How the American Dream Is Keeping Us Broke


keeping us poorOur grandparents grew up in a time when you had to learn to be resourceful.

Things were fixed and not replaced, women made their own clothes, and neighbors shared one phone. Things were purchased because they were necessary, not because they were simply wanted—and guess what? No one would ever have dared to refer to your Nana as a cheap-ass.

So where did we go wrong? Research from Ohio State found that people in their late 20s and early 30s carry significantly higher credit card debt than older generations and pay it off much more slowly.

RELATED: Debt, Savings or Retirement: How to Prioritize Your Financial Goals

Much of this can be attributed to the rising costs of education, but the bigger problem, in my opinion, is our generation’s fear of looking cheap.

Looking Rich Doesn’t Make You Rich

Success is naturally equated to wealth, and no one idolizes someone who isn’t successful. The younger generation adores ultra-rich celebrities, and this has only helped to morph the American Dream into a whole new level of status and luxury we all think we can achieve.

In pop culture today, having the appearance of wealth trumps actually having any money. We see rappers in chinchilla jackets popping Ace of Spades champagne in their videos, not driving a Toyota and having game night in with their friends. Kanye said it best: “What you think I rap for, to push a fu@#ing Rav4?” What needs to be understood, though, is that people who are really wealthy actually attribute their frugal habits to getting and staying there.

The number one quality of successful people is living below their means: For example, there are 1,138,070 millionaire households living in homes valued under $300,000, yet at the same time, 86% of people driving the most expensive “status” cars are non-millionaires.

RELATED: What Does It Mean to Be Rich? Depends on Your Age.

We need to remember that banks won’t approve us for a loan just because we’re carrying a Chanel purse.

Most people who actually have money are not scared of seeming cheap—that’s how poor people think, and it keeps them poor.

Why ‘Cheap’ Isn’t an Insult

I’ve lived in New York City—a not particularly inexpensive city—for nine years, and I saved almost a half a million dollars before I was 30. I didn’t create some stupid app that I sold for a bunch of money—I was a waitress and a model. I wasn’t even a big model. Not even close, actually … I mean, I’m not ugly or anything, but you get the point.

RELATED: Why You’re Not Actually Poor

I lived in an affordable apartment, I never took taxis, and I never feared being labeled as cheap. Did people call me that because I always looked for better deals and watched my spending? Sure, but while they racked up debt in an attempt to show everyone how well they were doing, I was putting myself in the position to have the money to invest in my future.

Who knows—maybe this is what the future will be: Those who know to sacrifice will be the ones who ultimately live in comfort, and those who feared looking cheap while rocking Louboutins and Gucci loafers will be forever unable to move out of their parents’ house.

Where will you be?

Love reading other people’s financial tales? Check out more great LearnVest-exclusive personal stories

ashley stetts 3Ashley is a model living in NYC. She created as a guide to living luxe for less with tips and advice on saving money. Follow her @thefrugalmodel

  • Memphisperson

    Love the articles, but wish there were more pointers on saving. I purchased my first home a year ago after saving every dime and penny I got my hands on. I live in a pretty large house but my mortgage is less than the amount I was paying in rent. You have to get creative when saving money. Yes, my friends call me cheap, but they never seem to have any money, or they are always borrowing money. I learned early in life that you really can’t depend on anyone but yourself.

  • Gilda Mehraban

    I was a big fan of Learnvest but I feel like the value of the articles is slipping. This is one is a perfect example of the deterioration. Less preachy, more practical articles please.

    • Lindsey

      I couldn’t agree more!

  • cristina

    Your point is well taken, but come on, a half million dollars saved before you’re 30? Don’t pretend like that’s something that average person (much less the average New Yorker) is capable of. I have a hard time believing that your average annual income in your 20s was less than six figures even if you were a small-time model–which, by the way, still sounds like backdoor bragging. You’re rich AND pretty! We get it. I agree with Gilda. Enough with these self-congratulatory articles written by people in the top income brackets.

    • Yary G

      I agree with Christina. I have a hard time believing you were making the average $30,000 to start off salary of the typical New Yorker. Waitressing? If you were a model sounds more like Cocktail Waitressing… which can easily pay $1000 a night. Which is what most people my age (24) make in two weeks.

      Not buying this article, babe. Even though I loved your Kanye reference.

      • guest

        If you’re bitter that you don’t make enough money, you could always pick up a second job like the author rather than criticizing her for working and saving.

