Can You Afford the American Dream?
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I just read this new report that says that the american dream now costs one million dollars more that the average american makes in their lifetime. And this early feeds into this consumer sentiment slump by obsession, what everyone want to call IT that we're in. But what are the number is behind this report and do they add up today? Were breaking up the cost of the american dream.

My friends is Steve. Welcome to on the market. And i'm joined by my favorite myth busters and voice of reason. Henry washington is up.

What's up? This is exciting. I I am looking forward to learning this crazy.

This is gonna about, yeah. I think this is going to be a fundo format that we're trying out. I think it's safe to say that you have not prepared for this recording at all that correct.

I know nothing about what you're about to tell me.

I knew you would excel in this role of doing nothing before. Good day. Now IT sort casting nail.

So basic that was, this is a joke, because the whole point was, I basically get a walk enry through an article that I just found was super interesting. And he can interrupt me with questions or be the voice of reason here. So let's just jump into IT.

I found this article on how it's super interesting because we see all this economic data right now that is very positive for GDP just came out and it's up. The labor markets doing surprisingly well. Real estate, despite people saying it's gona crash, is being resilient but the people aren't happy.

I think that's safe to say, right? Like people are not feeling the economy even though some of the high level data says it's doing well. And I guys I read this article, I like this is IT right, like expectations are x and reality as y and there's a big gap between the two.

I think people just feel abuse and so so when they hear the headlines and say the economy is doing well, it's like an abused person yeah whatever you say, it's still in well yeah but I don't feel that way at all.

right ah people feel glad that's like sure whatever you say ah OK, you're lying to me. But I think the reason, I guess, we've talked about a bunch of the show, but the reason I think people feel that way is like both things can be true. Like the total pie, the total economy can be growing and IT might not be impacting ordinary people all that much.

You know you see a lot about how you ceos and executives and you know big corporations are taking a lot more money, but it's not necessarily leading to more income for people. But let's let's talk specifically about this. So this comes from investing pedia. And according to their research, the american dream now costs four point four million dollars, and that's the estimated lifetime household cost of common milestones. So that includes stuff like getting married, raising two children, buying a home, having new cars, saving for retirement, going on yearly vacation.

So are they saying that you need four point four million dollars a year to afford the american dream, or that you will need to spend that much over your lifetime.

over your 100呢？ Maybe, but that's a daunting number, right? What's so daunting about as they go on to say that the average american with a degree, so that's only about a third of people have a actor's degree.

The average american earns two point eight million dollars during their whole career. So if you're single, your totally skirt like you can do this. But I guess this dream IT probably is talking about a couple because IT has wetting and raising kids, and there not that you can raise kids.

I think that could be a little misleading though, because if you think of the average cost of a house, so what's the the national average right now? Four hundred .

and fifty is .

the Normal american may may be to over their lifetime. yes. So you know four fifty times three is what .

a one point three million, kay.

So like that's one point three million in just housing, but people don't typically pay their houses off. They might need to buy IT, but they're not going to spend the entire amount you'll sell before they get through paying off the home typically. So I think it's probably .

a little mislead that number. So the number they gave for housing as part of this calculation is nine hundred and thirty thousand dollars. And I basically, I figured out the way they were calculating is that they do pay IT off and IT is four hundred and forty thousand, but if you finance a four hundred and forty thousand dollar house at seven a half that integrate your pen on nine hundred grand over the course of thirty years to own that home.

so is a lot of money.

Yeah, man, that four point four million.

Yeah.

that's intense.

okay, but the nine hundred and thirty thousand wasn't even the biggest cost. I'll ask you to guess what the biggest cost was. It's probably not something you think about is not something .

necessarily buy. 嗯， goodness, man, I have no clue. Insurance now make us pay for that forever, for everything forever. Well.

we'll get to that, mitt. But I don't think that's even included in this calculation. So the retirement is one point six million dollars. So that's just retirement savings, which honestly.

