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A frugal lifestyle shouldn't vanish when economy rebounds

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Wednesday, February 10, 2010

(Updated 8:35 am)

By Kara McGuire
Star Tribune (Minneapolis)

(MCT) — Frugality. That's been the buzzword of the Great Recession.

Sliding home values, stumbling stock portfolios and a shaky job market brought with them a consciousness about spending that many of us misplaced during years of consumer overindulgence.

Americans responded to the crisis by buying less, clipping coupons more and increasing savings to 4.8 percent of disposable income in December, up from near zero before the recession.

In the past year, blogs about frugality went viral. Everyone from Oprah to President Barack Obama joined the frugality parade.

Now a new term is marching through the blogosphere: frugality fatigue. But I'd argue that if frugality is done right, there should be no such thing.

Being frugal doesn't mean being stingy, miserly or downright cheap. The true spirit of frugality is to be mindful of how you use your limited resources. To be prudent with your money. To buy the best of what you need but no more. To avoid waste.

That's why the new frugality aligns so well with the growing interest in living green, argues American Public Media's economics expert Chris Farrell in his new book, "The New Frugality."

"A sustainable sensibility both saves money and does good," writes Farrell, who also writes a column for the Star Tribune (Minneapolis).

The new frugality also means embracing a "margin of safety" in your money life, he says. Spend less than you make. Have months' worth of salary set aside in a savings account. Never charge anything you can't afford to pay off at month's end. That's the new frugality.

But even more than smart saving and spending, to me the new frugality is freedom. By saving money and keeping life simple, a job loss or a drop in income doesn't create an immediate catastrophe.

Low expenses mean having the freedom to take a needed break after a layoff, or to choose a job with more than compensation in mind. The fewer expenses you have, the more you can spend on things that matter to you — family, hobbies, charitable causes.

For me, the new frugality is old hat.

I was taught early to manage credit, and I inherited a deal-seeking gene from my father. I hate waste. I hate clutter even more.

My family deliberately keeps expenses low. We're staying in our 1,400-square-foot house with three kids and a big dog because it's close to our workplaces and we could afford the mortgage on one income (with some sacrifice).

A bigger house would mean a bigger mortgage payment, more electricity to heat it, more stuff to fill it. Upsizing would probably move us farther from our jobs, making it harder to remain a one-car family.

Longer commutes and higher expenses would translate into less time spent with our children and fewer family vacations. Keeping our footprint smaller is good not only for our family, and for the environment, but also for the community because we can donate more to organizations doing good in Haiti or feeding the hungry here in town.

Living a frugal life is a work in progress, filled with compromise and contradiction.

Coming of age in a keeping-up-with-the-Joneses era, it can be hard to shun super-sizing for sustainability.

I spend hours per month poking through real estate listings because I still can't quash my dream of a Brady Bunch house on a super-sized lot, even though I know staying put is a good choice — even with the $6,500 repeat home buyer tax incentive.

I occasionally confuse frugal with cheap. And too much focus on saving money can mean wasting another finite resource: time.

I know living this way is impossible for some. It's hard to raise a family on a single income these days.

Many people are locked into high expenses, and most won't walk away from an overpriced mortgage, even if it eats up most of their paycheck.

But if you can afford to live frugally, the troubles of others in recent years make it crystal-clear that living frugally is a smart choice.

Accompanying Photos

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rmacz

February 10, 2010 - 9:39 am EST

This must be an Obama reelection ploy and blame Bush.....HA!

AgnRepub

February 10, 2010 - 10:50 am EST

Obviously this article has more to do with politics than reality. If this "journalist" knew anything about real life, she would know that materialism is what keeps this country(and the world) running. You know how many more jobs there are because of people not being frugal? When the economy rebounds, people need to go back to spending frivolously. The longer people are frugal, the more prices will go up, and more jobs will be lost. Especially since America is becoming a service oriented economy, due to stricter government regulations on industries(and if Obama gets his way with Cap and Trade, it will just perpetuate the problem by driving the remaining manufacturing companies out of the country).

And do you know which jobs would disappear first if everyone became more frugal? It would be the low-paying, entry level jobs, which would push more people into poverty, which would increase the amount of people that depend on the government, further increasing the "welfare state". This, of course, is a corner-stone of Progressives(i.e. Obama). So, to reiterate my original statement, this article is definitely driven more by politics than anything else. Doesn't surprise me though as no one can argue that the News and Record doesn't lean just slightly to the left.

As rmacz said, I am sure that this is all Bush's fault, even if the percentage of the debt to GDP was consistently lower while he was in office than any other President over the last 25 years. And even if the percentage of the debt to GDP under Obama is almost 50% higher and increases by the day.

