Currently, the average American household carries $137,063 in debt, but only makes $59,039 in income per year.
In some states, the ratio is even worse. In California, for example, the per-resident debt balance is $65,740 while residents make about $28,000 annually on average.
Debt to income ratio is an important measure of how people are handling their money. It’s not the only measurement, but it can tell us a lot.
I’d like to return to these statistics in a moment. But first, I’ll change the subject.
I am often confronted with a question about minimalism that goes like this, “My parents grew up during the Great Depression. They were taught a ‘waste not, want not‘ mentality. How do I help somebody with that worldview embrace minimalism when it appears to run contrary to everything they were taught growing up?”
It’s a good question and one that must be answered. In fact, in The More of Less, I write about the different generations and how factors of their upbringing may impact their view of possessions. (I also address why each living generation is currently drawn to owning less).
It is important to remember that a waste not, want not mentality to possessions is required when goods and resources are scarce or difficult to access. But when that same mentality is brought into an environment where goods are increasingly affordable and accessible, it often results in the accumulation and keeping of possessions that are not needed.
A grandmother once shared with me how this mentality resulted in a burdened life. She learned at a young age, because financial resources were limited, to take advantage of sales and never get rid of anything that could eventually serve a purpose.
“Joshua,” she said, “I have piles and piles of ungifted Christmas presents in my basement. Every year, after Christmas, when toys were put on clearance at department stores, I would stock up because I couldn’t pass up a sale. But by the next Christmas, there were new things that the kids wanted, and those toys would always go on sale. So, I bought them and gave the new toys. But sure enough, when Christmas toys went on sale after the holiday, I would buy more thinking I could use them as gifts at a later date. The stack of ungifted Christmas gifts in my basement has grown and grown over the years.”
This, from my experience, is what happens when we bring a waste not, want not mindset into a world of abundance. We accumulate at too fast a pace, and rarely decumulate.
I should mention, at this point, that minimalism doesn’t mean we become reckless with the possessions we have. We don’t wastefully throw away everything in our home with the assurance that it can be quickly replaced. That’s not minimalism—that’s irresponsibility. Minimalism has just the opposite effect, it calls us to be increasingly thoughtful in the things that we own. And if something is worth owning, it is worth buying something quality that will serve its purpose for a long time.
I want to talk a little bit about the waste not, want not mentality because it is still a valuable approach to life—not in terms of possessions or the things we keep stacked up in the garage just in case we can use them in the future.
I’d like to consider the wisdom of waste not, want not, when it comes to our finances and how we spend our money.
Let me repeat the numbers above: The average American household carries $137,063 in debt, but only makes $59,039 in income per year.
Additionally, here are some other economic facts from our country:
- 58% of Americans have less than $1,000 in savings.
- 78% of U.S. workers are living paycheck to paycheck.
- 85% of Americans feel stressed about money.
These are fascinating stats to me considering America is one of the wealthiest nations in the history of the world. It doesn’t seem like 85% of us should feel stressed about money or that 78% of us should be living paycheck to paycheck.
I realize, of course, there are some uncontrollable, external factors that may be impacting our personal finances. Losing a job, a medical emergency, or unexpected tragedy (just to name a few) may result in some of us being included among the statistics above.
But for many of us, our finances are entirely under our control and we still struggle to get ahead.
The reason this happens is because we waste too much money on things we don’t need to buy.
We buy clothes we don’t need, furniture we don’t need, decorations we don’t need, kitchen tools we don’t need, cars we don’t need, technology we don’t need, even square footage we don’t need.
We struggle to get ahead financially, but our garages are so full of boxes we can’t park our cars inside them. This is all wasted money!
Adopting a waste not, want not mentality to possessions in times of great affordability and accessibility often results in owning more than we need.
But adopting a waste not, want not mentality to money in times of great affordability and accessibility is essential!
Money is a complicated issue with any number of different variables that come into play in our individual lives. But there is one principle that is important for each of us to adopt:
The less money I waste, the more money I keep.
And the less money you waste, the less stress you feel and the sooner you can get ahead financially. Waste not, want not.
Dear Joshua:
Thank you for sharing this article. I totally agree with you.
Also, I think spend money wisely is difficult.
We should spend our money on things that really matters. For example, food and experiences. Charity. Because at the end of the day, we are going to die.
Material things and money will stay here on Earth when we passed away.
Finally, I think the best thing we can do is love, live well, eat well and enjoy life!
This one is truely amazing. I start every morning with your posts, and my breakfast and hot tea. They inspire my whole day. Give me a good feeling inside.
I do not live in debt. I rent my apartment, and me and my kids live accordingly to my paycheck.
