Goodbye to the Joneses. 3 Practical Steps to Arrive Financially.
The Joneses are everywhere.
And boy, do they like to spend money; frequently money they do not even have.
Please do not try to compete with them.
They will beat you every time.
When running out to money or filing for bankruptcy tires them, they will call in their relatives. And their relatives will outspend you! You see, this is an exceptionally large and extended family.
They go by different names of course, not all of them are Joneses. They like to have their own identity. However, they all have the same mission, to own the biggest house, drive the newest, most expensive car and take the longest, sweetest vacation. The leaders of this family are remarkably successful at their mission and will not be bashful about telling all the Average Joe’s this.
I think the technical term for this is humble bragging.
Consumer spending accounts for about two thirds of the economy. The measurement the government uses is the Gross Domestic Product (GDP). This is not hard to see. Packed restaurants, new vehicles on the road and those Amazon Prime Trucks are everywhere.
1)Your Savings Plan
Your mission, should you decide to accept it, will be to save money every month. I am not suggesting you need to sit at home on Friday nights clipping coupons and re-reading your favorite book, The Complete Tightwad Gazette in the dark to save money on your light bill.
You should certainly enjoy life. What is the point of saving and investing if you cannot have fun? Unfortunately, when you accept this mission, it might mean that you will not be able to buy that brand new Fire Engine Red Ferrari like Mr. Jones this year. Sorry about that. He might give you a ride in his.
At any rate, please do not think you are being punished. Unless you have a printing press in your basement, you will just need to make choices about what is important to you. Do not forget, 4 Things Every Investor Can Control.
Mailbox is Full…Again.
Think about it when you get home from work your mailbox is full. Consider yourself to be disciplined if it is not stuffed with bills. Even if it is not jam packed with bills, it has all kinds of offers to borrow money. And the next day it will have even more offers to borrow.
That is just how it is these days, borrow, borrow, and borrow. Fortunately, the Postal Service does not deliver on Sunday. It is the day of rest you know, so there will be no borrowing. That is, of course, unless you go online.
Yikes, so there will be borrowing on Sunday!
One of the keys to achieving your financial goals is your ability to save money every month. Some people think if they just earned more income, they would be able to save more money. Unfortunately, it may be that little or none of this extra income gets saved. Certainly, earning more income is what some people have as a goal, more income, and more choices to spend.
However, there may be a time in your life when you really need that “extra” cash. It could mean working more hours to try a get a bigger bonus or your spouse must go back to work to bring more income into the family. Here are Practical Reasons You Are Going to Need a Bigger Boat.
2)Your Cash Flow
However, income is not the only factor that will impact your ability to save. One of the primary factors in calculating cash flow is your debt service. Do you have your debts under control and therefore have the cash flow available to save? Or are you strapped trying to keep up with your monthly payments?
When you consider taking on debt, there are two types, good debt, and bad debt. What exactly is good debt? It is debt associated with buying a home. I used to think that debt for higher education was also good debt. Now, I am not so sure. There is $1.66 trillion of student loans now. Of this, about 7% is in default. The prior administration kept trying to get student loan debt forgiven. 1)
Good Debt
Why is a mortgage good debt? First, historically, owning a home has been a decent investment. Notice I did not say owning a home is a great investment. It can be, but not always.
Second, with the passage of H.R. 1 – One Big Beautiful Bill Act (OBBBA), there have been some temporary benefits for seniors and homeowners.
One change was the increase in the standard deduction. In 2025, a married couple filing a joint income tax return gets a standard deduction of $31,500, single filers get $15,750. Additionally, for taxpayers age 65 and older, married couples filing jointly get $1,600 each and single filers get $2,000.
OBBBA also allows taxpayers age 65 and older an additional bonus standard deduction of $6,000 each. Therefore, a married couple filing jointly, where both are age 65 or older, get an additional bonus standard deduction of $12,000. This is available from 2025 through 2028.
There is a phase out for this additional standard bonus deduction. For married filing jointly, this starts at $150,000. For single filers, this starts at $75,000.
Taxpayers can elect to use the Standard Deduction or Itemized Deductions. Which ever is better for them. The primary Itemized Deductions are State and Local (SALT) taxes, home mortgage interest and donations.
Another change in the OBBBA was the increase in the SALT Deduction from $10,000 to $40,000 effective in 2025. This is effective from 2025 through 2029. The future years deduction will increase based on inflation. In 2030, the SALT Deduction reverts to $10,000.
Third, the fact of the matter is you must live somewhere.
Hopefully not with your in-laws.
Just kidding. Sort of. So, you will have to either own or rent.
Housing Crisis
The primary advantage to owning a home is that you do not have to pay rent. Of course, starting out and buying your first home will mean having to take out a mortgage. This can be for up to thirty years.
On the other hand, if you rent, in addition to getting to live there, all you get is a cigar box of rent receipts at the end of the year. This is not the way to build your net worth.
Certainly, in the current housing crisis, it may be necessary to temporarily rent. However, long-term it is preferable to own a home. Keep in mind that real estate prices are cyclical.
This means that real estate prices go up and down.
Sorry, I had to put that in italics. Younger people have not experienced declining real estate prices. They do decline, and when they do, watch out. If you buy a house when prices are at the peak in the cycle, you could be living there for an extended period before you can break even.
However, unlike someone who rents, when you own a home, you will have other expenses. Even if you do not have a mortgage (a wonderful place to be I might add) you will still have to pay for real estate taxes, insurance, utilities, repairs, and maintenance. These bills can certainly add up quickly. This does not even include the time and sweat you will put into your home to keep it in good condition.
3)The American Dream
What was the American Dream back in the day has turned into a housing crisis. One outcome from The Great Recession of 2007-2009 was that building came to a grinding halt. This naturally decreased the supply of housing.
Although it was not as high as it was during the COVID-19 pandemic, unemployment doubled from 5.0% in December 2007 to 10% in October 2009. 2) Consequently, the foreclosure rate rose to 2.9%, up from about 1% for the prior decade. 3)
The economy was, well, not good. Home prices fell 30%. The S&P 500 Index fell 57%. A trickledown effect of a slow housing market includes a slowdown in sales of things like furniture and appliances.
Adding to the lack of available inventory are current homeowners with low fixed rate mortgages. While these folks may want to move, the math is just working against them. If you have a mortgage with a 3.5% fixed rate mortgage, why would you move and then have a 7% mortgage.
As they have gotten older, there is strong demand for housing by Millennials. This crowd was born between 1981 and 1996 and are currently between age 29 and 44 years old.
The lack of building through the years, current homeowners ‘stuck’ with low-rate mortgages and the Millennials looking to buy has created a shortage of 4.5 million homes.
Currently, with little inventory, elevated prices, and recently higher mortgage interest rates have made it challenging for first time home buyers. Additionally, rents have been rising making it more difficult to save money every month.
For homeowners, due to the recent run up in prices, the equity they have in their home tends to be their biggest asset, followed by their 401(k) plan account.
Action Item
Take a step back and look at your priorities. If keeping up with the Joneses and being President of the local chapter of the “Shop-Till- You-Drop-Club” are important to you, it will be challenging for you to achieve any of your financial goals.
If you need help with Goodbye to the Joneses. 3 Practical Steps to Arrive Financially, give us a call at (860) 645-1515 or E-Mail Thomas.scanlon@raymondjames.com.
This is original content written by Manchester, CT Financial Advisor, Thomas Scanlon, CFP®, CPA.
1)dfr.oregon.gov – Student Loan Annual Report – July 2025
2)federalresrevehistory.org – November 22,2013
3) attcomdata.com – January 14, 2010
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