kurgun

February 10, 2010 - 12:42 pm EST

I was frugal way before the recession hit. Prices for everything in my opinion are entirely too high. Back in the early 90's about 1991 before what they called the new information super highway, now the internet were projections. Those projections were false in every way, they projected with the power of this information super highway that production would increase, morale for jobs would improve and everything would be very affordable. I'm seeing just the opposite in every aspect, the government is partially to blame for all their outlandish spending. The others to blame are the corporations that insist on making the quickest profit imaginable. Then profit loss comes along because none of the companies that saw great success during the other eras of history showed these young companies how to handle loss. So now the new companies solution to profit loss is simply lay people off because these corporations don't have the right accountants balancing their checkbooks. See as soon as someones lifestyle is interrupted, or some fat cat learns they won't be getting that huge bonus they always use to do really stupid stuff, they simply get rid of employees so they can continue doing whatever stupid thing their little lifestyle demands. These businesses are young and have no desire or vision to build their business, they just look for the quickest way to profits, and when that doesen't happen for them, their backup plan might be to sell out or cut employees, new businesses have no concept of what it takes to be a business these days,

annetterachlin

February 10, 2010 - 12:42 pm EST

My depression-era parents were very frugal when I was growing up. Noone ever writes about how their actions affect their children, but my parents behavior negatively impacted me throughout my life. I couldn't buy clothes like my classmates did, we didn't take vacations like our neighbors did, I couldn't have an allowance like my friends did. This led to feeling inadequate and being ostricized, even though my father had a very successful career and was wealthy. Now in their 80's my parents are still self-sufficient and have enough wealth to take care of them. But at what cost. Their children don't have much to do with them because of the way the way we were treated when we were younger. Their grandchildren don't have anything to do with them because their cheapness extended to never doing anything for their grandchildren. Yes, love isn't based on what people "do for you" but when love is withheld in the name of being frugal, there is bound to be repercussion later.

speakup2

February 10, 2010 - 3:10 pm EST

You have nothing to do with your Parents because they didn't buy you everything that you wanted?...If your friends wanted nothing to do with you because of what you didn't have..I would say that was a Blessing. They weren't true friends anyway..What a Brat..

As far as spending to make the world go round..That is all fine as long as people actually HAVE the money that they are spending..Too Much Credit has ruined this country..The Repubs want all the tax payers to use credot cards, the Dems want all the tax payers to fund their credit cards...The Tax Payers can't win...

I am still reelin' over this person who hates their parents(and taught their own children to hate them as well) because they were frugal..You need to get some serious help..I hope that you actually paid attention, because you will need to know what they know here in the near future..(^_^)

chieftp

February 10, 2010 - 6:01 pm EST

I'm thinking if you don't want to have anything to do with your parents or grandparents, it's probably not because they won't give you money or buy you shiny new stuff. my grandparents never had much, but I would not have traded any of them for all the money in the world. nothing wrong with being thrifty and careful with whatever you have, but then there's just plain ol' being a stingy tightwad. and that's most likely just one irritating character flaw that these folks have.

aliluyya

February 11, 2010 - 11:23 am EST

Do you realize, annette, that your post makes you sound like an ungrateful, whiny brat? Well, if you didn't, here's your news flash. Money does not equal love. Love does not equal money. If you wanted to buy clothes, why didn't you go out and make some money yourself? That's what I did. You better believe I didn't want to wear the Wal-Mart clothes my mom wanted to buy me, so I made a deal with her: You give me the $ you would have spent and I'll make up the difference and get what I want. Problem solved, character built, lesson learned. You don't even have to get a job, just help a neighbor with yard work or do some babysitting once and awhile. The point is, STOP WHINING ABOUT HOW OTHERS WRONGED YOU AND DO SOMETHING FOR YOURSELF! That would teach you some character too, in which department you seem to be sorely lacking. I mean, really?? Do you expect people to feel sorry for you? Plenty of people grew up poor, and it's a great way to learn the value of a dollar. Grow up already!

ginandpool

February 10, 2010 - 9:40 pm EST

In the Bible the first example of frugality is in Genesis Esau gave his inheritance to Isaac for a bow of soup. Like Esau we use our credit card like Esau to get what we want now, not latter when we need it. Thus paying interest on what we get way into the future. The credit card is a form of slavery. It is a form of getting things before we can afford them. Like a child we want things we want now not when we can afford them. By waiting till we can afford them we will be better off. By being frugal we will be better off in the future. We have to buy things no matter what. so the same amount of buying will be there but it wount be on credit. The Bible says take a lesson from the ant people. They store up food for the winter. Take care of what you have and you may get thru the winter like the ant.

chieftp

February 11, 2010 - 1:23 am EST

"the bible says......." oh lordy, one of those people...

the bible also says to "give no thought for the 'morrow," and to not "lay up your treasures on earth where rust and moth doth corrupt." so which is it?

laserguidedloogie

February 11, 2010 - 8:03 am EST

Living below your means is one of the hardest, yet most useful things I have ever learned. Get rid of your credit cards, NEVER buy a new car, and try to only go into debt for things that will appreciate in value or add value to your life (like a house or education).

Also, read the book "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko.

Learning how to manage your personal finances is one of the most useful things that you can ever know. Sadly hardly any student graduating from high school learns these valuable skills in school. Usually they only learn the harsh lessons about personal finance the hard way, after they have made some bad mistakes.

I suppose all that multicultural and "hate whitey" dogma is more important to the social marxists who run schools these days.

Ken
http://www.LaserGuidedLoogie.com

aliluyya

February 11, 2010 - 11:13 am EST

Everyone else can spend them self into an oblivion of debt, but I never have and I never will. True frugality is a character trait you have your whole life. It focuses on value, not cheapness. I've always put a portion of my paychecks into savings, actually now I put my savings in a high-interest money market account from my credit union. I used to have my savings at Wachovia, but they never treated me with respect, so I punished them by taking my money away, and I am so much better for it. America will never fully recover from this recession if we don't build a new economy that's not so largely based on consumer spending.