Page 223 - Psychology of Money - Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

Rising incomes among a small group of Americans led to that group
breaking away in lifestyle.
COBACOBA

They bought bigger homes, nicer cars, went to expensive schools, and took
fancy vacations.

And everyone else was watching—fueled by Madison Avenue in the ’80s
and ’90s, and the internet after that.

The lifestyles of a small portion of legitimately rich Americans inflated the

aspirations of the majority of Americans, whose incomes weren’t rising.

A culture of equality and togetherness that came out of the 1950s–1970s
innocently morphs into a Keeping Up With The Joneses effect.

Now you can see the problem.

Joe, an investment banker making $900,000 a year, buys a 4,000 square foot
house with two Mercedes and sends three of his kids to Pepperdine. He can
afford it.

Peter, a bank branch manager making $80,000 a year, sees Joe and feels a
subconscious sense of entitlement to live a similar lifestyle, because Peter’s
parents believed—and instilled in him—that Americans’ lifestyles weren’t
that different even if they had different jobs. His parents were right during
their era, because incomes fell into a tight distribution. But that was then.
Peter lives in a different world. But his expectations haven’t changed much

from his parents’, even if the facts have.

So what does Peter do?

He takes out a huge mortgage. He has $45,000 of credit card debt. He leases
two cars. His kids will graduate with heavy student loans. He can’t afford the
stuff Joe can, but he’s pushed to stretch for the same lifestyle. It is a big
stretch.

This would have seemed preposterous to someone in the 1930s. But we’ve
spent 75 years since the end of the war fostering a cultural acceptance of
household debt.