Why Chase the American Dream?

By Nick Hodge | Wednesday, April 10th, 2013

A lot of people have been asking, "What's it all for?"

I had the chance to talk to a wide variety of people over the Easter holiday: friends, family, hunting buddies, old high school acquaintances. And though they all said it differently, many had the same general questions and problems...

My 21-year-old cousin is a cashier at SuperFresh. She's attending community college and was able to afford her own apartment for awhile. Now she's living back at home.

Friends my age (30) are combating debt — student loans, credit cards, cars, prematurely bought houses — while still trying to keep up the American consumerist lifestyle as The Dream slowly slips away.

Their parents aren't any better off: Many still owe tens of thousands (or more) on their mortgages after using them as cash machines before the bubble burst. The 401(k)s that replaced disappearing pensions haven't lived up to promise. They're 50-some years old, and many of them will have to work until their 70s or 80s just to get out of debt, let alone build a nest egg...

“We've done everything we were supposed to,” was a common sentiment. “And we still can't get ahead.”

From a four-bedroom house, two cars, 2.5 kids, and a dog to a four-year college education and a nine-to-five, in many cases, what they were “supposed” to do turned out to be the wrong thing to do.

They felt like they were trapped in the rat race for nothing. They had things, but not wealth. They weren't happy. They didn't know how they had become a wage slave, working every day with little to show for it and no sense of future financial security.

This is the Heart of America. This isn't the 47 million Americans on food stamps, or the 14 million on disability (which is 25% of Americans over 20, by the way).

This is the eroding middle class, on which America's consumerist economy depends. They make just enough not to qualify for public assistance (they don't want to anyway), but not enough to get financially ahead.

They're beginning to wonder what, exactly, they've been working for.

It Depends on the Goal

While on vacation in Mexico, an American businessman came across a local fisherman with a small boat full of fish. The businessman asked how long it took him to catch all those fish, to which the fisherman replied only a short time.

“Why not stay out and catch more?” the American asked.

“Because this is all my family needs,” said the fisherman.

“Then what do you do with the rest of your time?” questioned the American.

“I sleep late, fish a little, play with my kids, take a siesta, stroll into the village, play guitar and sip wine with my friends. I have a full and happy life.”

“I have an MBA,” said the American. “You should spend more time fishing and buy a bigger boat. With the proceeds from the bigger boat, you could buy a fleet of boats. Instead of selling to a middleman, you could sell right to the processor and eventually open your own cannery. Then you could move to Mexico City and then New York, where you'd run your expanding enterprise.”

“How long will all this take?” the fisherman wondered.

“Twenty to thirty years of hard work.” was the reply. “But then comes the best part! You announce an IPO and sell your company stock to the public and become rich. You'd make millions.”

“And then what?” asked the simpleminded fisherman.

“Then you would retire to a small fishing village in Mexico, sleep late, play with your kids, and play guitar and sip wine with your friends,” said the businessman.

The fisherman, a bit confused, asked, “Isn't that what I'm doing right now?”

Be Your Own Mexican Fisherman

My grandfather didn't do anything he was “supposed” to do. I'm a lot like him.

Dirt poor and barely able to feed his young family, he left Italy in the early 1960s. He left his bride and young daughter (my mother) there to be sent for later.

With the equivalent of an eighth-grade education, no money, and no firm plan, he got on a ship, leaving his parents and siblings in the Old Country in search of a new life. He moved in with an already-immigrated aunt, took a job sewing suits at a factory to hone his trade, and started saving.

Banks? He didn't trust them. Managed retirement account? Fuggedaboutit. He operated in cash.

He saved enough to bring over my grandmother and mother, and eventually enough to open his own small business, Italo's Tailor Shop of Newark, Delaware. He went from unable to afford milk for his child in Naples to owning a successful business in twenty years.

My grandfather still doesn't know what credit is; he only took cash or check at his shop.

He and my grandmother pinched every single penny, from canning vegetables to fixing everything until it could be fixed no more.

And every major purchase — houses, cars, appliances — are still paid for up front in cash.

They don't teach hoarding cash, being frugal, and owning hard assets in high school — it's mostly a staging area for the rat race.

But who ended up best in the long run?

Over 70% of middle class Americans expect to work in their “retirement” years because they'll need the money or health benefits.

While those people are greeting at Wal-Mart, my grandfather is probably tending his fig tree or doing some woodworking or watching Juventus play soccer or going on his annual cruise or digging his toes into the sand in front of his oceanfront condo.

Point is doing what you're told is best or what everyone else is doing may feel right, but it's often wrong.

I'll be 30 this year. My truck and student loans are paid off. My first house is locked in a 3.2% mortgage that I expect to pay off in the next five years. I just got my first credit card, and that was only to improve my credit score. I've never carried a balance.

I have an IRA and a personal trading account I use to make equity investments. I use precious metals and art as an alternative store of wealth and source of value.

I spend a lot of time hunting and fishing, probably 50 days a year, if I had to guess. My freezer's filled with meat I brought to the butcher myself and vegetables I watched grow from seed.

I don't try to keep up with the Joneses or outwardly impress others... In fact, I avoid consumerism. I still wear jeans and sweatshirts I wore in high school. I used my last two cell phones until they died of natural causes. I bought my truck one-year used to avoid instant depreciation.

I don't enjoy saying it, but I'm in a better financial position than most 30-, 40-, and 50-somethings I know.

I don't have a solution for the 50 million Americans on Medicaid, the 47 million on food stamps, the 14 million on disability, or the millions more on housing assistance or other forms of welfare.

I don't have a solution for the central banking system that continues to encourage this kind of wealth disparity. That's not my job. I never want it to be.

The way I see it, my only job is to live life the way I want to live it in the face of current market and economic realties. And I happen to make money by telling people just that.

Wise investments are a big part of it, and I'll be telling you about plenty of those...

But they aren't everything. And I don't use their proceeds to buy things or stuff, I use them to live the kind of life I like to lead. Just like the Mexican fisherman. Just like my immigrant grandfather.

Like I said, 74% of Americans expect to work in their retirement years.

My grandfather did what he wanted and ended up fully retiring in his 60s when he sold his thriving tailor shop... to a Vietnamese immigrant.

Stop running in circles chasing the busted American dream.

Create your own dream and follow your own path to get there.

Call it like you see it,

Nick Hodge

@nickchodge on Twitter