What Does It Mean To Be Wealthy? (Part 2)

Print Friendly, PDF & Email

Examining the Wealth Paradigm Shift

In the first portion of our three part series, we discussed how to define your own personal version of what being wealthy truly means. We looked at James and how he lost everything but found his own personal way to live a wealthy life. In this article, we look at how the American idea of wealth is changing before our eyes. Just like after the Great Depression, we may be seeing a return to ideas about saving, investing, and liquidity.


If the last few years have taught us anything, it is that things are not always as they seem, and depending on the good times to last forever can create some real havoc in your life. There is no denying it.

  • The median net worth of the American family fell from $126,400 in 2007 to $77,300 in 2010—a 39 percent drop.
  • Fewer than half of American families were able to stay on the same economic level.
  • Median income fell almost 8 percent between 2007 and 2010 to $45,800
  • The equity Americans held in their homes fell by more than 42-percent to $55,000

These numbers show a post-crash economy in an absolute free-fall, but the Fed released other numbers that imply a fundamental shift in how Americans—especially younger Americans—are approaching their finances.

  • Median credit card debt fell 16 percent between 2007 and 2010
  • Almost a quarter of American families have no credit card debt at all.
  • Personal debt has fallen to levels not seen since 1982

Granted, statistics and numbers can be twisted and molded. People can make them say anything they want but the truth is, the assumptions many Americans based their wealth building and retirements strategies around proved false, and a lot of the wealth of two generations built on these assumptions was wiped out in just 3 short years. The stock market, long seen as a safe haven for retirement money, stopped its perpetual increase and fell. The housing market and home ownership, long seen as a path to financial security, collapsed and home ownership became a burden rather than something for which to strive. Buying a big house and worrying about paying it off later is no longer seen as a sound plan for financial security.

The numbers and the actions of Americans seem to indicate that a high value is being placed on being debt free, or at least maintain manageable levels of debt, rather than live an extravagant lifestyle on borrowed money and time. The new definition of wealth may be freedom from financial obligation rather than visible extravagance. Americans are making less, but they are still managing to pay off their debts. That shows a fundamental shift in the priority of the American people—from excess to austerity. Many, like the grandparents and great grandparents in the depression, are saying, “Never again.”

America will recover. Of that, there is no doubt. The Great Depression spawned the Greatest Generation, and perhaps, the Great Recession will spawn a similar generation that will take the nation to new heights. In the next part of our 3 part series, we will examine what modern Americans can learn about personal finance from those who survived the Great Depression.

Facebook comments:


Powered by Facebook Comments

Comments are closed.

Read previous post:
Housing Market Indicators in this week’s S&P/Case-Shiller Home Prices Index

For the first time in years, home prices in all 20 statistical areas increased over the prior month. On an...