We do not buy the most expensive clothes, but we have nice clothes. I inherit alot of mine, and when the kids were young we swop clothes with friends. And bought some ofcorse. Winter clothes are expensive, and waterproof shoes for scout trips. My son used to be a gymnast, and that was very expensive.
We still managed to stay debt free. Because we do not over spend. I think people should start using only their debit card, and not their credit card. So they are automatic cut of from spending to much.
Then they would think about everything they put in their cart. Do I really need to give my kids that tenth toy for x-mas? Do I need 2 bottles of soda for one weekend? Do I need the new cd. Why not wish for it for your birthday instead.
People buy what they want like there is no tomorrow, but hopefully there is a tomorrow with less spending and more calmness. More smiles. Less worry about debt.
What I like is that you have brought to light the sadden truth. Looking at our spending will minimize the worries. This is my kind of taking away tip. Thanks, Joshua.
Joshua,
I cannot explain how much you impacted my life with this concept of minimalism.
I’m super grateful for your work and message.
I pray these videos could somehow be translated in spanish, since I have so many friends and family that could also benefit by your message.
Thank you so much!
God bless you!
My husband and I are not typical Americans. We do not live paycheck to paycheck. We have ALOT more savings than the average American. We have zero debt. We made sacrifices and we lived with less to get there. We payed off our house in 14 years. We drive older cars that are paid for. I drive a 2003 PT Cruiser. I live in town and work five miles from where I live. I paid $5,000 in cash for the PT Cruiser a couple years ago. It had low mileage for how old it was. I don’t need a fancy car or an expensive car. I am content with a reliable car that gets me to and from work. My husband drives an older vehicle as well. We have adopted a minimalist lifestyle. I have found that I feel so much more relaxed and content living this way. Not dealing with money stress has been a HUGE blessing for us. Don’t get me wrong; things come up. But when things come up, we are prepared for them!! I have teenagers. My 14 year old son has cost us thousands of dollars in emergency room visits every year; he thinks he is invincible for some reason. But those trips are not crippling us; they just reduce how much money we can sink into savings.
My husband and I share most of your story except we do not have children. Because we started downsizing 5 years ago, sold our home of 26 years and moved into a smaller place with 10% of our former household, we were able to completely retire, debt free at 55 years old. I didnt realize until I let 90% of my household go, just how much having a house full of stuff I didnt really need to was stressing me out. Once it was gone I had a new lease on life and started retirement stress free, debt free in a beautiful new home that echos when we talk because we have furnished it with only what we need. I encourage family and friends to create their own paradise by empowering themselves to live better with less.
I am almost 70. When I was a child, we got water to drink with meals. My grandfather would cut paper napkins in half so we couldn’t waste a whole one. Clothing was passed down several times. Underwear was mended. We weren’t poor, my friends lived the same way. When my kids were little, clay was made from flour, salt and water. We never bought gift wrap, we used the funnies. I made doll clothes. My grandsons built a castle out of a cardboard box. Most of the toys kids have now aren’t needed.
You are so true. My mum always made clothes for my dolls, and I inherited skii and snow clothes, almost done colorbooks and used toys from my boycousins, but I loved them. I never wanted to buy clothes when I was young. I looked at it as wastefull. Now the trend is buy and throw away. It truely breaks my heart. Why??? It does not do anyone any good. Why buy it if you do not need it, and you can not afford it. Mvh Ellen.
When I was young (82 years ago), “waste not” meant using something until it was unusable or gone. Clothes were mended and ALL food was eaten. Leftovers and hand-me-downs were a blessing and a luxury. Nothing went to waste. “Want not” meant coveting what others had. We were taught to be grateful for what we had and/or received.
I remember in school there was a poor family. The two children brought crusts and rinds for lunch. I felt rich to have lard sandwiches. When we found out that was their biggest meal of the day, it didn’t take long for all of us to start offering them our ‘leftovers’. It made us feel so blessed and rich to go without and share, not that any of us had much to go without!
this article confused me,as I agree that the interpretation of “waste not, want not” was maybe incorrect. To me ,it means that you use what you have to it’s full advantage and then you don’t need other things (because you are making do with what you have). I had to re-read the article several times!
Thank you for sharing this article.
All this focus on money vs stuff… More money and less stuff doesn’t equal happiness either. Make sure you spend money wisely. And spend it! If I die with money in the bank it’s a fail too.
Indeed! I was taught to view money as a tool, where you always pay yourself first and put any pay raises aside before you see them, but never be afraid to spend it to make your life easier and more pleasurable. It’s why I will spend a little more for the cheese that’s already shredded when I’m making tacos, or pay a lawn guy to mow and weed whack our acre and a half every week from April to October.
