No, the American dream doesn't cost 130K

A few weeks ago, I was browsing the Internet with my morning coffee when a link to a write-up at USA Today caught my eye. It read "Price tag for the American dream: $130K a year."

The article, which is based on a study conducted by researchers at Cornell University, claims that the rising costs of everything from food to housing have resulted in a new American dream that is out of reach for all but the one in eight American families who earn at least $130,000 per year. They apparently wrote a book about their study as well, in which they described the American dream as "finding and pursuing a rewarding career, leading a healthy and personally fulfilling life, and being able to retire in comfort."

Why does the American dream suddenly cost 130K?

But, $130,000? Confused, I dove right in, picking the piece apart in an effort to understand where the authors were coming from. I even wondered if I had misread the title or discovered the world's most unfortunate typo. No such luck. Here is the basic rundown of the new price tag for the American dream, according to USA Today:

Essentials -- $58,491
  • Housing ($17,062)
  • Groceries ($12,659)
  • Car expenses ($11,039)
  • Medical ($9,144)
  • Education for two children ($4,000)
  • Clothing ($2,631)
  • Utilities ($1,956)

Extras -- $17,009
  • Annual vacation ($4,580)
  • Entertainment ($3,667)
  • Restaurant dinners ($3,662)
  • Cable, satellite, Internet, and cell phone ($3,100)
  • Miscellaneous expenses ($2,000)

Taxes and Savings -- $54,857
  • Federal and state taxes ($32,357)
  • College savings for two children ($5,000)
  • An assumption that at least one working parent maxes out their employer-sponsored 401K ($17,500)

Total: $130,357

Although some of these averages seem startling, a handful can be easily explained. The cost of housing, for example, was predicated upon the median price of a new home ($275,000) and a down payment of 10 percent. Then they simply spread the payment over 30 years at 4 percent interest. We all know how the cost of housing varies drastically due to geography, so it makes sense that areas with expensive real estate bring up the average cost for everyone.

Transportation expenses at $11,039 seem high too, but not so much when you consider that the average car payment reached $471 in Q4 of 2013. With the typical monthly car payment reaching epic proportions, it is not hard to imagine any family spending far more than even this study suggests.

What about the rest?

But does living the American dream truly require an annual vacation to a luxury resort as the study suggests? I don't think so. We all know that many families prefer the simplicity of a campsite under the stars and the opportunity to show their children the beauty of nature. Others relax at home, go on cross-country road trips, or travel to visit family instead. Are they simply doing it wrong?

And it's hard for me to imagine a family of four that needs to spend $16,321 on food to achieve the true American dream. They might want to, but it is certainly not a requirement. That's $1,360 per month in case you're keeping track, and a ton of cash if you are making any kind of effort to keep your costs down. Does any family need to spend that much money on sustenance to be truly happy and prosperous? Hardly.

What is the American dream?

In the book "The Epic of America," James Truslow Adams stated that the American dream is "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position."

Those words were written in 1931 and, although I'm sure there are multiple meanings and theories, I interpret Adam's words to mean that the American dream is synonymous with opportunity. In that sense, the American dream might not be something that is achieved all at once, but an ongoing journey or phenomenon that happens over time.

Unfortunately, as the USA Today piece shows, for some of us the American dream has now devolved into one based merely on consumerism -- a lifestyle that cannot be achieved without cable television, regular restaurant dinners, and a smartphone for every child; one in which a 4WD SUV is the norm and the food bill runs upwards of $16,321 per year for a family of four. A life of consumption.

This isn't my American dream, and it doesn't have to be yours.

The American dream is what we make it

I worry about sweeping generalizations about the purported new American dream and the message it sends at a time when so many people are struggling. Those who are trying to get ahead and making progress could see the 130K figure and believe that the goal post is moving faster than they are.

But when someone tells you that you aren't, in fact, "living the dream," should you listen?

I don't think so.

It's true that times are tough. The price of everything from food to healthcare is whirling out of control, and full-time jobs are hard to find. In fact, so many people are working several jobs just to make ends meet, let alone get ahead, or -- heaven forbid -- get rich slowly.

Headlines like those in USA Today don't help. In fact, they make us feel as if the American dream is much further out of reach than what we thought. They tell us that we need more, that we aren't trying hard enough, and that we may never succeed.

It's a lie.

Defining our own dreams

Instead of falling victim to this trap, I challenge you to follow your own dreams -- no matter what they may be. Decide what brings value to your life and the lives of people around you and pursue it. Find happiness in small things that don't cost much, if anything at all. Choose a life that is fulfilling, challenge the status quo, and ignore those who keep perpetuating the idea that we would all be happy if we only had more money and more stuff.

Find your own American dream and refuse to let someone else define it for you.

Chances are, it won't cost anywhere near 130K.

Do you feel like you have a shot at the American dream? How much money do you think the American dream requires?

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