Monday, February 09, 2009

Bold Money Management in Tough Times

Lately I've been wondering if it's better for all of us if I cut back and spend as little as possible, or continue spending as usual, or do what I can of next year's Christmas shopping now in order to spur the woeful economy. So far my own income has held steady in these trying times, so it's not a matter of having to decide between food and prescriptions, the situation that many are encountering.

Of course my decision is quite small-scale, but if everyone who could made an extra purchase or two now, it seems to me the economy would be quite stimulated.

So far,though, I've instinctively been cutting back. Most everyone seems to be doing the same thing, whether from need or caution. Not sure that's the best approach. Certainly it's not the boldest approach.

What do you think?

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mamie said...

I find myself cutting back, asking if I really need something or just want it. But since I'm somewhat of an over-doer in everything, I tend to spend money on food just to get some spending in. Whole Foods, I'm sure, is thankful.

I think also that I feel guilty right now about spending money on things I don't really need. As in, why should you get this when others are (fill in the blank). I deal with this by making donations to the Salvation Army and the Food Bank, and it assuages the guilt.

My relationship with money has always been very healthy, and I never felt that there wouldn't be enough until now. I'm a little freaked by that.

Peggy Payne said...

You're bold to be giving money to charities at a time when you're freaked about it, Mamie. That still seems wonderfully healthy to me.

Greta said...

Our income, knock on wood, has remained steady. I think we're being frugal b/c of not knowing what the future will bring. For instance my health insurance may be requiring larger co-pays. Your question is excellent. I've considered buying Christmas/birthday gifts now while the prices are reduced. But then, What if?? It reminds me of an ongoing dilemma: is it "greener" to use plastic or paper? I couldn't manage that, so I've switched to my own totes...when I don't leave them at home or in the car! I really do wonder what we individuals can do to have the greatest impact on both our environment and our economy.

billie said...

I try to cut back on purchases at bigger "chains" and keep using self-employed, small businesses as much as possible.

At Christmas we did all our Christmas shopping in small local shops. Every single shopkeeper seemed genuinely moved by our purchases, and profusely thanked us.

I think a shift back to local is the right move in the big picture, plus it just feels right to support folks who are working hard locally to stay in business.

I've been trying to view this whole economy thing as an opportunity to make changes that are for the better, not just cutting back to make it through this tough time and then go back to business as usual.

It's interesting to think about it as a way to grow, for me, anyway.

Peggy Payne said...

Billie, your local strategy is excellent. That seems to me an ideal answer. Also long-term.

Greta, I'll be interested to know what you decide about advance Christmas shopping. I'll let you know what I do.

I'm also affected by my plan to sublet in NY in October. I need to save up for that--my 60th birthday professional excursion.

K.B. said...

We're spending our money at stores we want to see stay open. It's pretty much as simple as that. I've always felt something of awe whenever going through the business sections of a town or city. All those hopes and dreams, out in brick and mortar for people to see. So it always made me sad to see business closed: the manifestation of a dream that died.

So this is just an extension of that.

Here in the UK, you'll periodically see pictures in the paper of rather forlorn villagers holding up signs in front of a closing pub, which usually read things like "Save Our Pub". One can't help but sometimes think that if the village had gone into the pub and spent their money there, they wouldn't be facing the loss of the business.

Anyway, in some ways, we're very very lucky. We don't have rent or mortgage at the moment. I can't work at the moment, being on a visitors visa, but my partner's job provides for both of us. We're lucky enough to be staying with family and friends while traveling about.

It'll have to end sometime, but in the meantime, we're enjoying it, and trying to spread it around a bit.

Greta said...

Peggy, I still haven't made a decision about Christmas shopping now, while prices are low. The problem is that we're in a self-imposed 6 months of only buying "necessities."

Anyway, I just read this and am pasting it here since it was an online piece to share:

"A poll released on Thursday showed 86 percent of Americans have cut spending or changed their saving or investment pattern, though just 30 percent say the thrift was driven by actual financial hardship. The rest, 56 percent, cut back because they worry their financial situation may get worse in the future, according to the national survey by the Pew Research Center for the People & the Press."

Kevin Hassett, an economist at the conservative American Enterprise Institute:
"So the right answer is to save, but that's bad for the economy," Hassett said. "Clearly what's good for the individual isn't necessarily the thing that is going to give us the best GDP number this year."

In other words,(my words, not theirs) it's tough to know which way to go!

Peggy Payne said...

I think you said it best, Greta.

Ideally, those who are in good financial shape now would keep spending, and the rest hold back. That seems like a good financial plan for any time. Kind of a no-brainer, really.

Peggy Payne said...

K.B., I share your sadness at seeing a business go down. My parents were in the retail clothing business. I do see stores as brick and mortar dreams; not everyone does, I've been surprised as an adult to learn. Maybe that's a result of the impersonality of chains.