Rich Man, Poor Man – The Illusion of Wealth

Illusion of Wealth

Seattle, Washington, U.S.

Meet Bob.

Bob is a 42 year old male, married for 17 years to a beautiful wife named Phyllis. They have two children, a dog and three cats. Phyllis works in a salon as a manicurist where she’s been for the past 9 years, and Bob is a software engineer working for a company in Seattle where he’s been for the past eleven years. He makes $65,000 a year before taxes, and she makes around $40,000 a year before taxes. Together, they have a combined income of just over $100,000 per year.

Bob and Phyllis have a four bedroom home with a front and back yard, and a two car garage. They both have their own vehicles to get them to and from their jobs. They have a 50 inch television, an XBox 360, a Playstation 3, four home PCs (two for themselves, two for the kids),  four smart phones (two for themselves, two for the kids) with data plans, two tablets (one for the kids, one that he and Phyllis share).

From the outside, Bob and Phyllis are living the American Dream. A life of plenty. All the modern amenities and gadgets that a flourishing family should have. And 100 percent of what they “have” is paid for with credits cards and loans.

The house mortgage is $350,000. He still owes $19,000 on a $32,000 car loan. She still owes $4,000 on her $11,000 car loan. They have just over $15,000 of combined credit card debt. She owes $62,000 in school loans, and Bob owes $130,000 for his school loans.

Taxes for the couple are just around 25% per year when combining federal and state taxes. That means they have a bring-home pay of 75,000  a year before taxes. Their mortgage payment is $1,400 per month. Their car payments combined come to $1,000 a month, before insurance.  She pays around $350 a month for her school loans and he pays roughly $600 a month for his. They eat purely organic produce, and their groceries for a family of four cost them around $2,000 a month. Utilities run around $1,000 a month to keep the home air conditioned and heated, along with cable TV and high-speed Internet, water and recycling receptacles for the trash cans.

Already their projected bills per month come to $6,350, or $76,200 a year, which is over a thousand dollars more than their take-home pay. And we haven’t even gotten to the car insurance, gas for the vehicle, costs of clothing for the children, extra-curricular activities for school, Christmas gifts, entertainment costs, vacation costs and beyond, which run between $6,000 to $10,000 per year. In short….Bob and Phyllis are the typical American family, living far beyond their means but maintaining the illusion of wealth through credit management. What they can’t afford to pay with their bring-home salary they make up for with credit cards in order to keep their family “living the life of plenty”.

They have zero net income, and zero net worth. In fact, they are over-extended, and are making anywhere between 10k and 12k less than what they actually need to pay their bills, thus requiring them to use credit and credit cards to make ends meet. Stimulating the economy through continual cycling of never-ending debt.

Meanwhile, In Mexico

Meet Juan.

Juan is a 42 year old male, married for 17 years to a beautiful wife named Maria. They have three children, two dogs and one cat. Maria works as a secretary for a lawyer where she’s been for the past 11 years, and Juan is a software developer for a small company in Mexico City where he’s been for the past 9 years. Juan brings home around $20,000 USD a year before taxes, while Maria brings in around $10,000 a year before taxes. Together, they have a combined income of around $30,000 a year.

Juan  and Maria have a four bedroom home with a front and a back yard, and a single car parking area. They share a vehicle, and he drops her off and picks her up from work on his way back and forth. Sometimes she takes public transportation to get home. They have a 50 inch television, an XBox 360, a laptop for the kids and one for themselves. They each have smart phones, and the kids have burner phones for texting.

Their house is paid for. They bought a single-bedroom place when they were just married at 22 years old for $15,000 USD in a quiet subdivision of Mexico City and over the years added on extra rooms and a second level. They pitched in and bought a car together when they were 32 for $5,000 USD…up until that point they used public transportation to get to work. They worked part-time jobs to put themselves through school, and they don’t have credit card debt because they don’t buy anything they can’t afford to pay cash for.

Taxes for the couple run around 25 percent, leaving them with a take-home pay of around $22,500 per year. Insurance on the car runs around $500 per year. Gas comes to around $800 per year. They eat purely organic produce, cultivated by the farms around the city, and groceries for their family of four cost around $300 per month. Utilities for the home cost around $150 per month for AC/heat, cable TV, high speed Internet, water and gas. Entertainment costs for the year are around $1,300 for movies and events for the kids. They take two vacations a year which cost around $2,500 in total.

