I intended this to be one post but it got pretty long and I realized that to really hit my main points it was going to have to get broken up. Figured this was the best route so I pushed my other plans to the right a day.
I have been accused of being heartless or inexperienced or otherwise somehow not well informed on this topic. I have said more or less that people are where they are because of choices they made. That elicited a series of unhappy comments. Here is my take on the whole thing. First of all I believe in personal responsibility. Aside from truly freak accidents and blind dumb luck pretty much everything that happens in our lives is a result of some choice or another.
However it seems that maybe some folks see this position of mine as an attack against them or a view on them as an individual. That is not the case. I have a solid measure of respect for people who instead of complaining about this or that come right out and say "I made a mistake and am living with the consequences". Good people can and do often make poor choices. Maybe it is just that my mind is compartmentalized but I can really empathize with someones tough situation without trying to shift blame for it away from them. I can feel bad for someone in a rough spot while completely recognizing they put themselves in that spot.
As I talked about in length yesterday the American Dream is getting harder to achieve. Its price has gone up and the earning power of a lot of folks has gone down. No point in excessively rehashing, read yesterdays post if you need to catch up.
I see two broad reasons people opt out of the American Dream. The first is that they (at least right now) just plain can not afford it. The second is that they want to take another path. We will talk about them in order.
Some folks just plain can't afford the "American Dream". They may have the exact same job their father had (unlikely but lets go with it) however they make less money and stuff costs more. There is a lot of pressure to drive this and live here, etc. It is a hard decision to do something else, like what you can really afford. One of the downsides of the relatively recently passed insane credit bubble was that it was very easy for people to borrow their way into the American Dream. Then their adjustable rate mortgages adjusted or they got cut from 40 hours a week to 35 and their whole house of cards falls down.
Some people do not want the American Dream, at least not all of it or right now. They might just like being foot loose and fancy free preferring to live in a motor home instead of a 3 bedroom ranch. Maybe they realize that to them it is worth downsizing their expenses in order to be able to work less or take a few months every year off. Maybe they are just super cheap and would rather have cash in the bank then wood floors in the dining room.
To a certain degree Wifey and I fall into this category. We like most parts of the American Dream but are going to do it on a time line we are comfortable with. One thing about my rough age group (call it 23-33) we seem to expect to walk into a darn near ready made American Dream like a week after we get even a mediocre job. It is sometimes possible to do it that way these days (more so 3 or so years ago) with the ready available credit to anyone close to worthy.
Personally Wifey and I were not comfortable with that format. The idea of having a solid emergency fund and little or no debt suits us. We are living pretty modestly now in order to be able to do well and still be well within our means later. It might be a pretty solid idea for someone like our friend 5:59 to bite the bullet and live in a cheap little apartment for two years to pay off those student loans and otherwise shore up their financial foundation. Like many things in life the right answer is not the easy one.
We would love to own a nice home and drive a couple of solidly decent cars. However right now we can not pay for them in a fashion that is comfortable for us. We have very different opinions on how we should spend, save and borrow than most other folks. When we got married we lived in an RV for a few months. Lots of other folks would have gotten a nice apartment or even rented a house. We had some interesting times in the RV and Trailer Park and saved up some money. Folks at work messed with me a bit until I mentioned that our total housing expenses were $300. In hindsight I should have gotten a travel trailer and lived in it through college. In Alabama we chose a fairly modest apartment in order to save money.
I would love to drive a newish Toyota FJ Cruiser and Wifey would enjoy a nice little BMW. To be honest we could have these things this weekend. However we really do not want a car loan (let alone 2!) and thus we have one beat up old car. Instead of having 2 car loans eat up our income we chose to save up for a modest second car. Also by living well below our means we are able to put money towards stuff we think is worthwhile. Two car loans would make it impossible to establish an emergency fund, save for the future or otherwise get ahead.
In a few years we will buy a house. It will likely be a pretty modest fixer upper type place. A wood stove for sure and ideally a basement but nothing too amazing. I would rather fix up a place a bit than pay for a perfect place. We will come at home ownership a bit later than a lot of my peers. After all until you are a home owner you haven't made it. Too many people over the last few years jumped into something they could barely afford if they got a normal paycheck and nothing bad happened without even enough savings to get some basic repair on their car. Between their ARM mortgages adjusting or a crazy event like having a few slow weeks at work and these folks can have real issues. Personally I would rather have a bit more modest home, slightly later in life but with a solid emergency fund and with a home we can genuinely afford during a bad month when everything goes wrong.
I strongly encourage you to think long and hard. First think about what you can realistically afford and then think about what your priorities are. Remember, no matter how much someone else says you need to drive this or live here unless they are going to pay for it they don't get a vote. It is fine to want this and that and the other thing, most of us do. However you have to look at what you can afford and choose. Also to make things even more complicated you need to balance how much of a lifestyle you want to make yourself be able to afford. A guy who lives a lifestyle, even the American Dream that requires him to work 70 hours a week at a job he hates might just be happier with a smaller house, or even a trailer, and a more normal job that is not so stressful.
We all face a variety of different kinds of pressure. This pressure both real and perceived can couple together with our own desires and be a recipe for disaster. People back themselves into a circle where they have to have that house filled with those electronics in that neighborhood with those cars out front. They get all this stuff which they can't afford, seeing it as the only option and then don't understand how things are so bad. I do not have a great answer for this. Just like anything else your choices are your own and others do not pay the price for them. The same way that a friend who encourages you to do shots with them on a work night when they have the next day off is not going to feel your hangover the next day at work. People might cheer you on or encourage you to do something or another but at the end of the day your choices, good or bad are your own.