Many people have adopted a cash-only lifestyle in response to one financial catastrophe or another. It could be tied to a job loss that shuts off the cash flow, forcing people to take a hard look at their outstanding debts. But even though they may have put their money hardships behind them, they haven’t fallen back into their old bad habits. MarketWatch explores this phenomenon in this article.
The extended shopping spree that Americans enjoyed for the better part of two decades has come to a screeching halt, thanks to the recession, high energy prices and a seemingly unending stream of layoffs.
Frugality — and it’s defined in different ways across the socio-economic strata — is not only chic, it’s downright sensible and that makes people feel smarter, experts insist.
It appears that for some of the financially educated, conspicuous consumption has bitten the dust. They’ve adopted frugal habits such as:
- Shopping at garage sales;
- Giving up their cellphones;
- Growing their own vegetables;
- Clipping coupons;
- Carpooling to work;
- Not using credit cards;
- Shopping in second-hand stores;
- Buying store brands.
Also, people are getting rid of the junk they’ve accumulated, as evidenced by the 60% increase in garage sale listings on Craigslist. People are discovering that less is more. The trend isn’t limited to people in financial hardship, either. Many people who earn over $100 thousand have drastically cut their spending, according to Pam Danziger of Unity Marketing.
She studies the habits of people with incomes of $100,000 or more, which represent the top 20% of U.S. households. She calls those consumers “the economy’s heavy lifters” because they account for some 40% of consumer spending.
“These consumers are very drastically pulling back spending,” Danziger said. “They really are defining more precisely what they need versus what they want and the wants are coming up short.” In a recent Unity Marketing study, she said 80% of respondents agreed with this statement: “I am thoughtful when I shop: I am thinking more about whether I really need an item or just want to buy it on impulse.”
When the stock market was rising fast and the values of their homes were hitting unprecedented levels, those households felt free to spend, spend, spend because, well, they could. “Now that all that perceived wealth is gone, they’re back to having to spend their earned income,” Danziger said.
Another contributing factor to a cash-only lifestyle is the fact that credit is harder to get than it used to be. Credit card debt is falling slowly, replaced by debit and pre-paid credit cards. But is this new frugality just a passing fad?
A recent Harris survey for the NFCC, the national credit counseling group, found that of the 57% of adults polled who said they were spending less, 45% said they would jump back into the stores if their financial situation improved.
“Those people are wired like that,” said NFCC’s Cunningham. “They’re grieving over having to give up their lifestyles that they created.”
I know that we’ve cut back on several luxuries, like dining out and buying clothing. I don’t have a lot of junk lying around, as I’m the crap-thrower-outer of the family, so no Craigslist for us. This recession has reinforced some of my good habits, and discouraged me from picking up any new bad ones. I can’t ever see myself dropping lots of cash on the newest gadget, or expensive toys that we can’t afford.
How about you? Has this recession changed your buying habits?
Get the Corporate Barbarian delivered to your inbox. Click here.
Print This Post
|
|
|
|
|
 |
Related Posts -
Barbaric Book Review: The Wealthy Barber The Wealthy Barber by David Chilton was first published in 1991. It's a basic financial guide, told in a narrative style, about three young people who seek financial advice from the town barber. Yes, you read that correctly, a barber. The story follows a young teacher as he learns, along...... -
Flexible Spending Accounts (FSAs) Photo by caricaturas For the past several years, I've enrolled in a Flexible Spending Account (FSA) at work. I designate a dollar amount for the year, and my company deducts a percentage of it each week from my paycheck. I'm issued a debit card to use for medical-related expenses....... -
Beware of Debit Card Overdraft Fees Photo by Medmoiselle T A recent Yahoo! Finance article highlighted the new tricks that banks are using to increase their profit margins. Here's the link: Overspending on Debit Cards is a Boon to Banks People who use debit cards for purchases are making the banks smile. The reason is...... -
Roasted to Death Photo by lightmatter A recent Yahoo! News article brought to light the hardships of California's farm workers. You can read the original article here. A lawsuit is underway due to the deaths by heatstroke of five farm workers. The core body temperature of one guy was 108 degrees! So...... -
Un-Broke on ABC Over at Consumerist, there's a video of Seth Green that will appear in the ABC show Un-Broke on Friday night. It's a take-off on MTV's Cribs, and shows Green as he takes us on a tour of his frugal crib. Here's the link at Funny or Die: Un-Broke: The Seth......
Related Websites -
Saving for a Rainy Day Having a few easy and down to earth concepts and ideas for spending less, cutting expenses and socking money away is a good way to start putting together a rainy day fund. This freed up money can be applied to your emergency fund so that you can weather any financial...... -
Sunday Money Roundup - L.A. Friend In Town Edition. It's always great when people come visit you, isn't it? This weekend I am hosting a good friend from Los Angeles - can't wait to see what he thinks of New Mexico! On to the roundup... Thanks to Budgets are Sexy for hosting this weeks Carnival of Personal Finance, where...... -
Ten Ways to Start Spending Less Money This Week Itâs tax season once again, the time to look for all of those receipts you promised yourself you would save at this time this year. You have to scrounge around for all sorts of paperwork, and spend hours trying to figure out the tax code which is longer than several...... -
Do We Really Spend More With Credit Cards? When most people look at credit cards, they see them as just another way to pay for goods and services, like paying with a check, or paying in cash. Some people talk up credit cards because of the rewards programs and the fact that you are using someone elseâs...... -
How to Spot a Credit Junkie With the recent financial turmoil, it is clear: Our country has a lot of credit junkies. This is not synonymous with people who may have a shopping addiction, which I’ve written about. You don’t have to crave Gucci in order to have a credit problem. To some people, credit......
