The American Nightmare: Putting the American Dream on a Credit Card

In a previous blog, we wrote that the price tag for the American dream is around $130,000/year.  If a household does not have that kind of income, how does its members keep up with the Joneses? Some do through the use of credit cards.  

“Buy now, and pay later” often means “pay later and pay more too!

In 2017, the amount of outstanding revolving debt has exceeded $1 trillion1, which makes sense given that in 2014 the US Census Bureau found that 72% of consumers had at least one credit card.

And just before the pandemic, in February 2020, outstanding consumer debt topped 4.2 trillion2 with 1.1 trillion of that amount as revolving debt. Credit cards are revolving debt.

So the use of credit cards is still on the rise.

Credit card users actually tend to pay more when making a purchase.  In a 2012 study by Chatterjee and Rose, participants were given the opportunity to purchase tickets to a basketball game that had been sold out.  Some were told they would have to pay in cash, and some were told they would have to pay using a credit card.  Those who paid by card were willing to pay more than twice as much as those who paid using cash

Indeed, paying by card often removes the pain of purchase.

So what’s the solution if you don’t make the amount of money you need to purchase the American dream?

First, realize the dream is really a nightmare.  And wake up!

Here are 4 ways to awaken:

Acknowledge realityYou cannot afford to do or buy certain things.  What do you need to do to get out of the credit card cycle?  Sell some items?  Get a second job?  Cut out some discretionary expenses? All of the above?

Get yourself on a written 30-day budget.  Expect that the first month will be especially difficult since you will be paying for last month’s behavior (your credit card) as well as this month’s current bills. Resolve to follow through with this plan.  The next and following months will be better and better.  You’ll become aware of what you’re spending money on, and you’ll see yourself saving more as you spend less.

Roll up your debts into a snowball.   It doesn’t even have to be winter.  Begin paying extra on your smallest debt balance.  When that debt is paid off, roll the amount you were paying on that one to the next smallest.  Keep going until all your debt is gone!

Don’t neglect paying yourself.   And it’s always best if you can pay yourself (in the form of saving money) first.

StoreHouse Financial Solutions can guide you to become debt free, help you know how much to save, give you direction and hope.

2021 can be the year where you are awake from the American Nightmare!

1 according to

2 Current US Consumer Debt