Making A Living Is Easy (if it weren't for the Jones family)

It is relatively easy to make a million dollars these days. After all a million dollars ain't what it used to be. What cost $1,000,000 in 1980 would have cost $2,677,633.83 in 2006. Today, one would need to strive to be a 3 millionaire if being "rich" is what you are after.

Let's say that is what you want to do. How do you get there? The average salary in 2004 was about $46,000 and if you earned that salary for a 45 year working career you would earn over $2,000,000. Say you invested just $200 each month over your career and earned 8% (long term average stock market investments earn %10-%12). After your 45 years you would have a million dollars in your investments. What's that add up to - over $3 million. but alas this tale is not yet done, for in the intervening years you needed to feed, to shelter, to clothe and to vacation your family. Hopefully you will also have shared your bounty with your favorite charities. And at the end of your working career you have spent it all except that $1,000,000 you have in investments. But as we know-A million dollars ain't what it used to be, especially 45 years from now. In fact we might even need to be a $9 millionaire.

So you're asking - I thought you said it was easy to be a millionaire. Yes, it is easy but staying one is really hard. Chasing money is tiring. It makes us work more, see our families less. It makes us eat worse and exercise less. It makes us more able but less willing to take a vacation and relax. And in the end all we have is a lousy million dollars or so. This is what is called the rat race. Running on that little rat treadmill going no where important.

Bottom line is that there are a few poor assumptions in our little thought experiment above. The first is that the ultimate goal is to be "rich". Sure it would be nice but it also causes a few problems - jealousy/enemies, taxes, easy access to vices, arrogance, hangers on and lets not forget it doesn't make us happier (see Opening Day Passion). The solution to this is to redefine your life on your terms. What is important to you? Is it time with family? A job in one of your passions?
Everybody wants to have a fulfilling life full of time with family and engaging in their passion but a whole lot of people aren't doing it. Harris Interactive did a poll that painted an ugly picture of job dissatisfaction. Forty-one percent of employees overall are unsatisfied with their jobs, with many feeling that management lacks integrity.

So why are we standing for such conditions. The answer is that we are stuck keeping up with the Jones family, what Thorstein Veblen's labeled - Conspicuous consumption. In essence we want what we see. If the Jones family gets a pool in their backyard, we want a pool. Ma Jones gets a new volvo station wagon, we want a volvo station wagon with the heated leather seats. And increasingly, since Veblen theorized this in 1899, we don't just want the volvo - we go get it.

Now that we find ourselves with a bigger house than we need and newer cars than is necessary and other toys of the "leisure class" (boats, snowmobiles, cable, season tickets) we can't fathom living without them. Even if we can concede that these things aren't need we can easily justify them because we can "afford" them. After all our salary is enough to cover all those payments.

Now we have come full circle. Remember that $3 million we made in our lifetime? We just spent it. And remember all the things we wanted to do with our families and with our talents and passions? We didn't do it.

Next time I will try to write about how to say sayonara to the Jones family and get out of the Veblen Vortex.