      • Sarah Lauren

        She did say in her blog that she was making up to $1,000 per night as a cocktail waitress and that it did pay more than her modelling job.

  • Whitney

    I loved this article. Subjects like this are so obvious, but need to be said to remind us what is really important. Thank you!

  • Jessica

    Although I agree with the core message of this article, I really didn’t like the tone or the way the author presented her opinions.

    “What needs to be understood, though, is that people who are really wealthy actually attribute their frugal habits to getting and staying there.”

    That’s interesting since I think Kanye West has an estimated net worth of $90 million. I don’t think he attributes his frugal habits to part of his success, and I think he’s part of the ‘really wealthy’.

    “The number one quality of successful people is living below their means: For example, there are 1,138,070 millionaire households living in homes valued under $300,000, yet at the same time, 86% of people driving the most expensive “status” cars are non-millionaires.”

    This may be true, but 1,138,070 millionaire households doesn’t mean anything unless you know how many total millionaire households there are in the U.S. (assuming you are talking about the U.S.). If there are 10 million millionaire households, then I don’t think this number is significant. Also, where are your sources?

    “… I saved almost a half a million dollars before I was 30.”

    Good job! I’m impressed. But, assuming I graduated from college at 21 and started working immediately afterwards and had a 60K/year job (which is above the national HOUSEHOLD average in the U.S.) – I would put away a maximum of $540K if I saved 100% of my income and had no taxes. I have a feeling that the author makes considerably more than 60K/year.

    “I didn’t create some stupid app that I sold for a bunch of money—I was a waitress and a model.”

    As a woman who works in a STEM field, I found this comment somewhat bizarre. Although I understand that the author is trying to convey that she didn’t come into a large sum of money either by chance or innovation, why is she putting down people who acquired financial success in a bulk transaction? And, especially, why is she putting down entrepreneurs and STEM workers in particular?

    LearnVest – you already put up far too few articles mentioning women who work in STEM fields…please refrain from insulting women in my field directly. Or, if you don’t want us as part of your community, I’m sure I’ll be able to find a personal finance site that does want me there.

    • cristina

      Well said. Although I’d wager that acquiring such savings by creating a “stupid app” is no more a product of luck that doing so through modeling. How many of us are born with the body type to make six figures showing it off? I’ll grant that a successful modeling career requires work ethic and ambition (although no harder than most jobs with the same salary), but it’s not exactly hard labor.

    • Kristina

      THANK YOU! As a women in STEM, who will barely make it out of all of the schooling by 30, I completely agree with your comment. Where are the articles about those that slowly but surely acquire wealth (of knowledge and otherwise)? There is a whole section on LV for moms, but there is little if any representation of women in STEM fields. When they are not talking about their motherhood status, they are talking about living in NYC and/or models/actresses/waitresses. It is really insulting to promote (by volume of stories/discussion) certain occupations while putting down others. There is nothing to put down about innovators that produce tangible solutions to problems (in business, healthcare, etc.). Women are sorely underrepresented as patent owners and I wish them continued fortune if they are successful developers. How about promoting women who are making their own paths…who are doing the job (in any field) without a partner at home to help? Unfortunately, LV is yet another platform (sadly, from women themselves) that is a cheerleader of outdated stereotypes. I am one less reader of these “articles”.

      • Bee

        It’s exactly that, and I love it! The site is in the middle of an awkward phase so the current articles are a little hit or miss, but the archives are loaded with pure (patiently-acquired) gold.

    • Christine Wilson

      I’m another woman in STEM too. I thought it was bizarre too “I didn’t create some stupid app”. Why is she putting down those that know how to program and sell? It is a skill.. I know Angry Birds and other apps that may not be loved.. but you can’t help what the market loves! Still not stupid that someone created a popular app.. still takes technical skill and business sense to be successful.

      I think you need to create an app to see that it actually takes some programming skill.. and more than that.. it will just sit there unused if you don’t know how to make an app that people want.. or you don’t know how to market it.

  • Guest

    Uh, most people don’t even EARN half a million dollars before they’re 30.

  • cocoachanel74

    Hmmmm????? I’m a little leery of those who use the word ‘never’ in articles like this. I do understand what you’re getting at…and the point is, well, received…but not realistic in any way at all. You really had to be doing well to make that type of income and save that much….that’s not realistic in today’s world for sure…not for the 47%’ers who exist. I wish you much continued success, however.

  • Yary G

    I have a hard time taking money advice from a model.

