Many of my friends look at my lifestyle and see travel, leisure, a lot of free time, no day job… so naturally, they wonder why I am living on a tropical beach if I haven’t had a job in over four years, while they are slaving at the office and barely have $5,000 in savings?
It is getting a little too obvious that major companies want you to stay at your job for 45 years or more, and will put everything in place for you not to leave. So does the government. They want you to be good soldiers and keep paying income taxes. You have to be really strong to escape the system.
50 years ago, your grandparents were living the simple life in the country, or in a small town. They would do most things themselves. Your grandma would cook from scratch while your grandpa would fix the car and the house, maybe even build an extension himself, to make room for the kids. She would sow the family’s clothes and cut everyone’s hair while he would chop firewood. Their days would be filled by chores and even at night while listening to the radio she would still polish the silverware while he would grease the entrance door.
As a result, they needed very little money. A one income household was able to pay off a mortgage in 10 years or less, not because they earned more or houses were cheaper, but because they put a bigger chunk of their take home pay into it. They had zero other debt, and would save until they could afford a car or a refrigerator. They would keep their furniture for life, and buy quality items that would last for decades. There were no such things as whims or impulse buying.
A crisis or job loss was tragic, but often not fatal. The family would grow their food, mend their clothes, and get strong social support from their church and family. When you have built your house and chopped your firewood, you can afford to work just for the price of your food.
But what was in it for the manufacturer? If you got a table when you got married and didn’t buy another one until you die, how would they turn you into a repeat customer? By inundating you with a myriad of consumer goods, sofas, clothes, ready meals… that are ever changing and thus forcing you to keep with the trend. With increased offer, companies forced you to work harder, to make more money, to buy more stuff. The second spouse now had to work to pay for the American dream, the two cars, the 5,000 sqft house, and the fridge upgrade every 5 years.
Note: I am all for women joining the workforce, but when I see people like my sister working minimum wage when the household would be better off having her at home, it makes me wonder. She would pay less taxes, have one less car, no childcare,… work related costs are higher than her salary but she doesn’t see it that way. Unless you are two high flyers, the lower earner has often best stay at home than work.
Another related phenomenon was that money now bought many conveniences. Instead of chopping firewood to cook and heat your house, you could work two hours at your desk, and make enough to pay your electric bill. So if you kept living your grandparents’ life, limiting your needs and being quite self sufficient, you would be faced with
1. An incredible rate of savings, way over 50% of your salary, leading to financial independence in 10 years or less, or
2. A LOT of time in your hands, if you stopped working once you had enough money to cover the bills. Which happens to be some people’s definition of financial independence. Say you limit your needs to $1,000 a month, you can now work part time and cover your expenses and then some, while enjoying plenty of free time.
And if you have free time, you have time to do self sufficient tasks, and consume less. Make more, spend less? Sounds like bankruptcy for the big players. So what does a company do to get you to still want more? They give you a TV, amusement parks, laptops, movies, the mall… so you do not have a moment in your spare time to think about freedom. No, you need to work more to pay for all that.
They make it easy. They give you a card. You can pay it back later, in “convenient installments”. At 29.9% APR. Handcuffing yourself to another year or two of company work just to thank them for the cash advance.
And if you want more, they will give you drugs, social media, alcohol and Vicodin. Anything so you just sit there and keep producing and making them richer.
Should you go live in the woods and hunt wolves for your subsistence? Absolutely not. Enjoy the fact that one hour of your labor can buy so much more than before. And use those hard earned dollars to buy things that will give you more value than the energy spent to earn them. Early retirement is not for everyone, but consumer debt should be for no one at all.
This post was featured on the Financial Uproar, thank you!
Wow – I love this and completely agree with what you’re saying.
It certainly was a very different world when my parents were my age. By my age they were married, had kids, had bought a house and a car. Even they tell me they were pretty carefree days.
Today a massive increase in property prices means people are having to work harder and harder for ever-smaller homes. As a result they’re delaying house purchases and having kids. I even recently read that taking inflation into account, this generation is actually worse off than our parents.
And then – as you say – there are the “gadgets”. The number of people I know who have every gadget under the sun (I know one person with THREE ipads!) yet are always complaining they’re broke and will never be able to retire.
HELLO!!!!
I believe financial freedom is still possible. Infact, thanks to all the information on the internet – the blogs, forums and social media pages – combined with all the books on the subject – in my opinion it’s now easier than ever before.
You just need to be a bit frugal, live below your means, avoid all the shiny things the marketers are trying to sell us and “follow the program” that so many people have successfully used before.
