
Price tag for the American dream: $130K a year - nkurz
http://www.usatoday.com/story/money/personalfinance/2014/07/04/american-dream/11122015/
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mikepmalai
So what parts of the "American Dream" are cut and/or subsidized with debt to
fit reality? Median household income is about $50K so there's about a $80K
shortfall between the $130K "American Dream" and the $50K "Median American".
Assuming $20K of the $80K shortfall are taxes you wouldn't have to pay due to
earning $50K instead of $130K, you would still need to cut $60K out of
expenses. Looking at the list, the line items most likely to see cuts are:

Housing at $17k per year

Groceries at $13k per year

Car at $11k per year

Medical at $9k per year

Education at $4K per year

Apparel at $2.6K per year

Vacation/Entertainment/Discretionary at $17k per year

Savings/College Investments at $22.5k per year

What's scary is you can completely cut savings, discretionary, and medical
(~$50k total) and still need to find another $10k to cut. This is how we end
up with people in debt and/or are forced to live without a safety net (no
insurance/savings) to fund everyday expenses.

So what's the fix? Tough to say. Near term you're definitely seeing a rise in
"sharing economy" type activities to better utilize/monetize assets. Provider
gets another revenue stream (to supplement flat/stagnant wages). Consumer gets
an end product at an affordable price (since they can't afford it otherwise).

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incision
This would be really interesting with some sort of selector to see how the
costs and relative balance would change by region/state.

For instance, in the DC area it would be far more - probably nearly double for
housing, utilities and education/childcare. Median home price here is $400k,
electricity is $0.13+ kWh, daycare is $500-1000/mo, private school is
$11-30k+/yr.

Personally, I spend far more than listed in each category above plus taxes and
far less on nearly every 'extra' and several 'essentials'.

Also, since a surprising number of people commenting here don't seem to be
familiar with the phrase:

[http://en.wikipedia.org/wiki/American_Dream](http://en.wikipedia.org/wiki/American_Dream)

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ChuckMcM
I really appreciate that they pointed out where they got their numbers.

I don't agree with all of them (I don't think that a family of 4 should
necesarily own a 4WD SUV which will accentuate gas and insurance costs when 4
door economy car would be fine.

Not sure what the $2,000 a year per child education expense is, seems too
small for private school, too big for public school. I couldn't find the
referenced USA Today article. Our neighbors' kids who are still going to the
public high school spend about $1,500 on various sports costs and other school
supplies.

Also food seems a bit steep, a bit over $1,000/month on food? That is like
$250 a week. Presumably they eat out a lot?

But the quibbling then boils down to _how_ they are living and _where_. So
that makes it challenging. A family of four that buys annual ski passes every
year, eats out for at least four meals a week, has the bread winner buying
lunch every day, buys all new clothes to match the latest fashion, doesn't
keep any vehicle longer than 4 years, and only buys things "new"? Ok, I could
believe $130K.

But then I fall back to what is the point? And then you see it, the entire
point:

 _" Nonetheless, it's clear that though the American dream is still alive,
fewer and fewer of us can afford to live it."_

And this, I just don't believe at all, although I get how if people do believe
this, it works to their advantage. So by and large, not a reasonable article
in my opinion.

~~~
tacoman
Maybe food is more expensive in Canada, but my family of 4 never eats out and
we spend $250-275/week. I cook most things from scratch and I buy mostly local
or organic dairy and produce which costs me an extra 25-30% depending on the
season.

~~~
YZF
There can be a lot of variability depending on where you shop.

We buy fruits and veggies in the specialized "market" stores. Supermarket
prices are double. We buy stuff that's on sale (pretty much everything goes
through a cycle of sales or is on sale somewhere). We shop for dairy across
the border where organic milk costs about half...

(Vancouver, BC, area)

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jljljl
Keep in mind that there are assumptions made about what the "American Dream"
is, driven by cultural representations of what a stereotypical successful
American life should be like. It doesn't seem geared toward what the "Average
American" life is really like, it's more of a "How do I live like the families
on TV?"

Hence the 4WD SUV, owned home, 2 kids and college attendance, etc.

EDIT: Downvote? Am I misrepresenting something?

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cyphunk

        "It's not about getting rich and making a lot of money.
         It's about security"
    

that the American Dream can somehow provide security is its greatest lie. any
american that has lived in europe long enough understands what differentiates
it from america is how people perceive this issue of social and financial
security. europeans expect their socialist structures to provide security. one
can see it clearly in the mentality of personal investment. american's, to
their credit, live for taking risks to get ahead. whereas europeans avoid it
(and save), with the expectation their government is to provide them with such
security. a european is more likely to put their money into an obscure
insurance than a stock. sure, this risk-averse mentality might might make the
place a lot less productive (at least one _could_ argue) but it sure makes it
a lot more liveable and safe.

