What’s Your Financial Lifestyle? (Part 2)

Last updated on June 21st, 2014

This is part 2 in a series that playfully examines several financial lifestyles commonly observed by the Cash Cow Couple. Read the first part here – Part 1 (The Borrows).

On Wednesday, we looked at Bob and Bianca Borrow’s story. You may recall how the Borrows treated credit cards like free money, charging everything to the max. You may have thought to yourself – “I’m not like them! I live within my means and only buy what I can afford!”

Fair enough, let’s consider an alternative…


“We spend less than we earn!”

– Carl Consumer

It is true that most folks are more responsible than the Borrows. Perhaps your lifestyle more closely parallels that of Carl and Connie Consumer. While the Borrows clung to their credit cards, the Consumers can’t get a big enough paycheck. Instead of borrowing to the max, Carl and Connie spend almost every penny of their combined net incomes. They look at their take-home pay, commit that number to memory, and make sure not to spend more than what they earn! The Consumers think they are doing quite well, “living within their means.”

Like “everyone else” they know, Carl and Connie can’t afford to pay cash for major purchases such as a home, a new car, or that new pool they’ve been wanting for years. I mean, they’ve worked hard and saved up a down payment. What else can be expected?

When discussing these major purchases, the buying decision usually boils down to the magic question: “Can we safely afford the monthly payment?” As long as money earned exceeds money spent, why worry about the details?

They never stop to consider how much they’ll pay in interest on top of the purchase price or worry about how quickly they can pay off the loan in full. Such details are boring and best left to nerds and financial professionals. If they can comfortably swing the payments, they’re buying the goods. Of course, they don’t need a payment plan for necessities like food or clothing. They pay for those in cash! “Remember,” says Carl, “we don’t spend more than we earn and we’re doing just fine.”

Both of their employers have 401(k) plans in which the employer provides a 5% company match on any money that they are willing to  invest on a tax-deferred basis. Carl and Connie have also thought about contributing to a Roth IRA, which allow after-tax earnings to compound tax-free for retirement. But the timing isn’t quite right so they pass up the free company match and the opportunity to build wealth and minimize taxes.

Of course, they would like to save and invest, but there are far too many things they need right now:

  • A newer car (because that 2007 model has too many miles at 60k and is likely to break down soon – plus it looks ugly!),
  • That new LED TV (The 3-year old LCD doesn’t have wifi to stream Netflix and the picture isn’t quite what it once was…),
  • A new iPad (That retina display just tickles the eyes, don’t it?)
  • The latest iPhone (How can I use that old 3GS, 4, 4S model? The camera is blurry and it refuses to run more than 5 apps at a time!)
  • A family cruise (It’s time to reward the children for excellent grades and the adults for working so hard).

Unfortunately, the Consumers are working for their dollars instead of letting their dollars work for them. Although Carl and Connie believe they own their finances, the truth is that they are slaves. Like the Borrows, a job loss, accident, or illness could lead to a complete financial meltdown. Without a cash cushion and a long-term plan for achieving financial freedom, they will be unable to successfully retire until a very late age. In fact, they may never be able to retire if Social Security goes poof. The Consumer’s are slaves to a full time job or a government bureaucracy.

How Sad.

    • Elyse
    • February 18, 2015

    Wow! you hit the nail on the head for me. Its refreshing to see young people getting this, but for me and my hubby we are learning late in life what living within your means really means. We are in our late 40’s early 50s and have a daughter graduating from HS next year. College savings??? uhh, we didn’t make enough for that. Our story is a typical one. Not quite like the Borrows, but more like the Consumers. We both got through college debt free, but quickly got into debt after getting married with a new car and house. It seemed like we never made enough–one of us has always been a below earner and the other average, in comparison to most of our friends who had two nice incomes from the get go. It was cheaper for me to stay home when we had kids and I worked as a freelance writer for a while, so it was a good trade off. Those were the good years. Then, as many did in the early 2000’s, there were the lay-offs and settling for a lower wage.
    Long story short, we have a lot of family debt and business debt and we are trying to dig our way out. I really wish we had known more when we got married!! Now that my husband has a good 6 figure job, we are on a debt snowball plan. I continue to do the same with my business debt. Hard lessons!!! He doesn’t believe it, but I think we can be debt free (or really close to completely debt free including our house) by 60 years old. I know, we are pathetic, but gen x’ers. we are learning…

