The American NightmarePosted: February 5, 2014
Is the American Dream dead? Should we be renaming it the American Nightmare?
The question is often asked. The very asking of it implies the answer will be yes.
My life circumstances would suggest answering affirmative. I went to college but am underemployed. I have a negative net worth. My house is currently $35K underwater despite being in a working class neighborhood (average home value ~$100K). All of these were choices, clearly ill-considered, but choices nonetheless. I’m not a victim of the system. The rise in CEO pay is indeed sickening when executives so rarely add value, but meeting basic necessities in America has never been easier.
When deciding how to answer the question, consider the following before saying yes.
The false dichotomy of wants vs needs
Consider shelter*. We all need shelter. A lean-to, cave, tent, shack, cabin, 1 bedroom apartment, 2 bedroom house, and mansion are all ways of providing shelter. Where along the spectrum does need become want? What is enough? There is no correct answer, even when considering a specific slice of culture and history. There are certainly norms for a given period and place, but there’s never a magic answer where needs are fulfilled and everything further is a want.
Subsequently, in the overwhelming abundance of present-day Western society, it’s very easy to find yourself saying “I need X.” Step back. Consider every purchase. Consider every possession. What satisfies a truly basic necessity? What brings a measure of leisure or fulfillment to your life? What is cruft?
There are numerous tips and tricks for decluttering and avoiding purchases. I won’t recommend any particular method but it’s eye-opening when you realize how many things you’ve coaxed yourself into believing are a need.
The easy counterargument is “if I have the money, why shouldn’t I?” How many finite resources will X consume? What is the environmental impact of X? What will X actually do for you? Would you rather invest the money to purchase time in the form of earlier retirement?
Living in the Circle of Control
People take great pride in being “informed”. They have opinions on the Syrian civil war, rare earth export limitations, the stock market, everything under the sun. Why? To be frank, your opinion on all of these things is worthless unless you’re in public service.
Unless it is an election day, in which case your opinions do have value, give yourself an information vacation. Turn off the TV. Turn off the radio. Don’t read the news in whatever form you consume it. Tell me, in a day, a week, a month – are you not happier and less stressed out?
We spend our days concerned with many things over which we have no control. Instead, we should devote all of our focus on those spheres we can influence, at least in part. Work. Family. Friends. Our community.
I’ve been so much happier since I began making a conscious effort to mesh my circle of concern with my circle of control. Suddenly, I feel like I’m an agent of change. I’m not the victim of vast economic forces. I’m not terrified of terrorist threats. I’m in love with my wife. I am nurturing my children. I do the best I can at my job, but understand that I should adopt a fatalistic attitude towards things not under my control.
Debt Should Not be Normalized
A house can be an excellent way to provide shelter. An education can be a valuable way to increase your income and productivity. Leveraging future income to purchase these things now should be done very carefully. Employers like employees who own homes, because those people have a clear incentive to keep working and stay in the area longer. The more debt you have, the harder it is to change jobs and risk the interruption of income.
A life financed by debt can be a seemingly comfortable one, but like the prisoners in Plato’s Cave, being unaware of your chains makes you no less bound. People struggle and struggle to get ahead, but so much of this is because of the costs of financing. In our own circumstances, paying off our debt will probably take longer than going from zero net worth to a stocked retirement nest egg.
Instead, don’t put yourself in that situation in the first place. Even if it’s too late for you, educate your kids to be debt averse. Work during college. Work before going to college. Buy a house only if it’s cheaper than renting in that particular area (it can be, but why do you think so many people own investment property?) Never, ever finance consumer items. Nothing is worth enslaving yourself for.
*This is paraphrased from the book Early Retirement Extreme by Jacob Lund Fisker. I don’t own a copy, so forgive me for not citing a page number.