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Titanbase
I think it's a good goal to work towards. Second, it's one less thing to worry
about. You could easily get by on half of that if your American Dream is
different.

As a software developer, I've always dreamt of making enough money, or getting
funded to the point where I can make my own software.

Recruiters often remind me that programmers are a dime a dozen, so chasing
projects can be frustrating.

My 'workaround' to a lack of funding is to develop my first game (that I
designed) on the weekends. The only drawback is it takes a lot longer.

The sweetest advantage to weekend software projects? I can focus on making a
game that I know will be fun and sell well. That aspect has always been out of
my control for my previous projects, where the focus is creating another's
vision of an app or game.

You can check out my apps at bensapps.neocities.org for previous client work.

~~~
pfisch
Programmers are a dime a dozen......what are you talking about...?

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feverishaaron
And in the Bay Area... I'd guess at least $280K a year.

~~~
eitally
It depends how to define American Dream. That's an outlandish salary even
there, attainable by almost no one, at yet thousands upon thousands of folks
are getting by ok.

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diminoten
Living where?

~~~
eli
In whatever town has new homes available for the national median price of
$275k. Definitely not my neighborhood.

~~~
TheSageMage
Where I lived in TX(Mckinney/Frisco/Plano) had median home prices around that
range for newly build homes.

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grimtrigger
$2k for clothes is "essential"? That seems ridiciulous. I probably spend less
than 200 a year on clothes.

Also, I disagree with the sentiment that children (2?) are essential.

~~~
pessimizer
>I probably spend less than 200 a year on clothes.

For four, including growing children?

>Also, I disagree with the sentiment that children (2?) are essential.

Essential for the "American Dream," not for the calculation. Of course they
are.

~~~
YZF
"I wear your granddad's clothes, I look incredible"

You can spend anywhere between close to zero to infinity on clothing. Brands
or not brands, new vs. hand-me-down. Sale or regular prices...

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freedom123
The American Dream isn't about a price of annual income. The American Dream is
about the possibility of having an annual income. Originally American was free
which brought on the Enlightenment Period, the Industrial Revolution and allow
with it, the concept of making money. The dream is you can make money. This is
an important concept to understand back then because making your own money was
impossible with the enslavement by kings and variants of Statism. Today
American isn't free there is no American dream. Today we are more taxed and
more regulated than ever. The concept of making money only exists by having
50% of it redistributed - enjoy.

~~~
Teckla
_Today we are more taxed and more regulated than ever._

Say what? Tax rates in the U.S. have been trending down for decades,
_especially_ for the wealthy.

[http://en.wikipedia.org/wiki/Income_tax_in_the_United_States](http://en.wikipedia.org/wiki/Income_tax_in_the_United_States)

See the section titled "History of income tax rates adjusted for inflation".

~~~
freedom123
You are talking about 1 element, out of a million, pointing to it and saying
this is a falsehood. For example, you are basically looking at 1 tree saying
its not growing, while ignoring the forest around you - enjoy.

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hyperliner
I think the American Dream has been inflated to mean "the American citizen
gets everything s/he wants." hmmm, seems like whining.

Look, the American Dream is about being able to have a reasonable life, keep
your family healthy and safe, be a free citizen, and work hard to earn your
living.

When did it get to be redefined as "I need a 80 inch TV, XBox, 4-wheel drive
car, private education, cellphones, multiple DVRs, 3000 sq ft home, and no
taxes and no responsibilities for my expenses, nanny for my kids, golf
lessons, soccer, and three cars"?

That attitude of entitlement is what is killing the American Dream, IMHO.

~~~
dragonwriter
> Look, the American Dream is about being able to have a reasonable life, keep
> your family healthy and safe, be a free citizen, and work hard to earn your
> living

No, its always been about having two general things: (1) Experiencing
continually improving material abundance by the standards of the time, and (2)
Not being prevented by imposed class or other restrictions from being able to
attain even greater material abundance with the scope of one's own ability.

This has been pretty true even before the phrase "American Dream" for the
concept was popularized in the early 20th Century, but was clearly attached to
the original popularization of the term and to its use since then.

It has _never_ been as modest as you present it.

~~~
tormeh
In fact, the American Dream is the opposite of modest.

~~~
hyperliner
I dont think "opposite" is the right word.

It just means you have the opportunity to prosper based on talent and
achievement. It never guaranteed prosperity individually.

~~~
dragonwriter
> It just means you have the opportunity to prosper based on talent and
> achievement.

No, it doesn't. From the earliest articulations, it involves both _having_
wealth and having _opportunity_ to further that wealth without barriers of
class.

> It never guaranteed prosperity individually.

It doesn't guarantee _anything_ , because its an common individual
_aspiration_ (hence the word "Dream" in "American Dream"), not a covenant.

------
neduma
May not fit for Silicon Valley dream though.

~~~
serge2k
Wow, I have never heard that SF is expensive. Thanks for letting us know this
revelation.

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mifreewil
Ridiculous Article. All the costs are exaggerated and padded.