Their total cost of living for the year come to around $10,500 USD per year against a take-home pay of $22,500, which means a net profit of $12,000 per year between the two. They own their home, all the remodeling they’ve done to it over the years, their car, the TV, the amenities and have a net worth of around $50,000 USD when factoring in the current value of their home after all the renovations. 

The Conundrum

Most Westerners make the assumption that anyone living in a country beyond their borders is living a life of poverty. This is the illusion of wealth. Because while the vast majority of Westerners living a “life of plenty” with all the “modern necessities” are doing so on credit…people like Juan living in developing countries around the world have been living intelligently, working hard and living within their means, without credit.

Let’s say Bob gets sick and can’t work for six months. What’s going to happen to the house and the vehicles when he can’t make the mortgage payment for four months running, and then the car payments are four months behind, and the school loans haven’t been paid because he’s trying to keep food on the table and the water/electric going for his children and family, so rather than pay the loans he pays the necessities?

Do you think the banks and the creditors are going to pardon him, give him slack because of his circumstances, offer to forgive his debt and give him some more time so he can at least put food on the table for his family? Hell no! Within four months of late payments the bank is going to send a repo man in the middle of the night to take the cars, and then they will send a government-backed repo team to claim all the goods in the home and foreclose on the house to recoup their losses, leaving Bob and his family out on the streets.

All those “things” that Bob and Phyllis think they own, are in fact nothing more than borrowed…and they will spend their entire lives paying for those “things” until they are in their late 60s and early 70s…if they are lucky.

Meanwhile, Juan can take an entire year off work just because. His home, his car and everything he owns is actually, really, physically his. He bought and paid for it, with cash money, without credit. The bank can’t come hunt him down because he owns the title to his home, free and clear. He paid cash money for his car, and thus doesn’t have to worry about the bank coming to repossess it if he gets sick or can’t work for a few months out of the year.

The Illusion

The average Westerner (especially those from the U.S. and the U.K.) have been taught since birth to trust in banks and the credit system since they were old enough to read and write. They have bought into the lie of credit hook, line and sinker. This is blatantly obvious in the simple fact that if you ask any a Westerner about themselves and their job, they proudly list off their associated purchases as a symbol of their wealth…never once mentioning that they actually never purchased these items in the first place. They are instead on loan, via credit.

This is because the average Westerner has been brainwashed into simply ignoring the fact that they are a slave race. They honestly believe that they own their home, because after all they signed the paperwork at the bank for it. It’s “their car”, even when they still have five years’ worth of payments left on it. It’s “their television” even when they paid for it at Christmastime with a credit card. It’s “my vacation” even though it was put on a credit card. They believe that credit is the same thing as physically owning the item in question, and are thus deceived. 

“Welcome to my home” they say when you walk in the door, forgetting the fact that they still have 32 more years of mortgage payments to make and if they miss a couple or are late on more than a few the bank will quickly strip the home from them, leaving them out in the cold without a second thought. “What do you think of my car,” they ask, forgetting that they still have five more years of car payments to make before the car is actually theirs, and if they miss more than a couple the repo man will show up in the night and take their car without any warning.

Credit is a lie. It is the painted jail cell that has been carefully blended into the background so as to remain out of sight, out of mind. It is The Great Deceiver, shrouded in bells and whistles and paint and flashing lights and software and technological advances and promises of being “better than anyone else on the planet”. It is the illusion of wealth, and it has enthralled the once-great countries of The West and trapped them in a downward spiral that is currently being played out in the so-called “global crisis”.

Meanwhile, Juan and others like him are going about their daily business, living in developing countries where the cost of living is a fraction of what it is in The West. Free of the credit system that has dragged the West down into its demise, and free to live far simpler lives.

Mexicans, for example, have more than three times more national holidays than the United States. Italians work half the hours but yet have a take-home pay that is twice the average American….and they traditionally practice the siesta (afternoon nap) in southern regions of the country. So not only do they work half the hours and make twice the money, but they do it while managing to catch an afternoon wink along the way! Colombians have a two to three hour lunch break (traditionally) to break up the work day, and Bulgarians have holidays that literally last for a week, yet 98% of them own their own homes, free and clear of mortgages.

If these countries are supposedly so “backwards” and “inferior” to the West…how is it that their people have zero debt, four times and more the national holidays, half the working hours and afternoon naps to boot?

