Why can't we save?

Today's Wall Street Journal has a personal finance column (not available unless you subscribe) that takes note of the fact that Americans aren't saving anything. The problem is not excess spending on Starbucks lattes and the like. The problem is money we're spending on houses and cars.

Everybody needs a house and a car, or cars, right? Well, yes: but the Journal columnist says that "houses and transportation accounted for 52 percent of all expenditures in 2002-03, up from less than 41 percent in 1950." The jump comes in because we are buying bigger houses and more expensive cars than we need.

"The trend has been to buy the most house you can afford, rather than the amount you need," notes Sophie Beckmann, a financial-planning specialist at A.G. Edwards in St. Louis. "It's the same thing with cars. You see a lot more luxury cars on the road. While you can get by with a $20,000 car, people buy the $40,000 SUV with the leather seats and the TV. There's a lot there that's discretionary."

The columnist, Jonathan Clements, concludes: "Indeed, if you're willing to skip the heated car seats and the third bathroom, you would probably still be living better than your parents did -- and you will free up money that can be saved."