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.
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.
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!
Naomi May says
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.
Tamera Tignor says
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.