Posts Tagged consumption

SqueakyMarmot

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.

• Of Tapout T-Shirts and Other Free Advertising Photo by bdjsb7 My son is a diehard UFC (Ultimate Fighting Championship) fan, and he's actually gotten me hooked.  I mean, who doesn't love seeing two guys beating the hell out of each other?  He wanted to get a Tapout t-shirt, so we headed on over to Dick's to get him sized......
• A Game of Inches Photo by Mulad "Annual income twenty pounds, annual expenditure nineteen pounds and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Mr. Micawber, from David Copperfield There is a narrow margin between victory and defeat; between joy and misery; between savings......
• Down to One Cup of Coffee Gunjan Karun I'm almost there.  I'm down to one cup of coffee per day.  What a long day it is!  I'm almost ready to break the caffeine addiction that started in high school.  But I have a feeling that I'll stick to the one cup for a little while,......

• Warning Sign: Are You In Too Much Debt? Why Do We Spend? I suppose the first step to understanding why we find ourselves in massive debt is understanding that we are in a country where consumption is king. How many times have we heard that our economy is a consumption economy? The trade deficit really doesn't matter! And......
• Ten Warning Signs of a Normal Financial Life If you ever listen to Dave Ramsey, you know that he acknowledges that what he teaches is "abnormal" compared to the "normal" financial behavior we see engaged in by a substantial majority of American consumers.  I don't agree with everything that Ramsey preaches but his statements about normal financial behavior ring......
• Reasons Why it is More Fun and Logical to Monitor Net Worth not Credit Scores Today's post is about tracking your personal net worth and your credit score as an enjoyable activity and as measure of financial success.  This article addresses the relative merits in a personal financial plan of monitoring your net worth as compared to your credit score.  In that sense, this post can......