I can't!

As part of their "special edition" content, Yahoo! Finance is running a four part series from Forbes.com titled "Buying the American Dream." It looks at what it costs to live the American Dream in four regions of the U.S. (northeast, south, midwest, and west)

How they define the American Dream is interesting:

We're breaking down the costs of maintaining a nice, but not opulent, life--private schools for the kids, a large house in an upscale neighborhood, a weekend retreat, a pricey night out once a week, a couple of very nice cars.

We find more detail about that dream in the details of their methodology:

We tabulated the annual costs for a family of four with one child in a private college and one in eighth-grade and attending a private school. If your kids aren't college-age yet, this gives you a chance to plan ahead. Our fictional clan has two houses--one in a nice neighborhood and one in the country or at the beach.

And on the weekend house...

We also wanted our imaginary family to have a weekend retreat. So we chose a likely location for a country or beach house (Lake Tahoe, Jackson Hole). Some resort areas, like Idaho's Sun Valley, draw affluent visitors from around the country and the world, so vacation home prices were sometimes higher than the costs of primary homes in the state. We looked at last year's median sales price when we could obtain it, and used it to estimate what a nice second home might cost today. We used the same mortgage assumptions as we did for the primary home.

And on the cars to own...

Our family has two very upscale cars; a sporty BMW 325i sedan and a capacious Lexus RX 330 with front-wheel drive, both 2005 models.

And on eating out...

Since the Fictionals like to eat at nice restaurants, we figured out how much it would cost them to have dinner each week (including appetizer, main course, dessert, a bottle of nice--though not amazing--wine and tip) at a pricey local place. We then multiplied that figure by 52 to get the annual spending total.

And on vacations and travel...

This high-income family also likes to travel. We had them take three vacations each year: A week-long winter stay in Palm Beach for the parents; a romantic three-day jaunt to Paris in the spring; and a seven-day ski vacation for the whole family.

And on schooling the kids...

We figured our family would send its children to private colleges, which could be anywhere in the country. For this, we used the average annual cost for a resident student at an American college, including room, board and other expenses, according to the 2004 Annual Survey of Colleges performed by The College Board.

After reading through the section on the West, I've decided that I'm still pretty far from living the American Dream in California:

The costliest place in the region (dude!) turned out to be California. We have to hand it to West Coasters--it must be hard to be laid-back when you have to pull in nearly $370,000 per year after taxes to live well.


I guess I should have bought A LOT more Google stock back when it was cheap, huh. My 30 or so shares have to go way, way up in value before I have any hope. Maybe if I had bought 30,000 shares...

Then again, I'm also short a wife and two teenage kids, so I guess there's a lot of time before I have to strike it rich!

Not that I'm really think this whole "american dream" has much to do with what I personally want out of life. But it's still fun to see what's required to live up to a stereotype.

Posted by jzawodn at November 10, 2005 02:14 AM

Reader Comments
# Jeffrey Friedl said:

Wow, the definition of "American Dream" has certainly changed lately. What ever happened to a small house with a white picket fence, happiness, and the right to complain about taxes?

Living my own American Dream in Kyoto, Japan

on November 10, 2005 04:20 AM
# Kent said:

Sheesh. As a non-US citizen, does anyone else think that this "American Dream" is good indicator of what is wrong with the US?

Do people seriously still subscribe to this unbelievably selfish notion?

on November 10, 2005 05:15 AM
# Jeremy Zawodny said:

I sure don't.

There were no airplanes in the American Dream! ;-)

Screw the fancy cars and second houses. Just find me a nice Piper Super Cub and a grass runway...

on November 10, 2005 05:26 AM
# Sheeri Kritzer said:

Now, I grew up in the solid middle class, sometimes dipping down to lower middle, because my parents had bad spending habits. Anyone living that lifestyle is living an opulent lifestyle. Sadly, "nice" these days is not having to worry about your gas bill, heating bill, car repairs, etc, and having maybe $100 or so per month to save, so you can buy that house.

