On July 4th, a day which celebrates our pursuit of happiness, USA Today claimed that 7 of 8 households can’t afford the American Dream. This gloomy article tried to pull a summertime Grinch on us (said the media giant to the little girl, “You say you want some fireworks, Cindy Lou? We’re sorry but you can’t afford them, so boo hoo hoo.”).
Fortunately for us all, USA Today is flat wrong. Why? Because its version of the American Dream requires oversized homes, constant overeating, overweight SUVs, and inexplicably, stratospheric taxes (weren’t sky-high taxes why we declared independence in the first place?).
If you run USA Today’s bloated mirage up against a less extravagant lifestyle, it proves that the American Dream is alive and well. In fact, my figures show that families of four (FOFs) can easily fund the American Dream on annual incomes of roughly $75,000—or about 42% less than the $130,000 USA Today claims is necessary.
To begin with, I’ll put USA Today’s inflated numbers side-by-side with my more modest estimates. Then I’ll compare each major expense line-by-line. Note: each item below reflects the annual cost for FOFs (so if you reside in a smaller household, you can reach your dreams for even less).
|USA Today||Frugal Fringe||Difference|
|Car Expenses [4WD SUV]||$11,039||$4,386||$6,653|
Here’s the USA Today recipe for residential happiness: “Home ownership is central to the American dream. So, we took the median price of a new home ($275,000), subtracted a 10% down payment, then projected the annual cost of a 30-year mortgage at 4% interest. We also added annual maintenance costs of 1% of the purchase price. Total: $17,062 a year.”
The McPaper fails to consider the McMansion craze. Factoid: whereas in 1987 the median US home measured 1,730 square feet, today’s median home is 2,306 square feet. This gives rise to a fundamental question: “are families happier now with 25% larger homes than they were back in 1987?” Despite living in bigger houses, Americans seem crankier than ever (I know this from published polls and also because I’ve been stuck on highways at rush hour).
Since larger homes haven’t produced a happier citizenry, why not move our FOF into a house that’s 25% more compact, as was typical in 1987? This cuts the yearly housing expense from $17,062 to $11,665. And since our FOF now resides in 25% smaller living quarters, it spends about a quarter less on utilities as well.
Food: Home and Away
USA Today writes: “We used the U.S. Department of Agriculture’s April 2014 figure of $12,659 for a moderate-cost grocery plan for a [FOF].” Factoid: the same USDA report also provides a “thrifty” alternative that costs FOFs just $7,741. No one starves under the thriftier plan, which serves good food with less processing (such as cholesterol-cutting oatmeal instead of sugar-infested dry cereals).
USA Today also pads its ledger with $3,662 in restaurant visits. As the article acknowledges, however, restaurants are an “extra.” Since fewer restaurant visits can scale back family waistlines, spending 50% less here will likely improve our FOF’s overall happiness.
USA Today supersizes transportation: “In May, AAA estimated it would cost $11,039 a year to own one four-wheel-drive sport-utility vehicle.” Factoid: the same AAA report states that a small sedan costs only $6,967 per year. Our FOF could even buy a used Prius. My 2010 Prius costs a mere $4,386 per year and seats four people comfortably (and still gets everyone from Point A to Point B).
Vacations, Entertainment, and Other Extras
My version of the American Dream cuts these “extras” in half. Summer vacations can occur every other year or involve camping trips or family visits. For entertainment, our FOF can use the local library and enjoy outdoor activities instead of joining health clubs. Our FOF can bundle their TV, internet, and cell service with a single provider for about $150 per month (or use pay-as-you-go phones instead of full data plans).
USA Today says that “total federal, state, and local taxes were pegged at 30% for households at this income level, based on a model developed for Citizens for Tax Justice.” But this one-size-fits-all tax model produces a major fallacy. After all, we know a number of important tax-reducing specifics about the authors’ hypothetical FOF: they enjoy four exemptions, they stash $17,500 in a 401(k), and they pay specified amounts for mortgage interest, real estate taxes, state income taxes, and medical costs. All of this lowers the FOF’s taxable income. Indeed, when I apply the available deductions, the combined bill for federal, state, and local taxes plummets to $6,229. To see my tax calculation, click here.
The Biggest Fallacy of All
USA Today concludes that “living the American dream would cost the average [FOF] about $130,000 a year. Only 16 million U.S. households—around 1 in 8—earned that much in 2013, according to the U.S. Census Bureau.” This sounds dire but USA Today is mixing apples (incomes for FOFs) and oranges (incomes for all households, most of which are smaller than FOFs and tend to earn less). The paper’s own sources report that the average FOF earns $90,184 per year (per the 2012 Consumer Expenditure Survey). Therefore, most FOFs can easily afford the $75,000 it takes to fund a non-inflated version of the American Dream.
Bottom line: the American Dream is alive and well and living in the USA (no thanks to USA Today).
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I apologize that it took me ten days to rebut our national McPaper of McRecord, but getting the numbers right takes time. Besides, I spent the Fourth of July weekend celebrating my own freedom from the many tyrannies of over-consumption—the same tyrannies that USA Today buys into for its overbloated version of the American Dream.
I hope that you were able to enjoy your own July 4th free from the ensnarements of excess. For the American Dream isn’t about big McMansions or colossal SUVs or pricey restaurants or the most expensive cell plans. Sorry USA Today, but maybe the American Dream doesn’t come from a store, maybe the American Dream . . . perhaps . . . means just a little bit more. And no summer visitation by a media Grinch can stop us all from gathering—hands clasped in hands—to celebrate together our most cherished freedoms (hopefully with fireworks overhead and low overheads on our household ledgers).
Photo Credit: Nathan Rupert