We are absolutely no longer one of the “wealthiest nations in the history of the world”. We are now a debtor nation, and as your article points out, largely a nation of debtor citizens.
The illusion of wealth is just that…an illusion.
I absolutely agree with ffinli. Every time we hear “We are the wealthiest nation in the world”, almost always the next sentence says all the negativities no rich country should have.
Our material possessions do look wealthy, but if you haven’t paid it off, you actually don’t “own” it. Creditors own it.
Excess stuff is not only a waste of money and time. It negatively affects the relationship with the family and friends.
I know this very well because I’m suffering from a pain in losing my possible best friend who is super disorganized. Enormous amount of his energy is being spent on looking for things, or worse, patching up forgotten appointments on daily basis.
.
I realized that he doesn’t have room for me as a friend.
The unfortunate thing when people use the phrase, “Waste not, want not,” is that they are only focusing on one type of waste–namely the value of the specific thing in question. But accumulating possessions leads to different types of waste that can be crushing.
One of these you’ve already mentioned–square footage. The more you own, the larger the container you need to hold all of it, and the price of that container, whether it’s a larger house, additional storage units, or a trailer on your property, just goes up and up and up.
An overflow of possessions also lead to wasted time–the time you spend looking for something, or moving something out of the way, or walking around something. Though it can only seem like a few minutes here and there, it adds up to significant time away from your family or pursuing other interests.
And finally, perhaps the most damaging in my opinion, there is the wasted mental energy of having to remember that you have all these things, where they are, and where they go. The mental burden of this can be crushing.
So perhaps when we encounter people who say, “Waste not, want not,” we should counter with, “Waste what?” And when they answer that they don’t want to waste the thing at hand, we can ask them if that thing is more important than all the other things they are wasting just by keeping it.
This. Just this. “Wasting what? Space, time, mental energy?”
Thank you, Margie.
Excellent insight . ! Have been struggling with this as was not taught the lifeskill of setting boundaries ..either for oneself or for the other . In my growing years there was no reason to understand this concept of ‘waste not want not ‘ .as there was not enough to waste.!! Yet imbibed the integrity of Charity .. whether it be food or clothes .. a feeling of wanting to hoard for oneself or for some future use was ajudicious understanding what essentials need to be at home ..
But am also so grateful for getting to exerience the other side of the spectrum after getting married !
So, now in my senior years and with grown children I feel an auspicious understanding of each person’s individual journey in life and the situations that caused one to be in the’ waste ‘induced situation or the ‘want ‘ induced situations ..
May each one be blessed to find their balanced path .
Thank you Josua for this topic ..it got me to delve into what I can choose to change. ???
In Gratitude for T
I’ve found your reminder that “all of your stuff used to be money” to be quite helpful in delaying or stopping purchases.
I also appreciate the mention of buying unnecessary square footage as I think whats considered “normal” or “expected” has gotten very expensive. Can we please give each other permission to not have guest rooms? :)
May I chime in and ask, what is with these McMansions with more bathrooms than there are bedrooms? I truly wonder about the bowel issues wealthier people must face. It’s a mystery.
That’s funny! I, too, have wondered why there are so many bathrooms when I read descriptions of large homes.
It’s very insightful how you linked the circumstances in which one grows up (such as the Great Depression) to the kind of mindset they adopt with respect to owning things. My mother drives me crazy with the fact that she likes to save so many things I find useless; however, she grew up in the midst of a civil war in her country. As a result, I can start to see why she would be interested in holding on to so many possessions for which there is barely any space. Once again, very insightful article!
The debt numbers are interesting. $16k on credit cards on average is scary. But it’s kind of strange to include a mortgage in with that number. At least with a mortgage, you have an asset that in a lot of cases is worth the amount of debt of the mortgage or more.
I think stats about savings and financial stress are a bit more accurate representation overall. Good stuff as always, Joshua!
I was questioning how much of that average debt number is mortgage and student loan debt. Our family of 6 has a credit card we pay off in full each month, two older cars paid in full, and no debt other than our mortgage, which is manageable enough that we are not living paycheck to paycheck but is still more than our annual gross income. But one of the few requirement my husband and I had when house hunting, other than a good school district, was we wanted our kids to each have their own bedroom (he and I both grew up sharing a room with a sibling) and in this pandemic, it has been a lifesaver for everyone’s mental health to have a space of their own.
