Is The American Dream Still Alive?

In yesterday’s post, I link to my podcast appearance on The White Coat Investor. I was perusing through the comments this morning and was taken by one in particular. During the interview, at some point, I made a statement that there is a simple path to wealth, and that most people could become financially independent. The commenter took exception, and felt that I was being too generous. He felt that financial freedom, in fact, may not be an option for a large part of the United states. This made me think. In my estimation, reaching FI is the quintessential American Dream. So is the American Dream still alive?

I believe it is. I believe that the grand majority of people can reach a solid financial standing if not complete independence. Jim Dahle, in his reply to the commenter, noted that if a couple can build in a savings rate of 15%, they should be able to make it to the finish line by retirement.

The math has been demonstrated repeatedly. But math is just numbers. Many of us want to see actual proof of concept.

In response, I present the family of one of my best friends growing up.

Proof of Concept

He was the youngest of three siblings. His parents immigrated to the US under duress in the early eighties with a few thousand dollars, and the clothes on their backs. Their skill sets were minimal. His father had some sales experience, and his mother was a house wife.

Is the American dream alive? Let’s take a look.

At the suggestion of a friend, his mother enrolled in a certified nursing assistant class and twelve weeks later landed herself a job at the local hospital. Although over the next few decades her salary never topped 40K a year, it was enough.

His father was able to obtain a series of sales jobs in the beginning, but given his heavy accent and the prejudice of the time, he never managed to make even fifty percent of what he was earning in his home country. The majority of the time he produced no income.

My friends parents are now approaching their eighth decade and have a net worth of well over a million dollars.

How do they do it?

Save

They saved assiduously and never spent a penny more than they needed to. They shopped at multiple different grocery stores and always bought the cheapest produce. Then they recycled cartons and containers from food products after they were done eating the contents. Grocery bags were never thrown away.

They bought clothes and household items used, and showed up to every local garage sale. They accepted hand me downs from friends and neighbors. Broken items were often repaired and rarely thrown out.

The back yard always housed a large garden. Fresh produce was on the menu throughout the summer. Projects around the house were done during weekends and evenings. Bathrooms were remodeled with blood, sweat, and sometimes tears. If the human know how was available, nothing was hired out.

Is the American dream still alive? For those who save it is.

Utilize

It was not only saving, but being aware of all the governmental programs available to help. Given their abysmally low-income, they qualified for Medicaid. Their children were able to receive free lunches for a number of years through the public school systems.

When the teenagers were ready for college, there was a host of student loans and grants that paved the way for all three to receive professional degrees.

We ask if the American dream is still alive for the poor and the downtrodden today, but there are still programs designed to help. Whether that remains with this current administration is unknown, but traditionally this country helps its poorer members.

Innovate

Once the finances had stabilized and there was a little money in the bank, my friend’s father utilized leverage to buy a large multiunit building during a real estate recession. He scrounged up enough money to put twenty percent down on a two hundred thousand dollar building.

For decades he has managed that building by himself. Not only has it appreciated to over a million dollars, but also provides forty thousand dollars of cash flow every year.

They are now financially independent, live in one of the most expensive suburbs in the country (to be close to family), and have children who are now well ensconced in the upper/middle class socioeconomically.

Final Thoughts

Can anyone reach financial independence? Is the American dream still alive? I believe that for the majority of Americans it is. I think the math proves it. And I push forward my friend’s family as proof of concept. it may not be easy. it may require sacrifice and struggle. But if you are willing to save, utilize what the government offers, and innovate a little, I think a viable path lies ahead.

It’s not just about high wages.