Friday, December 27, 2013

Is the American Dream Dead?

In the past few years, we’ve been inundated with politicians and talk show hosts that tell us that the American dream is dead. It’s come from the left, where liberals have bemoaned the growing disparity between high and low incomes. It’s also come from the right, where red-blooded conservatives have pointed to the “socialist” policies of the Obama administration that are choking the innovation of the private sector. According to them, we are in a pretty dark place. But I’d like to revisit that conventional wisdom for a moment.

I don’t believe the American dream is dead. I believe it is alive and well, but it’s hidden behind the cloud of our popular culture that tells us we need and deserve things we can’t afford.

However, if you scour the internet with a quick google search of “The American Dream is dead” you’ll find all sorts of complaints about the current state of Americans. I’ll list the top two: 1) College costs too much, 2) It’s too expensive to move out of my parents’ house. Let’s examine those two…

College Costs Too Much
One of the most frequent complaints from parents, youth, and adults in their 20’s is that college just costs too darn much! Tuition at top private universities can be around $45,000 for undergraduates annually. How is the middle class to survive?

This may sound harsh to some, but you don’t need to go to Harvard or a private school to be successful. I graduated from James Madison University, whose 2013-2014 annual tuition is $9,000 for undergraduates. The tuition wasn’t all that bad. It was the costs of housing, food, and living costs that came from me moving two hours away from home. I turned down acceptance from a great public university in my home town because I thought it would be more fun to live away from home. The $30,000 in student loan debt I walked away with was almost all room & board costs, not tuition costs. My part-time employment could have fully paid for my college if I had chosen to live at home.
Another consideration is community college. Community college has a stigma, I get it. Most states, however, have a program much like Virginia’s, where you can get a two-year associates degree and then transfer without question to a university for specialized instruction. Annual tuition for a full-time student at NOVA Community College? $4,500. That’s half of what I paid at JMU. Considering how much I remember from my English literature and medieval history class, I think I could have benefitted from some additional cost reductions.

So yes, college does cost too much, if you attend a private school or are worried about your lifestyle throughout college. In Europe, it’s more standard for students to live at home during college. If you make wiser choices than I did, you can receive a college education, work part-time through college, and end up with some significant savings instead of debt before entering the post-graduate work force.

It’s Too Expensive To Move Out of my Parents’ House

This is a difficult discussion that varies widely based on where you live and your situation. Let’s start with renting and move to owning. Renting will be quick. Yes, we all would love to live without roommates, but think about how much you’ll save by keeping that low-cost bachelor pad for a few more years while you save to buy your first home.
Now let’s move to owning a home. It seems my generation has become hypnotized by HGTV. I don’t know how many times I’ve seen couples on the show complain that their budget couldn’t get them what they wanted. Well, what did they want? A walk-in closet, granite kitchen countertops, separate sinks for husband and wife in the bathroom, adequate space for entertaining, a yard, all within a 15 minute drive to work. Is there any wonder why those numbers don’t work when you’re a young couple? After unscientifically asking some from previous generations, I found that their first homes were usually older and lacked many of what were then modern amenities. I also found that more often than not, their first home wasn’t located anywhere near their desired neighborhood. But, after working for a few years, wouldn’t you know it, they moved to that neighborhood.

It seems that recent graduates in my generation expect to have their parents’ lifestyle without the 20-30 years of work their parents’ put in to get there. Is it any wonder it’s hard to find a house with those expectations?
Then there’s the question about saving up for down payment. Going back to issue #1, let’s first assume both you and your partner saved $5,000 between the first day you worked at age 16 and college graduation. Well, there’s $10,000 for a down payment right there! If you are in the market for a $100-200,000 home, you’ve got 5-10% right there, which qualifies you for most conventional loans within two years of full-time employment.

The American Dream is Alive

I recognize that these are very generic numbers and scenarios. Individuals are faced with challenges and obstacles as individual as they are. However, my point is not to solve the world’s problems, but rather to indicate that the American dream is alive and well.

Popular culture has done a great job telling us what we deserve, and most of those things put us into debt and convince us we need things we can’t afford. As soon as we break out of that cycle, the American dream starts to come back into focus. It is possible, even probable, for a college-educated graduate in their mid-20’s so survive and plant the foundations for thriving.

My belief is that even amid this recession, the American dream is strong for those who want it. The dream is not about high-paying jobs and get rich quick schemes. Those who succeed isn’t exclusive to those with the most high-paying jobs and genius-level intelligence. It will be those with the self-discipline to delay gratification, take small steps up the ladder of life, and eventually look down to see their dream has become a reality.