There were two ways to be happy: improve your reality, or lower your expectations ― Jodi Picoult, Nineteen Minutes.
We are headed toward a period where we all need to lower our expectations. A long, slow, steady decline is the best we can expect. There are several reasons for this.
The main reason I think we are due for a drop in our standard of living is our dependence on oil. Oil has served the US well over the last century. It has provided the US with an unprecedented freedom in mobility. Most of the great human advances have settled around better transportation. Something as basic as the stirrup had a great effect on history. The sociological implications of the car on American mating rituals has been huge.
But we have been using up oil faster than new oil is being discovered—even if the Russian theory is correct and oil is seeping up from the depths and oil is not dead dinosaurs. I have been reading books about what is called "peak oil." In particular I read Kunstler's book, The Long Emergency. While I accept the basic premise of peak oil, I was not impressed with peak oil advocates’ reasoning, especially Kunstler's. What they overlook is that other sources on energy can be used to make fuel. The process to make liquid coal has been known for a century and was used extensively by Nazi Germany and Apartheid South Africa. The US can do the same.
However, there are big drawbacks. It will be a lot more expensive than it has been in the past. Tyler Cowen describes this process in his book, The Great Stagflation. It is only natural that the first things that are harvested are the easiest, the "low hanging fruit" as Cowen calls it. That fruit is long gone. In additional it will be less environmental clean than oil.
What does this mean for you and me?
Two car families will become one-car families. One-car families will become public transportation users. Since the US is built around the car this will be difficult. In the future the first question in looking at a house will not be "How are the schools?" It will be, "Where are the bus lines?"
The US must live within its means, and that means more busses and fewer cars. But this does not mean the dystopian future predicted in various bad novels, and a few good ones, and by "peak oil" advocates will occur. The US is headed for declining standards of living as the price of fuel goes up, as it must, but not Mad Max Beyond the Thunderdome.
So if you are looking for a house to buy, look for a house that has a space for a garden and is a short walking distance to a bus line or shopping. Right now few buyers are looking for this combination. This will change.
There was an old English proverb I read years ago: income £ 20, expenses £ 19 6p, happiness; income £ 20, expenses £ 20 6p, unhappiness.
Lower your expectations.
Live within your means.