How to avoid the FALSE PROMISE of the Madison Avenue lifestyle

The Madison Ave lifestyle is everywhere we turn. You know what I’m talking about… Fast paced… Beautiful homes, beautiful new cars, two new motorcycles in the garage, a poolside hot tub, fine dining every night… Everything you ever wanted right there at your entire disposal. Advertisers are experts at tapping into our dreams of having the ability to live like this. (The glamor of a gleaming new car on wet pavement at night is a sure sell.) But there is one group of advertisers that is especially good at making us believe that the Madison Ave. lifestyle is possible for everyone… The credit card companies.

Let’s take a look at some of their ads. There is a major credit card that everyone is familiar with. The tagline for your TV ad? “Be where you want to be!” And it usually shows people who are traveling the world, enjoying all that life (with credit cards) has to offer. Now what is this company trying to say here? They are trying to make you believe that this credit card will take you where you want to go in life.

I just received a pre-approved credit card application in the mail. The headline read “Get the credit you deserve!” Makes you feel great, doesn’t it? …Know that you deserve something. It makes you want to get up and fight, because it implies that right now you are not getting what you deserve. After all, credit is a constitutional right, isn’t it?

Here is an excerpt from another I received in the mail the other day. Part of the sales letter read: “Only a select group of people will carry the gold card. It instantly identifies you as someone special, someone who has achieved a higher degree of financial freedom (emphasis added), and who expects higher levels of financial freedom.” financial flexibility, convenience and service in all your dealings.

Sounds great, doesn’t it? Especially the financial freedom part. After all, isn’t financial freedom what we all want?

All of these advertising campaigns are based on one premise: “You can achieve a better lifestyle using credit than spending cash.”

Here’s a problem… This premise is a lie!

Here’s the reality: You can live better for a few years using credit, but then you’ll spend the rest of your life living below your means trying to pay it all off. It’s all an illusion.

Credit makes you believe that you’re okay (or at least doing pretty well) because you have all these “stuff.” But here are the facts: If you make a $2,000 credit card purchase at 19.8% and only make the minimum payments, it will take 31 years to pay it off and you will pay $8,202 in interest! That means that by using credit, you’re paying five times more than if you used cash.

Move along. Buy all those nice things on credit, and I’ll only use cash. Let’s see what happens. In the beginning, you will have one or two nice cars, a nice boat, nice furniture, and a big stereo, etc. And I will drive older cars. I’ll have “first American garage sale” furniture and clothing. And I will probably deprive myself of that bike that I would really love to have, because I don’t have the money to buy it.

From all appearances, you will appear to be much more successful than I am… At first. But what is really going on here? In a few years I will not only catch up with you, I will pass you by and leave you in the dust financially. This is because when he paid $10,000 for a $2,000 purchase with his credit card, I saved until I had the $2,000 to pay in cash. So I was able to invest the extra $8,000 you spent on interest. You had compound interest working against you, but I had compound interest working for me! (And that’s where you want to be!)

Ten or twenty years from now, you’ll be up to your earlobes in debt and still trying to live the illusionary Madison Ave lifestyle. grows into millions, literally!

By then, I’ll be working because I want to, not because I have to. And I’ll be able to afford to buy almost anything I want… Cash! …While you’re sweating the economy and the next downsizing or looking for the next $50 raise, just so you can stay on top of all those credit card payments you’re making for things you bought years ago and probably have forgotten for now anyway.

Are you starting to get the idea? Credit is not good for you. It promises (and offers) short-term profits. But it always brings long-term pain. By pursuing the Madison Ave lifestyle using credit, she is actually moving further away from him. Rich people understand this principle. That is why they are rich. There is a fascinating book called “The Millionaire Next Door” written by Thomas Stanley and William Danko. (Published by Pocket Books, a division of Simon & Schuster Inc.) The authors spent many years interviewing the wealthy. (Those with a net worth between $1-5 million). And some very interesting things have emerged from their study.

Let’s look at the car buying habits of the wealthy. What kind of car would you expect a millionaire to drive? An expensive luxury car or an attractive foreign sports car? Well, Stanley and Danko have discovered that this is not the case at all. They have found that the most popular brand driven by the rich is Ford. And the most popular models are f-150 pickups and scouts!

Here’s what Stanley and Danko have to say: “How do millionaires buy vehicles? About 81% percent buy their vehicles. The balance is leased. Only 23.5 percent of millionaires own new cars. Most haven’t bought a car in the past two years In fact, 25.2 percent haven’t bought a motor vehicle in four years or more How much do millionaires pay for these vehicles The typical millionaire (those in the 50th percentile) paid $24,800 for their most recent purchase Notice that 30 percent spent $19,500 or less.

Also keep in mind that the average American buyer of a new motor vehicle paid more than $21,000 for their most recent purchase. This is not much less than the $24,800 millionaires pay! Also, not all of these millionaires bought new vehicles. How many indicated that their most recent vehicles were used? Almost 37 percent. In addition, many millionaires indicated that they recently lowered prices, that is, they bought vehicles at a lower price than before.” (pp. 112-113)

In other words, millionaires drive average vehicles! Why do they drive average, old cars instead of new, fancy cars?

1. They’re rich *because* they drive average old cars, and they know that if they bought new luxury cars all the time, they wouldn’t be rich.

2. They don’t feel like they have to maintain a status symbol or “keep up with the neighbors” because they know they are worth much more than the neighbors could ever dream of.

My wife recently spoke with a mechanic who had dreams of purchasing his own facility for his auto repair business. But for him, it was just a dream. He could never afford it. Yet in his driveway sat a beautiful new turbocharged diesel 4×4 pickup with a king cab and etc, etc. In fact, he even joked about the “mortgage” on his truck. But what he didn’t realize was that if he hadn’t bought the charm of that beautiful new truck, he could have bought his garage and owned his own business.

If he had driven an older truck and bought his own business, he would have finally had the freedom to drive whatever he wanted! Achieving the allure of the Madison Ave lifestyle kept him from achieving the Madison Ave lifestyle.

To live the Madison Avenue lifestyle, you must first avoid the Madison Avenue lifestyle. Don’t spend $10,000 on a $2,000 purchase because you bought it using a credit card! Instead, save $2,000, buy it with cash, and invest the $8,000. Eliminate all your debt, including your mortgage, and then invest the money you’re now wasting paying interest.

If you do it consistently, you’ll have a compound interest working for you instead of against you, and twenty years from now you’ll find you have a new address on Madison Avenue.