I went to the doc yesterday (nothing serious) and it became something of a confessional during my treatment. Hearing I’d written Your Money or Your Life he at first was dismissive (oh i read all those money books), then curious, then confessional. He’s been a wise tighwad for years (his ex hadn’t been, ergo ex) but his nest egg lost half its value in the stock market plumet. Which is why he was treating me rather than fishing – he can’t afford to retire. A recent AP article (link below)says that the new frugality is the new normal by necessity. Even though in prior recessions spending bounced back with vigor, this time people put themselves too deep in the hole to have much to spend even when/if the economy rebounds. This recession is a wake up call, a reset button, and even after the recession, predictions according to the article are that spending will rise to no more that 86% of prior levels.
Part of the problem is evident with my doc. Even though prudent, he’s a Boomer and he needs to work and to make his money last a lot of years. Others were not so cautious. They not only lost 40-50% of the value of their nest egg, but they went into debt and treated their homes like ATMs to participate in what then seemed like the new normal – rising markets and housing prices meaning we can spend with no thought of tomorrow.
It’s a hard time. It’s hard to face that a way of life you thought was normal and predicted would last stops being viable. It’s hard for the economy to face that consumers might not bounce back, that some enterprises may not be viable anymore. This require a major rethinking on part of consumers and businesses. There will be success strategies – but what? Creative, happy frugality will certainly be a consumer strategy – but what about producers?
The forest is often healthier after a fire burns out the dead underbrush. Let’s hope we all survive by living well within our means. And let’s hope the new economy is wiser than the old.
Here’s the link to the AP story http://news.yahoo.com/s/ap/20090907/ap_on_bi_ge/us_meltdown_new_frugality