How to Reach the New American Financial Independence Dream

Here’s how you make the most of your piece of the new American Dream.

The American dream was simple, dare we say easy. Get an education. Pass the terrible Standardize Assessment tests (SATs). Attend subtly expensive college. Make bad decisions and then fall in love or vice versa. After that, work hard at a job you hate or mildly tolerate for several decades. And if everything goes to plan, you’ll eventually have enough money to buy a house with a white picket fence.

The last decade has proven that the anachronistic American dream is unrealistic. Ironically, it was just always a dream while for many a waking nightmare. I’m Black. Leave it to Beaver lacked black characters so I’d take a pass on Making the American Dream Great Again.

For many people of color, it was and still is a meritocracy nightmare. Add on a pinch of chronic FOMO, materialism, and social media; voila infinite indebtedness. Let’s peel back the layers.

Table of Contents

Without Education, the American Dream is Subjective

If you don’t come from a good area, your school mirrored the daycare to the prison system.

Good teachers were a distant memory and unqualified substitutes were plenty. The SAT was the final nail in the coffin for people unfamiliar with travel, history, or even basic reading comprehension. By fluke, I survived the ACTs and SATs.

While I wasn’t much of a reader (and still ain’t), I was poor enough to be stuck at home on the weekends glued to the Discovery Channel, the Learning Channel, PBS, and the History Channel. Trust me, those channels had real content beyond Ancient Aliens, Pawn shops, and competitions. Complimented by the local Barnes and Nobles, I learned all the terms non-blacks were familiar with. Math came easily to me, so my test scores reflected them. This was way before the Brookings institute decreed, “SAT math scores mirror and maintain racial inequity.”

In the selection metrics, colleges use SAT or ACT scores for admissions and financial aid packages. The most selective institutions require high SAT scores for entry. Of those scoring above 700, 43 percent are Asian and 45 percent are white, compared to 6 percent Hispanic or Latino and 1 percent Black.

If you were lucky enough to go to college, you were also lucky to pick up most of the student loans along the way.

Typically, Black borrowers bear a median student loan balance of $30,000. Nearly ninety percent of Black students have to take on student loans to pay for college.

And, if by some measure you survived that; you start out making less pay with more liabilities from debtors to family.

The dream for people of color is still rarely attainable.

Debt, Gas, and food prices are rising

So where does the rest of the American dream fall apart?

The daily cost of living increased way beyond the median income. As our discretionary appetite changes, the average American is finding it harder and harder to keep up with their peers. Real estate (in most cities) is becoming more expensive.

Covid-19 obliterated the economy, devastating household incomes and ushering in a global reset. Productivity hit an all-time low. Taking output per hour and dividing that number by an index of all the workers — paid and unpaid, the U.S. Bureau of Labor Statistics found that labor productivity slowed in 2022. We have two generations of quiet quitters who aren’t willing to work for the next 50 years.

The current inflationary economy and the rolling recession are eating away at the value of your dollar. All while companies scramble to lay off employees and talk about AI. As of December 2022, the median US personal saving rate fell to 3.4 percent (down from 7.5 percent in the prior year). Americans’ total credit card balance exceeded $925 billion by October 2022, according to the Federal Reserve Bank of New York. That’s a $38 billion jump from $887 billion in the first quarter of 2022.

Planning to get a new credit card, your interest rate will likely be 23.55 percent. The average card is offering an APR range of 20.10% to 27.00%, based on your creditworthiness. But what about homes though? As of April 2022, the median home sales price was $428,700. That’s a 30 percent increase from 2020 when the median was $329,000.

For context, Americans must earn $107,000 to afford a moderate house. For most Americans, owning a home is now a distant dream.

So how do you pivot? Or at least keep up.

“In short, from new research based on some novel metrics of wellbeing, I find strong evidence that the American dream is in tatters, at least.” Brookings, 2017

Your only option is to get resourceful and fast. It’s now mandatory to be financially literate and most importantly financially independent. You can no longer rely on one source of income to cover your expanding list of expenses.

So with all of that in mind, here are strategies to take back control of your life and income.

A Way Out of the American Nightmare and Towards a New Dream

Spending $100 Less Per Week (+$5,200)

Start small and start easy. Learning to reduce your expenses, is an essential part of the mental jumpstart you need against your peers. Track your personal finances for at least three months to establish a baseline. Cut mercilessly from what you don’t need. Instead of opting for the easy route, do it the old way. For example, learn to cook instead of eating out. Clean your home instead of getting a maid. Pick up your own groceries.

Change your routine and change your trajectory.

Get Some Savings While You are At it.

According to the Federal Reserve, 40 percent of Americans can’t afford an emergency expense of $400 or more. Nearly 60 percent can’t afford $2,000. If you fall into that group of people, time to pivot.

Each month, contribute whatever you can afford.

I don’t care if it’s $5, $50, or $500. Do what you can to ramp up your savings. Relying on less credit spending is also key to boosting your savings. Take the challenge and make life harder for you.

Dream differently than the rest.

Earning at least $100 per Week (+5,200)

According to Forbes, “Having multiple sources of income can decrease your risk of losing it all.

If someone can sell silly red Santa boots, you can earn income. Scratch and class your way to victory. All you need is way more than $100 per week. Think of it like a game. Every bit helps you transform into a new version of yourself.

Invest at least $500 per Month

This is where the rich become wealthy and where the working poor become rich. Investing should be your secondhand drug of choice. Not too much or it becomes gambling. But just enough makes you are player at the table.

An investment of just $500 per month for 10 years at 8 percent is nearly $100,000. 30 percent of that total is all interest gained. Do so for 25 years, and you will land at $450,000. Of which nearly 70 percent would be interest gained. Over 40 years, your portfolio would net $1.6 million.

Yep, it’s time to stop sitting on the sideline. Time is ticking. This is how you attain the new financial independence dream. You reevaluate where you are, by taking accountability for how the rest of the game plays out.