Are you new to the world of personal finance? Well then, hello and welcome (I think this makes me some sort of an ambassador; gee I hope we get badges, oooo or sashes.). Right now happens to be a good time to take up an interest, perhaps even a passion in proper money management; you know, global recession, high unemployment, catastrophic national debt and all.
Friend emailed me a great article the other day about the newly frugal souls out there, and it’s got me wondering just how many of you I’ll see around later – please stay, I hear we might be getting badges!
Here are some of the key excerpts from New York Times article Credit for the Recovery:
EVERY time the United States suffers a recession, trendspotters hasten to identify signs of frugality, extol the rediscovery of thrift and find evidence that Americans are finally (finally!) kicking their demon debt habit. We crack open history books to locate the anti-debt impulse in pre-revolutionary America and troll through quotation collections for ammunition. I’ve been around long enough to go through this exercise twice — first in the early 1990s and then in 2001 after the dot-com bust. Here we go again…
…Indeed, the savings rate, which fell into negative territory in 2005 at the height of the boom, bounced back strongly. Through 2009 and thus far in 2010, Americans have been setting aside 5 percent to 7 percent of disposable income as savings. Web sites like couponmom.com and Groupon have attracted millions of penny-pinching users.
But for this recovery to mature, broaden and persist, the greatest economic force known to mankind — the American consumer — has to get back in the game.
In an economy in which consumers account for 70 percent of activity, credit is both a vital lubricant and the indispensable fuel. Money may make the world go ’round, but credit makes the gears of commerce run smoothly.
John Maynard Keynes wrote of the paradox of thrift — if everyone saves, everyone becomes poorer, because demand for goods and services will fall. Here’s another paradox: Running up consumer debt may be a moral failure and a recipe for long-term damnation, but it also contains the roots of our short-term salvation.
Are your thoughts provoked?
Mine were. In fact, here they are in convenient numbered formatting:
- It’s likely that most of the people who have embraced a newly thrifty mentality due to hardships of recession will revert to old habits once their own finances stabilize. Urgency can be a wonderful, but short lived, motivator.
- Those who have recognized the greater benefits of frugality (i.e. earning more, giving more, being free) will stick around and eventually earn their frugal badges.
- Without a deeper commitment than fear, making major changes to lifestyle and spending habits is even more difficult.
- We save and spend about the same as we did before the recession. I was cheap then and am cheap now (but am actually trying to be less so).
- It’s not a spend all or save all world. Saving without goals, saving just to have more money, spending without thought, or spending at other’s expense are all equally stupid actions.
- I’m no economist, nor am I a sorcerer. I don’t know if Keynes was right. I do know, however, that not everyone will save. That’s just a fact. Saving is difficult. It requires self-discipline and self-deprivation which both suck and due to their suckiness most people are inclined to resist. So don’t go worrying about how your saving will ruin the economy. Leave the over-spending up to everyone else; you can count on them.
Article publié pour la première fois le 01/11/2010