Tuesday, December 15, 2009, AM | Leave Comment
A time comes that an increasing number of people get tired of routine things to do, one of which is shopping. Especially in today’s rotten economy, when you do shopping just for the sake of shopping, because you have nothing much else to do, you must change your habits. The general populace is being hit hard by job losses, and are strapped with debt. Consequently, millions of Americans are changing their free-spending ways.
Most folks have come to realize to tighten their financial belts. Financial experts report that the brutal economic downturn has reduced the value of stock portfolios and home values of most and made the once-easy credit tough to come by. Even some Wall Street tycoons have been affected by the downturn and are consuming less conspicuously.
The national savings rate which lingered around 1% in 2008, has soared to 4.4% so far this year and it seems to grow a little more in the months to come. All the data tell the same story. People who spent every dime of their disposable income two years ago are now saving and paying down billions in credit-card and other kinds of debt.
Even the rich have shifted from shopping at luxury stores to buying from discounters. Thus, they are saving with more vigor and tenacity than economists have seen in decades. Now when friends get together, they talk about money, some sweet deal that they have found or what they are investing in.
In the past, you could borrow against your home equity to finance your daily purchases. In that scenario, a couple of hundred dollars of pair of jeans seemed cheap. You were paying only a few bucks a month by adding the purchase price to your home equity loan.
In a Nutshell
What’s unclear is whether this new-found frugality will disappear as soon as the credit is loosened and start flowing again. The answer could determine when and how the nation pulls itself out of its current discomfort and uneasiness. However, in the mean time, let us hope we all keep the savings rate as high as our finances will allow and not go back to the free spending days of the years gone by.