Transcription
Anyone who grew up without money can pinpoint the exact moment or situation that made them aware of the fact that they had less than their peers. For me, that was being in elementary school and going to other kids' houses to work on school projects, only to find that we'd be working in the basement and then realizing that their basements were nicer than my entire house. Typically, it would be a fully furnished wreck room complete with a floor to ceiling big screen TV and theater style reclining chairs, basically every video game console known to man, a pool table, a fully stocked bar for the adults, and a dedicated computer for the kids to play with. For reference, I have never had a finished basement in my entire life. I still don't. My basement's like an empty concrete cell. I didn't have a computer in my home until I think about 2002, which was like 5 to 10 years after everyone else had one. And I should mention that when we finally got one, it was a huge financial undertaking. Oh, and the TV in our house was about this big, and the buttons were held on with clear medical tape. And honestly, I don't say any of that to complain. It was mostly fine, but I'm just trying to provide some context.
In the '90s and early 2000s, things like computers, big screen TVs, and video game systems were obvious indicators of wealth. Oh, and trampolines. If a kid had a trampoline in their backyard, their parents were loaded. It sounds funny, but these types of things were very expensive. A 50-inch TV, for example, could run you $5 to $6,000. A basic desktop computer running Windows XP, easily a $1,000 bucks. And even just a VCR was at least $200 to $300. But then how else could you watch Rugrats in Paris for like the 327th time? These items were objectively expensive even at the time. But when you factor in inflation and what those dollars were worth 20 or 30 years ago, it's even more striking.
And what really puts us into perspective more than anything else is comparing it to the cost of housing at the time. In 1992, the year I was born, houses where I grew up in the outskirts of Toronto sold for about $150 to $200,000. Rent for a one-bedroom apartment at the time was about $600 a month. At a time when a large suburban home was $200,000 or an apartment was $600, a $5,000 TV was equivalent to 2.5% of the price of the house or more than 8 months of rent. Today, the houses in those same areas start at about $1.5 million, and a one-bedroom apartment is at least $2,500 a month. 2 and a half% of $1.5 million is $37,500. And 8 months of rent now cost 20 grand. Nobody in their right mind is spending 20 to $30,000 on a TV. At least, I certainly hope not. But you don't have to because equivalent TVs today can be had for like $1 to $2,000.
I think it's more than fair to say at this point that many purchases that were once considered luxuries of the rich no longer are. It's now common for people to be completely broke but still have the newest smartphone. To live in a tiny shitty apartment but still have a massive TV and the newest gaming console. To be living paycheck to paycheck or even drowning in debt and still be dripped out head to toe in expensive designer clothes. And while it's very easy to point the finger and say that these elaborate purchases are the reason people are broke, that's not even scratching the surface of what's really going on.
Over the last several decades, we've gone through this kind of economic inversion. Like, it used to be that necessities like houses and cars and education were relatively affordable for middle-class people, while luxury goods like consumer electronics and collectibles and other frivolous gadgets of whatever type were more expensive and often out of reach. But today, it's pretty much the complete opposite. Needs like housing, vehicles, college degrees, and in America, health care are astronomically expensive and require most people to go into serious debt to acquire them, if they can even acquire them at all. Meanwhile, trivial wants like tech products, home decor, and goofy countertop appliances are more affordable than ever. In most cases, costing less than a single month of rent. And that dichotomy has led to the rise of what some people are calling luxury poverty. A lifestyle where you may lack the financial stability associated with things like education, home ownership, and career growth, but you still have access to the newest iPhone, Xbox, or air fryer.