I have lived not spending my whole life and I am quite old now. It has paid off as I do not have a very large income. To those that have trouble spending on what they don’t need I would say if you can stick with it for a while it is just normal to use what you have, reuse to something else and if it works you don’t need something new. I shop 2nd hand stores and manage to look as good as anyone else. I have purchased one new piece of clothing this year and that is a dress to wear to my granddaughters wedding. Believe me folks it pays off and you will have money left at the end of the month and way less stuff to deal with.
I am a self-proclaimed minimalist, however I have to say that if you’re including mortgage debt with that $137k number, then I fall into that statistic, as well. I have no credit card debt or student loans, but we owe $120k on our modest beachside bungalow and I purchased a car for $10k earlier this year that I’m paying off. That $137k number should be startling, but it’s accurate when you are working to own your home and have a very small car loan for a couple years. If this post included a breakdown of credit card debt or other debts that aren’t ideal that are the national average, then it would carry more weight with me, personally. But yeah, I guess I carry $130k in debt and I’m okay with that because I know the type of debt it is, and it’s worth it to me.
We recently had a medical emergency that puts us in the debt category. Funny, though, how focusing on health and family makes us spend less in the day to day. We spend way less time browsing Amazon and walking the aisles of Target.
This is great. Isn’t it paradoxal that recovering from an illness means relaxing take a walk and not to worry… rather than being stressed by debts and bills
record state/s and federal tax revenues coupled with record deficits is a recipe for economic collapse…someday we’ll all pay the price for living beyond our means…and it’s gonna hurt !
It is that thinking “wrongly” that we are the richest country leads us to live beyond our mean and not prepare us for any economic collapse like now.
Yes when you hear china owes 1,3 trillion on Usa debt, and Usa has debt to other countries as well. It is clearly not the richest. Other countries luckily do not have to take up debt to have surgeries they need. This makes me very sad to hear that people are in debt after hospital and emergency visits and needed surgery. Very sad indeed! Hopefully it gets better for you all.
China own.
China own not owes.
Does this debt include mortgages?
The price of houses in some parts of the UK are astronomical, therefore people have to take on massive mortgages just to get a relatively ordinary-sized house. I am a single parent who works full-time, have a mortgage of £61,000 and no other personal debt. I love in a (for my area) decent sized 2 double bed flat. If I wanted to move to a slightly bigger house (3 bed) I would have to double my mortgage. It’s not worth the risk.
The converse offers the perfect minimalist wisdom, “want not, waste not”.
In my opinion, reducing your wants is the key. Your message about reducing our exposure to advertising has been especially helpful to me over the years. Thanks.
I never comment, and very rarely read them, but I was coming on to say the same thing: “Want not, waste not!” I know from my own experience that as I want less, I use fewer items, but utilize them more.
How about calling it “maximalism”? Owning minimally, utilizing maximumly.
Hi, Mari. I call it “maximum gratitude, minimal stuff” (which happens to be the name of my minimalist blog). When we really appreciate what we have, we gradually learn to want less.
Thank you for your encouragement. Your blog is fantastic. I’m inspired to help others more.
We worked to pay our mortgage off early and saved $93,000 in interest. Our modest house is 1 story, 1960s, 1200 sq ft and cost $225,000. But we had a 30 year mortgage and that accumulates a lot of interest. So now we have no debt and a right-sized house. It’s great. I didn’t really understand interest savings until I sat and played around with mortgage payment calculators one day. I was shocked to see how much you could save.
(And yes, I understand the theory about investing that money instead of paying off the house in order to get a theoretical higher return. I chose to take the guaranteed interest savings instead of the riskier investment path.)
Anyways, if anyone out there has never used an early mortgage payoff calculator, I highly recommend it so that you can see the savings for yourself.
We are doing the same thing. We also put solar panels on our roof so we could eventually do away with our electric payment. For now, it’s just replacing that payment until they are paid for.
I agree with mark about the comment that Jesus was frugal and when we get thru minimizing our home and actually have more income put it to good use. But more quality and not quantity. I’m on my third go around in riding myself of many duplicates and too many of some things. When my husband was alive 7 years ago now) he didn’t throw anything away! Always figured somebody might use it. I’m a little better but my life’s wants and needs has changed so I’m trying my best to follow your books. I’ve thrown and given much away and donated to charity. Just cleaned out wine and alcohol that hasn’t been touched for years. Giving it to people that will enjoy it. Also round three in clothing and kitchen areas. Thank you Joshua for getting me on the right track. May take me a year or two but also following your course!!
