What is the American dream
The dictionary definition of the American dream is the ideal by which equality of opportunity is available to any American, allowing the highest aspirations and goals to be achieved.
For me, it means that if you work hard enough, you can achieve anything you set out to do. Unfortunately, there are some steps, that need to be taken, between working hard and getting to you dream and that is where many people derail. This site was created to give you a roadmap on how to achieve your own American dream and provide guidance on each step of the way.
Set your goals
Most people go through life jumping from one thing to another, and they never really stop to think about what they really want. Life just happens to them and then, when they are in the midst of a midlife crisis or on their deathbed, they realize they didn’t live the life they wanted, and have regrets.
The first step in achieving the life you want is to stop and take some time to visualize the way you want things to be. You will take this visualization and turn it into goals. The goals they will change how you behave. They will motivate you to keep moving forward. You will start to look at where you are and question if you are actually making progress towards your goals. Instead of aimlessly wandering from one thing to the next, you will start traveling towards a destination.
Figuring out your goals is not only the first step, but it’s also the most important part, because what you are doing is forming your American dream. I can’t do it for you, it’s a different dream for everyone. Not sure where to start? Don’t worry, we have a goals setting exercise that can get you going.
Make more than you spend
Almost any goal you set is going to require money. 63% of Americans are living paycheck to paycheck. If you are going to have any money at all then you need to make more than you spend.
Save and cut back on expenses
When I was younger, I was making $30,000 a year and I thought if I could just make $50,000 I would be rich. However, when I got to $50,000 I was still poor. What happened? As soon as I got more money I gave it away by adding new expenses. No matter how much money you make, there is always a nicer car, bigger TV or bigger house.
The first thing you should do is cut back on expenses. You probably have already spent more than you need and there are some easy areas to cut back on. Perhaps you go out to eat too often, or maybe you have every premium channel on cable, or you buy a new phone every year. You need to look at these expenses and determine what is a need and what is a want and cut some wants.
The important thing here is that you want to get to the point where your expenses are less than what you make, so you can start saving money and to live below your means, even when new money comes in.
In many cases cutting back on your spending can get you to the next step, but there is only so much money you can save due to the limitation of how much money you are bringing in. Your earning potential on the other hand is unlimited. In your primary job you should see if you can get a raise. If not, then you can try to acquire new skills to make more money. Lastly, you can do some side hustles to bring in some extra money as well.
Grow your money
Now that you have money, you have an asset. What you want to do next is to grow that money, so it is working for you to help you meet your goals.
Pay off debt
Your past self stole from your future self and took out debt. Now not only do you have to pay off that credit card or loan from past spending, but you are also paying interest on top of that. Your debts are diminishing your future potential. When you pay off your debt you are making money, because you don’t have to pay the interest, and you are also freeing yourself from the chains of a monthly payment.
There are some cases where debt can be good. For example, if you take out student loans and get a higher paying job that is an example of good debt (no Liberal Arts Major, I’m not talking about you). Another example might be taking out a loan to get a real estate investment property. In both of these cases the debt is helping you make more money than you paid. An example of bad debt would be buying a TV on your credit card. The TV is going to make you less productive, and it’s not going to pay itself off.
Invest your money
Paying off debt is great, but in the end it’s just a way to make money. Depending on the interest rates on your loans, sometimes it’s better to invest the money. For example, if you had a student loan for $30,000 over a period of 30 years you would be paying $110.89 a month and $9,918 in interest over the life of the loan. So if you paid it back early you could be making $9,918 in cash for your future self. Now say you invested that $30,000 in the SP500 over a 26-year period, withdrawing the $110.89 every month to pay off your loan. At the end you would have $427,104 in the bank.
Investing and paying off debt is great, but for most people don’t want to wait until retirement to have a ton of money. This is where big bets come in. They are vehicles to make a ton of money in a much shorter period of time. Examples of big bets are starting your own business, investing in higher risk vehicles and real estate.
The downsides of the big bet is that in many cases you can lose all the money you put into them. Sometimes it can take 2-3 of these big bets before one of them takes off for you. So it’s important to have an incoming flow of money that allows you to save for these big bets and recover from losing the money.
We have a guide on some wealth accelerators that can get you started, when you get to this step.
Trade money for time
Once you have money, you will want to break the link between time and money. At this point you don’t want a job where you are paid by the hour, you want to make money based on results. This can be done with a small business, investments or even some sales jobs.
You don’t have to wait until you are rich to trade time for money. You can start outsourcing different parts of your life, as more money comes in, like replacing grocery shopping with grocery delivery or paying someone to maintain your lawn.
Achieve your goals
Eventually, as long as you keep a focus on them and measure your success you will hit your goals. Congratulations, you will now be living the American dream! Not long afterwards you might start to feel empty. You might start to ask yourself, what do I do next now that I have achieved everything I wanted to?
Even if you aimed pretty big, you should be able to come up with new goals to strive for. It’s part of the human condition that we are most happy when we are reaching for something. An example of dreaming bigger is Elon Musk. He made millions from the sale of PayPal and reached the goal of financial freedom. He then took some time to think about what he wanted to do next and came up with the goal of space travel and electric cars. You don’t have to send people to Mars, but rest assured, when you reach this point you will be in a different place and new dreams will present themselves to you.
I hope you will join me
What do you think? Does achieving everything you ever wanted in life sound exciting to you? I hope you will consider following these simple steps and join me in chasing the American dream.