I would argue that's not enough.

doesn't sound like enough. That doesn't sound like enough one point. Like if you retire at sixty five and you let's say you live twenty years after that, hopefully longer, but that's eighty grand a year.

That's eighty grand a year. And depending on how you're doing that, you're probably paying taxes on IT. So let's like five grand a month in spending money. And by the time you and I retire, just a rule, thun, on inflation as the dot that is spending power of dollar has every thirty years. So you're going to be double that in thirty years.

Absolutely, that's not enough. And people also forget that like the older you get, the more expensive your housing cost becomes because if you have to go into a home or a community that's between five to ten grand a month right now, on average.

it's only going to go up. Yes, that's oh my god, that's insane OK. So those are the two biggest ones. The third biggest one is raising two kids and therefore your colleges that's like a lot of expenses .

all mix together .

yeah but still .

they they estimate the .

cost of raising two kids with four year pologies at eight hundred and thirty two grand. You ve got two kids. You put that decide.

I don't know. I feel like eight hundred dark two grain is like per year, right? Kids are expensive. You know how much IT calls to put your kids in activities? I don't know how kids afford activity.

yes. So swift classes are eighty .

grading and and then my wife will be like and tomorrow then swim. No, it's expensive, bro.

Yeah, that seems crazy. I I mean, I don't have kids yet, but I have a financial planner and he was asking, like, if you have kids, are you going to pay for their questions? Like, no, it's too expensive that have .

to include daycare too, right? Because daytime I .

think so yeah I think that does include childcare from what said .

care is the most unaffordable when you're Young and when you're old, it's no yeah it's a couple grand a month when you're free school age and it's another five to ten grand it's so yes.

it's man, right?

So we've .

hit some of the categories that cost americans the most over their lifetime. But when we come back, we'll talk about other elements that are part of the american dream and the expenses that are not even included in this four point four million total.

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Looking back, friends, Henry and our hero breaking down the cost of the american dream. So just so if you cap so far of the american dream retirement that's that everyone inspires to, obviously they're same one point six million. The a classic part of the american dream is only at home, which is nine hundred and thirty grand.

We are raising two kids with their four year colleges, this next one, which is in the last really big one, which I have. I find this kind of crazy, but they say owning a new car and they count both people in the couple having a new car lifetime eight hundred and eleven thousand dollars. And I sort of reverse engineer the math. And it's basically if you own a car, like if you take out a five year loan of the car and make payments on IT and then the minute you're done paying, you buy a so like that to me seems .

too much is like.

is that the american dream just constantly owe a new car? I guess for me that's never been part of IT? Oh.

one hundred percent. yeah. absolutely.

Just not a car guy.

I know people with over a thousand dollars a month car payments on cars that aren't that cool. Like, you know, somebody go out by a regular card, but they don't have great credit, but they want to be. And so instead of getting a hundred accord, they get immersed, dies bans, and they are playing two thousand hundred dollars a month because they have a seven, eight, nine, ten percent interest rate. Because I ve got to keep up with the Johnson, and other friends have new cars. I see, yeah, i'd definitely see that.

yeah. I saw something that the average car payment now in the U. S.

Is like six hundred dollars a month. That's too much. That is too much. I don't care how much money don't do. That is a bad idea.

That doesn't C I mean.

my perspective is warped because I ventures wa car in five years. I have a i'm a bike that I bought and to provide that every day. So it's a little different. But yeah, man, that that part was super expensive.

So I mean, if you do in the math, right point four million, how many working years are we giving people?

I think forty five.

four point four million divided about forty. So that's one hundred and ten thousand dollars a year constantly as .

a couple of two .

people with a but .

I think that's what so crazy about this is that the media right now for family think it's like eighty grant. So like that's why people are peste, right? It's like if this if this dream is yours, retirement only a home, raising two kids, having nice cards, which is kind of a reasonable dream like that. We've all been conditioned to want the average person can afford that. And so no wonder people are angry.

Yeah I mean, I get that. I mean, but breaking IT down, that's fifty five grand per ur working adult for your entire working career. That doesn't seem too crazy.