    • Colleen Oczkowski

      Why? Are models supposed to be dumb? Because she seems pretty smart about earning money and saving it. Her bank account seems to reflect that.

  • Colleen Oczkowski

    I remember reading another piece by her that I think it explained that the modeling thing isn’t a long career for most models so she understood that she had to save as much as she could while she was marketable. She also worked at a fancy nightclub with bottle service; a job that also weighed heavily on her looks. With the money she was making as a model it sounds like she didn’t really need to do that to earn a good living but worked that extra job to squirrel more money into her savings. It is a different situation from what most woman have but this piece is one that shows her money smarts and the superficiality of status symbols.

  • Sher

    I see the comments in reaction to this article and I’m a bit miffed and perplexed. I am glad that Ashley actually is saying what she is saying; but it seems people are getting the wrong message.
    This entire article could be viewed as “about Ashley” or it could be viewed as – are you living beyond your means to make others happy? Interesting how the comments about her being a model is exactly what she is saying. At the end of the day, it appears to me she is saying:

    Wait for it…wait for it…

    “Make money when you can, save as much as you can and then you’ll have money when you CAN’T make it anymore. So, stop buying items to make ‘other people’ impressed with the money that you won’t have – because you spent it on items you didn’t need.”

    I work a few jobs, not to make ends meet – but to squirrel away money so that I can make my dreams come true. I could go an purchase my Gucci, Prada, and Dior items…but why? I can pick up an item with the same functionality at Target and for a much better price. If it goes out of style – I know I didn’t spend $2,000 on it and I can just go buy another functional, cute item.

    I’m aware that discussing money is such a sensitive issue, but if we don’t speak up and share and support one another for being money-smart instead of money-stupid. We’ll all be paying the price – Ahem, Sequester, Recessions caused by ignorant home buyers, massive unemployment, and on and on.

    Kudos to Ashley! Keep on speaking up girl!!

    • pjeffuller

      Although, I agree that buying Gucci, Prada, and Dior items are completing unnecessary and a waste of money, buying from Target can be just as wasteful. I have purchased quite a few shirts from Target that are manufactured overseas using mediocre materials by people in poor working conditions (clothing probably produced in the same factories where the above designers have their clothes produced). The shirts never button properly and several of them have ripped after repeated wears. After the clothing’s demise I find myself having to replace the clothes. So, I’m throwing good money after bad. There has to be a middle ground of quality products that will last, at a reasonable price. So, although I don’t advocate spending 2000.00 on one article of clothing, I also can’t advocate spending 20.00 on a Target shirt that I will have to buy repeatedly. Spend a little more money on a quality article of clothing (preferably manufactured in the US) and hopefully get several years of wear out of it.

      • Sher

        And that’s a good choice. I’m not advocating one thing over another. A person is free to make choices that support their ideals/ethics. I am advocating for being money-smart, like this article says. If someone prefers to spend more money for quality that lasts, then so be it. It’s that person’s money and there’s no preaching here other than optimism that those choices will enable them to have a financially stable future – rather than succumbing to some form of ‘fitting in’ with the crowd. A person can work toward trying to change everyone’s mind, or they can work toward making changes in their own life. I prefer making the changes in my own life; a much easier task to accomplish!

  • Ubil

    I love this, this is spot on.
    My daughter of all people told me about a book she was reading: You are worth millions you just don’t know it.
    You would think that it was about self worth but infact it’s about the exact same thing you are talking about – people living within their means, understanding that you should have a certian money mind set and that yes – you are worth millions and you are squandering it away trying to live up to an expectation that is false. To quote the book
    “You have been convinced you need those $150 dollar sneakers, that do not help you run faster, jump higher and were not made by that basketball player.”
    it’s just a way of moving your millions into their pockets.

    • raluca805

      What’s the name of the book your daughter’s reading?

  • agnes

    I worked for many years as an RN with a degree. after 20 years in one hospital I finally reached $20 an hour but now days RN’s make much more do less work and complain about money. Life has nothing to do with how much you make it is how you look at money what it can do for you and learning to save as a young child. In first grade we had a savings account in school I attended. Schools need to change the political awareness and teach children economics starting in first grade. Who cares if all like you most of these people you will never meet again in a lifetime. Looking wealthy is not the answer it is a personality , , cleanliness and handling the money you make and how to live frugally and still look like a million. Shoes at $ 100 plus, handbags etc are not necessary as people care less but if you are clean, work hard, save money for future is the answer. Most wealthy people inherited their money and still can be pigs. Bums or street people do not want to work and with the government who wants socialism is helping them stay that way. Buy What ever is necessary not what you see others do.

