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White picket fence, 2.5 kids, big SUV, keeping up with the Jones'. We've all heard of it, but have you actually analyzed the ugly truth behind the American Dream?
The popularization of The American Dream is often attributed to historian James Truslow Adams. In his book 'The American Epic', published in 1931, he describes the dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. Sounds magical right? This idea of an American Dream has been sort of twisted and distorted based on appearances and luxuries and on appearance of luxuries.
To live the modern standard of The American Dream; we are encouraged to take out massive loans for a college degree(s), get a decent paying job, get married, take out a mortgage for the most expensive home for which a bank will approve a loan, lease an expensive luxury sedan or large gas guzzling SUV, have two and half kids, work 45 years and pray we were able to save enough cash to cover our expenses until we expire. All the while making sure those damn Jones' across the street don't drive nicer cars or send their kids to better schools. The sad truth behind this lifestyle is that a good amount of folks are living with crushing debt and are always one paycheck away from financial ruin - let alone being able to afford to live after their working years.
According to Bloomberg, as of Q3 2016, average household student loan debt totaled $49,042. Average credit card debt was around $16,000. Average mortgage debt hovered around $172,000. Not even including medical debt, auto loans, personal loans, etc.... the average American household is over $230k in debt! And for what? To appear wealthy? Don't get me wrong. I'm not saying no one should want nice things, but is crushing debt really worth it? My answer is no. Take a look at this survey released by SunTrust Bank in 2015. 35% of respondents said that money is the main cause of friction in their marriages.
The American Dream isn't all a nightmare... if done the right way. Delayed gratification is key. Its the ability to put off immediate reward for a sometimes greater reward down the line. For example take Kayla, two weeks into her first job right out of college, has had her eye on a candy orange Lexus coupe. Her salary allows her to afford the lease payments along with her living expenses and student loan payments; leaving less than $100 for savings every month. Should she get her dream car now? No! She should build a decent savings and pay off her student loans first. This way she'd be able to enjoy the candy orange Lexus without the financial stress of student loan debt and absence of an emergency savings cushion.
Ignore the Jones' - let them spend themselves into financial ruin. Create a budget, build your savings, pay off your current debts and then enjoy the true American Dream.
" I don't want any part of the American Dream. It's all about buying crap you can't afford. I want my own dream!" - Melinda Collings