First Signs of a Declining American Standard of Living!

Listen to this post.


It’s been a few days since I’ve had an opportunity to post here on the Internet Entrepreneur Connection but today you’re in for a treat.

That’s because today I am going to demonstrate why I believe we (here in America) are seeing the very first clear signs that the American standard of living is decreasing.

However, my intention is not to bring ‘doom and gloom’. My hope is to help you understand the urgency behind becoming an Internet Entrepreneur and establishing more than one income stream for yourself, if you haven’t already done so.

We have quite a bit to cover so let’s get started.


I Was Part Of This Statistic 

If you’ve been following me for sometime than you know that I became fascinated with the economy and personal finance right out of college. This was due to the fact that I felt betrayed by the very system I had always been assured was the only way to obtain the standard of living I envisioned for my life.

After college I had no job and was more than $45,000 in the hole.  When I finally did find a job 9 months later, I was severely stressed and fearful of losing of losing my job, was working early mornings, late nights and even through lunches – I was working myself to death at 23 for peanuts of a paycheck.

This led me to go into deep personal study to find an answer and figure out what went so wrong in my career.

What I discovered literally blew me away. It was for that reason that I started this blog you’re reading this article on and the very reason why I am writing de-CLASS-ified: Death of the Middle-Class and rise of the Internet Entrepreneur – my very first book that I have scheduled to release this coming April.


C’mon! This is America!

I am pretty confident that most people don’t believe that the American standard of living can actually go down.  Decrease standard of living

I mean, c’mon! This is America we’re talking about here! We don’t take steps backward we keep moving forward.

I know a lot of people have that mindset when it comes to the U.S as a society and as a people and I say this because I hear it all the time when I talk to friends and family.

And I share in those sentiments but the reality of what’s happening to the American standard of living for the 25%-66% of American households – the middle-class of America, is much different.


For Many, It’s Start With Student Loans

I grew up poor so I didn’t even qualify for a credit card and before college I had zero debt. That all changed after I became a college student.. Unfortunately, for many young middle-class people living in today’s age, college will be the beginning of financial ruin and a lower standard of living.

Last month I wrote about the disastrous college loan plan that the current administration was putting into effect coming 2012.

To summarize, what this plan does is ‘help college grads” making student loan payments, by setting a maximum repayment cap of 10% of their discretionary income to apply towards their student loan debt, with full debt forgiveness after 20 years.

For example, someone graduating college in 2012 with $50,000 in student loan debt and earning an income of $35,000 a year, would only be required to pay back about $1,100 per year. Well, clearly if we do the math, after 20 years, there’s still about $24,000 that are not paid for, sticking tax payer with the tab.

What this college loan plan does, in my opinion, is only incentivize college students to rack up more federal student loans because no matter how much they borrow for school, they know they’re only paying a fraction of the bill.


Someone’s Has to Pay

Unfortunately, this fraction of the bill that is not paid for by the student has to be paid by somebody. At this point the federal government has 2 choices to pay off the bill:


  1. In crease taxes on the middles-class
  2. Borrow to pay off the remaining bill, which adds to the deficit, results in money printing and therefore inflation of the U.S dollar.


You see, either way you want to paint the picture, all this college loan plan does at the end of the day is allow you to go to school so that you can get an education so that you can


  1. Give more of your hard-earned dollars to the government; OR
  2. Work more to buy less with your money

By that way, at this point you (and the rest of the middle-class) is also paying for every other college grad who was granted student loan debt forgiveness with and did not pay his bill in full.


And Here Is Where I See It…

In may 2011, the New York Times reported that the median starting salary for a college grad was about $27,000 and that 24% of recent college grads we underemployed or unemployed all together.

Those are horrific number anyway you want to cut them.

The result?

The College Parents of America organization recently announced that as much as 65% of recent college grads returned home to live with their parents after college – these grads are referred to as ‘Boomerang kids’.

What does this show us?

This tells me that these students clearly cannot afford to go live off on their own; they cannot afford rent or mortgage costs, cannot afford food or energy expenses, and cannot afford vehicle or transportation cost, without the help of family members to make ends meet.

This is one of the very first signs that we can clearly see of a decreasing American standard of living.


Middle-Class, Listen up!

