How the American Dream Is Keeping Us Broke

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By ASHLEY STETTS

Our 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 University 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. 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.

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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 reallywealthy 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 percent of people driving the most expensive "status" cars are non-millionaires.

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

Pictured: Ashley Stetts
Pictured: Ashley Stetts
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.

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?

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Old-School Money Tricks That Still Work
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How the American Dream Is Keeping Us Broke

With the various incentives to use credit and debit cards, cash can often seem like an afterthought. After all, obtaining, tracking, and toting it can seem more hassle than it's worth. But if credit-card swiping is turning into mindless spending with month-end statement shock, it might be time to switch from plastic back to paper.

A once-weekly withdrawal from a no-fee ATM can help keep spending on everything from incidentals to luxury items in check. Want to take it up a notch? Try budgeting and paying cash for purchases larger than the daily latte: groceries, gas, mass transit tickets, or an evening out.

Bank of America offers its customers the chance to Keep the Change. The premise is simple. For every purchase a customer makes with his or her debit card, Bank of America will round up to the nearest dollar, and deposit the difference into your savings account. The bank will even match the difference for the first three months, up to $250. The catch? B of A charges a $12 monthly maintenance fee for customers who don't use direct deposit or maintain a $1,500 minimum balance.

The old-school alternative? A mason jar and a daily ritual of emptying pockets and purses of any loose change left over after paying for items with cash.

There's something inherently charming about the old Holiday Club and Vacation Club accounts. They call to mind days when every $5 received in a birthday card was squirreled away; when banks still gave out toasters, and lined their counters with jars of lollipops.

It might sound quaint, but the discipline works. Socking away a few dollars a week over the course of several months to help fund a vacation or holiday shopping adds up. The cash out at the end of the term is like winning the lottery -- one lump sum comprised of tiny, barely noticeable amounts throughout the year.

Previous generations knew their banker by name, knew his or her children's names; they swapped stories, were part of the same community. While it's temping and convenient to complete most banking transactions online or rush in and out of a branch when needed, what's lost is a personal connection that email alerts and social-media posts simply can't replace.

There are tangible benefits to getting to know local branch staff. Having a face-to-face connection with bank staff can be helpful in resolving charge disputes, being kept abreast of rate changes, and getting information on specially tailored products.

Before the days of the large international bank, most people had their financial needs met at the corner savings and loan. If big banking has lost its appeal, seek out smaller, local banks, many of which aren't publicly traded, or credit unions, which are not-for-profit. The difference between these two types of banks and large, publicly traded ones is that banks that don't have to appease shareholders can focus on its customers first.

According to the Independent Community Bankers of America, local banks focus on "personal service, local credit decisions and ownership, and reinvestment in the community." And according to the Credit Union National Association, credit unions exist to provide financial literacy for their members, serve the needs of their members regardless of means, and offer lower rates than traditional large banking models.

While no one would recommend stashing savings under a mattress or issuing I.O.U.s for groceries, adopting some old-fashioned tactics for financial management might be just the ticket to thriving in the modern world.
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