Seriously, though, a vacation home? 2 week-long vacations per year, and 1 long weekend, to places you fly to? That's 'rich'. Period. If they wanted to be more realistic, they could have at least included a driving trip or 2, and a timeshare.

on November 10, 2005 07:11 AM
# Peter Davis said:

It can be done on much less than you think. I'm doing the important parts of what you mention already, on far less than $370K a year. And, no it's not because I live in an inexpensive area, we're in metro-Boston. We've got the house, vacations (summer in Europe, weekends in Vermont, and one or two other week long trips per year, just got back from Utah on Monday), send the kid to private school. We forgo the unimportant things you mention. Instead of a BMW, we drive a Honda. Instead of eating out at restaurants regularly, we have our meals together at the dining table in our own house. It's actually quite easy to do if you forget about the cars and restaurants. Besides, Hondas are far more reliable than BMWs, and eating at home (we shop organic) is far more healthy than restaurant eating. :)

on November 10, 2005 07:17 AM
# Kevin Scaldeferri said:


I think those authors are confusing "The American Dream" with "in your dreams".

on November 10, 2005 08:34 AM
# pmp said:

The readers of Forbes are basically wannabe rich people, right? So articles like this are basically fueling their pipe dreams that they can move up from their modest suburban means to the ultra-rich elite.

It is also probably fueling a lot of fights between husbands and wives about how little they have living in their crappy 4 bedroom house in the suburbs with stupid vacations to places that people have heard of and their gas guzzling SUV. If you only make 250K more honey, then we could have all the things that would make us happy. So go out there and earn it, but don't miss the kids soccer practice.

get a grip.

on November 10, 2005 11:15 AM
# Melissa Della said:

I agree with Jeffrey. ;) Our "American Dream" still involves buying a moderate house and being able to live relatively comfortably. Not getting a ridiculously overpriced vacation home, going on 3 elaborate trips a year, and sending the kids to expensive private schools. (Nothing wrong with public universities, anyway.)

on November 10, 2005 03:15 PM
# Greg said:

And on vacations and travel...

This high-income family also likes to travel. We had them take three vacations each year: A week-long winter stay in Palm Beach for the parents; a romantic three-day jaunt to Paris in the spring; and a seven-day ski vacation for the whole family.
Jeremy certainly has that beat - constantly traipsing the world pimping his mysql book, on Yahoo's dime.

on November 10, 2005 04:13 PM
# Joe Zawodny said:

Yeah, I have to go along with my dislike of their definition of the American dream. Mine is to save 20% of our gross income with the hope of having enough money in old age to pay for insurance and prescriptions. Honestly, my idea of the american dream is not to be in hock up to our eyeballs, but rather to own our home outright as well as the vehicles. Eating out means a BBQ on the deck with a few friends. Who needs a second home?

on November 10, 2005 06:11 PM
# nico said:

Sadly, "nice" these days is not having to worry about your gas bill, heating bill, car repairs, etc, and having maybe $100 or so per month to save, so you can buy that house.
nico - http://www.referat10.com

on November 11, 2005 04:12 AM
# Wolf Harper said:

They say "a nice, but not opulent, life" -- and they proceed to describe an opulent life. Worse, a consumerist life. The trouble is, nobody is going to pay $370,000 to an employee. * To make that kind of money, you have to be either a self-made man or an heir(ess). And part of becoming self-made is having the discipline not to piss away perfectly good investin' money on that kind of opulent junk.

* for superstars of stage or sport, perhaps, but not to you or I.

on November 13, 2005 08:39 PM
# Arnie Gullov-Singh said:

Vacation homes are a really bad idea.

Firstly, from a tax standpoint you get hit hard: you can't deduct the mortgage interest or property taxes and there's zero capital gains tax exemption when you sell, unless you claim it as your primary residence, which is a red flag for the IRS.

And then once you commit to buying a second home you're so deep in the hole that you'll feel compelled to spend every spare moment in your new home away from home - including the two hour commute each way - and miss out on visiting all the other great places in the world.

If you really only get two and half weeks vacation (hardly something to dream about) and have $370k/yr to burn, there are plenty of spectacular vacation homes to rent by the week (which were bought by other pursuers of the american dream).

on December 27, 2005 07:58 PM
# joe joe said:


that's $370K AFTER taxes.

on January 7, 2006 04:08 PM
# Denise said:

The average American doesn't make $370,000 a year. I consider myself average being a single person with no kids who makes $35,000 a year and I should be able to afford to buy the "American" Dream, but can't. The average house in my neighborhood (South Florida), which is a real dump now goes for over $300 grand. Who's DREAMING now?

on June 13, 2006 06:05 PM
# Geothermal heat pump said:

A week-long winter stay in Palm Beach for the parents; a romantic three-day jaunt to Paris in the spring; and a seven-day ski vacation for the whole family.

on October 17, 2008 09:54 AM
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