A really inspirational post Pauline 🙂
Thanks Richard! I read that we are the first generation to be worse off than our parents as well, and have a post about that coming soon. That is crazy since as I wrote, you need to work less than they did to cover basic expenses. If you go to a cheap rural area, you can still find really affordable housing. Saying you must living in a big city because you make big bucks doesn’t really make sense if you are going to live like a pauper, better make less and live in a big house in a smaller town.
I really agree all your points. During my Grandparents’ time they work simple and happy life. My Grandfather do all the farming works while my Grandmother is staying at home as homemaker. Yes they earned money and they had foods to eat always. They sent most of their 14 children to private school.
They had different values and put education in high respect, while now I hear parents complaining that school is too expensive but their kids have iPads and expensive clothes. You just have to prioritize.
I can totally identify with everything that you’re saying here. You’re not alone in your opinions. A lot of books about economics and the decline of the middle class point the finger at consumerism and rapid fire marketing that is constantly bombarding us everywhere you go.
It’s very unique what happens when you stop thinking you “need” things and really evaluate what will happen if you don’t get them. Over time you start to see that things like food and fuel to go to work become a lot more important than new dining room sets, etc.
Starting thinking about a purchase in terms of hours worked to get it also works well to realize the disproportion between your effort and the value you actually get out of the item.
Most people are slaves to their jobs. Working more than 40 hours a week to get a meagre paycheck. Sadly, most people can’t earn enough to provide a good family life, let alone have enough savings. The rich poor income gap is getting wider and wider. Life was much simpler back then which you mentioned!
You can make a good living on a small salary, if you google $1,000 monthly budget, you will see how some people make it work without major sacrifices. The only thing is they live in the MidWest or somewhere rents are really cheap. You can’t make it work in NY. Being a minimum wage worker, I would move my family to a cheap area to stretch my income further, since the minimum wage would be roughly the same but life could be 40% cheaper.
I think about this all the time. Who on earth came up with a 30 year mortgage too? It really does seem like we are set up to be working slaves our entire lives. To get out of the rat race, you have to do things differently.
30 year mortgages can be convenient with today’s low rates, if you are smart enough to invest the money elsewhere, but many just use it to buy even bigger houses and have a crazy high debt to income ratio.
“but consumer debt should be for no one at all.” I LOVE your final point Pauline! It’s spot on, yet so many trick themselves in to thinking “stuff” will make them happy. I used to be guilty of this and am thankful that is far behind me. It can be difficult to not follow the norm, but it’s certainly not impossible and definitely worth the effort.
It is hard because we are trained to think we should belong to the norm. If everyone borrows for college, so should we, etc. Sometimes we don’t even think things could be different.
I agree with everything you say here (especially your overarching point) except for the fact that your employer wants you to stay at your job for 40 years. I disagree. I think employers prove every day how little they actually care about who works for them. Employers seem to realize that there are plenty of people out in the labor market and treat their workers like cattle. If workers were treated better, maybe they WOULD stay for 40 years (like in the 1950s….).
Yes, you are right, I meant it in a way that the corporate world as a whole wants you to keep being productive for as long as possible, so you keep making money and spending on things you wouldn’t if you were more self sufficient, like convenience food, cheap gadgets, etc.
I’ve read a few articles about how one income used to be enough. I have always believed in this and my husband and I have lived on one income while having dual incomes. But I see so many of my friends struggle financially while earning dual incomes. It just seems to be the norm now a days.
If you break down what your friends spend on, a lot of it could be cut down if only one spouse worked, no child care, less taxes, no second car, etc. but if they inflated their lifestyle to the level of two salaries it is really hard to lower that and go back to living on one.
While I agree with your sentiment that we are very much in a consumer culture, the idea that we were great savers decades ago is somewhat of a myth. In the book, In Cheap We Trust, the author, Lauren Weber, does a great job at pointing out that we’ve been terrible with our money since the beginning. Only in times of crises like WWII did we truly save (but we soon splurged when it was over).
Also, I disagree with your sentiment about a woman paying a large portion of her salary towards child care. While yes, it might be a struggle for two working parents to pay for child care, a parent who leaves the workforce also severely restricts their ability to rejoin the workforce at the same level they left it at. When you rejoin the workforce after many years out, you may have to start from the bottom again, or lower than your level when you left.
