The Price of the American Dream: A Local’s Take#

Hey there! Let’s talk about something that’s changed a lot around here: the American Dream. Not just needing enough money to afford the payments on it, but needing enough money to actually buy the whole package. You know, the house, the two cars, the family, and a basic vacation every single year.

Now, it probably won’t shock you to hear that these things we all used to think were just part of a good life have gotten pricey. But honestly, it’s hit a tipping point. The American Dream isn’t gone, but in many places, it’s turned into an extreme luxury. We’re talking costs that could reach as high as $10 million to actually afford it all. That’s more than most folks will ever make in their entire working lives, before taxes, interest, and just paying for stuff like food.

It’s tough news, I know. But trying to stick to that old idea of what you’re supposed to have in life? For most people, it’s just permanently out of reach now. And as more Americans figure this out, it’s really changing how our economy works.

The Three Big Points#

There are three main things to understand about all this. On their own, each one seems pretty obvious. But when you put them together, things get really interesting, and maybe a little worrying.

1. The American Dream went from affordable to luxury: It used to be a lifestyle that someone with a regular job could manage. Now, it’s so expensive that even households with two professionals working full-time are struggling to keep up.
2. Alternative lifestyles are cheaper than the traditional dream: Things that used to seem super fancy, like traveling the world or living in exotic places, are now often much more affordable than buying a standard suburban house with a 30-year mortgage.
3. What happens when people make a logical choice? This is about what happens when folks look at the numbers and decide to pick a different, better life for themselves, even if it’s not the traditional one.

Now, I’m calling it the “American Dream” because, let’s be real, it makes for a catchy title for a video like this one. But honestly, this story? It’s pretty much the same all over the world, and in some places, things are even tougher than here.

The High Cost of the Dream#

So, how expensive is this dream package now? Let’s break down some of the costs.

The Most Expensive Luxury: Children#

There’s one expense that has grown faster than pretty much everything else. It’s become a kind of status symbol, even though, technically, it’s… well, having children.

• According to data from the Bureau of Labor Statistics:
  • The cost of raising a child, adjusted for inflation, has gone up by more than 50% since the year 2000.
  • Some of the biggest expenses for raising a child are now 250% of what they were just 24 years ago!
• This data was collected focusing on husband and wife families, so it factors in the potential cost of one parent taking time off work to care for kids.

So, why is this happening? Fewer people are having children. Young working professionals often earn too much to qualify for most government child subsidies, but they don’t earn enough to truly afford raising kids comfortably.

The only people who can really afford children without a huge financial strain seem to be the very wealthy. They don’t bat an eye at spending thousands a year on the best preschools or all the gear their child might need. This means that mostly only expensive, high-end services catering to rich families can count on having enough business to stick around. So, the expensive options are often the only ones left in the market.

Yes, there’s also a large group of people with lower incomes who still have many children. But the US Census Bureau suggests this is part of why America has higher rates of child poverty compared to elder poverty.

A study by the Tax Foundation found that married couples with children were the fastest shrinking group in the middle-income brackets. The reason? People just couldn’t afford to raise kids. Now, the Tax Foundation is a think tank that pushes for lower taxes and less government spending, so they might have a specific point they want to make with that report. But the numbers themselves seem pretty clear: people want to have children, but they simply can’t afford it anymore. Something that previous generations just expected to do has become one of the most expensive luxuries in today’s world.

The Rise of Affordable Alternatives#

But here’s the flip side: While everything you might need for a “normal” life is getting ridiculously expensive for regular folks, previously “luxurious” alternatives are actually getting much cheaper.

• Remote work has been a game-changer. A lot of young people can now get one job, or even multiple jobs, and do them from anywhere in the world.
• Traveling the world full-time or living in a cheaper, maybe exotic, location used to be just for the super-rich “Jet Set” crowd only a few years ago. Now? Almost anyone can do it, and often they can save more money than they would living in a big city.
• These folks, often called digital nomads, have gone from a tiny niche group to a big part of the workforce in less than a decade.
• A survey by the firm MBO Partners, published in the Harvard Business Review, found that 17.3 million American workers now identify as digital nomads. That’s a massive 150% increase just since 2019!
• In that survey, “digital nomad” covers a wide range: from tech workers sailing the globe and sending code via Starlink satellite internet, to traveling nurses living in a van, to someone who just moved temporarily to a cheaper city to work remotely.
• The number one reason people told the HBR research team they were living this “unrooted” lifestyle? They couldn’t afford a more typical life. And if they were going to be uncomfortable anyway (financially and maybe physically), they’d rather be uncomfortable while seeing the world.

The sacrifices you need to make to hit the road are much smaller than they used to be. Landing a remote job is still tough, but way less so than it was. Some people in fields with lots of remote work, like technology, data analysis, or creating media, have even started online forums where they talk about how to work multiple full-time jobs simultaneously and make several incomes at once.

Living in a different country has also gotten much easier. Some places popular with digital nomads looking to save money are actually safer, cleaner, and have better facilities than many unaffordable American cities. Some countries are so welcoming to young remote workers that they’ve started offering digital nomad visas to make the legal and tax stuff much simpler for working there.

Even if you get lonely and want to visit friends and family back home often, saving $2,000 a month on rent goes a long way toward buying plane tickets on budget airlines. Funny how airline tickets seem to be one of the few things that have gotten noticeably cheaper while everything else gets more expensive!

So, there are still tough parts about living abroad, but they’re getting easier all the time. Meanwhile, the traditional American Dream? It’s just getting harder.

What Happens When People Give Up?#

Not everyone who’s priced out of a “normal” life goes off on an adventure like being a digital nomad. Some people do make the best of a bad situation right where they are. But globally, there are way more young people who are simply giving up.

Think about this: In a time when the average American can’t even handle an unexpected $1,000 expense**, luxury companies selling things like **$5,000 handbags or $10,000 watches are making record profits. What’s going on?

This is often explained by something called “doom spending.” If you’ve worked hard, gotten a good education, landed a decent job, worked for 10 years, and you’re still no closer to owning your own home, it’s understandable that you might want some kind of reward for all that effort. If you can’t afford a sensible big purchase like a down payment, maybe you can at least buy something that looks like you’ve got your financial life together. It’s not logical, no, but companies don’t make billions selling $2,000 shoes by appealing to logic!

Doom spending is part of a bigger trend of people just deciding to throw in the towel.

• In countries like China, where the competition for housing and basic necessities is even more intense than here, there’s a movement called “lying down” (tang ping in Chinese). Young people decide not to work or go to school, and instead just stay home, relax, and maybe play video games all day.
• This trend was seen as such a threat that the Chinese government actually banned the term on social media!

And maybe that’s the most important thing about the American Dream slowly dying: What happens when lots of people just give up on it?

The American Dream system really only works if most people actually believe in it and participate to keep things going. Maybe, just maybe, the baby boomers kind of brought this on themselves? They voted for policies that helped them out, often at the expense of future generations. Now, their kids might not want to keep that system running for them. The tricky thing is, most boomers will be gone before this becomes a major crisis point.

A Natural Cycle?#

Maybe, just maybe, all this is just part of a natural cycle that’s been happening for hundreds of years. To learn more about how money works and the history behind some of these trends, go check out the latest video on the depressing history of retirement.