Today, it’s getting harder and harder to survive off of 2 incomes, much less surviving off of 1. Unfortunately, I don’t see it getting better.

It used to be that you could go to school, make good grades and find a safe secure job. I say the new paradigm is learn new skills, become an Internet Entrepreneur and ensure your way of life.



Are you seeing a decrease in your standard of living? Did it start with student debt for you or is it a result of other factors?

23 Responses to “First Signs of a Declining American Standard of Living!”

  1. Hector, you make excellent and very valid point in this blog post. I can tell that as young entrepreneur and having started 2 businesses and a 3rd on the way that if you truly want to live a life of fulfillment and be truly free, you must start thinking outside the box and in a different way. I’m not sure who said this quote “you can’t solve a problem at the same level that it was created on”. Meaning, if you want to solve a problem and create a real solution you must think differently an in an orthodox fashion.

    Unfortunately, the education system forces and confines the individual to think and act a certain way, taking away they’re hope, dreams, ambitions, and the ability to think critically and on their own. This results in a decrease in self worth and value and as a result lower wages and salaries.

    Great post Hector.


    Isaac Tobelen

    • Hector says:

      Isaac – very well put, man! I couldn’t agree with you more. I also know exactly what quote you are referring to but cannot think of the author either.. I would go as far as betting that it was Einstein.

      Anyway, you’re absolutely right when it comes to school and the fact that it molds us to be linear thinkers – never thinking outside the box and never really developing ourselves to produce the value to we would expect would help us attain the standard of living that we want.

      But what I am seeing now is that even for those people that do go to school an accomplish great things as students, it is getting increasingly more challenging for those individuals to create the standard of living they were aspiring to achieve.

      This comes as a result of lower wages for recent grads historically speaking, increased levels of student loan debt and an inflating currency ($) that requires them to work just as hard to buy less and less every day.

      I believe that to achieve the standard of living they want in the near future, most people are going to realize they are going to have to make the transition to being entrepreneurs and do the things that you and I are now doing.

      Thanks for the awesome comment, Isaac!

  2. [...] YOU especially to Jk Allen, Danny Iny, Marcus Sheridan, Hector Avellaneda, John Falchetto, Robert Pinto-Fernandes and John Sherry for reaching out and connecting with me [...]

  3. Great write up, Hector!

    This is a major concern and very real for many out there today. Here’s another kicker:

    9 times out of 10 a resume or application will not even get glanced at if you don’t have a form of higher education or a lot of experience. Now, insert your post…

    It’s absolutely ridiculous. The best way to combat this is through information. Glad to read articles like this. Keep up the great work.
    Jason Anthony recently posted..What To Do When You’re Handed A Blank Check

    • Hector says:

      Hi Jason, thanks for your comment and welcome to Internet Entrepreneur Connection.

      You’re absolutely right if you are referring to working for big corporations. I think a lot of small business owners that hire people could care less about how much education you have. Instead, I think they are interested more in results. i.e. what have you done in the past, what skills do you posses, what can you bring to the table in other words.

      Most college kinds dont want to work for the small business however. Why? because there is more money in big companies. Unfortunately, we live in a society that encourages young people to go into debt to get a ‘high paying’ job. The numbers are simply not supporting that logic anymore and once more people wake up to it, I think there is going to be a huge paradigm shift.

      Time will tell

  4. Thanks Hector. Great insight here. In reality, our system is built to produce students who “go out and get a job”, instead of a more healthy: “go out and create jobs”. How do you create jobs? By creating companies. By being an entrepreneur.

    And, not just Internet entrepreneurs. Still need the guys and gals creating value innovation in areas such as travel, product distribution, medical and countless others.

    Keep it up Hector. Good thoughts here… :-)

    • Hector says:

      Eric! Thanks for your comment and Welcome to Internet Entrepreneur Connection. You are absolutely right! School teaches people how to be employees not entrepreneurs. Every now and then you’ll get a guy or gal (I think that was us) that strays from the flock and discovers this thing called free-enterprise. And we like it so much t hat we refuse to ever think that one paycheck every 2 weeks is our reality.

      Unfortunately, for many. That paycheck every 2 weeks is their reality. You see school teaches us that there is no other kind of income other than linear income. The kind that you have to work to get paid – work, get paid, work get paid; don;t work dont get paid, and that is totally wrong.

