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.
Tina says
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.
Ellen says
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.
Molly says
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!
Sally says
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!
Samarpan Thorat says
Thank you for sharing this article.
MD says
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.
Chris says
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.
ffinli says
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.
Mari R says
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.
Mari R says
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.
Margie Remmers, iSpyWaste says
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.
LavaidaVandelia says
This. Just this. “Wasting what? Space, time, mental energy?”
Thank you, Margie.
Meeru . says
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
Kate says
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? :)
Susan Snook says
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.
Leslie Anne Perry says
That’s funny! I, too, have wondered why there are so many bathrooms when I read descriptions of large homes.
Raed Aridi says
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!
Jordan says
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!
Chris says
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.