What the hell is happening? The US may be in a tariff war with Canada. Australia may be fighting for their lives, one kangaroo boxing match at a time. And England is still holding out hope that dentistry may one day become mainstream. But one thing that all of these countries have in common is a rampant housing crisis. Over the last several decades, baby boomers have done everything possible to ensure that housing prices continue to skyrocket year-over-year in efforts to protect their biggest and sometimes only asset. Between NIMBYs pushing for increasingly restrictive zoning laws, forbidding medium and high-density construction, treating real estate like a speculative investment instead of, you know, somewhere to live, and allowing private equity firms to buy up entire neighborhoods and turn them into rentals. Young people have been left high and dry. And our reality is now that even people earning six figures a year are often priced out of home ownership in most metropolitan areas. Buying a house, something that used to be a middle-class milestone, easily achievable for pretty much anybody who followed the traditional path of going to college, getting a degree, and then landing a decent job, has now become an unattainable fantasy for all but the wealthiest people in society.
And speaking of going to college, things have become pretty bleak in that regard as well. Up until the 1980s, states used to provide significant funding to public colleges and universities, making them reasonably accessible and affordable for the average person to attend. It used to be fairly common for students to get low-wage summer jobs, which would then allow them to mostly cash flow their post-secondary educations. And even if they did need to take out some student loans, it typically wasn't for much. But around 1983, states started to cut that funding, making tuition a lot more expensive. And around the same time, the US federal government decided to start backing student loans. This meant that colleges could go hog wild raising their prices knowing that they weren't assuming the risk of people defaulting. So, they only stood to gain from people taking out bigger loans and going deeper and deeper into debt in efforts to get an education. And the cherry on this Sunday is that they made it so these federally backed student loans are non-dischargeable, even in bankruptcy, meaning that no matter what happens, you're on the hook for these debts for the rest of your life. And with that, the cost of college tuition in America has increased over 700% in the last 40 years, causing graduates to start their adult lives with an average of $40,000 of student debt.
These two issues combined have led us to a point where millennials and Gen Z's are more educated than any previous generations in history. Yet, they have the bleakest outlook when it comes to economic opportunity. They're up to their eyeballs in student debt that in the best-case scenario will take decades to pay off. And despite having degrees and credentials coming out of their laboos, most will still likely never own a home. And that's not even mentioning how terrible the job market is right now with many people unable to find work at all, let alone in their field, regardless of their educational background. I actually made an entire video about this a few weeks ago, so I'll link to it if you want to check it out.
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So housing and education are through the roof. As we can all see, the price of cars has been steadily increasing in very much the same way over the years. And as for the American health care system, or the lack thereof, I guess, really all you need to know is that there's an entire TV series about a high school chemistry teacher who has to turn to cooking industrial quantities of crystal just to pay for his chemo. But what about consumer goods? Thanks to globalization and offshore manufacturing, the cost of most consumer goods has come way down over time. It turns out that when you outsource production to countries without labor laws, where you can employ children, expose them to toxic chemicals, and pay them 12 cents a day, pretty much anything can be made really cheap. Who would have thought? Hell, Tim Ferriss got rich just from writing a book about it. #risinggrind. The rapid advancement of technology has also played a role. Of course, as tech products become more and more advanced, we get more bang for our buck with each new product release, as well as the opportunity to buy older, perfectly sufficient models for essentially pennies on the dollar, like my iPhone 11, which I bought for nearly half the price of the iPhone 13 that had just come out at the time.
And with that, there's been this growing trend of people clinging to consumerism, to smaller, more affordable luxury purchases as their only way to feel like they are actually achieving something for all their hard work. Like maybe you'll never own a home or pay off your student loans, but by God, no one can stop you from enjoying a $27 smoothie or from filling your tiny apartment with every piece of crap you find on TikTok shop. Maybe you can't save up $200,000 for a down payment, but you can definitely save up $300 for a status symbol toaster. And listen, I know more than anyone how much every little bit really does count at the end of the day, how quickly a few hundred dollars here and there can really add up over a month or a year or five years. But I also understand how unrealistic it is to expect people to deprive themselves of every little thing that makes them happy all in hopes that maybe one day it will add up to something meaningful. Especially when those hopes are becoming less and less realistic over time.
