A couple of days ago the current President of my country was asked what should one do if he had a hard time finding a job, finally got rather low paying job, but he'd still like to start a family. He answered without a shred of hesitation that such people should borrow money from somewhere, effectively becoming indebted to some bank for the rest of their lives.
It's a very common mindset, people are being trained to believe that living with a huge debt is a perfectly normal thing. It isn't. Just as you say all you need to do is to live within your means and rationalize your spendings a bit. It's surprising how many things can be "within your means", even with very little income, if you're willing to do some work on your own.
I was way poorer than I'm now for most of my life, but I was never indebted to anyone. Instead of borrowing money I've learned to live making around $200 a month. That's of course another country, another currency and another economy, but to put things in perspective: that's less than one tenth of average income here. I learned to fix things that broke, learned to make things of my own, learned to recognize when something is worth its price and when it's not. I'm almost 30 now; I earn twice the average salary now, but I still make (some) furniture of my own, I still repair things around the house myself and I still don't buy the most expensive things "just because".
I don't know about economy and such, maybe it really is beneficial for most people in the economy to borrow money and live way above their current means, but on a personal level taking on a debt looks like an economic suicide.