MTV Cribs, Bling, and...the housing bubble?!?!?
I got an e-mail from a reader today that posed the following question to me:
Do you think there is a direct correlation between MTV Cribs and the housing bubble?
I have thought about the very same thing on many occasions...how the MTV Cribs, pimp-my-ride, bling-bling attitude IS having an affect on society. I was talking with a title rep friend today, and they mentioned the "bling factor" that everybody is striving for and I said the same thing: that everybody wants to "live" like "mtv cribs" but they don't have their albums on the charts yet, movies in theatres yet, or play for a pro team yet. On a side note: the title rep didn't like the financial situation that many people were getting into, but they said the same thing that soooo many others say "if we don't do the deal, somebody else will".
I don't think MTV Cribs or any of those things CAUSED the bubble, but they are definitely influencing the perspective of generations of Americans. I think it extends to way more than housing though...it's the cars, big chrome wheels, tv's in the cars, Crystal in the fridge, etc. It is a "look" that you have to have if you want to be "somebody". MTV Cribs even has their own line of home furnishings...for those who want to "live like a celebrity".
I enjoy watching Cribs, as I enjoy flipping through a Robb Report. There has always been an interest in "lifestyles of the rich and famous" and there always will be. The difference is that living that "lifestyle" has become more "attainable" through lax credit standards. Years ago, if you wanted a TV, you saved your money, and bought a TV. You didn't make buying a TV a 4-5 year process. I happened to be in Los Angeles recently and heard an add on the radio where you can lease and/or finance wheels for your car! Call me crazy, but if you have to lease the wheels to put on your car, then I think your priorities are slightly out of whack. But hey, at least you are living a "pimp-my-ride" lifestyle!
Almost every single person in MTV cribs...says "you ain't a playa without a plasma on the wall". I just happened to be at Best Buy this week, and EVERY lcd and plasma tv has a little sticker with a bow on it "take me home for $47/52/77/120 a month" "no interest for 18 months on TV's $299 and up" etc. Sure, many of those MTV Cribs were done by a professional designers, for millionaire sports stars, actors, or recording artists. They can actually afford to pay cash for the TV, and not finance it over 3-5 years. Debt is what happens when people try to live a life they cannot afford today. Everybody wants to live like a millionaire, but does anybody really want to do the work, or wait the time it takes to REALLY be able to afford these things?!?!? Why wait until tomorrow, when you can finance today?!?!?
It is even having an impact on childrens toys. I happened to be in Target the other day to get some detergent and other necessities. There was a display in the toy section for remote control DUB cars. If you don't know what DUB Magazine is, here is the link. Anyway, these cars are all "pimped" out with big chrome wheels, lowered, and all the bling you can imagine. Check the 2 links I just highlighted to see what is showing up in the toy section. There is nothing wrong with the cars, bling, etc. in and of itself, it just becomes a problem when people make it a priority in life, and will go into great debt to "look" like they are a "baller".
Been to Vegas lately?!?!? All the young people "ballin" with their expensive clothes and jewelry, pimped out cars, and thowing big money down on the tables and $400 VIP bottle service in the "hot" clubs. Heck, a drink at most bars now is $8-16 bucks! I know there are a lot of young people that are making lots of money (especially after the stock boom, and now real estate boom), but I have a feeling that a majority of people in their 20's are not millionaires. I have seen some of my brokers that have made a big montly check, and head to Vegas to drop 3-5k in a weekend of partying. The problem is that they don't have health insurance or a long term plan. I know this, because I'm starting to sense some desperation with some brokers (mostly the younger ones) that thought 20k a month was going to go on forever. Some are wishing they had 5k back in their savings accound, instead of memories of a great weekend.
If you haven't read or heard of the book "The Millionaire Next Door", I suggest you check it out. Here is a shameless plug on my part...but I have a link to the book on the right hand side (scroll down a little bit). I think people should check out that book if they want to see how people become REAL millionaires. Here, I'll give you a big hint: it involves living beneath or within your means, and not taking on needless debt for things like "bling".
I guess the way I was raised, is that you buy all of the "stuff" after you have taken care of the "important things" i.e. savings, insurance, investments, retirement, risk management, etc. I know that isn't popular, doesn't make for great television, but it makes for a responsible member of society. Don't get me wrong, I like all that "stuff", I just don't think it is prudent to go into high levels of debt to put on a "show" or live a lifestyle beyond your means. I am by no means perfect, and there was a time when I was younger that I financed an TV/surround/DVD system because it was at 0% interest for several months. I had the money to pay for it up front, but since it was 0%, I ended up spending a bit more than I had planned and paying for it over several months. So yes, even I was guilty of doing this...albeit when I was younger and on my own for the first time.
How are you going to feel when your taxes go up because the government decides to bail-out all the people that wanted to live an MTV Cribs lifestyle on a Gomer Pyle income?!?!? How much are you going to wish that there were more financially responsible people in this country.
So that is what I think. I don't think any of those things CAUSED the bubble, but they are definitely influencing the perspective and consumer spending of generations of Americans. Several months ago, one of my brokers was telling me that their daughter thinks she is getting an H2 when she turns 16. The thing is, she thinks she is entitled to it, and that you are a nobody without it. It seems that many children in their teens see the lifestyle, but they have no comprehension of how hard it is to really earn the 50k needed to buy a Hummer...and how old it gets spending $500-1000 a month on gas to keep it running.
I know there are many responsible parents and children out there, but I have a feeling their numbers are falling behind those of the MTV generation. If the number of people overextending themselves to finance homes, cars, and consumer "lifestyle" items is any indication, I think we will be in for trouble in the long run if we keep extending credit for everything in the world.
I know this wasn't a totally housing related post...but I think that people chasing a lifestyle is definitely contributing to the consumer spending that is being financed through this housing boom. Debt, and living beyond your means, whether through housing, lifestyle, or a combination of the two can certainly make somebody an FB.
What do you think?
I look forward to the comments...