It's not. But I think it's just different than in the past when this .

dream was like you .

can just a little and and like that. That's a big shift in our society, and I do want to talk about that more. But let me just tell you the last couple categories they included here, pets thirty six thousand. I mean, honestly, i'd spent the eight thirty two on my pets. Wedding the average Price for wedding now is forty four thousand dollars.

That is so angry that since ridiculous in a culture where people don't stay marry, that seems it's insane because if you just .

say the word wedding to anyone, they just double their Prices. Yeah, when my wife and I was getting married, I was like, I was like, we should just call IT a family reunion. Let's just call the photographer in the cater like love in a family reunion.

Yeah, can you kate IT for us, as my wife might shop where I A White dress. But it's a family, really doesn't a family. But it's unbelievable for grand.

That's ridiculous. That's the time in the world much.

It's unbelievable. And then annual vacation, a hundred eighty gram. So I figured that like sixty years of vacations at three grandpop, that's fine.

yeah. And I don't know why they could, but they put funeral as eighty five hundred box. I don't know what I image the american dream. I'm not thinking about my funeral all that. But I guess in some respects I think about the funeral part of the american dreams is that, like, I hope they don't just, like, dump my body behind the future.

Yeah, mean, you can be expensive. I onesta think that's probably cheap.

yeah. I think .

that I think people.

I think pretty. So I think, you know, what's crazy to me about this is this is four point four million dollars, but IT doesn't even include living expenses like this isn't food, is not eating, you know even even the owning a car doesn't include like maintenance and gas. So this is like outside of your living expense.

And it's funny when you said, what's the most expensive part you ask me that question. My immediate thought went food I .

guarantee .

expensive well.

for you and me probably yeah I put a high priority is absolutely .

if that's not food that's insane um you would be .

so proud to me this weekend I went to a barbecue e restaurant with some friends, got a full brisket on tray and then ordered another rack of ribs on top of IT. And everyone looked at me like I was and I ate every time by IT. Was sok the est .

thing i've heard yeah but then like .

one hundred and twenty dollars later, that was a dinner. So that adds up. So I think what you think about the fact that living expenses aren't even included in this, then you you know you're pretty far away from achieving this. If you earn a median income, which is average, you know half of people make media incomer less. So that was just kind of so crazy to me about that.

I mean, it's scary to think like there's a big piece of the pie a lot of people are going to miss out on. And typically, it's going to be the things up a letter into the spectrum like retirement and you're going to have to cut back on a lot of the things like, yeah, housing expenses. That's crazy, man.

I don't know how people can do IT. What sort of bubbs me out is like I don't feel like it's gonna get Better, like I I maybe i'm pessimistic or i'm missing something, but for me, IT feels like a long path for this to get any Better like things aren't getting less expensive. And although wages are going up, IT would take a long time of stable Prices and increasing wages for this to meaningfully change.

No, I I don't think IT IT truly gets Better. I do think there is still a gap between what things costs and what people make. And I do think that, that gap is gona continue to close, but I don't think it's gonna able to solve all of the problems that we've identified here.

Yeah and I me like this is a reason why I think you and I both got into real state investing because like you need to find ways to supplement your income. But the other thing I wanted to ask you about is, like IT strikes me that you know, the average person is probably going to have to adjust their expectation of what the quota, quote, american dream.

Reality is absolutely the american dream. So I mean, american dream is what to own a home, to have a job on a home, be able to retire and take care of your family. And and and I think that that people still want that.

But I think that that's why like side hustle culture is so popular. And we do live in a time now where IT is a lot easier to find ways to make money on the side. Then IT wasn't the past. And now I think side houses become more of A, A, A necessity than something, you know, a few people do occasionally. I think A A lot more of the american population is going to have a second sort of income on the side and IT just be a Normal part of life yeah like IT .

seems to me that you sort of have two choices here. It's you either increase your income and you could do that by the guide house, like you said, or pursuing a career that's going to earn you higher than the media and income. And we did I did mention that you know statistically, people in the us.

