Saturday, December 26, 2009

The American Dream

The following is a guest post by Ryan of PortfolioBalancer. This week and next I am running a number of guest posts while I am vacationing with my family in Costa Rica. I will resume posting my own original content after the first of the new year. Speaking about new years and new year resolutions, Ryan's guest post is all about making decisions and taking some action. Here goes:

You can achieve anything in this country, or by extension, anywhere. That is the American dream. The American Dream has nothing to do with homeownership. That is a nice goal, but too shortsighted to truly hold the title THE American Dream. Homeownership seems like an easy goal designed to make you relax, feeling that you have accomplished something. Well, I don’t want to relax, pacified, and neither should you. I want to see what one can accomplish in such a free society, that is my goal.

Ah, there lies the true American dream: freedom. Freedom of mobility, across the country, out of social classes, above the norm. There is a beaten path of a standard life, laid out before us. If you follow the path, and convention, you will achieve a reward of comfortable years without work in the future. But what if. . . I always wonder, inserting the financial or health catastrophe of the moment. You only live once, why not impress yourself, let go of the fears. Insure against disaster and move on. You can do anything. You never have to settle, you are never beaten. Time and action can fix all.

You are blessed, to live in a country this free. You can achieve anything, but it will not be given to you. Whatever you want your life to be, it can be. But you must take action. I can attest to the fact that many small steps over time begin to turn into something extraordinary. You simply need to persevere until the achievement becomes clear to you. Time does not stop, and the amount you have on your clock is finite. So, take a concrete step. Decide where you want to be in five years. Is this goal attainable? If not, then you must change something, or face reality. Think where you would be today if you had acted five years ago.

What effect does a one degree change in your life’s path equate to ten years out? How far apart would these two paths be at the end?

What are you afraid of? Failure? Do you think that everything always works out for everybody? You can decide on your level of commitment, but there is no limit, anything you can think of can be done. Maybe you don't have enough income to achieve your goal. How would you survive? Figure out a solution. Maybe you can build investments that produce income, so that you do not need to work, only live beneath the income level. There is a way around every obstacle, so focus on solutions not on excuses.
Reach. Turn off the T.V. and do one thing. Start with one action, one phone call, one budget. The dream is different for everyone, but each is just as relevant and as attainable. Life is a game, and there are some rules, but as long as you follow these rules you can play freely within their confines. Play.

I am nobody special, just someone inspired to attempt what this country is so proud of. Something that the masses seem so disillusioned with the possibility of attaining. Holistic freedom. I am nobody, yet I did one thing today, I wrote this post. What about you?

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Kim Stiens said...

I know its counter to the point, but stuff about the American Dream always bothers me because its a myth... statistically, any given American is more likely to descend socio-economic classes as they grow older, and the single best predictor of wealth in a persons life is not education or IQ, its simply how much money you start with... your inheritance.

Sure, hard work is good. But I worry that pie-in-the-sky exaltation of the American way make people complacent within the very sort of social and economic systems that I think this blogger warns against become entrapped in.

Anonymous said...

I've always found it ironic how the US identifies with freedom, capitalism, social mobility and middle class entrepreneurship.

Although some of this must still be true as start-ups/VCs remain an American specialty and the brain-drain to the US appears to be neverending. Yet, the fact that there is capital gains tax - which is a prime impediment to building wealth and living off your investments - while there are places where there is none (or less, see - is contratry to that.

Income tax in places like New York City - which is often associated with capitalism - in some cases equal or even exceed what you would pay in France or in some Scandinavian nations (A Finnish girl in NYC told me she pays more here than back home).

Finally, inhertance tax, the most unjust tax of all, will revert to pre-Bush amounts in 2011 resulting in the 2nd highest tax rate in the industrialized world (after Japan)on assets where taxes have ALREADY been paid on many times in some cases! [A company sells a good, there is sales tax, then they pay corporate tax on profits, then they pay dividends which are also taxed and THEN you pay inhertance tax on that]

Perhaps all of this is done in the name of equality, as the previous poster indicated her belief that the money you start with is the greatest factor in determining future success...

Much to my dismay, this appears to be what people want and it certainly isn't freedom and capitalism!

ryan said...

