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How much money would you need to buy the American Dream?
Not how much would you need to make in order to afford the REPAYMENTS on the American Dream… how much would you need to buy the house, the two cars, the family and a basic vacation every year?
Probably a lot more than you have, right?
I know it’s not going to blow your mind to find out that these (supposedly) vital ingredients to a good life have gotten kind of expensive… but it has reached a tipping point.
The American Dream is not dead, so much as it’s an extreme luxury that in many parts of the country can now cost as much as TEN MILLION DOLLARS to afford… that’s more than most of us will ever earn in our lifetimes BEFORE taxes, interest payments and basic essentials like… food…
Sorry to be the bearer of bad news, but holding onto the traditional financial wisdom of what you AUGHT to have in life is now permanently out of reach for most people and as more Americans realize this, it’s fundamentally reshaping our economy…
According to data from the US Fed and the Census compiled in the Cas Shiller Index, the average cost of a home in the US is now more than seven point six times [7.6X] median COMBINED household incomes.
That’s now significantly higher than it was in the leadup to the Global Financial Crisis, an economic meltdown enabled by… housing speculation.
If you think that’s bad, spare a though for the UK, which has lower wages but similarly priced homes or Canadians who according to data compiled by financial samurai have on average ten percent less [10%] less disposable income but live in houses SEVENTY FIVE PERCENT [75%] more expensive
New mortgage rates are also at the highest point they have been since 2000, when home prices were only four times household income.
The average person even IF they have a full-time working partner cannot reasonably afford to purchase an average home at current prices with current interest rates without paying more than HALF of their BEFORE TAX income in INTEREST.
That’s before principal repayments on the loan, and before income tax. In reality, the average bank wouldn’t even write this mortgage because it would be financially irresponsible.
So it’s time to learn How Money Works to find out why it might be time to let go of the American Dream…
