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The New American Dream

In an October 3rd article, I was challenged by an Urban Country occasional reader and friend Kam on my definition of freedom. Kam wanted to know how I think people can achieve what I’ll call the “New American Dream”. To recap that article in a nutshell, the “New American Dream” is freedom from the banks, freedom from the oil companies, freedom from your car, and freedom to breathe fresh air and enjoy the earth as it was intended to be enjoyed. After I coined the term “The New American Dream” just now, I looked it up and saw that someone else already took this idea, and it’s actually along the same premise as mine, with the central theme “Living within your means”.

The core principles my definition of freedom is to live a life where you aren’t constantly wanting more, downsize and simplify your life, consume only what you need and indulge occasionally, be conscious of the consequences of every decision you make, and set a good example for our youth. If you live by these general rules, you will be one step closer to achieving my definition of freedom.

Now to address Kam’s 2 specific questions. First he asked “What are the ways we can avoid being affected by fluctuating fuel prices, when most of the very food we eat is delivered to us in ways we cannot control?” Firstly I’d like to point out that transportation costs are only one part of the overall cost of food, and rising fuel prices will certainly impact food that has travelled halfway around the world more than relatively “local” foods. So even if the cost of fuel were to double tomorrow, your grocery bill won’t double, though it will most likely go up. So we need to be more conscious about where our food comes from in order to minimize the impact. Secondly, when you look at an average family’s budget, food is a relatively small item proportionate to our other expenses, so an increase in food prices typically don’t have a major impact on a family budget. When I think of rising fuel prices, I think heating/cooling people’s homes and filling the tank in their car will have a more drastic impact on the budget than food. Thirdly, in the worst of times, we could change our eating habits. A 60 cent can of brown beans can be a pretty healthy (and cheap) alternative to a $10 Strip loin.

His second question was “What in your opinion are the realistic alternatives to a stock portfolio, when it comes to saving for retirement or education?” I think a better option for retirement would be collecting random items your entire life, then when you retire, sell those items on eBay. I think that would be a fun retirement job and those items would surely be worth something by the time you retire. In seriousness though, I think investments need to be balanced, and people should be investing for the long term. When the markets started to tank, I didn’t go look at my Mutual funds statement to see how much “money I lost” (I still haven’t looked at my statements). I’m investing for the long term, and the money I have invested is only worth something when I’m ready to cash it in. If people are investing in the stock market on a day-to-day basis, then those are people who are essentially gambling, and I’m not going to feel sorry for them when they lose money just like I don’t feel sorry for myself if I lose money at a casino. Now, the corporate greed that has led to the imploding of several banks in the US, that is something that I think shouldn’t be allowed, and I think more regulation is needed to avoid this (Crap, do I sound like John McCain??). Canada has so far set a good example for the world about how banks can prosper under tight regulation and not be as susceptible to the risks that Wall street firms have encountered. I think the executives who cashed out right before their banks crashed should be accountable and I strongly disagree with the bailout package that has saved the companies that created the problem in the first place because it will drastically increase the federal deficit and/or cause inflation all while making taxpayers pay for greedy corporations addiction to gambling.

Now, back to my point about a “balanced investment”. I think people shouldn’t rely exclusively on their stock market investments or mutual funds for their retirement, since the stock market can be inflated since its value is based on the confidence of other investors who trade on a day-to-day basis. People can balance out their portfolios by investing in safe bonds, real estate, gold, etc. One of the best retirement packages I’ve seen is when people who bought up one or two houses near a college and rented them out to students. Sure, it’s a bit of work to manage, but it’s a pretty safe investment for the long-term. Of course, try not to buy when the market is at a high, but even if the value goes down, don’t forget that you’re in it for the long-term, so a short-term decrease in value doesn’t mean it won’t gain its value back in 5-10 years. Warren Buffet, in this recent NYT Op-Ed, says ”Be fearful when others are greedy, and be greedy when others are fearful”. Buffet thinks it’s a good time to buy, so it’s all part of the great game of investor confidence.

I think if people live within their means and don’t strive for “all things bigger”, then an economic downturn will certainly have less of an impact on them. To me, reducing the size of our houses, our cars, our food and our waste is the simplest approach to achieving my definition of freedom and we can all do it by eliminating things in our life that only serve to harm either the earth and our wallets.