because * they drive average, old cars, and they know that if they bought new luxury cars all the time, they wouldn’t be rich.
2. They don’t feel like they have to maintain a status symbol or “keep up with the Joneses” because they know they are worth so much more than the Joneses could dream of.
My wife recently spoke with a mechanic who had a dream of purchasing his own facilities for his auto repair business. But, for him, it was just a dream. He could never afford it. However, in his driveway was a beautiful new, turbocharged, double cab, etc., diesel 4×4 truck. In fact, he even joked about the “mortgage” on his truck. But what he didn’t realize was that if he hadn’t bought the charm of that beautiful new truck, he could have bought his garage and owned his own business.
If he had driven an older truck and bought his own business, eventually he would have had the freedom to be able to drive whatever he wanted! Reaching for the allure of the Madison Ave lifestyle prevented him from reaching the Madison Ave lifestyle!
To live the Madison Avenue lifestyle, you must first avoid the Madison Avenue lifestyle. Don’t spend $ 10,000 on a $ 2,000 purchase because you bought it with a credit card! Instead, save $ 2,000, buy it with cash, and invest the $ 8,000. Eliminate all your debt, including your mortgage, and then invest the money you are now wasting paying interest.
If you do this consistently, you will have a compound interest in your favor rather than against you, and twenty years from now you will discover that you have a new address on Madison Avenue.