Exploring different ways to keep more of our earnings is a practice that I have come to enjoy as a game - a proposition that is win/win for us.

We use credit cards, and will take advantage of a "6 mos. no interest same as cash" promotion in a heartbeat, but when the date arrives to pay up or pay interest, the amount is paid in full.

I hope that after the economy has stabilized, many will indeed come to realize that "things" are not what is really important for happiness, and will come to be at ease and enjoy a simpler and less expensive lifestyle.

Some people will return to their free spending ways, but there are several factors that will keep spending in check:

1 - Many people are unable to ramp up spending due to job loss or pay cut.

2 - In the same way that homeowners felt rich when housing prices were increasing rapidly, they will feel poor as their home equity continues to evaporate. There is a huge percentage of people who are upside-down on their mortgages. People aren't going to go out and buy jewel encrusted clown noses when they owe the bank 50K more than their house is worth. And that situation is going to last.

3 - With the blow to housing prices and 401ks, working people will need to boost their savings to repair household balance sheets/retirement savings.

4 - The next generation is learning their lesson, too. There are millions of kids whose families are currently going through foreclosures and bankruptcies. They are having to move, leave schools and friends, and participate as their families cut back on everything. For anyone experiencing this directly or indirectly, their spending habits and attitude towards debt will be affected for decades to come.

The above is why I don't believe anything like a robust recovery is coming any time soon. The consumer (70-ish percent of the economy) is tapped out, unemployed, having credit lines cut, still losing home equity, needs to boost savings, etc. If consumer spending stays flat or only increases slightly, it will be next to impossible for the remaining 30% of the economy to create the sustained 3% or higher GDP growth we need to bring the unemployment rate down.

@AdvocatesDevil: Nah, I'm in the same boat. Found out about them giving mortgages to dead people long after it all ended. Sigh, me and my cheapskate ways, i'm always late for the parade I guess.

Well of course they have. Why spend what little money you have at a store or business that's going to rip you off, piss you off or even try to make you sick (I'm talking to you, CVS). I certainly won't. The businesses that do this are going to lose customers hand-over-fist to the ones that treat their customers right.

If there are any left of the latter, that is.

@Duke_Newcombe sees what you did there...:

It's the first for me that had any impact.

I am one of the fortunate that had a good job and actually got a better job in this craptastic environment. My income increased 30% overnight. I coupled this with a 33% decreased in rent ([by getting a roommate] Boston is expensive living solo).

It is a freaking windfall. I have lived no different and opened some online savings accounts but pretend the money does not exist. I hope to keep putting it away. Hopefully the banks will use my savings to lend and increase the money supply.

Meanwhile, I will continue to return cans for the Nickel and purchase whatever is on sale.

@Paladin_11: I agree that consumerism was raging rampant. I keep hearing that Blu-Rays and HD/LCD TVs are so great, but frankly, my current ordinary DVD player and TV work just fine for me. I really don't have to see an actor's every wrinkle. I seriously doubt I'll replace either until they break.

@dragonfire81: Depends. With the new credit card protections going in, credit may never be quite as easy as it was. I know I'm even canceling a card because they are instituting a yearly fee of $50. The card only had a limit of $2,000 anyway, so its not like I'm losing much and the credit hit should be minimal.

I can about guarantee you some of them would go back to their free spending ways if they suddenly became able to access credit again. Some wouldn't, but many would.

Not to nitpick, but this economic event would be the third not the second. 1981-1982 had around 8% unemployment rate and a 13% inflation rate. What we're at is around 10% unemployment with 0% inflation.

We've changed the way we spend money (did this back in 2007) such that we don't use credit card, we have no debt except for our mortgage, and we use a spending plan/allowance system. Do we spend less money? Not that much less, we just spend it differently, like last year I bought a car but I saved up and bought it with cash (and it is a nice car). We take vacations and travel, but again we save up and we set a budget.

I am actually more loyal to companies and shops that treat me well, I will gladly pay more for goods at my local Mom and Pop store where the clerk knows my name and knows what I there to buy. Sadly, most of the big comnpanies, with the exception of Nordstrom, seem to be treating me worse so I have less loyalty for them.

@sammy_b: I don't think it's bad of you at all. You say you saved up for it - sounds like it should last you for many years, and you're not going into debt to pay for it. I think selective shopping of quality items is smart.

I've lived frugally while in high school and college and even now to some degree, but I can finally afford the nice, beautiful, quality items that I've always wanted (a $200 watch, for example). To be fair, I saved up and researched, it - it wasn't an impulse buy, but it seems while the rest of the world is hoarding their pennies and shopping at Wal-Mart, I finally have the budget to buy nice things and I'm enjoying it.