This trend of luxury poverty, of people spending excessively on smaller materialistic things while simultaneously struggling to build financial security for themselves, has had a much bigger effect on our culture than I think most people realize. For one thing, it's created the illusion of prosperity where there often is none. Because consumer goods are cheap, poverty often looks less visible. Like your struggling co-worker might have nice sneakers or an expensive watch, which is actually just masking the precariousness of their financial life. This adds to the harmful narrative that poverty is simply a result of poor budgeting without acknowledging the systemic issue of economic disparity that is only getting worse for each generation. It also leads to feelings of shame and personal insufficiency when you see that seemingly everyone has the newest and nicest of everything. So why don't you? Obviously, social media only makes this worse. It's basically nothing more than a medium to build FOMO and sell you at this point. I don't even really know why we're all still using it, but whatever. And of course, credit cards, buy now pay later services, and other financing platforms are only making this even worse because they've further blurred the lines of what affordability really means. If I walk down the street carrying a $5,000 purse, it may seem that I'm doing really well financially, but you'd have no way of knowing if I maxed out three credit cards to get it or if I bought it with Klarna. And you'd have no way of knowing that maybe I could only afford it because I live with four roommates and 22 cockroaches in a one-bedroom apartment. >> Please don't tell anyone how I live. >> You'd have no clue, but I'd look rich. And I know that sounds hyperbolic, but really is the reality for a lot of people.
Because necessities have become so expensive, people are delaying or entirely missing traditional milestones of adulthood. Not just home ownership, but getting married, having kids, or even just moving out of their parents' house. And the result of this is seemingly a permanently teenage mindset that favors instant gratification and consumerism over fiscal responsibility and setting long-term goals because they feel completely out of reach. So, what's the point? It's causing people to just kind of give up. If rent is 75% of your take-home pay, you might as well just keep living in your parents' basement and treat yourself to whatever you can afford, right?
But is there an alternative? Is there a way out of this mess? On an individual level, we obviously can't control the economy, unfortunately. We can't control the housing market or the cost of college or whatever. But we can control how we leverage the opportunities we do have. If you're young and currently still living at home or with roommates, you have the prime opportunity right now to take advantage of having low expenses and to start saving money aggressively for your future. There will obviously come a time where you want to progress forward and your cost of living will increase, but saving up a nest egg between now and then will only serve to make your life easier when you get to that point. It's also really important to choose your path of education wisely. Do some research on the job prospects and salary projections for whatever you're planning to pursue before taking on five figures of student debt. Make sure the numbers make sense and that your future income can justify the expense. Also, don't overlook less expensive avenues like community college or trade school, which can both lead to really lucrative careers at a much lower cost. I know it's cliche, but consider a side hustle. Technology has made it easier than ever for us to spend money, but it's also made it easier than ever for us to make money. I've made plenty of videos giving examples of things you can do for a little side income, so I won't go too deep into it right here, but just find something you're good at and use it to make yourself a few hundred extra per month. That money can go straight to your savings for a house or to pay off your student loans or to help you buy your next car without debt.
This one's really important. Get some hobbies. I've always believed that compulsive consumerism is largely tied to boredom and lack of fulfillment. Shopping is a great but actually terrible way to kill time. So learn a musical instrument, join a sports team, volunteer, draw, paint, take photos, do whatever it is that floats your boat, but find a source of dopamine and happiness that isn't just a buy it now button. And finally, vote for politicians who support people over profits, who advocate for things like higher wages and affordable housing and education. Too many people in positions of power are far more interested in protecting corporations than serving you, but their job is to serve you. So, hold them accountable and make them do their damn jobs.
All right, that's all I got for you guys in this one. I am really looking forward to reading your thoughts and experiences in the comment section down below. If you like this video, like the video. Make sure to subscribe for more. You can follow me on Instagram at according_2 Nicole. Don't forget to check out Delete Me at the link in the description box down below and use the code Nicole for 20% off. I'll see you guys next week.