New American Dream: Being Debt-Free
(NEW YORK) -- A great number of Americans are redefining the American Dream. That was the takeaway from a recent Credit.com poll, which showed that nearly one in four people between the ages of 18 and 24 defined the American Dream as being debt-free. Shockingly, that's more than those who dream of owning a home.
The poll underscores the belief that there is a great deal of nostalgia for a promise that increasingly and tragically looks to be further out of reach for newer generations. Once upon a time, the American Dream was a Technicolor affair, replete with two and a half thriving, college-bound kids, a dog or cat and not one, but two cars in the garage that were owned outright, or would be before they were ready for the crusher. Finally, and most importantly, for generations of Americans, the American Dream was about owning a home.
"The value of homeownership is deeply ingrained in American public culture," write William M. Rohe and Harry L. Watson in the introduction to their book, Chasing the American Dream: New Perspectives on Affordable Homeownership. "From early laws requiring landownership for the right to vote, to nineteenth-century homestead legislation, to contemporary real estate brochures, the ownership of a home has long been presented as a crucial part of the 'stake in society' expected of full fledged members of American communities."
Now it appears that for millions of Americans, the American Dream is looking different. Credit.com's study found that while 27.9 percent of respondents see the American Dream as retiring at 65 and 18.2 percent see it as owning a home, 23 percent view the American Dream as being debt-free.
The Great Recession affected all Americans. The irrational exuberance of the mortgage boom and investment portfolios yielding 10 percent growth year after year led to a burst bubble, downsizing and various kinds of over-corrections. At the height of the boom, USA Today published a poll in which 81 percent of young adults said getting rich was their top priority (and 51 percent gave the same priority to becoming famous). Americans now face a new personal finance reality.
For millions, fame and fortune is probably out of the question absent a win on reality television. To them, financial survival equals success and the American Dream is about staying above water while the kids pile up an average $27,000 of student loan debt, mortgages are upside-down, and not enough money is finding its way into retirement portfolios.
Today, more Americans dream not of affluence, but of basic financial stability. That's what both retirement and freedom from debt have in common. When Americans dream of retirement and freedom from debt, they dream of being able to exhale. Homeownership is a little different. Rohe and Watson frame it as an aspirational component of American citizenship. Others believe that you haven't really "made it" until you own a home. However, the failure to own a home is generally not a source of stress in the same way that drowning in debt and the inability to retire are.
In another section of the survey, in fact, we see just how important debt is to consumers. When the poll asked what financial goals are most important to respondents right now, being free of debt/credit card debt was at the top (33.4 percent of responses). The runners-up weren't even close: Retiring at age 65 (11.6 percent), buying or paying off a car (11.3 percent), sending a kid to college (8.1 percent), buying a home (6.8 percent), paying off student loans (6.2 percent), paying off a mortgage (5.6 percent ) and buying a vacation home (3.2 percent). (And 13.8 percent had no response, for those of you doing the math).
Finally, the poll found that nearly one in six respondents felt that it was unlikely that they would ever be debt-free in their lifetime. That's a troubling number and one we're going to have to watch over time.
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