Is that bad of me?

@diasdiem: Same thing is true of one night stands (at least, some people regret them).

Sorry...was that a bit too Cylon-ey?

So now it makes more sense than ever to buy quality products that will last, not because they're on sale at Mall Wart.

It's a bad economy. It ain't the Great Depression, not even close.

@Applekid: Exactly and it's more than just that for me. Companies that historically had a good product - who now have shipped production overseas to a bargain basement factory to line their pockets - have lost my business. I don't care if it says Samsonite or Crapsonite, if it's all made in the same place and the one is charging $200 more is it any wonder I'll buy the cheaper.

For me loyalty isn't just falling so I can save a buck on one trip to the store. Loyalty is falling so I can save many times over by buying products that last.

For instance, with food: no more brand names, period. So far in the last three weeks we've tried generics for everything, and liked them just fine. In fact, we don't even shop at the big premium grocers anymore... Food4Less (part of Krogers) and Aldi.

Here's the kicker... since now we're happy with the food quality of the generics, what reason would we have to go back to premium brands if / when our real income increases? Even if they offer 20 or 30 cent coupons as a lure, I'm still saving nearly 50% buying generic without a coupon or a store loyalty card.

It's going to be dark days for retail soon.

Speaking of which, Bad Predictions by Laura Lee looks like an entertaining book. I like this one:

Before man reaches the moon, your mail will be delivered within hours from New York to Austrailia by guided missiled. We stand on the threshold of rocket mail.
Arthur Summerfield, U.S. Postmaster General under Eisenhower in 1959

@pb5000: Yes, but such a large part of our economy is now based on our irresponsible ways, that it will have a short term impact on our economy. Long term (if people keep it up), I think it will help. The problem is that it probably won't last long term.

The public at large has noticed their short-sighted pocket lining adventures.

Does. Not. Happen.

Sure, there will be a certain % who do not go back to buying stuff willy nilly. Good for them. Most of them however will go back to buying stuff, but they will be less likely to overspend or buy excessive crap they do not need. Some others however will just return to their old ways as soon as they are out of this particular hole.

However, I think the biggest permanent effect will be felt on those who just were entering the real world as the crisis was taking over. They are more likely to be more circumspect with their spending long into the future. Especially if they saw what happened to the near-retirees who now cannot retire.

Others... unless their portfolios were permanently damaged, they will slowly drift to their old ways.

@dragonfire81: Not true of everyone. I have a very high FICO score, lots of credit cards and no credit card debt. My frugality has nothing to do with my available credit - I have lots of it. I've just learned that there is great freedom in having no debt since paying it all off last year.

Companies would never base their business models on ever increased spending, oh wait.

Oh and how in 2007 finance had solved the problem of housing busts. We were in a permanent economic boom back then, you know, just as we were during the the permanent economic boom in the 90s.

And how by 2042, we'll have a hispanic majority in America. Cause nothing between now and then will slow the influx. Nothing!

*sigh* Why is so much attention paid to such short-sighted future predictions?

@Paladin_11: I was in Mexico last week and two seperate street vendors urged me, "Buy some stuff you don't need!" I told them "But I'm not a typical American!" but I don't think they got it... or cared. Can't blame them for wanting my money but I'm super selective nowadays.

Too many past assumptions I had about the country, economy and my own financial situation have been proven false. I'm not going back. This isn't a matter of temporary belt tightening. Maybe it helps that my parents grew up in the great depression?

@Paladin_11: Investment is like spending, but without the product, and you get more money back. Americans used to get behind that initiative.

Now that many of us know what it's like to be laid off when it seemed IMPOSSIBLE to those of us who work hard and had bosses that were very happy with our work and appreciated us, I prefer the satisfaction of no debt to buying a bunch of crap. I still like to shop but am far more selective than before, and savings are now imperative to me.

Did you ever meet someone that lived during the great depression? Many of them are very frugal. They got hurt badly enough that they never, ever, forgot the lesson, even after it no longer applied to them.

This economic event is the second only to the great depression which, if you use unadjusted unemployment as a guide, were 3/5 of the way to.

Uh...

oh - and Americans not going back to normal? I dont buy it.

why less loyalty? I'm more loyal to the companies that have always treated me right - even when they were not desperate for cash. The companies that "suddenly" became nice and accomodating - since they now have to "earn" our business - I dont feel for so much.

...until credit cards and loans are once again super easy to come by. Most people don't become frugal by choice, they become frugal because it's the only way for them to get by.