The Leased Lifestyle

American Express really had our number when they said that “membership has its privileges.” We love to belong, to feel like we’re part of something. Maybe it’s the association that membership has with being cared for (as by a parent) or with the security of the crowd (as with a… herd. Sorry, folks, sometimes the analogies aren’t flattering.). Whatever the reason, as a culture we’ve demonstrated time and time again that consumer goods and experiences are part of how we define who we are to ourselves and each other.

What does it mean to live in a society that uses material goods to make abstract concepts like “identity” and “membership” more tangible? Well first of all, it seems to involve selecting, buying, and displaying a whole lot of stuff. A tremendous amount of energy and attention goes into keeping up with those pesky Joneses, who seem to always be one step ahead of us in getting the latest aspirational hoo-ha.

If this sometimes feels exhausting, stressful, and over-stimulating that’s because it is. It’s tough to keep up with the consumer treadmill. When “new” and “latest model” become the most attractive product attributes, then actual ownership becomes more tedious and the Leased Lifestyle takes on a whole new appeal.

When you own something you are responsible for its care and eventually for its sale or disposal. Depending on the item, ownership has a semi-permanence that comes from the value of that item becoming part of your own net worth.

When items have little or no long-term value, the benefits of ownership are decreased. This is why many financial advisors do not recommend buying new cars or expensive computers, because these items traditionally lose most of their value soon after they are purchased.

Leasing, on the other hand, offers a couple of interesting alternatives to the ownership experience. When you lease something – be it an apartment or a car – you are able to walk away from the item when the term of the lease is over. You are not committed to the item for perpetuity or until you find another buyer. The item will also usually come with some sort of additional service, such as yearly maintenance for a leased car or the on-call superintendent who will fix the pipes when they break. That’s because the owner is the one who has a vested interest in keeping the item in good condition. As the leasor, you’re just there for the use of the item – and isn’t the using the best part?

In some cases, leasing even allows you to procure a more expensive item than you would be able to buy outright. This was certainly the case in the 1990’s when a leasing boom in the luxury vehicle market took hold. Someone who found it prohibitive to pay $60,000 to buy a Lexus might be more than willing to pay no money down and $500 a month for five years to drive one.

Nowadays we’re seeing consumers’ desire to lease as opposed to own creep into some very interesting sectors. Bag, Borrow, or Steal allows members to pay a monthly fee and in effect rent a different designer handbag whenever they are ready to trade in their current selection. With bags in the Couture category starting at $175 a month this is not cheap. But it’s certainly less than paying $2,000 to actually buy a Chloe Paddington bag – especially when what you really want is the bag’s very time-sensitive It Status rather than its last-a-lifetime quality construction.

For the Leased Lifestyle to be profitable and therefore worthwhile, sellers and service provider must make a profit. And in fact, some industries have shaped their entire business model around the consumer’s preference for low-commitment, high-novelty products. In the United States wireless carriers offer cell phones at far below their manufacturing cost in order to sell lengthy service contracts that more than make up for the loss they take on the device.

This can lead to some confusion and therefore disempowerment on the consumer’s part. “Service” is abstract and difficult for consumers to value. For example, I have no idea what it costs Verizon for me to call my mother, and therefore would be hard pressed to know if I’m being gouged.

When we try to apply what we know about product pricing to this Brave New Leased Lifestyle it gets even more convoluted. Debt Hater writes:

I just bought a new cell phone. I bought it because I had a $150 rebate that expires in March. Then the MotoRazr Red was half off with another credit for a new two-year contract. Then, Radio Shack had an additional couple bucks off. So a phone listed as $309.99 became $19.99 and I bought it.

What does this do to the consumer’s idea about the product’s value? She believes any item that sells for $20 must “really be worth about $10.” Her attention is on trying to assess the value of the product rather than the value of the service. (By the way, this kind of scenario just about makes a blood vessel burst in my husband’s head.)

The Leased Lifestyle is growing, moving from traditional areas like vacation time-shares and into whole other facets of our daily lives. Zone Diet meals that are delivered to your home so you don’t have to cook or think about calories. Tie-of-the-Month gift clubs so that your “gift” is, in fact, the ongoing experience of newness and novelty.

So is the Leased Lifestyle bad or good? Well, it’s certainly a useful adaptation to the stresses of an ownership lifestyle that moves too fast. With our love of trends and the continued growth of the service economy, it does seem that the Leased Lifestyle is going to continue to evolve and expand. I think we’re at the beginning of something and time will tell if both consumers and retailers continue to favor it.

