2008 February 04 Monday
Frugality And Thrift Make A Necessary Comeback

Washington Post personal finance columnist Michelle Singletary joins a sudden flurry of writers promoting a return to frugality as a response to uncertain and worsening economic conditions as she promotes an author on "Enoughasaurus".

With so much bad economic news coming out almost daily, you may be feeling overwhelmed. You may feel there's nothing you can do to prevent your own household from crumbling financially.

But you can do something. You don't have to wait for the official word that we are in a recession to start shoring up your own financial house. And this is true whether you are in a time of plenty or of economic woe.

Now may be the time to embrace frugality. It might be a good time to say, "Enough is enough." That is one of my personal mantras. It's also one that Jeff Yeager has lived by for most of his life.

Yeager has conquered what he called "Enoughasaurus."

The Daily Telegraph in the UK joins in this trend with an article by Eithne Farry entitled The shift to thrift.

Given the economic climate - spiralling personal debt; share prices plummeting - 2008 could be the year to embrace these make-do-and-mend virtues. Jonathan Loynes, the chief economist at Capital Economics, warns:"We're about to be hit with a triple whammy. Basic things like food, petrol and energy will cost more.

"There is a slow-down in the housing market, which makes everyone feel less confident financially. And credit will be harder to come by. We should all be tightening our belts."

It's not quite as onerous as it sounds. Recession thinking tends to be practical but prosaic: switch off the lights when you leave the room; turn the heating down and put on a jumper; take your shoes to the mender rather than throwing them away.

Writing in the New Zealand Herald Nicola Shepheard also joins in with an article entitled Shift to thrift - downsize your spending

So what better time to join the shift to thrift and revive some of our grandparents' pennywise tricks?

The war and post-war eras saw thrifty living as a way of life, before the consumer society intervened and waste became both a corporate by-product and corporate industry.

The call to budget and eco-consciousness can sound like a sentence to dullness and self-denial. Many frugal habits are prosaic and require a little self-discipline: turning off lights, not taking the car for short trips, buying refills.

But thrifty living doesn't have to equal homespun naffness and wowserism. Thrift can be rewarding, creative, sociable. Thrift can even be hip.

One moneysaving, eco-friendly trend that's already swept Britain and the United States is swapping clothes, or swishing.

Auckland speech therapist Polly Newton started throwing clothes swap parties with a friend five years ago when they were poor students.

Now she does it for original pieces that you couldn't buy, the re-using ethos, and fun. Up to 20 per cent of her wardrobe is from clothes swaps.

Writing for the New York Times Peter Goodman reports we may have reached a cultural inflection point away from living on credit. Geez I hope so.

But now the freewheeling days of credit and risk may have run their course — at least for a while and perhaps much longer — as a period of involuntary thrift unfolds in many households. With the number of jobs shrinking, housing prices falling and debt levels swelling, the same nation that pioneered the no-money-down mortgage suddenly confronts an unfamiliar imperative: more Americans must live within their means.

“We don’t use our credit cards anymore,” said Lisa Merhaut, a professional at a telecommunications company who lives in Leesburg, Va., and whose family last year ran up credit card debt it could not handle.

Today, Ms. Merhaut, 44, manages her money the way her father did. Despite a household income reaching six figures, she uses cash for every purchase. “What we have is what we have,” Ms. Merhaut said. “We have to rely on the money that we’re bringing in.”

The shift under way feels to some analysts like a cultural inflection point, one with huge implications for an economy driven overwhelmingly by consumer spending.

The American trade deficit is not sustainable and has enabled many people to live beyond their means. The down turn in housing prices, the decline in the dollar, and the recession might finally cause a turning point where people have to start living on what they earn.

Share |      By Randall Parker at 2008 February 04 09:47 PM  Economics Family

Wolf-Dog said at February 5, 2008 5:18 AM:

"The down turn in housing prices, the decline in the dollar, and the recession might finally cause a turning point where people have to start living on what they earn."


But if we had not de-industrialized the United States, then with robotics and advanced materials, we would have been able to build and manufacture for every citizen. It is still not too late for a massive re-industrialization campaign. American engineering schools are still the best in the world, but money is not allocated to re-industrialize in a smart way the way the Japanese are doing.

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