      • Jacob
      • February 19, 2015

      Elyse, thanks for stopping in and commenting!
      Not pathetic at all! In fact, it makes me quite happy reading comments like yours because it proves that people are able to change. I’ve been around a lot of older individuals who refuse to change their lifestyle habits and then make the excuse that it’s just “harder” when you get “older” to change. You’re proving them wrong and making us smile.
      Keep up the hard work and I’m sure you guys can achieve your goal by 60. If you do, you’ll be way ahead of the majority of your peers!

  1. Pingback: What’s Your Financial Lifestyle? (Part 3) • Cash Cow Couple

  2. I love the continuation of this story.

    I know so many people like this. My mother is a perfect example.

    I was once a combination of the Borrows and the Consumers. I feel so good having moved away from that.

    I can’t wait for the next installment!

      • Jacob
      • April 13, 2013

      Glad you enjoyed it Mark! We know a bunch of people who spend like the Consumers as well, it’s never a good thing. That’s so awesome that you have moved away from that lifestyle. I’m sure you’ll reap the rewards for years to come.

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  4. Reply

    Jacob, how many times might I say to you, If only we had you guys 20 years ago! The perfectly placed humor always makes your posts do delightful to read.

    I love the list of things the family NEEDS. Yes, how we justify our purchases with I Work So Hard I Deserve This! Until we realize that the excitement fades long before the new-car smell or the first nick in the granite countertop (do they have nicking capability? not sure as I do not have nor want one!)

    I’m not sure how we’re surviving without a TV, iPhone/iPad, or fancy clothes. In fact, we should book a cruise right now lest we be considered losers! 🙂

    Happy to read your posts as always. Thank you!

      • Jacob
      • April 12, 2013

      Thank you Tammy! Oh, who needs lasting excitement?! That’s when it’s time to buy something else! 😉

    • cj
    • April 11, 2013

    How sad indeed, Jacob. What a splendid post. We were headed down the path of the Consumers and it was intensely stressful. Having $100 left over at the end of the month does not equate to financial irresponsibility, but many people think it does. We did. We were wrong with a capital W.

      • Jacob
      • April 11, 2013

      From consumer to jolly Hoombah! What a turnaround! Loved your last post…

  5. Reply

    That image totally made my day. “Don’t imPRIUS me much”?!?! Genius! Still cracking up five minutes later.

      • Jacob
      • April 10, 2013

      Thanks the Mrs. for that one! Because of your comment we found your rockin’ site. Thanks!

    • John S @ Frugal Rules
    • April 10, 2013

    How sad indeed! Being a slave to consumerism can be a VERY costly thing to say the least. Unfortunately, for many, they can’t see past their noses and see what these expenses will cost them in the long run.

      • Jacob
      • April 10, 2013

      Just like you, we’re hoping to open a few eyes John!