Actually, You Are a Beautiful and Unique Snowflake

I have a secret for you. This secret is going to change your life. Here is the big news:

Everyone in the world has more or less money than you.

That’s right. There is no sameness. No comforting lie that in America “we’re all middle class.”

I read a great post last week on Getting Green titled Why I Keep Quiet About My Salary. In it, the poster writes about why he does not disclose how much money he makes on his blog (or to anyone but the most intimate people in his life). While I fully support his personal choice, I read with great interest his rationale for privacy:

If I made substantially more than my roommate or other friends, they would probably become jealous of my salary. They might be well-intentioned, good people, but over time they would more than likely become jealous and… resentful. They’re not bad people, but money just has a way of effecting [sic] people.

If I made substantially less than any of my friends, they would probably naturally feel superior to me. If I made less than them, they would figure that they are worth a lot more than me and work a lot harder than me. If this were to happen I would have the privilege of dealing with a superiority complex.

I find this position really interesting. First of all, the writer chooses to speak only about how he believes others will feel if they find out he makes more or less money than them. Instead of stating his own feelings (he never says, “I feel inferior when others earn more than me”), his primary concern is to avoid others' judgment. In describing what is “natural” to feel in response to this information, he is perhaps revealing something that is true for himself but that he may not be comfortable owning. Comparison judgment can be very disruptive, and this writer has a strong desire to avoid it.

Money is a sensitive topic, especially when it impacts our social selves. One of the reasons people are so anxious about money is because it is often a basis for comparison. While I don’t deny that people rampantly compare, it's unfortunate, because I think money is about the most invalid form of comparative measurement available.

If one person has $20,000 in the bank and another has zero, then is the one with $20,000 that amount… “better” at “money?” If one person earns $50,000 a year and another earns $75,000, is that person getting it 50% more “right” than the first guy?

Of course this example seems ridiculous because it’s not just about the dollars – maybe one person received an inheritance and the other did not, or one is a school teacher and the other works in marketing. With so many ready contextualizers, money immediately proves itself to be a poor standard of personal comparison or worth.

Even if two people both earn exactly the same income they can have widely varying financial lives. Inevitably they have different housing or transportation costs. Maybe one pays a student loan. One may support a family. I will guarantee you that they will have differing values about what they prefer to spend on food, clothing, entertainment, etc.

At the end of the day, money is a resource that empowers a person’s choices. But different responsibilities, liabilities, and opportunities affect the amount of “choice” a certain income is likely to afford. And while there may be similarities or trends, the delicate combination of resources, liabilities, and choices is unique for each individual.

If I may wax rhapsodic for just a moment, it is this uniqueness that makes me love what I do. When I read a person’s budget and talk to them about the role of money in their lives, I get such a strong sense of who they are as a person that I sometimes joke that I can “psychoanalyze a budget.” Where does the person treat himself? Deny himself? What are the boundary issues in this person’s life? What was provided in his early years or what did he have to overcome? It’s all there in black and white if you explore the meaning behind the numbers.

I think most people find this concept of financial uniqueness surprising and terrifying. Surprising, because most of the popular wisdom about money involves certain universal truisms: save a portion of each paycheck, don’t buy a new car, pay off your debt. How can we be unique if we’re all supposed to be doing the same things?

And it’s terrifying, because if there is an area of our lives where we’d appreciate the comfort of the crowd, it’s in our finances. Making choices about money can be anxiety-producing. We would all like our choices to be validated -- or forgiven-- and since we tend to keep our personal information private we measure ourselves against those universal truisms to see how we’re doing.

When I say to clients, “Everyone in the world has more or less money than you,” my words are usually met with a surprised laugh and then a sigh of relief. Inherent in this phrase is permission to be an individual, to have limitations, and to still be okay.

Certainly there are economic realities that must be acknowledged. It is beneficial to spend less than you earn, and it is prudent to save for the future. But it is not a sign of one’s moral superiority to be in a favorable financial position. Nor should it be shameful to have less. (Or, conversely, to feel guilty for having more, or virtuous for having less.)

I feel strongly that it’s important to diffuse some of the isolation that we feel around money, and to not be so emotionally constricted on the topic. When our financial decisions are grounded in personal meaning, there is such freedom to own the whole spectrum of who we are. It doesn’t matter who has more or less, because we are all beautiful and unique snowflakes.