So maybe sooner. I live in a under 1000 sq. Ft house in senior community and house is paid for so the minimizing is good for me as At my age never plan on moving and giving my house to my daughter when I pass which I hope will be at least 10-15 more years. But I want to be doing more of what makes me happy. Quilting for family, friends, charity for foster children thru Linus charity with quilt for kids, my church activities, and enjoying my family and friends. I still even work part time at 75. (Tax prep for 40 yrs. )
Thanks again
Sue
Well Jesus lived in a time with not alot of stuff to buy, and he lived not in a rich village but a poor. He was a carpenter so not a rich man.
Majority of adults lack critical thinking skills, reason I have dumped former friends, relatives or aquaintances when I later see their values don’t measure up to mine or I find later they live in clutter or let their kids rule the house. Hubby and I are social recluses, in retirement more so, because we expect those we came in contact with to have our values. Ghosting is easy with modern electronics and blocking know how. Seldom see these losers when running errands. Civic clubs and churches are full of dysfunctional adults, small Bible study w/ likeminded and online study is fine w/us. Reading and watching travel and history shows is preferred.
I’m not so sure you learned anything about the gospel in your “small bible study”. Calling people you don’t agree with or share the same values with losers and avoiding them is exactly the opposite of what Jesus calls us to do.
Well said Mark. I love reading Joshua’s blog and it helps me get away from the hatred that is permeating our world.
Mark & Betsy: I musta hit a nerve. I never said to hate anyone. Bad company corrupts, (I cor:15:33, etc) we are not young adults,, but retirees, and expect more out of older people. So, use descretion in choosing friends. How can two walk together lest they agree? Depart from evil, find those who elevate, not waste your time. If you both want to run with slackers and duds, then fine, live on. Horders and those that live in clutter, on junk foods are losers. If Mr. Becker doesn’t agree w/ this than he can block my postings.
My two favorite thoughts……
It’s not what you say.. it’s HOW you say it!
It’s not what you do, it’s How you do it….
Hoarders often have mental health problems, including Obsessive Compulsive Disorder, and/or as the article explains, they grew up in great poverty and feel horrible guilt passing up a “good deal” or disposing of anything still usable. Encouraging them to recycle or donate things in good condition to another in need can have a very positive effect on those who feel so guilty “wasting” things.
Sometimes hoarders are lonely or have suffered abuse and use material things to fill an emotional void, too. Of course, this is a dysfunctional response to pain, but these people deserve our compassion, not to be called “losers.” I know one sweet elderly lady whose home is a bit cluttered, maybe not hoarder level, but almost, because she delights in stretching her income to buy toys and clothes for kids whose families can’t afford them. It’s just that she tries to stockpile these on-sale and thrifted things in her tiny guest room. Someone like her would benefit from feeling more included in her community, not being condemned, isolated, and avoided. She told me that she never had any toys or nice clothes growing up, and often had an empty stomach, and she thinks she is helping kids have a happier childhood than she did. Minimalism is easier and more approachable when a person is mentally healthy and feels connected and loved, and some people need more help with that.
Thank you Mark ??
I agree with you Mark…100%. I am a Christian too and to hear such talk is absurd! If Jesus DUMPED us “losers” 2000 years ago—He would of had no one to die for. God hates arrogance. Jesus always put arrogant people like that in their place. The above post sounds like something from 100 years ago. What nonsense! Messed up! ;)
The world would be a very boring place if everyone were the same. Calling people who are different from you “losers” is a very UNchristian thing to do. Sounds like you need to read and understand that bible a little more closely.
Diane,Mark and Betsy: Don’t you view people that live in clutter, slack in housekeeping, and eat junk food, spending hours on their phone or game stations as losers? I never told them they are, I just think they are. You already assumed I said it to their faces. You can chose loser friends if you want, and I’ll make choices. Why are you even on this site if you think slacker friends are ok? Everyone has a right to choose who they assoc. with. And it is none of your biz who others hang with.
Nobody says you have to associate with those you see as bad influences, but the fact is, you’re being judgmental towards those who are different than you. The fact that you don’t call them “losers” to their faces doesn’t negate the fact that you think of them as losers.
I would point out as well that many people are drawn to this site specifically because they struggle with clutter. Joshua has always written from a place of grace, not judgmentalism. You would do well to do the same.
Mindful purchasing is required, think before purchase that how many times I will use this item or how long will i use it , will i get unavoidable pleasure, think for 30 seconds will change your mind.
These 30 seconds can save lot of money, similarly this pattern of thinking can safe you from wastage of time and also safe you involving in any type of sin. Must try it.
Those ratios are identical.
Thanks for mentioning that Jessica. The first stat ratio is by household, the second stat is by individual. Assuming there is more than one individual in a household, the ratio increases.