We’ve been told that the recession ended last quarter. That we’re finally having economic growth. Thus we should all go out and stimulate the economy by spending money. In truth, it really is the only way to get us out of our economic rut.
But the reality is, are we really going back to our free spending ways? I can’t believe so. When I started LivingAlmostLarge in 2006, I knew I had been over spending for nearly a year. I had no financial grasp on our spending habits, and while we were saving a good chunk of our income, we were also wasting a lot too.
I decided to get serious and see where our money was going. And boy was it eye opening. We were spending upwards of $1k/month eating out, $1k month on entertainment/groceries. We weren’t creating debt, but we could have been saving that money. Plus with my DH starting a part-time MBA program, we really needed to get serious about paying as much of it in cash as possible.
So we changed. We began to follow a budget again. We didn’t budget every dollar and we didn’t eat a “rice and beans” diet, but we curbed our spending. In 2007-2008, I started coupon shopping as I a rise in our spending. It was due to inflation rather than overspending. The coupon habit has gone down in 2009, but I still keep an eye on sales and our budget.
With the recession, while we didn’t cut our spending in preparation for a job loss, we prevented ourselves from spending more. The raises we got were saved in anticipation of murphy’s visits. Talking with others, they were cutting their spending finally.
But now with the recession over will they go back? I doubt it. From talking to other people, they aren’t ready to recover and assume life can go back to pre-2008. Rather, most of them will continue cautiously by not cutting their budget more, but rather sticking to it.
I think that we’ll continue on this path at least till 2010, then reevaluate our situation. If things get better, it’s possible we could make changes to our lifestyle that are “luxuries” not necessities. Like what? Hiring a maid, getting data plans for cell phones, buying more organic food, etc.
Do you think the recession is over? Are you going back to your former lifestyle? Or sticking to your recession budget?
6 responses so far ↓
1 George@Moneylounge.net // Sep 28, 2009 at 11:05 am
It’s good to know that we are having some economic growth again, although it will still take some time for most of us to recover from it. I think that many will still stick with a budget.
As for me, I’ve always been fairly frugal, but due to the recession, I had to postpone two trips I was saving up for (needed the money elsewhere). Hopefully recovery comes sooner so I can start saving up for them again.
2 Thinkingabout it // Sep 28, 2009 at 11:09 am
Not until the unemployment rate is half what it is would I consider upping my lifestyle. I’m too vulnerable to job loss and subsequent inability to get hired anew. With part time contract work there is no unemployment benefit possible either. I have 11 months expenses saved and am working to build up 2 years.
3 Meg from FruWiki // Sep 28, 2009 at 12:21 pm
Our situation doesn’t really have much to do with the recession directly. We changed our lifestyle because we knew we needed to in order to get out of debt. And when we get out of debt I don’t see us changing things dramatically because then we’ll be looking to save up money for retirement. Fortunately, the frugality skills we’ve learned over the past couple years work as well for saving retirement money as they do for paying down debt. Maybe we’d change if we felt like we were really making sacrifices and just for the money, but we’re proud of what sacrifices we’ve made for other reasons and we actually enjoy our lives more now than before because we’ve found so many alternatives to our old, more expensive forms of entertainment.
4 Bucksome // Sep 29, 2009 at 7:49 am
I think technically the recession is over, but it is not over for a large number of people who are still unemployed or will become unemployed in the next few months.
I don’t plan to go back to my old ways because I’m committed to living debt-free and working towards that goal. However, I think American’s in general will spend more although I think my generation, the boomers, will start getting serious about saving and building wealth in preparation for retirement.
5 Meg // Sep 29, 2009 at 11:13 am
The average person CAN’T go back to his former spending ways, regardless of desire or intent.
Americans have been financing their lifestyles with credit cards and home equity for years. And since card companies are slashing limits and home equity has largely dried up for many people, Americans will now be forced to live within their means to a large degree.
6 LAL // Oct 5, 2009 at 11:36 am
George, I too spent money on other stuff instead of previously saved commitments, the biggest being home repair.
Thinkingaboutit, very conservative outlook.
Meg, that’s a good point. I hadn’t realized I had changed either.
Bucksome, sorry to burst the bubble, but most boomers I know don’t have the time to save for retirement if you look up definition of boomer. But they are saved because many still have traditional pensions to bail them out.
Meg, that’s a good point that we’ve been financing our lifestyles.
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