I agree, that our system is not the best. But these are the confines of the game that you are playing. Is the answer to not try, since the results of your action will be over-taxed?

Accept your hand, and play it well. My parents own a small business and I actually received less support than both of my sisters. Yet I took it and ran with it, whereas they did not.

I would agree about inheritence and wealth predition on average. But that averages in most people who never attempt anything, just take their 40hrs and spend the rest in front of the TV. I was not writing to those that aspire to be average. To benchmark yourself against others is weak, race against yourself.

On the note about capital gains taxes, there are ways around everything. If you owned an apartment building, a profit on sale would be a taxable gain. But the monthly rents you could live off of, w/out cap gains tax. And upon sale, you could do a 1031 exchange for something else and pay no cap. gains.

You are only limited by your imagination and the strength of your desire to live the life you want.

Anonymous said...

Ryan - I was refering to capital gains on financial products. No way to really escape those. There are some techniques (they are mentioned in the wikipedia link I provided) to reduce/defer but they seem to only apply for people with specific plans/cases (i.e charitable trusts).

About the rents from real estate, I believe that counts as taxable income, correct? Worse, I believe that dividends will also count as income once the Bush tax cuts expire. I bet WisdomTree won't be selling as many of their ETFs!

ryan said...

@ anon

Ah, since I don't invest in taxable accounts I never assume someone is talking about that. I always assume Real Estate, since that is my preference for tying up capital.

Correct, rents are taxable income.

Slinky said...

I always find posts like this inspiring. I too find it frustrating when people refer to owning a home as the american dream. It's not.

This country was founded by a minority that wanted the freedom to live whatever life they wanted and the courage to make it possible. They became the majority of a new country and that's what we're founded on. Of course, as they had children and others immigrated and time went on, they seem to have once again become the minority. And, of course, we are a country ruled by the majority. No wonder we're all mixed up!

As for me, I'm keeping the dream alive as best I can. My mother struggled and worked multiple jobs to keep the electric turned on and to find $10 a week to pay for piano lessons. I paid my own way through college. I landed a job on my own merits without the benefit of 'connections'. I've landed myself solidly in "upper middle class" where I'm perfectly happy. I bought my own car, I'm paying for my own wedding this year with plans to buy a house, retire young and start a business. I won't be rich, but I'll be free, and that's enough for me.

Ronen V said...

Slinky, good for you!

Who doesn't like freedom? It's the definitions of what freedom is that people are fighting over.

Slinky said...

I've always thought freedom was nothing more than having a choice.

Shadox said...

Slinky - some would say that freedom of choice is a very ephemeral thing if you are "free to die", because you don't have health insurance; or you are "free to look for a job", in an economy which holds way too few of them.

Definitions matter.

Slinky said...

The post said it best:

"Insure against disaster and move on. You can do anything. You never have to settle, you are never beaten. Time and action can fix all."

"You can achieve anything, but it will not be given to you. Whatever you want your life to be, it can be. But you must take action."

"Maybe you don't have enough income to achieve your goal. How would you survive? Figure out a solution."

"There is a way around every obstacle, so focus on solutions not on excuses."

So do choices.

Shadox said...

That's an optimistic point of view voiced by my guest contributor, and I am not against it. I just consider it somewhat naive in some cases.

Over the years I have come to learn and accept that some problems do not have solutions, more specifically, some problems don't have solutions that you can implement on your own.

That's why we have a community. Freedom is good and important. No one will argue against freedom. However, in some cases freedom on its own means little if all it means is "freedom to struggle with your own problems and live and die as the fates may decide".

I am very much a social liberal and I am a strong believer in freedom, but I am also a strong believer in social responsibility and community support.

For example, I am very much in favor of public places smoking bans, even though some consider it a restriction on freedom; I am also very much in favor of helping the needy, even though the philosophy stated in the article, taken to it's logical conclusion, can be interpreted to mean that folks should stop complaining and solve their own problems rather than looking for assistance.

All I am saying is that freedom is only one aspect of many, and what some consider freedom (freedom to pollute, as one simple example) I consider irresponsibility. Freedom, yes. But also social responsibility and mutual aid.