Who have a batch rr s degree due earn higher amounts. But that does that's not a hard and fast rule there. You know you can make a lot great money in the trades. There are other ways to make great money and go to a coding book camp and make a tony money. So I just mean, in general, finding a way to increase your w to single job or supplement income or on the other side of things that sort of define your own version of the american dream. That probably doesn't include one of these major categories, ies here like raising to do kids, retire, retirement.

That's hard to give up. You know i'm just sitting here taking of like the fundamental differences between um the times and I think what you and I grew up seeing because we're kind of on the on the cusp of two generations who have two different paths, right and so for like our parents and for us almost essentially um a path was laid out for us where all you ve had to really do was just walk down IT and you could afford the american dreaming, right?

They they told you what to do. You go to school, you get good grades. You go to college, you get a degree, you get a job, you clip the corporate latter, you'll make enough money to live your life.

And this is the first time when really like that path doesn't lead you to the american dream anymore. Yeah, like it's still there. But IT doesn't lead you all the way to the american dream.

Many more IT stops somewhere short of IT. And so now people are forced to essentially become their own trail blazers if they want to get to the american drain. It's A A different thing.

Now absolutely. It's just requires, I think, a little bit more creativity. You need to figure out how you're going to do IT, whether that's house hacking, you know, something like that, which is a great way to do IT or no driving for uber becoming a realistic investor like those are all good ways to do IT.

And I guess the question is like, is that bad or wrong? Like do we feel like we are entitled to the american dream like we were before because you see at all the time on tiktok? And like people can't afford to home and they can't afford to do these things and IT needs to be fixed. And you know, it's always been on us to get to the american dream, but now it's on us to figure out how I get there to the path. Doesn't take you there anymore.

okay? So we're going to pretty deep peer so stay with us because Henry and I are about to get into some of the underlying causes tied to the cost of the american dream, the parts of the dream that we personally will consider giving up first and the things we don't want you to know. Our lifetime total spending on all of this right after the break.

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Looking back to the show, let's pick up where we left off. I've think you would be great if everyone could just follow a path like you said and be financially secure. That would be an ideal situation.

I do think IT is an opportunity to sort of a rethink the american dream and what pieces of IT actually matter to you. Because when I was looking at this, I sort of eluted to this. But to me, owning a new car just doesn't matter like it's not something I prioritize.

I think if I need a car again in the future, which i'm sure well, I probably won, buy a new car even though I can afford IT like it's just not super important to me. I think there are things like owning a home that is to be seriously reconsidered. I've rented for the last five years I have on a home. So I don't want to be a hypocritic, but I do think like there might be a future where people choose to rent for a longer time because IT actually is right now in today's day age and is a financial benefit is cheaper to rent by any metric. You can don't listen to your agent who tells you that you should buy necessarily because .

total cost of ownership is what we're talking about. It's not just your mortgage payment.

Talk about everything and that includes appreciation. IT is cheaper right now to rent, and that might change. That pendulum sort of swings back and forth over history.

But I I think it's actually quite liberating if you can remove yourself and so of divorced yourself from that part of the american dream. Do you think I have to own a home? Last five years I just did extended to me.

I rent my house and I take the money I would have invested in a home, and I invested rental properties, you know, like, and that just been a Better financial situation for me. Does that come with some emotional downsides of not owning around home? sure. But like that sort of one of the trade, ffs, that we have to make in .

the statement.

if you had to remove one of these categories from your american dream, what be?

And in my thinking, as i'm following a traditional path.

or like or like myself, you you oh gosh man.

I would for me I would be retirement because I would already use real state my retirement so I ouldn't I wouldn't .

even even budget that yeah I guess that's true. You're not saving that money, right? Like you're not among in your savings account that you're going to delete.

You might have to put that money into a asset, but then it's not going to delete because it's going to be income producing great. I guess when I when I look at this, i'll be honest, I spent more than that on my wet. I did not.

