Frugality During Recessions

[barbaro]

I think being frugal is good for many reasons. When we are not frugal we spend our heard earned income on things. This is wasteful. It's also wasteful not to use all of a product that we can, instead of throwing away that tube of toothpaste that has a little bit left in it, etc. This article also notes these trends of frugality could last a long time whenever the economy picks up again.

Here's an article on normal folks and former upper-income people who are figuring out creative ways to save more and waste less:

Already frugal get extreme during downturn

They’re pinching pennies tighter than ever, and sharing the tips

Amy VanDeventer cuts lotion bottles in half so she can scrape out the last drops. "I was already cheap," before the recession she says. "Now I am neurotic about it."


March. 10, 2009

NEW YORK - Amy VanDeventer has always been a cheapskate. The recession is taking her to new extremes.
Before the economy tanked, she was still wearing maternity clothes from her last pregnancy, clipping coupons and using hand-me-downs to dress her daughters, ages 2 and 3. Now, she's salvaging bagel scraps left on their plates for pizza toppings and cutting lotion bottles in half so she can scrape out the last drops.

"I was already cheap," said VanDeventer, a 36-year-old mortgage loan underwriter from Broomfield, Colo. "Now I am neurotic about it."

If you thought those cheapskate friends and relatives couldn't pinch pennies any tighter, think again. The recession is making tightwads like VanDeventer cut back even more. They're going way beyond sharpening their coupon scissors, replacing already cheap store-brand fabric softener with vinegar and even making their own detergent. VanDeventer was drying her hair in front of a fan after her portable hair dryer broke — until her friends bought her a new one.

The recession is radically changing behavior among many different types of people, from the Wall Street bankers who are now waltzing into Wal-Mart for the first time to buy their groceries to teens who are now thumbing through the piles of status jeans at secondhand shops to save money. And experts say that such behavior could linger long after the economy recovers.

What surprises frugality bloggers is that many cheapskates such as VanDeventer haven't lost their jobs and are not in danger of losing their homes. Many have stashed a good chunk of cash away. But the economic uncertainty is catapulting them to new levels of thriftiness.

"I do it out of fear because I would rather put that money in the bank or purchase something we really need," said VanDeventer, who now saves about 50 percent of her take-home pay, up from 25 percent before the recession began more than a year ago.
The trend is disturbing for merchants, who are already reeling from the sharp pullback by spenders. Such extreme miserly behavior could only worsen the decline in consumer spending.


"Frugal people are now looking at more ways not to spend money," said Lynnae McCoy, who runs a blog called beingfrugal.net, which attracts seasoned penny pinchers. In January, her site received 110,000 hits, up 30 percent from a year ago. What intrigued McCoy was the interest among frugal folks to save even more money by making their own detergent and other household goods.

Link & Entire: Already frugal get extreme during downturn - Personal finance- msnbc.com

[chassamui]

This woman is so clever. All the money she saves and half her salary is going into "THE BANKS " FFS they are the ones who started all this crap in the first place.
How dumb is that?

Money saving tip. If your TGF asks you to buy her a car, tell her to swivel and give her a bicycle instead. It's better for the environment.

[barbaro]

I assume she's putting money into banks. Maybe CDs, cash. It's OK to be in cash - for now.

Here is another article that just came out:

Extravagance Has Its Limits as Belt-Tightening Trickles Up

In just the seven months since the stock market began to plummet, the recession has aimed its death ray not just at the credit market, the Dow and Detroit, but at the very ethos of conspicuous consumption. Even those with a regular income are reassessing their spending habits, perhaps for the long term. They are shopping their closets, downscaling their vacations and holding off on trading in their cars.

.....economists point out that the Great Depression created a generation of cautious savers. The longer the downturn this time, they say, the more likely it is to change financial habits permanently.

.....“Even though we’re secure with our jobs, you’ve still got to plan for just-in-case,” Ms. Moreno said, “especially because we have a kid.”

As many economists have noted, cutting spending is the worst thing people with means can do for the economy right now. But that argument seems to have little traction, especially because even those with steady paychecks and no fear of losing their job have seen their net worth decline and their retirement savings evaporate.

Entire: http://www.nytimes.com/2009/03/10/us...2&ref=business

[Thai Pom]

Mrs TP

cuts lotion bottles in half so she can scrape out the last drops

Has done since I met her!

[Bugs]

The sad thing is that much of this will actually lengthen the down turn. Prior to the down turn it was true that the average American spent way too much and saved way too little. The time to address that issue was when times were good.
Now that times are bad the key to turning things around is to get people spending again (and the banks lending again), and as these articals indicate that is the furthest thing from most people minds right now. If everyone doubles the amount of money they bank now as compared to before, this downturn will last for a long time.