~~~
mgkimsal
really? the 'essentials' seemed mostly reasonable to me - grew up in midwest,
now living in the US 'south' (NC). Not much there struck me as way out of
line.

on the 'taxes' segment: most people won't owe $32k in taxes unless they're
actually earning a high amount anyway, so it's sort of self-fulfilling - if
you include $32k in taxes, then yes, you'll need to earn far more than that to
pay those taxes.

Not sure why 'cable/internet' are separate from 'entertainment'.

~~~
jmillikin
The expenses for groceries and the car are far higher than what someone making
$130k a year would pay.

$12,659 per year on groceries works out to roughly $240 per week. While it is
possible to reach that (e.g. by shopping exclusively at high-end specialty
grocers and avoiding coupons), most families would pay far less. A family with
access to a supermarket would probably spend around $80-$120 per week on
groceries, or $4200-$6300 per year.

The car expenses assume a very large fuel-hungry vehicle, and appear to assume
the vehicle will be purchased on a high-interest loan. A five-seat sedan would
work just as well, and would result in expenses of about $3000 per year ($10k
amortized over a ten-year operating lifetime, plus $2k per year in fuel).

Similar issues exist with the other large expenses. For example, the author's
chosen goal for college savings is higher than the cost of a four-year degree
at Stanford (according to the stanford.edu Net Price Calculator) and is far
more than tuition costs at a normal school.

~~~
dragonwriter
> A five-seat sedan would work just as well, and would result in expenses of
> about $3000 per year ($10k amortized over a ten-year operating lifetime,
> plus $2k per year in fuel).

(1) automobile costs include more than amortized purchase costs and fuel (such
as maintenance) -- especially if you are going to keep it operational for a
decade. (2) what 5 seat sedan has a $10K new price?

> For example, the author's chosen goal for college savings is higher than the
> cost of a four-year degree at Stanford (according to the stanford.edu Net
> Price Calculator) and is far more than tuition costs at a normal school.

The savings target for college savings shouldn't be compared against the
_current_ cost, but against the expected cost at the time the student will be
attending college.

~~~
jmillikin

      > automobile costs include more than amortized purchase
      > costs and fuel (such as maintenance)
    

For modern cars, maintenance is not a significant expense compared to the
purchase price and fuel. Insurance is cheap if one's not driving an expensive
truck.

    
    
      > what 5 seat sedan has a $10K new price?
    

No need to buy new, let some other sucker eat the depreciation. A 3-4 year old
Corolla (or equivalent) shouldn't cost more than $10k.

    
    
      > The savings target for college savings shouldn't be
      > compared against the current cost, but against the
      > expected cost at the time the student will be
      > attending college.
    

Inflation isn't going to be a significant factor, since long-term savings are
going to be placed in something like a TIPS bond. It is possible that the
total cost will increase, but what are the chances it'll cost more for a
regular school then than it does for a top-tier school now?

~~~
dragonwriter
> For modern cars, maintenance is not a significant expense compared to the
> purchase price and fuel

Its certainly not in the first few years (which is why some companies offer
prepaid routine maintenance) -- in the latter several years of a 10 year life,
that's far less the case.

> No need to buy new, let some other sucker eat the depreciation. A 3-4 year
> old Corolla (or equivalent) shouldn't cost more than $10k.

A 3-4 year old Corolla or other economy car is going to be spending more of
the 10 year life you propose in the part of its lifespan where the
"maintenance is not a significant expense compared to the purchase price and
fuel" argument is invalid than a new car.

> Inflation isn't going to be a significant factor, since long-term savings
> are going to be placed in something like a TIPS bond.

A TIPS bond is indexed to general inflation, inflation of higher education
costs has been _much_ higher than the general inflation for quite a long time.
So, yes, for _college savings_ , inflation _is_ likely to be significant
factor, even if you use an investment vehicle protected against general
inflation.

> It is possible that the total cost will increase, but what are the chances
> it'll cost more for a regular school then than it does for a top-tier school
> now?

Quite good. Using reference points I'm familiar with, the tuition for a UC now
are higher than the tuition at Caltech in the early 1990s, and the ratio of
college tuition inflation to general inflation has been higher in the second
half of that interval at the first, having stabilized at around 2.0 from the
late 1990s on, where it had been at around 1.5 in the early 1990s. So

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philbarr
I'm becoming increasingly annoyed with this kind of article or political
statement.

Look man, we know we're being screwed over. We all do. Why don't you tell us
what to do about it? Oh what's that? You don't have an answer...?

~~~
Someone1234
I cannot tell what your point is. Is it that nobody should discuss problems
without a solution ever?

Like should we not talk about the North Korean work camps/political
prisoners/torture because we aren't ready/willing to go invade them?

~~~
pessimizer
Or AIDS or global warming?