      I am working to change that paradigm and I am glad to have people like you on board!

      • Rana Shahbaz says:


        I am from London and have no idea about the school system in the USA.

        Having said that, USA is world power, don’t you think there must be something schools contributed towards this?

        As Guy Kawasaki quoted in one of his book that Steve Jobs always used to say that “there must be a better way of doing it”.

        I totally believe that this is the key of evolution and you should always strive towards the best but saying that schools are not doing anything, would be fair?
        Rana Shahbaz recently posted..Erik Qualman Shared the Secrets Behind the Success of Social Media Revolution Video

        • Hector says:

          Hi Rana

          Thanks for your sharing your thoughts and welcome to Internet Entrepreneur Connection.

          Yes, the United States is currently still the world power but our dominance has nothing to do with our quality of school education. If you lok back at history, the US became the world power after its victorious emergence in WW2, after which we became the lead manufacturer and exporter country.

          Back then, the US was still operating under a gold standard and after the Bretton Woods agreement, under which every other country pegged their currency to the dollar, our currency became the world reserve currency.

          Our status in the world has nothing to do with education quality and everything to do with economics. Unfortunately, the pendulum is swinging the other way. The problem is that most people have not realized this yet. When they do, our status as world leader and power may not remain.

  5. I believe it’s much bigger than money + debt, and it won’t necessarily result in a decreased standard of living.

    To me it’s about the potential and value inside every human being, and creating a system that helps each of us find our place and contribute at our highest levels.

    The current system does not do this exceptionally well, so it needs overhauled.

    Part of that overhaul is provided by nature, society, and the economy.

    Unsustainable systems will begin to collapse upon themselves, moving us all to create new one’s — ie: a new economy.

    To me debts + decreased living is only a symptom :)
    Jason Fonceca recently posted..We Go Deep, And We Don’t Get No Sleep

    • Hector says:

      Hi Jason – thanks for your comment and welcome to Internet Entrepreneur Connection.

      I respect your opinion, however as an avid student of economics I can confidently tell you that debt is the biggest paralyzer of financial prosperity and it effects all aspects of your life including the value that you as a person can offer the world.

      I felt it myself as a recent college graduate back in 2010. I was so deep in dent that I literally felt that I could not make ends meet as much as a tried, resulting in depression, low morale and even in how I approached opportunities to provide value (including in my job)

      You’re right about unsustainable systems collapsing and we will build a new economy, but in that process there is a transfer of wealth from the HAVE’s to the HAVE NOT’s and it is going to be a very different world we are going to live in, if we as a country and as a people continue on this road to financial ruin.

      I am still ve ry optimistic about what er can accomplish and I think most people will wake up to this reality, I just hope they do it before it’s too late.

  6. Jeanne Pi says:

    I came out of law school with over $100K in student loans, so I can certainly relate. If I had to do it all over again, knowing what I know now, I probably wouldn’t have gone. James Altucher wrote a couple of great posts on why parents shouldn’t send their kids to college ( and I tend to agree with him.

    It seems like higher education in the U.S. hasn’t kept up with the times. It is basically the same now as it’s always been. Instead of encouraging entrepreneurship, we’re just pushing students through the “factory”. Then what? With few job prospects in sight and a heavy student loan burden, we end up creating a generation of debtors. Yes, now more than ever, we need a paradigm shift.
    Jeanne Pi recently posted..How to Get Tons of Media Attention, Generate Massive Traffic, and Increase Sales Exponentially – The Ultimate Promotion Guide

    • Hector says:

      Hi Jeanne! Thanks for your comment and Welcome to Internet Entrepreneur Connection! It’s great to have you here.

      Thanks for being open about your student loan debt coming out of law school. You’re absolutely right andI think you hit the nail on the head with your comment about creating a generation of debtors.

      If I had an opportunity to do it all over myself knowing what I now know I would have definitely not done it again, either. Instead, I would have started a business much earlier and would have started working hard to build it.

      Unfortunately, from the time most of us are in high school we are told that the only way to succeed in life is to go to college and get an education regardless how much it cost. Money is not a reason not to go to college, is what we are told. That in itself is horrible advice! If I would have known as much about finance, economics and wealth building then as much as I know now I would have called out my counselors on it.