It’s all about frugality and living within your means. When you know what you really need out of life and how to get it without relying on the government, you embody the very essence of what it means to be a free human being.

Are you living in an illusion?

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About T.W. Anderson

T.W. Anderson is the founder of the Marginal Boundaries brand. He is the writer, editor, videographer, photographer, and social media guru alongside Cristina Barrios, the other half of the brand. In his spare time, he is the creative director of the Saga of Lucimia, a forthcoming MMORPG from Stormhaven Studios, LLC.


  • Credit is a bullshit game, Carmen :)

  • Carmen says:

    Wow. This post is eye-opening. I’m 27 and just about all my friends own a house. They keep asking me and my husband when we’re coming home to ‘settle down’. The other day I told my friend that I just don’t think we’re going to buy a house, because we don’t want to owe the bank money. She just didn’t get it. My husband and I have never even owned a credit card, so the ironic thing is we probably won’t even be able to get a mortgage because we’ve never borrowed money before and therefore don’t have a credit rating.

    But we’re managing to travel the world and still save $2,000 – $3,000 a month from our business. And yet people keep telling us that we need to get over this ‘phase’ of our lives. I think I like our ‘phase’ more than the Western world’s idea of living!

    P.S. You should add Australia to the US and the UK… people from my country are exactly the same, although luckily the minimum holiday leave is four weeks a year, and the minimum wage is around $18 / hour.

  • Absolutely, Charu

  • Charu says:

    Despite all our resources, Americans may be the poorest net worth individuals in the world. Add up the loans, credit card debt, cost of living and keeping up with the Joneses attitude and the net result is always chasing, never content.

  • Frank says:

    You, my dear sir, are a pinko commie bastard.

    Just kidding, great article!

  • @ Laura: not so much strange as just completely and utterly off the rails =P Thankfully it’s easy enough to stay off the rails if you don’t want to head down the track to utter destruction and a life of wage slavery like the majority of the on-the-rails lifestylers.

  • Oh, you are so right. We live in such a strange world.

  • Cheers, Dan :) Thanks for dropping by from the frozen north!

  • Fascinating analysis.

  • Brian, thanks for stopping by.

    I’ve used that particular photo more than once in posts here and at The Expat Guidebook blog. Most recently in the post Going Nomadic and Living Free of Credit.

    Net Worth

  • Hey TW, definitely a great perspective to have. I was actually trying to find a classic internet comic that relates to this but I can’t seem to find it right now, will let you know if I do. Basically, it showed a picture of a busy street with 4-5 different kinds of people and their “wealth”…turns out that because of student loans, mortgages, credit card debt, etc., that the wealthiest person on the street is the bum with $0.85 in his cup. That’s some truth.

    I think that credit is a great theory but we’ve twisted the idea of using credit to indicate reliability to using credit to build our sense of self-worth.

  • Indeed, Phil…even if they aren’t living on credit they are still sucked into the whole “cost of being American/Western”, which brings people who aren’t even in debt to their knees with the staggering costs.

    Thus the reason so many digital nomads like myself are opting to live in developing countries where our costs are literally tens of thousands of dollars cheaper =P

    Thanks for the comment!

  • Phil Hardaker says:

    Hey Tim, that is a great analysis!
    In the US, while we make higher salaries, expenses are so high that both adults in a family usually work. And singles, who bear many of the same costs, are poorer yet.

    I know that your posting was about the evils of dependency on credit, but for fun, let’s run the numbers assuming no credit. Say that Bob’s family has no credit card debt, no school loan debt, they are renting their house, kids still in public school.

    Ok. $105k gross income, $78k after 25% tax, or $6500/month net income. Rent for a house in Seattle, $3000. They own their cars but we need to amortize the cost of them; the $41k paid will depreciate 75% in 4 years, so cost is ~ $600/month. Auto insurance $70, gas $250, clothing and entertainment for 4, $400. Plus the $3000 you also estimated for food and utilities.

    Expense total: $7300. Even without credit expenses, they are still $800 short every month. To manage and stay out of debt, they have to cut back, only shop discount stores, have no vacation, accept a lower standard of living.

    In the case of layoffs, they will still ‘lose’ their house and sell a car because they can’t make rent payments. Since they haven’t been able to save for emergencies, there is nothing to keep them off the street. Pretty grim!

  • Well said Tim! It’s amazing what you can do the second you decide to no longer buy anything with credit.

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