Boston Gal's Open Wallet

I hope you're right that people have changed their ways and will be more frugal.

My fear is that since consumer spending makes up 70% of the economy, the government and business are going to be working overtime to get people out there spending. They'll start telling people that they need to get out there and spend for the good of the country and off they'll go! Saving might be good for the country in the long run but I haven't seen much long-range planning lately.

 

Actually I'm the same. I guess I'm not the only one who was forced to "see the light" and love the view.

I plan on riding the bus even if gas is free. It's more relaxing in the morning than dealing with traffic, it's good for the environment, and I get that added bit of exercise walking to the stop. Plus, the people are sometimes a hoot!

I also started touching up my own hair for a whopping savings of 90 bucks a month!

 

I've started doing a lot of frugal things not because I absolutely had to to make ends meet, but rather because I realized that some many things are easy, green, and save money. In short, it's hard for me to justify not doing them. In fact, I really enjoy some of my new more frugal habits like taking walks with my husband instead of heading to the gym, or staying in with a good book instead of heading out to shop out of boredom. And I've been thoroughly spoiled by home-cooked meals shared with friends!

What I hope is that some people are finally realizing how simple some changes are and likewise see no reason to switch back.

 

I love reading articles like this for two reasons. It shows me how people have really forgotten about events from recent history. Secondly, it shows you how shallow, narrow minded, our economy has become and based on the latest quarter's earnings, and nothing else.


To hit on the first one: I watched the movie "Breach" last night (about the guy in the FBI who was selling secrets to the Russians). He said something that rang true (while I have believe it for a long time). He said "The reason why America is going to loose, is because people have a short memory. They do not remember the bad times as bad, and they remember the good times as better than they were. America will loose until it learns moderation, and does not go to excess over things that they do not need." How true is that. We do not learn from the mistakes of the past. We do not see that spending money hand over fist (even if we can get access to it) makes a lot of sense. Do you need two cars worth your annual salary? Do you need a home worth 10 times your annual salary? Just because someone is willing to give you the money, does not mean you as an individual need to take it and spend it. I fear that we will have another cycle like this in 10-15 years (remember the late 90's anyone?) and we will come out of it, and people will forget. Maybe not those that are committed to a plan of saving, but those that cannot get past the 52" LCD TV they cannot live without. I deserve it right?


Secondly, like was pointed out in the article, people are attracted to the ADs. If Justin Timberlake drinks Pepsi, so should I (regardless of the lack of anything in there healthy and etc.) Don't get me wrong - I imbibe soft drinks almost daily, but it is not a given, and I treat them as a treat to have it. Our economy does not realize what we have, and therefore expects the same thing over and over again. Seriously, people watch at McDonalds one time. See how many people don't get the "supersized drink" and will go for water instead? Almost every time I go there - they are almost shocked when I ask for a large water. Corporations are the same way, they expect everything to be better than it was last quarter, no matter what. It is not Christmas in July, but we will have a huge sale to make our quarters look identical to the shopping season. What do they do the next year? More than one sale. Now you are having sales almost every month just to try to get people to come through the door. The stock market as a whole are no help either. They just geode along the company and say "sell this stock if they don't hit 5% greater than last year" and guess what .. no PS3 came out during that quarter (or other killer item) and now they did not make their artificial numbers some Analyst predicted - and now the stock market is off for a day because this company is "inept", etc.


So back to the story you brought up. My spending habits will not change. I spend less than I make, and save the rest for a big purchase (hot tub or guitar, etc.) or retirement. Changing my cost benefit analysis (CBA) of a purchase might change due to new, more recent factors, however overall my spending habits won't change.

 

I remember the 70's fairly well and all the things people did to save money then. Baking their own bread, buying compact cars, making drinking glasses out of soda bottles, etc.

Of course, those meaures all went away quickly when the economy improved and gas prices went down. I do hope that people will make permanent changes and that the personal savings rate will go up but I am not very optimistic based on these past cycle.

 

I highly doubt gas prices will ever go down from here so that probably will keep some people on track with the changes they made. Like others said though, the short memories of some will just cause them to get used to pyaing $4-5 a gallon and go back to older ways.

As for me, I made changes a few years ago to get out of debt and kept most of those. We were already at a level that we were comfortable with so the recent economy issues didn't change us that much. That being said, if it gets a lot worse we will be forced to make more changes. So those would probably be the ones that would get reversed once times improved.