One of the most prolific remnants of American culture from post World War 2 is the idea of the American Dream. According to Wikipedia, it describes “a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work.” This concept is born out of the statement in the Declaration of Independence that says “Life, Liberty and the pursuit of Happiness.”
In 2009, my wife and I realized our version of the American Dream – or so we thought. We broke ground on our dream home – a 4 bedroom, 2.5 bath craftsman inspired infill home on a corner lot just north of our favorite neighborhood. Idyllic was the intent and our perception of the execution. Knowing only a world where salaries climbed at 2-5%/year and the cost of everything was flat and the only limit to our opportunities lie in our own fears and doubts. The supposed “economic downturn” had not hit us. Yet.
In 2010, the first round of salary cuts went into effect at my job. The economy had gone in the tank starting a few years previously and was finally catching up to the company I worked for. There was no apologetic message from my employer, but rather a message that clearly read “you’re lucky to still have a job”.
Soon after, my wife and I found ourselves expecting a child. Betsy had to leave work several months before giving birth and never went back.
Soon after, things started looking up. I took a new job with a company that restored my salary to pre salary-cut levels. It still wasn’t going to be enough. The damage had been done. Loans had already been taken out to cover months of not having enough money to cover our expenses. Loans we hadn’t budgeted to pay off.
Back and forth we went for some time on what to do. Should we consolidate our loans? Should my wife go back to work? Should we sell our house? Money was tight and expenses were mounting. The car needed new tires. Our daughter’s Pre-School wasn’t as affordable as we thought. Available credit was near zero.
It finally dawned on us what had happened. We had been snookered and allowed ourselves to fall for it. We pouring out nearly every dime I could earn to try keeping this dream alive and it wasn’t adding up – ever. Even when I was promoted ay my job, all the extra money I earned was going into paying debt. On top of that, debt continued to mount every month. We didn’t have enough to support ourselves coming in. Something had to give. Debt was consuming 1/3 of our net income every month.
1/3 is a lot.
We noticed something as we peered into our hindsight about where we had been the last few years. The experiences we had were far and few between – I’m talking about the deliberate, memorable experiences. Going on vacation, visiting close friends, playing at the park, dining out at our favorite spots. The experiences were lacking. Our time was spent stressing over money, doing little but earning and attempting to pay down what had already been spent.
So we had identified the two major issues we had in our life: No Money, No Experiences. Consequences arising from that were big. Our young daughter was experiencing life with stressed out parents. Change was needed. We needed to shed ourselves of the weights that were holding us back. What good was a giant dream home to a miserable family?
Emotionally, the thought of selling our home was nearly unthinkable. This was to be the place where we were to retire some day and perhaps gift to our daughter. We had pages of plans for things we wanted to do to make it more comfortable and attractive. Parties we were going to throw. Artwork we were to commission. None of it was going to happen, however, at the rate we were going.
An interesting thing happens when you’re drowning in debt. No amount of best intentions or planning makes any difference. Your sole job is to avoid drowning. We had bought high and now were looking to sell high after only 5 years through a terrible market downturn to a tune of a 15% gain over our original purchase price. We realized quickly that we could sell the house and make enough of a profit to pay off all our debt. Amazing. A miracle situation perhaps?
We quickly contacted an agent to sell our house. Cautious optimistism was the sentiment all the way through. The next month was a whirlwind of cleaning and showings. Three offers came in before we listed. We took the first one. Another month later, I watched as the proceeds from the sale deposited into our checking account. It was at that moment that a huge weight lifted off my shoulders. That night, we had a “payoff party” and wired money to every bank we owed money to.
Debt gone. House gone. Freedom restored.
Six months later, we’re settled into our new home (a rental in a neighborhood close to our old home that’s quickly becoming a new favorite) and enjoying a less stressful existence. I’m eating better, exercising more, more effective at my job, playing with our daughter more, spending thoughtfully and most importantly – I’m not stressing about money anymore.
Our version of the American Dream was not one we had fully thought out and were prepared for. We executed too soon and at too high a price. After we left it behind, a new dream began to form. The funny thing is, it’s not a dream. It’s a reality.
We now prioritize experiences over material possessions – a life that has more meaning and reward for everyday experiences. We don’t have to dream any more as we set our sights on the things in life that aren’t about making more money and amassing wealth – rather, they are about the here and the now. Enjoying it, living in it and taking a proactive role in it’s development.
After executing our American dream, we dreamed of living in here and now. We couldn’t wait to be free.
That sounds more like a nightmare than a dream to me.
Absurd, isn’t it?