  • jokster

    She fails to mention she had guys with money buy her every meal. ….made it a lot easier to save.


    She dates dave grutman owner of biggest nightclub in Miami lol

  • Chunkie Jones

    I mean, I’m not ugly or anything, but you get the point……………Yeah we get it all right.

  • irked

    “Much of this can be attributed to the rising costs of education, but the bigger problem, in my opinion, is our generation’s fear of looking cheap.”

    …so in other words, “I’m going to ignore all the *actual* causes of the debt issue, which are structural and systemic and call for sweeping changes across society, and instead just rant about whatever I want.”

    I suppose it’s also true that because this single author was able to save 500k before she hit 30, anyone who is unemployed (and living “beyond their means” because they have no actual means) is at fault for that too? Because that’s the logic on display here, if “logic” can ever be really used to mean “factually unsubstantiated BS accusations.”

  • larisia

    you won the genetics lottery and you’re using it to your advantage. That’s okay. Congratulations. However not everyone can do that.

  • Trixit

    Good for you Ashley, smart and pretty. The fact that you started saving early on instead of squandering your $$ is setting you up for a life of choices you’d otherwise not have. Not sure why many of the comments are snarky. Jealous that you had the opportunity to make more than most of us when we were in our 20′s? The point is that you save. My sis has PLENTY of $$ but Costco and Target are her favorite shopping places. She doesn’t see the sense of spending it just because you can. Like you, she will never be poor because she does not overspend. It doesn’t matter how much you make, it matters how you manage what you do make. I’ve done well on $50,000 a year salary because I save and only purchase what I can afford. Keep it up and happy retirement when you are in your 40′s!

  • April Hunter

    I love this. I work a regular job and am a model too…I’m also “cheap”, knowing this can’t last forever and have managed to sock away quite a bit. I ALWAYS tell people to live OUT of debt, buy a used car outright or pay it off quickly, only have ONE credit card and live under their means. Clothing from Ross/Marshalls. Not the Mall. Great article, very honest.

  • Money-Smart Women

    Here are the points to take from this article: Live within or below your means; unless your friends or colleagues are paying your bills, spend only what you can afford without charging it and paying interest on it; save – no matter how much or how little you make; spend only on the basic investment pieces that you can mix with the high-low factor; and a college education these days does not necessarily guarantee a high paying salary – sad, but true!

  • Goldberry

    Note – women used to make their own clothes because it was cheaper than buying them. Now it’s usually cheaper to buy them, unless you’re buying designer brands.

  • Michael Banner

    How do we make saving money cool?

  • Notbuyingit

    I’m so happy to hear that folks aren’t buying into this anecdotal analysis. The truth is wages have been stagnant for over 30 years despite the extreme rise in the cost of living. It’s truly irresponsible to compare today’s young people to your nana, as resourceful as she may have been. Many of the young people I know are happy to live cheaply if they can.

  • Leah Fulford

    Not sure how the title and article go together.

    Also, it’s 1000% FALSE that the “really wealthy” frugaled their way to riches. Please. The really wealthy ($10M in net worth or higher) started businesses, created, invented, produced, or hustled their ASSES off in the workforce, earning heartily for their efforts. They may have been smarter with their dollars than, say, MC Hammer, but they earned tons of money. Not just any middle manager anywhere can live like a pauper and save half a mil in a decade.

  • JenInBoston

    I think it’s our tendency to thoughtlessly accumulate cheap crap, rather than our love of expensive things, that can do us in! When I started tracking every penny I spend, I discovered I frittered away so much on dumb stuff–5 bucks here, 20 bucks here. But, as I already knew, I rarely bought anything pricey and when I did, it had a long shelf life (e.g.,a new TV, sofa, piece of jewelry). Most of the cheap stuff I bought had a short shelf life (poorly made but cute $25 shoes) or ended up unused (cosmetics in funky colors) or could be done 10x more cheaply at home (coffee!!!). I used to buy a cheap coffee about 9 times per week, and I’d often grab a cheap bite with it. I justified it partly because it wasn’t pricey Starbucks. But committing to making my own coffee just in the mornings got me down to maybe 6 coffee shop visits per month and saves me about $4.15 per day EVERY day of the year! And that was with cheap coffee!

  • The Truth