Does Today's Good Life Grief Hit Home?

Physician's Money Digest, April15 2004, Volume 11, Issue 7

The cost of living the good life has become evenpricier. Need some convincing? According toCNNMoney.com, a good color television setcost $400 in 1965. In today's dollars, thatequates to about $2300. Still, that figure pales in comparisonto the price of home entertainment today. Forexample, a 50-inch flat-screen plasma television fromSamsung costs about $8000. Even at that price, consumerssay they have to have one.

How about real estate? In the early 1960s, a four bedroomhouse in a middle class New Jersey suburb soldfor $19,000. Last year, that same house sold for morethan 20 times that figure. The fact is, the once rare $1-million home has almost become commonplace. In2000, there were more than 313,000 $1-million homesin the United States. Clearly, $1 million just doesn't go asfar today as it did in the past. Why not?

Price of the Good Life

Bottom line:

Part of the reason why $1 million doesn't go as fartoday may be that there are more millionaires in theworld. According to an article on The Motley Fool Website (www.fool.com), there are more than one millionmillionaires in the world. We're earningmore, but we're spending it faster. The concern amongmany economists today is that over consumption is notonly unhealthy, but it's also economically unsustainable.

There is a price to be paid for living the good life.The fact is many of us—no matter what our annualincome is—may be living life a little too large. In otherwords, we seem to have become victims of the widespread"you can't take it with you" syndrome. But justhow far will we go and how much will we pay to be partof the good life? The following statistics shed more lighton the current economic state of Americans today:

  • More than one third of new Mercedes-Benz owners earn less than $60,000 a year.
  • The average consumer has eight credit cards and a balance of $8400 in credit card debt.
  • Almost 20% of all credit cards are at their limit.
  • The average American household pays $1000 a year in finance charges.

Reality Based Spending

If $1000 in finance charges doesn't seem like a lot toyou, consider the big financial picture. The amount ofmoney the United States paid in interest last year couldpurchase the entire inventory of 5000 Jaguar dealershipsor the company IBM, with $55 billion to spare. Whatthose interest payments do is increase the cost of livingthe good life. And according to Fool.com, we're not onlyborrowing more money, we're borrowing money thatwe used to say was off-limits, compounding the problemby paying it back slowly.

Interestingly, not only has the cost of the good lifechanged, but so has its definition. Desiring Starbucksover Folgers is small potatoes. In the 1960s, visiting Pariswas a big deal. Today, you can get great deals on trips toParis, but vacationers want to visit more exotic locations.Travelers spend thousands of dollars on cruises toAntarctica or excursions to climb Mt. Everest. But theremay be hope yet. Fool.com reports that the very richhave begun forsaking their Lamborghinis for $30,000automobiles.