Sunday, January 30, 2011

Frugality: Temporary, Tenuous, and Not Really Our Style

The folks at The Hartman Group, a consulting and reseach firm out of Washington state that monitors consumer spending with a jaundiced eye, aren't impressd with our collective rush to frugality. In fact, they already see us moving away from it as economic times get better. [A synopsis of their report is here. There's also a link to download the entire report.]

I wish I could disagree with them. I would certainly like to think that the consumer spending lessons I'm learning now because I have to will hold over in more stable times.

Alas, these consultants don't believe it.

And for good reason. As they so succinctly wrap it up:

"We knew it was coming. It always does.

With the start of every recession comes
a deluge of media and analyst reports
highlighting the American consumer's
sudden conversion from foolish, Godless
consumer to wise spendthrift.

They always call it the "New Frugality."

The report is dry and academic but contains flashes of humor, as when one researcher notes a Time magazine article on newfound frugality he came across during his research. "The Simple Life: Goodbye to Having It All," was published in March 1991. That, of course, preceded the era of excess in which consumers spent with wild abandon, turning to their homes' equity for cash when the credit cards maxed out.

I'm scrimping and saving right now. But with more economic stability (and less debt) I can scrimp more, save more, and feel the effects less. This is my goal, but as history (both this country's history and my personal history) can attest, learning from experience doesn't always work that way.


Sharon said...

Yes, Grace, but now that we understand history, we won't fall into that trap. I KNOW that I will never borrow from my house or my 401K for something as frivolous as remodeling the house, or getting furniture, etc. I certainly won't borrow to pay for college tuitions either. The kids will go to a local community college first before I do that. So, in a way, I've learned my lesson. Retirement is too close to change it.

Anonymous said...

Stay strong!

MasterPo said...

Don't kid yourselves. The worst is by far not over for the U.S. At best this is the proverbial calm before the storm.

Smart money is using this time to get prepared.

Maureen said...

There are obviously going to be people who will fall back into the old ways.
But those of us nearer to retirement have just had a huge wake up call, no way will debt ever become a fact of life for me again.

Grace. said...

Good point, Maureen. The study doesn't divide consumers by catagory, but I do think the recession has been a major wake-up call for those of us nearing retirement. We literally cannot afford to fall back into sloppy spending habits.

Anonymous said...

I look around at my friends, who are mostly in our 40's and see some who are preparing like I am. Yet still others who are charging, buying houses they cant afford and junk they don't need.

I am trying to pay off all my debt in the next 18 months. My kids are not taking school loans but are putting themeselves through with scholarships, grants and working during school and all summer long.

I am frightened for those that are my age and are not preparing for the fact that Social Security will not be there for us.


Anonymous said...

Funny because I was thinking about this the other day and how it suddenly seems "popular" to be cheap. But, there are defintitely differences. There's a surface level frugality and the deeper mindset and I think that's where the differences will fall in the future. The people who use this opportunity to really embrace a new way of thinking and living will likely stay that way. It's the ones who are just practicing tips because times are tight that most likely won't stay that way.

Donna Freedman said...

Just got a press release from the National Foundation for Credit Counseling that notes 66% of Americans surveyed have "frugal fatigue."
Specifically, they answered "yes" to this option: "I am tired of pinching pennies but will have to continue that lifestyle."
Only 5% said "yes" to "I am tired of pinching pennies, and have decided to begin spending more."
I think that some people learn and others never will -- that as soon as they get new jobs or pay down their debt they'll just start all over again.

Dave@50plusfinance said...

Those that were frugal before will continue that life style. Those that have changed for the better, may or may return to old ways. Some just never learn, no matter the circumstances.