      What’s worse is that as the economy keeps getting worse, these pieces of paper that already cost thousands of dollars, in some cases over a hundred thousand dollars, will only get more expensive as the ability to repay them (jobs prospects) will continue to decrease.

      I hope, and am very optimistic, that te young generation will soon wake up to this reality. Hopefully, it won’t be by force.

  7. Timo Kiander says:

    Great point Hector!

    I was fortunate to graduate without any debt, but I can understand that this is a big issue for many students.

    It’s a sad that young people are taught/encouraged that only by taking debt is the only way to manage/survive. I would assume this makes it easier to take more debt in the future as well.

    Anyway, great topic that you brought up! And yes, I’m looking forward to your book :)

    Timo Kiander recently posted..I’m Becoming a Father Soon – What Will Happen to My Productivity?

    • Hector says:

      Timo! Thanks for your comment and Welcome to Internet Entrepreneur Connection. You;re absolutely right! It is truly sad to see a whole generation in-debt themselves trying to do the opposite which is achieve financial prosperity for themselves and their future families. Unfortunately, I think we will have a generation fo people who will be much poorer over their lifetime and will never get to reach true finanical prosperity.

      This is definitely a big issue for a lot of people and the faster they wake up and realize it, the better! It’s great that you did not incur any debt to earn your degree(s).

      How were you able to accomplish Timo?

      Did you work your way through college?

  8. Tom Treanor says:


    Good points about the mindset changes required. I’ve always thought that the US is so concerned about liberal arts that we ignore post-high school education that can include really focused education on learning trade skills. Thanks for the post!

    • Hector says:

      Excellent point! The worse part is that we have students who borrow $100K in student loans for a B.A and graduate with liberal arts degrees that would not pay them more than $50K a year with a Masters Degree.

      Just a few months back I learned about a girl who graduated from Northwestern with $200K in student loans debt in Sociology. No way is she ever going to be able to pay that off, especially with the cost of living in the mid-east. Really Sad but that’s what I am here to do Tom! I am here to get people to wake up and to change the paradigm! :)

  9. Ryan Hanley says:

    The standard of living is already down…

    What it took one spouse to produce 30 years ago takes both spouses today. We’re not all living in mansions yet both spouses are working which should mean if the Standard of Living was the same or better that everyone has tons of disposable income.

    Except we don’t. We have inflation… and more work hours to produce the same amount of Revenue.

    Good article.
    Ryan Hanley recently posted..How To Make Money Selling Value through Blogging and Social Media

    • Hector says:

      Excellent point! If we were to go back in time we officially ended the gold standard int he 1970s, the dollar has lost about 95% of its purchasing power. There isn’t much to go before it literally goes to ‘zero’ which is why I am a big believer in minimizing my tax liabilities and buying real money (gold and silver).

      What do you think about the collapsing dollar Ryan? Do you think it’s collapsing, first of all, or do you think it’s solvent?

  10. Mike Garner says:

    To be honest, I find their quite difficult to relate to because I graduated in 1981 from a British University with a £200 overdraft. At the time, that felt enormous to me but I hadn’t paid any fees and received a grant for living expenses. I didn’t need to get a job to support myself. Happy days!

    It is however, a wider question than just Go to college -> Get a job. We all know that there’s no such thing as job security and the one thing that can’t happen to people that work for themselves, online or not, is that they can’t get fired. The mindset needs to change as the middle classes, in America or elsewhere, need to become more open to other forms of earning money.

    Hey, that way they’ll be able to become one of the tax-avoiding super rich!
    Mike Garner recently posted..If I had a restaurant….7 ways I’d promote it with Twitter

    • Hector says:

      Mike thanks for your comment and welcome to Internet Entrepreneur Connection.

      re absolutely right! The mindset has to change. You see, you know that there is not job security. But people that grew up in my generation were continuously lied to, time and time again that a college degree was job security and that it was the only way to get ahead in life.

      I no longer believe that (obviously) and I think that there are many people out there that dont, but there are many who still do.

      I am not on a mission to change everyone mind about opening their eyes to the realm and possibilities of entrepreneurship, something not taught to us int he education system.

      However, I am on a mission to educate those whoa re tired of working harder and are not working smarter.

  11. [...] Student debt surpasses credit card debtThe First Signs The American Standard of Living is Decreasing [...]

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