    • Joni Scott
    • April 10, 2013

    OK, now you are getting personal! 🙂 However, I have a Kindle Fire instead of an iPad, and an Android phone instead of an iPhone. The LED TV saves us money by not going to the movies 🙂 Thankfully, we learned early to max-out our retirement contributions, put everything on a frequent flier miles credit card which we pay off every month (we essentially fly free most everywhere we go), and to be properly insured. We learned a lot from sound financial advisors, and did much research on our own. We learned how to invest in the stock market, and the importance of charitable giving. Yes, we took our children all on a cruise to celebrate their accomplishments with graduation, and they were some of the best bonding family memories we have made. In fact, we also told them if they continued their educations and received any degree with a “D” in it (MD, JD, PhD, DDS, PsyD…you get the point) we would do it all again with a special trip to anywhere they wanted to go. We wouldn’t trade it for the world. Also, just did a little math on the new Prius from 2010. The 70,000 miles I have logged have cost me $4811 in gas and NO repairs over the 3 years I have owned it. The same mileage in our 2004 Hyundai would have cost me $13,588. (a savings of $8777 in gas alone, which more than covers the cost of the car in comparison). I agree with the principles you are presenting for the most part, but each individual needs to put a plan together that meets their own needs. Going into debt is never the answer, as you point out, but the key is a healthy balance. Achieving the life- goals on our bucket-lists is important too. None of us know how long we will have the health to achieve our dreams. We followed our plan, maximized our education, paid off debts early, retired early, and are financially free with no regrets 🙂 Life is a fantastic adventure, and meant to be lived to the fullest….and won’t be much fun if you deny yourself everything. You need to throw in a few joyous occasions once in a while!

      • Jacob
      • April 10, 2013

      Hey Joni! Thank you for commenting and following the site!
      You’ve left a thoughtful comment and I’ll try to address it all!

      First off, congratulations on all the success. Early retirement, newer Prius, nice vacations, LED TV, and new electronics means you’ve obviously done quite well! I think you’ll relate to a later post in the series which views a financially responsible family who maximizes retirement contributions and lives within their means. On the other hand, based on the information you provided, I’ll have to assume that you aren’t the average American who doesn’t have $1,000 in an emergency fund. Most people can’t afford to do/own what you’ve done.

      It’s not that I hold a long standing grudge against LED TV’s, it’s just that most people shouldn’t go buy one. The older LCD seems to work just fine. As does no TV at all. And I can’t relate size/quality of TV to theater attendance as we ourselves (who own old TV’s) don’t attend theaters yet enjoy plenty of television broadcasting.

      Just the same, most people shouldn’t (can’t) spend thousands on family vacations. How do I know? Because it interferes with saving for retirement or getting out of debt. Both of which are serious problems. Yes, we both recognize the memories and wonderful experiences that can be created. But we also recognize the fact that we’ve continued to build unforgettable experiences right here at home. Every moment, every situation is what you make of it.

      I won’t address your Hyundai statement, because the Prius amount is all I need for sake of calculation. Your Prius should get around 50 MPG? Many mid-2000 gas powered cars can achieve 35 MPG (much higher with hypermiling). The Scion xB is a good choice. Heck, even my 1996 Saturn gets close to that. So you’ll get roughly 30% MPG better, which means the gas car would have used $6873 during that time. Or roughly $2000 more. Depreciation differences will MORE than cover that amount, I assure you. The point being, most people shouldn’t go buy a new car. I’ll have to break that down in a later post.

      The last part of your comment is spot on. You never know how much time you’ll have in life. So spend life pursuing things that matter (not material goods) and socking away money to retire really early (or pursuing a career you actually love). Most folks slave away at a job they can’t stand for 40 years just trying to pay bills and hoping for a good government sponsored “retirement” at age 65. No thanks, I’ll skip the frivolous expenses now and still enjoy every minute!

      • Kris Prewitt
      • April 10, 2013

      Totally agree….Duane will not be able to retire as early as Mike has, but we have had such a fun marriage and made some awesome family memories during those years. Sometimes those memories do cost some money, but like the commercial says they are PRICELESS!!!!! Sadly, life can be cut short, so do throw in a few joyous occasions and learn not only the importance of charitable giving, but the wonderful feeling that it gives you to be generous to others. Love this life that you have together. 🙂

  6. Great post! I just heard a relative say at Christmas, when questioned about his new car “Oh, I don’t look at how much it costs, I just see if I can afford the payment”. The comment made me sick to my stomach. This was a 60+ year old man!

    • Reply

      Oh my word Laurie. Unfortunately I think this is more common than we care to think about.


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