American Dream Inflation

American Dream Inflation

I recently came across an article and video from Yahoo Finance title “What’s Holding Back the Middle Class? Look In Your Closet” and for whatever reason it really set me off. Forgive this post because it is going to be a bit of a rant.

Let me start by saying that I believe many in the middle-class have been getting screwed for a while. The median income in the United States hasn’t grown for years, perhaps decades. People seem to be working more for less. Income inequality is at all time high (another subject I want to tackle later because it is sickening the income gap). People don’t feel secure in the job anymore (not that they ever were to begin with, etc). It seems that the middle class has been holding on by a thread. But because this is a personal finance blog I want to talk about the personal finance aspects of things.

So we know that those macroeconomic forces are happening. People are earning less and their purchasing power has gone down. But instead of adjusting for those items and spending less on non-essential consumer goods we have actually spent more! I believe this article, is to some extent, correct when it assesses that Americans “waste” a lot of money on useless stuff. Look in your closet and check the last time you actually wore something or perhaps you still have tags on the stuff that you have bought. Is it me or is that just insanity.

Americans annual spending is up and so is our debt. Certainly you can attribute some of that increase in spending due to increase costs in food, transportation, and housing (particularly if you rent in a hot urban area), but our debt has also begun to increase again. From 2008-2012 Americans were generally paying down debt. Now we are adding to it again? Yet we still aren’t necessarily making more money.

Again, I don’t want to totally bash the “middle class” but this American Dream inflation absolutely drives me batty. I just don’t get it. I mean we can blame marketing and advertising and public relations, but then that assumes we don’t have brains and can’t make rational decisions with our money.

I am not advocating that we strip our lives down to nothing. We don’t have technology or multiple cars or nice clothes or whatever. But maybe it is time we do a little self-reflection (including myself which is part of the reason I started this blog) and asked ourselves do we really NEED to purchase that. Our WANTS have become our supposed NEEDS. I just don’t get it.

I don’t know why this article has made me so feisty and I am sure there are lots of people who will disagree. Again, there is no doubt that the middle class has been squeezed by those who gotten ahead on their backs. I don’t at all want to demean people’s struggles, but at some level I think a good chunk of us have too much stuff. Do we really need 20 pairs of shoes, closets full of clothes we don’t wear, a brand new car that goes down in value the minute you drive it off the lot? Are we just self-medicating ourselves with stuff to not really do an true examination of our lives? Maybe I am out too lunch on this one?

SO my question to you is do you have American Dream Inflation? What is your American Dream?

 

4 thoughts on “American Dream Inflation

  1. I gotta believe your wife really must drive you crazy given she loves clothes and shoes. How does that work when she wants to make a beautiful home with nice decor and cooks organic and non GMO foods, which are expensive? It sounds like the lifestyle you would prefer really contradicts that of your wife’s values and efforts.

    1. I would say that Mrs. ROB doesn’t necessarily drive me crazy with wanting clothes and shoes. But I would certainly say that we certain disagree on where and how to spend our money. The key thing, in my opinion, is to be able to live within your means. Be able to save. Be able to afford those nice things. As the Yahoo article mentioned, median incomes have actually gone down, particularly in their purchasing power, yet spending has gone up, creating more debt and more instability in the American market. Somethings gotta give. People can’t have everything. It is certainly fine to have clothes, shoes, and decor, but only if you can afford those items. Only if you can get them by not putting oneself in financial danger. If one can do that then that is fine. But when people spend money they don’t have then it can be extremely dangerous.

  2. i think a good rule of thumb to follow with any purchases (especially with the little things we think we need, the stuff In the closet) is do I have the cash in hand to buy it? or if I put it on my credit card, will I be able to pay that bill off when it comes? If yes, buy it if you want. If no, you shouldn’t go into debt to buy it. My middle class American Dream is to own a new Jeep Wrangler, or maybe I should consider a used one (you know, because of the devalue thing). But I really, really want a new jeep, even though I don’t need one. 🙂

    1. I think that is a great rule of thumb. There is nothing wrong with buying nice stuff for yourself, but as you note buying it when you have the money or will have the money during that month should/could be a great litmus test. Without it you just put yourself in more debt. Not a recipe for success. I would love a BMW Z4…although I don’t think that is going to happen.

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