[chassamui]

I assume she's putting money into banks. Maybe CDs, cash. It's OK to be in cash - for now.

Here is another article that just came out:

Extravagance Has Its Limits as Belt-Tightening Trickles Up

In just the seven months since the stock market began to plummet, the recession has aimed its death ray not just at the credit market, the Dow and Detroit, but at the very ethos of conspicuous consumption. Even those with a regular income are reassessing their spending habits, perhaps for the long term. They are shopping their closets, downscaling their vacations and holding off on trading in their cars.

.....economists point out that the Great Depression created a generation of cautious savers. The longer the downturn this time, they say, the more likely it is to change financial habits permanently.

.....“Even though we’re secure with our jobs, you’ve still got to plan for just-in-case,” Ms. Moreno said, “especially because we have a kid.”

As many economists have noted, cutting spending is the worst thing people with means can do for the economy right now. But that argument seems to have little traction, especially because even those with steady paychecks and no fear of losing their job have seen their net worth decline and their retirement savings evaporate.

Entire: http://www.nytimes.com/2009/03/10/us...2&ref=business

I think we all do it without ggiving it too much thought. As i think about setting up home in a new country, i clear out my old place and sell whatever i can. No point in shipping stuff to Thailand when i know i can buy what i will need second hand. In a recession people will always have decent stuff for sale so i don't see the point in buying new. It's civilized to recycle by bartering for used goods. Hey, even my TGF is recycled!

[Jet Gorgon]

Waste not, want not.

[sabang]

My journey from being a spendthrift to a reasonably frugal person started about four years ago, and it didn't happen overnight. So whilst the economic crisis has certainly affected my Balance sheet, it hasn't really affected my lifestyle.

[Fabian]

I think being frugal is good for many reasons. When we are not frugal we spend our heard earned income on things. This is wasteful.

I don't think that's clever. Spending is what we have money for.

[Loy Toy]

This economic disaster we are all going through at the moment is a kick in the bum/ wake up call for us all!

I think it is a good thing, even though many millions will suffer (including me) and I hope the lessons learned will be carried over to the next generations to come.

Greed and selfishness............will always come back to bite even the innocent.

[Boon Mee]

Well, it's not enough to be frugal during hard times. How about when them Argintines went thru their several economic implosions,eh? The following is a good primer for surviving those events:

Some facts:

1) Those that want to harm you/steal from you don’t come with a pirate flag waving over their heads.

2) Neither do they start shooting at you 200 yards away.

3) They won’t come riding loud bikes or dressed with their orange, convict just escaped from prison jump suits, so that you can identify them the better. Nor do they all wear chains around their necks and leather jackets. If I had a dollar for each time a person that got robbed told me “They looked like NORMAL people, dressed better than we are”, honestly, I would have enough money for a nice gun. There are exceptions, but don’t expect them to dress like in the movies.

4) A man with a wife and two or three kids can’t set up a watch. I don’t care if you are SEAL, SWAT or John Freaking Rambo, no 6th sense is going to tell you that there is a guy pointing a gun at your back when you are trying to fix the water pump that just broke, or carrying a big heavy bag of dried beans you bought that morning.

The best alarm system anyone can have in a farm are dogs. But dogs can get killed and poisoned. A friend of mine had all four dogs poisoned on his farm one night, they all died. After all these years I learned that even though the person that lives out in the country is safer when it comes to small time robberies, that same person is more exposed to extremely violent home robberies. Criminals know that they are isolated and their feeling of invulnerability is boosted. When they assault a country home or farm, they will usually stay there for hours or days torturing the owners. I heard it all: women and children getting raped, people tied to the beds and tortured with electricity, beatings, burned with acetylene torches. Big cities aren’t much safer for the survivalist that decides to stay in the city. He will have to face express kidnappings, robberies, and pretty much risking getting shot for what’s in his pockets or even his clothes...

Read it all here

[barbaro]

I think being frugal is good for many reasons. When we are not frugal we spend our heard earned income on things. This is wasteful.

I don't think that's clever. Spending is what we have money for.

But when Fabian?

When.....do the Germans spend?

I know the spending vs. saving ratio.

Care to elaborate for us?

[Fabian]

I didn't say that my compatriots are mostly smart people. My estimate is there are at least 80% morons as everywhere.

The funny thing is, when the economy was the closest to thriving we had in the last decade, they saved and when the news sounded bad they started to spend more.