when they ask things like, "Why can this family down the street go on all these fancy vacations and drive new cars?"

Same thing for us. I wondered myself when I saw them driving a new car home. How could Val and Ralph afford a new high-end car? I am sure I make more than both of them combined.

Then one day it hit me.

They don't own that impressive brand new car. They lease it. In 3 years the lease will be over and they'll get another new car. (Which is exactly what happened.)
Which will come with another monthly payment.
Meanwhile our perfectly good car will be paid off. In 10 years we will have had 6-7 years of no car payments while they had 120 car payments.

Luckily, neither of us cared about cars. If it worked, that's all that is necessary.

My teenage son asked me once, when we were going out to eat and I asked them which of the restaurants I named would we like to go to, "Dad, why do you make us choose only the ones you have a coupon for?" I told him "The coupons are the only reason we are going out and not eating at home."

Berkshire Hathaway FAQ

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