The purpose of working AND paying for childcare is that eventually, your pay and career will be better for the amount of time you continued working. So in five years time, paying for child care would be a smaller portion of your paycheck. Even a minimum wage earner at McDonald’s, if a good employee and she/he works at a busy location, will get promotions to Shift Lead, Assistant Manager, etc. Obviously, if it’s costing you more money for child care than what you take home in a salary, it’s not worth it, but if you’re breaking even or doing better and have a path for potential growth, sticking it out will be be better for one’s career in the long run.
Who is “we”, the US? I have only known people who were born from the 1920s onward so I guess I imagined that the pre WWII generations just lived the same way those did. A century ago, you could have a store credit in France which was one of the very few unsecured debts, and not paying it would mean your name written on a big chalk board as a bad debtor for all the villagers to see, and no one else in town giving you credit. Most families would buy a house as soon as they got married and thus start a forced saving in home equity. To this day in France you generally pay cash for everything (including car and university) but your home.
Regarding women (or the lower earning spouse) leaving the workforce, you make a good point about childcare being an investment to leverage your lifetime earnings instead of being a money pit. In the example of my sister being a social worker, she makes around $1,600 and can hope to go up to $2,500 at the end of her career, so I don’t think she would be missing out on much, since most of her $1,600 just increase the family’s tax burden, putting them in a higher tax rate. She wants to work for her sanity and to feel productive, which I respect, but if it were just a financial decision, her true hourly rate is so low she would be better at home.
Yes, I mean the USA. That book I mentioned takes a look back at the USA to as far back as the 19th century and mentions how we’ve never as a culture majorly pushed not spending money outside of being tied to a form of Protestant Christianity, like the way Calvinism encouraged us to suffer and not spend money in the 19th century. While yes, there are movements to stop spending, they’re more counter-culture, unfortunately.
I can see where your sister’s career may not be worth it. In my own career though, I don’t make much money, but women who continue on my path (non-profit fundraising) when you’re the Director of Development of a successful and large non-profit, making six figures is standard. I definitely want to keep working to not lose out on that.
I think I’m probably middle of the road. I really wouldn’t want to go to too simple times because I think we do have it a lot easier than our grandparents did. I do wish I had more self-sufficiency like being better at gardening, making my own clothes, etc., but would not want my life to be chores sun up to sun down. I also don’t feel like I’m a completely slave to consumerism either. Maybe with things like food, but not necessarily lots and lots of stuff. At least I feel I made a lot of progress in this area.
A full day of chores sure sounds boring, and we are spoiled that we can now buy convenience and save time (like getting a washing machine or at least going to the laundromat instead of hand washing), but I questions the use of the free time we got as a result, staying 4 hours in front of the TV instead is not what I would aim for. If you get to a point where you enjoy gardening, it is not a chore anymore, but a productive hobby. Like blogging or working on your car.
I was recently babysitting a little boy who was really upset when he got a hole in his sock and wanted his mom to fix it. She laughed and said of course not she’d just buy a new pair and he looked pretty confused “Why?” he said “These are fine I just need you to sew the hole.” It was one of those moments where I thought – we really do want to have everything easily purchased rather than take any time to fix it. I’m with his mom most of the time “Just get some new one’s they aren’t that expensive” but what if I always operated under the “I can fix it” mentality? Probably would save a fortune and be less material-focused. Out of the mouths of babes.
What a lesson from a small kid. I think I would go the easy route and buy new socks as well, since they are so cheap, I remember my mum spending hours mending clothes and socks and they would last a while longer, now when I need to sow a button I just bring it back to her 🙂
Pauline, this is my favorite article you’ve ever written! Standing ovation! Bravo!
As you know, we like what we like and have no trouble spending for it, but we want for little. Ridding myself of unnecessary “things” has made my life so much happier. I don’t miss one “thing” that I gave away or simply threw out. I’d rather spend on fun times – travels, morning coffees, etc. I like working part time and having my money be mine! I find that people find us “weird” but that is fine by me. I’m never asked to go on boring shopping sprees! 😉
Average people won’t like people who are not average, and will try to get you to belong right there in the middle with them so they feel safe. Good for you for sticking to what you want.
I think there is a lot of value in looking at where we came from, and perhaps trying to integrate some of those principles back into our lives. I do like convenience and, of course, not having to be stuck at home mending clothing and cooking, but from-scratch cooking and DIY home maintenance can save a ton and be really rewarding.
This looks similar to my enclosure we got a hold of
only recently, incredibly satisfied about it for those found on the fence about getting one,
do it now, you wont be sorry
I enjoyed your post
games of sniper shooting