Frugality is bad for the economy
“Frugal Families aggravate nation’s woes”: so trumpets the Wall Street Journal, with a picture of a middle-class family at their kitchen table. Read it here!
http://online.wsj.com/article/SB123120525879656021.html
Honestly, I can hardly see how learning to live responsibly can, in the long-term, hurt our country’s economic health.
My personal situation: as I said in an earlier post, I am trying not to be embittered. I have always been pretty responsible, yet I too lost about 40% of the equity portion of our retirement accounts. So (in the bitter mode), I missed the good times of consumption, but am subject to the same downturn as everyone else!
Would it be true that the habitually frugal (like yours truly) would NOT be aggravating the nation’s economic woes? I am going to be spending the same as last year. Plus, we’re planning on the following: some new slipcovers for chairs, a family trip somewhere, perhaps Boston and New York City, an expensive implant for my tooth (that should help the oral surgeon from his downturn), and Mr Frugal Scholar is itching for a new-to-him expensive bicycle (that should help someone who wants to/has to sell his bicycle).
Dear readers: no doubt this will be picked up by all the big blogs. But let this little blog know what you think!
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4 comments:
Please, no offence taken! I just get fired up when I hear about other people being stupid and we have to clean up the mess ( I lean toward the conservative, rather than liberal side, which I know is usual for people in education). I was laid off from work (in the first round of budget cuts in 2007) and can't find a full time job - no one will hire me because I cost too much now. I make about what that lady made, but I have to actually work for my money. Hmmm...
I enjoy your blog, as I am also in education and we seem to read the same articles each day! I have today's current article sitting right here - I tore it out of the paper this a.m.!
Good luck with the job search. Today my dh and I were told that a library program we were supposed to lead was cancelled owing to budget cuts (after we did a lot of the prep work . . . grrrr). But so far our main jobs are safe. Again, good luck to you. And many thanks for your comments.
I cling to my belief that if banks and financial institutions had retained their standards (i.e., lent only to people who could be expected to repay the loans) and most Americans had lived within their means, we would not be in the present predicament.
When you're not in debt, you have more disposable income. Every dollar you charge on a credit card is worth that dollar less the carrying charge. In other words, if you're paying 12% to a credit card, every dollar that you spend through that card is actually worth 88 cents. That's how much credit-card debt cuts your real buying power. Consequently, when you're free of debt you actually have that much more money with which to buy things: your dollar is worth 100 cents.
Obviously, the effect of huge mortgage payments that started out beyond the means of most buyers and then blew up to impossible proportions is to reduce consumers' buying power. How hard is this to comprehend?
Consumers who are not strapped with debt are in a position to buy whatever they need -- and want -- whenever they want it. Therefore, IMHO, those who say that frugalists are responsible for the nation's financial crash are dead wrong. To the contrary: those of us who live within our means are probably the only people who can still afford to buy Uggs and shop at Levenger's.
@Funny--Glad to know I'm HELPING the economy. This is something I keep trying to explain to my debt-ridden acquaintances: that if you're not in debt, you have MORE money to spend, even on STUFF.
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