I didn't close. I don't know how wit happened. But men, when you look at the final bill IT.

I did not.

But that one is what I would maybe reconsider.

Oh yeah, definitely for me. I'm not i'm just it's never been that big of a thing for me. And luckily, I married someone who did not want to be a thing either.

Yeah, I think my wife like a totally different kind of wedding.

So this was all you you're like.

I was just a grim ziller for sure. No, actually, we were thinking about a little pig, but I was. We got engaged in the fall of twenty and fifty, and we want up waiting four years to get married because of covet.

And we live in another country. And we just decided we wanted to have all our friends, like stay in one place of grand seen people in years. And he was totally worth that.

I was awesome, but I wouldn't know. I wasn't.

But no, you generally weren't. No smart man, real respect.

We should have invited.

But IT was a very small idea that was a bit fun. We'll do another now for that amount of money though it's could be cheap as fair. But no, so I think the the thing the one hope I have for something getting cheaper is college. I actually saw something the other day that college costs have been going down, according to the college board.

Demand is down.

It's just got a break. It's just one of those things that does not make sense. I can rent about this for hours.

Go off on this is i've get on a high horse about this.

I don't if you know this, but before I worked to pick up pockets, I worked in ed tech and higher ed. And this, the like cost spiral of higher education, drives me absolutely insane. That makes no sense.

No one benefits from IT. They're all nonprofits. No one even makes more money. It's just nonsense. The whole thing is the worst.

So I have some hoped that maybe will see either trade schools become more popular or demand will decline so much ecologies after rethink their their pricing structure and what they prioritize and rather than building out like a bufo shaped pool at the colorado, which they did for three billion dollars and then pass that Price on to students, for some reason you might just maybe become a little more focused on like the education piece and not all the like oxidation things and let people decide what's important to them and whether they want to spend money on a fancy gym or, you know, whatever IT else IT is the school is buying on. Students behave, but that's a whole. Another episode we .

should just started rant. I would love to partake in that episode.

right? Well, we could just get on and complain about the stuff. This is our new shell form APP. By the way, I just .

opining about, yeah.

exactly. Well, thanks for this conversation. This has been a lot of fun hopely. You are listening to this, but I have one last question for your hand. What category of spending do you never want to examine in in your life like you don't want to know the lifetime total of how much you've spent on what part of your life there is .

one hundred percent eating out for me like I don't I don't want to know IT. Here's why I don't want to know IT because I will not change no matter how absurd .

the number is.

The number can be the most absurd like I don't need to see that part like it's just i'm going to do this.

That's how I feel about vacations. I just yeah under native ground of the lifetime that's that's not going to do that for me. I'm sorry. I I just spend way too much money, ana and I never calculate .

this is why financial freedom so that I can spend money on food when I want, how I want, where I want. I've always been that weight. Like if I online shop for like some clothes, like right after I spent like two hundred books buyers or more, i'm like, I didn't need those shirts, that's crazy, but I can go to dinner and spend a grand on a dinner with my friends and I live.

I I mean, it's fun. That's what you want to do. Forget you don't the acron fire financial independence, retire early minds.

F I G O V minus five gov, it's financial independence. Go on vacation because I not I am not trying to retire early. I'm trying to take more vacations. That's one of in the game for yeah.

I did exactly. I don't want to retire. I love what i'm doing. I never want to retire, but I definitely want to be able to go out to eat where I want.

This is why i'm so excited to hang out with you in vegas next year for B, B, because combined or two favorite things just going up, you just made all the good. But anything ks about you doing the show? This was a lot of fun.

Please let us know what you think of this format. We always are trying to break the news and recent information. This is not exactly real state, but IT really has to do with the economy. And sort of I think it's very indicative of what's going on in the broader economy in an american society. And if you found out this, please let us know.

Great conversation. And IT sounds like to me, you need to reach out to the travel channel if you can just be the new Anthony y board day because then you can just travel in, need food everywhere. My hero, what an icon.

Well, thank you all so much for listening to this episode of on the market. We will see the next time.