What's a (Financially) Normal American Family?



Aug 8, 2020
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Have you ever asked yourself what financial "normalcy" is? If you were to ask yourself that question today, what would you say? Let's go through a few areas of personal finance right now. I think this'll be enlightening. To complete this exercise, I'll pose some questions and then answer them directly afterward. I'll think of the average 40 year old American married couple as I ask and answer the following questions.

1. Do they own a house? Yes.
2. Do they owe on a mortgage? Yes.
3. Have they purchased brand new cars? Yes.
4. Did they take loans to buy those cars? Yes.
5. Do they have children? Yes.
6. Do they hope for their children to attend college? Yes.
7. Are they saving for the children's college educations? Yes.
8. Are they hoping their children get married? Yes.
9. Are they saving to pay for those weddings? Yes.
10. Does each child have his/her own bedroom? Yes.
11. Does their house have more than one bathroom? Yes.
12. Do they own credit cards? Yes.
13. Do those credit cards have a revolving balance? Yes.
14. Do they own smartphones? Yes.
15. Before purchasing their house, did they research school systems? Yes.
16. Have they ever felt they had too much debt? Yes.
17. Have they ever felt they have too little savings? Yes.
18. Have they ever wanted to quit their jobs? Yes.
19. Do they experience financial stress? Yes.
20. Have they ever fought with one another about money? Yes.
21. Have they ever felt that they don't earn enough pay? Yes.
22. Have they ever felt overwhelmed by their finances? Yes.

Well, there you have it. The average American couple, no matter if they live in San Diego, New York City, or Tallahassee. It's always the same thing. I've talked to countless adults about their finances through the years and it really is like listening to a broken record. I stopped giving advice in this regard about ten years ago. It's useless. The common theme wasn't that any of these people wanted to own fewer and smaller things to fix their stressful lives, it was that they wanted more money to buy more things and experience less stress doing it. Not one person I've ever spoken to has told me that they plan on giving up any of their belongings or changing their way of living. It's been remarkable. The American mind is a strange thing. It's thinking is a strange phenomenon. From what I've gathered through the years, the average American can't stand being a slave to their government, their banker, or even their own self, but apparently that aversion isn't strong enough to initiate any consequential change.

To continue on with this exercise, let's now ask the same questions to a single man who lives alone in a cabin in the woods of Kentucky. If you picture this man who isn't married and has no children, how many questions do you think he'd answer yes to? Personally, I think he'd own a house, perhaps have a mortgage or some sort of a loan on it, maybe doesn't have enough savings, and has wanted to quit his job. That sounds about right. Those things are common among us.

Here's my question: do you think all the financial agony the average American feels every single day and night is worth it for the life he or she lives? If you say yes, it is worth it, why do so many of these people want to change? Why are millions of financial self-help books sold annually? Why are so many people stressed out when it comes to money? What's the problem when it comes to changing their behavior? Why do so many people seem to be stuck?

I'll tell you why. One word describes all of this and that word is desire. Did you know that when it comes to getting in trouble with personal finance, the trouble begins not by spending on needs, but by spending on wants? These people didn't need a brand new car, they wanted one. And that want forced them into a loan. They didn't need extra bedrooms for their children, they wanted them. And that want forced them into a larger mortgage than they would have had otherwise. They don't need their children to get married, they don't need their children to go to college, they don't even need their children. They want all of these things, which pushes many of them right into a financial hole. And this financial hole makes them do irrational things, such as buy big mortgages in high tax towns with splendid school systems, set up savings accounts for colleges and weddings, and lease cell phones to make their lives more fun. It's insane how much money the average American spends every month today as compared to just 20 or 30 years ago. I'm shocked every time someone tells me about their bills.

Did you know that back in the 1960s, 1970s, and 1980s, every child didn't have his or her own bedroom? It's true, there were these things called bunk beds, which enabled multiple children to live among one another. And because parents purchased homes with fewer bedrooms, they didn't need to spend lavishly on the home itself. Also, back during this time, there were very few brand new cars on the road. I remember driving alongside clunker after clunker as an adult. In today's world, recent high school graduates are driving nicer cars than any I've ever driven in my life. There was also a time when everyone in the world wasn't able to communicate with one another at any time of day from anywhere on earth. This actually wasn't very long ago at all. Today though, to obtain this privilege, one needs to either pay hundreds of dollars for a smart phone or lease one from one of the cell phone companies. On top of that monthly payment, they also have to pay for service, which is quite the chunk of change. Whether it be weddings, college educations, big mortgages, car loans, vacations, fast food, cable TV, whatever, I honestly don't see any way out for many people. They simply want too much.

If you ask anyone who has ever been to college what classes they took as a freshman and sophomore, they'll likely tell you they attended math, English, social studies, science, history, foreign language, and some others. Basically, they took general education courses that are available at any two year or four year college across the nation. These course are all the same. Psych 101 is Psych 101, no matter if it's taken in North Carolina or North Dakota. The same for Algebra and English Lit. Actually, these course are so generic, you, as a student, can play them on DVD and get the same thing out of them as if you were sitting in a classroom. Trust me, I've taken my fair share of these types of classes. So if all these courses are the same no matter where you take them, why in the world are parents and students paying four year prices for two year requirements? I'll tell you why. Because the kids want it. They want to go away to school and hang out with their friends. They want to hunt down future husbands and wives. They want to drink. They want to smoke. They have to have the "college experience." An experience, mind you, that was just invented a few decades ago. It's not like this experience was described in the Bible or anything. The same is true for home ownership. The American dream of white picket fences was invented during the last 100 years, after World War Two. It's not like this is some sort of thing that Aristotle contemplated with his students. This is Americanism at its finest and so many of us are falling for it. Falling right into our very own financial misery.

It happens though. I get it. What was once simple has become much more complex. Once upon a time, people simply got married. Today, people get pre-engaged and throw a party to memorialize the event. And then they do the same for their engagement, but this time, they hire a photographer. Then they get married - more parties and photographers. They have honeymoons, pre and post. They throw anniversary parties, bridal showers, baby showers, bachelor and bachelorette parties, birthday parties, bridesmaid luncheons, rehearsal dinners, holy communions, cub scout graduations, eighth grade graduations - the list goes on. Do you think any of these parties makes anyone any happier? I can tell you from experience that some of the most depressing and miserable people on earth throw the most parties.

Let's get back to the guy who's living in his cabin in Kentucky - alone - for a moment. Yes, he may not be as fulfilled as the average American is, but I can guess that he's much more at peace with himself. He probably makes a bit of money and pays his meager bills with it. He doesn't have a large cabin, but he's happy with what he's got. He most likely isn't in love with his job, but that doesn't matter. He'll keep his eyes peeled until he finds something better. To him, he's living exactly the life he's thinks he's supposed to live. He hasn't been infected with the virus of desire. You know the one - the one that keeps us at the mall or on Amazon.com, shopping for the next fix.

The greatest difference between the guy who's living in the cabin and the average American is that he's sitting there with a beer in one hand and a tobacco pipe in the other, laughing at the rest of the world. The world that's indebted, unhappy, and divorced.

This post is part of a series: The Total Money Makeover by Dave Ramsey
What's a (Financially) Normal American Family? was posted on 06-04-2021 by Phoenix1 in the Finance Forum forum.

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