$15,000 is an interesting number because it is one I estimated with my head, but then also empirically proved out for several years of frugal, minimalist living. Specifically, it's the lowest amount of money a person can live on comfortably in the US.
This assumes a lot of things.
That you don't have an insane commute.
You only have yourself to support.
You eat in and host at home most the time.
You go out occasionally.
You take a cheap road trip once a year.
The primary form of your entertainment is friends and conversation.
You never buy a new car.
And, you never buy frivolous (read-luxury) items.
When it's all said and done a single person can get by in the US, comfortably for $15,000 a year and enjoy a full and wonderful live.
Of course when I published this figure in various books, people would challenge me, questioning whether it was possible, even daring to doubt my veracity. But trust you me, I went through the hell and penny pinching. It's possible and it's well within everybody's ability to do it.
But $15,000 also happens to be a very interesting number in another regard. For while sitting at my other bar I noticed an advertisement for a mortgage company. And then an ad for a car. And so I quickly hit the internet, found some online calculators, and started crunching some numbers. Specifically, the TOTAL debt payments one makes over the course of their lives.
Naturally, this varies person to person so I assumed what I believed to be the "average" American who takes on debt for these specific things at these specific terms:
30 year term
4.5% fixed rate
$20,000 auto loan
5 year term
12 cars over the course of your life
$80,000 (includes what you paid without loans)
20 year term (or whenever the hell people get around to paying those things off)
Credit Card Debt
$4,000 balance assumed in perpetuity
Balance nominal from 15 till 75
Now, when you calculate the total loan payments for these four items you get:
Student Loans $137,554
Credit Card $33,600
And when you add them all up you get:
Now a funny thing about that number is if you take it and divide it by the number of years you're expected to live as an adult (60) you get $15,125.***
And what do you know? If you just refuse to take on debt for things like cars, education, houses, credit cards, and crap, you'll save yourself the necessary amount of money needed to support yourself for your entire life.
Of course, astute economists will point out that the numbers do not account for inflation. And normal everyday Americans will point out who wants to live a life making $7.50 an hour Valid points, but let me address them.
First, while absolutely 100% right, those figures don't count for inflation, they actually kind of do. Cars you are constantly buying at higher and higher prices so we could just assume that $280,000 is adjusted for inflation. Credit cards, well those balances will also rise with inflation, thus, adjusted for it. And how many people buy just "one house," never buying newer or better, never refinancing, never taking equity out of the home to improve the kitchen? Yes, that's what I thought. About the only that isn't adjusted for inflation is tuition, but even that I wonder about given how corporations and employers are now all just so pro-"continuing education" forcing people a life long financial burden of never having to stop paying for education and training. The point is, even if we were to adjust for inflation, that number would still come darn close to the $15,000 mark.
Second, the life style $15,000 a year affords.
Yes, who indeed wants that? Why men with used cars that need repairing, living in studio apartments, never enjoying fondue at the latest and hippy trendy restaurant, who go to (GASP!) Goodwill to get their clothes!? What kind of a life is that?
Certainly not one where they commute 500 hours a year, in a car they can barely afford the insurance on, to a job they hate, while they finance the hockey equipment for the children they can (also) barely afford, forcing both parents to work, while alienating their children in day care (also, barely can afford), driving the wife to divorce the husband, but not first without her racking up $20,000 in credit card debt for trinkets and bobbles she just needed to have, while dad buys himself a new Corvette to cope with the destruction of his family, and now two ex's who hate each other both fork over $50,000 a piece for lawyers so they can squabble over the remaining $5.83 in equity in their palatial McMansion.
You're right, they most certainly CANNOT afford that. They can only afford books, conversation, coffee with friends, fishing, and black and white movies on Netflix.
The point is simply this (and one I think we already know). If Americans simply got by with what they needed and not what they wanted, they would never have to take on any debt of any kind in the first place. This would not only result in much easier and less stressful lives, but lives where you would not have to waste 4-8 years of your youth in college, making college obsolete for many. The real issue many people have to solve for themselves is whether having "nice, but ultimately, pointless" things in life is worth the hell, struggle, strife, burden, stress, and pain the required debts to afford those things will foist on them. And given what I've seen of average Americans and their obsession with "late model German cars" and "brand designer jeans," it most certainly is not.
Enjoy the decline!
***I did want to make the note that while the technical age for reaching adulthood is 18 (and when you subtract 18 from 78 years of life expectancy you get 60 years of effective adulthood), this is functionally wrong for Gen X and Millennials. Since they do not move out of the house or stop fully receiving subsidies from their parents until the age of 43, the total number of effective adult years is really only 35 years. When you take this into account the average annual savings of not going into debt results in an annualized payment of $26,000, much more than the original $15,000. Perhaps this is why endebted and parent-dependent Gen X'ers and Millennials still have nice things despite negative net worths and multiple bankruptcies.