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.
Connie Agnew says
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.
Jennifer Craig says
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.
Kyri says
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.
Ileana says
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
Mik says
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 !
Brad says
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.
Ellen says
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.
Ellen says
China own.
Ellen says
China own not owes.
Luce B says
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.
Frank says
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.
Sarah T. says
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.
Mari R says
How about calling it “maximalism”? Owning minimally, utilizing maximumly.
Karen Trefzger says
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.
Mari R says
Thank you for your encouragement. Your blog is fantastic. I’m inspired to help others more.
Elizabeth says
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.
Annette says
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.
Sue Hartzell says
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
Ellen says
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.
laura ann says
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.
Mark says
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.
Betsy says
Well said Mark. I love reading Joshua’s blog and it helps me get away from the hatred that is permeating our world.
laura ann says
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.
Cynthia says
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….
Peace says
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.
Crystal Dube says
Thank you Mark ??
Judy says
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! ;)
Diane says
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.
laura ann says
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.
Mrs. Em says
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.
Mansoor says
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.
Jessica says
Those ratios are identical.
joshua becker says
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.