Recently I’ve noticed that I have a different definition than afford than my staunchly middle class friends. Actually I probably have a very different view of what middle class means, so let’s start with that.
Growing up I wanted the American dream, now I laugh at it. The American dream is really opportunity, but the connotation is a debt laden, deferred life to raise kids and fitting in anything to keep you sane. Middle class to me is:
- 500,000$ in debt on a place to live
- A 30,000$ car you don’t need
- Kids that need to go to expensive private schools their whole lives, totalling more per year than the median American household earns before taxes.
- A yearly vacation that leaves one more stressed coming home than leaving.
For a frame of reference, poor is not having or barely having enough to survive, and rich is interest earning interest. In other words, even if you make a lot less money than someone, you can be richer than them if you’re spending less, saving more, and earning interest instead of paying it. A recurring theme in personal finance blogging is horror stories of the writers when they were younger, and a lot of them mention buying stuff just to keep up with their peers. One particular staff writer at getrichslowly.org mentioned she wondered how all her friends could afford this stuff when it was sending her massively into debt? She later found out there were in the same predicament.
This brings me to my definition of “afford”. Here’s a typical conversation:
- Friend: You should have bought X car/let’s eat Y for dinner/why are you still using that instead of buying new Z product.
- Me: I can’t afford X, Y, or Z.
- Friend: You make 70,000$, you can afford it.
- Me: No, I can’t.
When they say “afford” they mean, I make enough money that I have enough to spend on it. If they knew I have something like a 15,000$ credit limit, then what I can “afford” becomes much higher.
But my perspective is different. I don’t see how much I make, I see how much I spend, and the 10,000$ earning 2 dollars a day in interest from my college loans. When I say I can’t afford something, I mean it won’t fit into my budget, which I have slowly been shrinking over the past four months from about 2,000$ per month to 1,000$ per month. Avoiding lifestyle inflation, this means every extra dollar I make is 55 cents (after taxes) more in my bank account. Not avoiding lifestyle inflation, every extra dollar I make means nothing, maybe an extra toy.
So what’s your definition of afford?
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