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?