The Age of Thrift
Before I get into the crux of this blog post, I want to give a shout-out to the thrifters, the savers, the modest spenders, the sacrificers’ (if you will), the saving for a rainy dayers’, the foregoers, the high net worth aspirers, the I don’t care if you call me cheap folks, the NOT “robbing peter to pay paul folks”, the I brought lunch to work everyday folks, the Non-Joneser, the I don’t care if it’s it’s name-brand folks, the I bought generic cereal folks (e.g. Marshmallow Treasures instead of Lucky Charms), the buying a car cash folks, the 25-40% down payment on a house folks, the sow up your shirt when it has a hole folks, the consignment shop folks, I’m not afraid to go to the back of the store where the clearance is folks, the I only buy things on sale folks, the low or no debt folks, they buy what I need folks, the live a modest lifestyle folks, the even though I make a ton of money I don’t have to act and express my wealth folks, and last but not least the people who realize that you can’t squeeze blood out of stone folks. Stand up, this is your moment!
I think the economic verdict on the global economy is in, The Age of Thrift is here. Not the technology age, or the industrial age, not even the age of Aquarius. The Joneses are now officially out of power. The citizens of America and the world are getting a dose of reality that they haven’t seen since the Great Depression. Is this the Great Depression for the vast majority of folks? No, but it depends who you talk to. To be honest, I don’t know, but people are hurting out there, even the well to do are getting hammered too. Should we really have sympathy for someone who has to get a Caramel Macchito once a month instead of everyday? Should we have sympathy for someone who has to forgo buying a Mercedes Benz for a Honda Accord? Probably not.
So what exactly is the Age of Thrift? Simply, less spending more saving. Less dependency on credit, if not none. Unfortunately all the financial analyst, economic think tanks and fancy economists in the world were unable to influence the government on properly managing the economy. Even the czars of Wall Street were intoxicated by greed, wait a minute, did I just say that?. LOL I applaud the Obama administration for trying to rescue the economy from a prolonged economic catastrophe, but I feel the damage has already been done. Let me be clear on this issue, you don’t need a Phd to understand that Cash is King. Typically used as a term to highlight the importance of having the proper cash flow in a business, a household is no different. The American people are getting the message, the personal savings rate is around 3.8%. We shouldn’t be celebrating yet, Americans still have spending and debt problem. Not to mention the personal savings rate should be more around 10%.
Keep in mind that the last time the Dow Jones Industrial Average was around 7900, was in September of 2002. Everyone is asking, “What will it take to get out of this?”. No one knows (not even the $3,000 dollar suit wearing financial professionals), but it’s time to get your “thrift on”. The global economy will have to contract further before it gets back on track. We have too much stuff in the economy, and not enough people with the proper disposable income to buy all the stuff. Hopefully being frugal will become a badge of honor and not a badge of ostracization. If it hasn’t set in how important saving is, check out this video from Citigroup CEO Vikram Pandit who watched the value of Citigroup go crashing and burning in 2008. Even the billion dollar entity isn’t immune to thrift (at least on a corporate level). Lets welcome the Age of Thrift.
Citi CEO Vikram Pandit Sees a Difficult Recovery Ahead
http://www.youtube.com/watch?v=98oR4iYYAsM
Citigroup CEO Vikram Pandit noted during an interview at Wharton last week that even with government intervention, global financial markets will need years to recover.
Battling the Anti-Thrifts One Slogan at a Time
http://www.kitsapsun.com/news/2008/may/11/michelle-singletary-the-color-of-money-battling/
A coalition of consumer advocates, public-policy groups and academics wants to attack our country’s dependence on debt by creating a national campaign much like the one used to curb smoking.
It’s Time to Drop The Consumer Label
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/03/AR2009010300058.html
“We Americans are so used to being referred to as ‘consumers’ that we comfortably fall into that role and do so conspicuously,” Krohn, a retired Navy submariner living in Arkansas, wrote to me. “Imagine an epitaph that read, ‘Michelle Singletary — A Wonderful Consumer.’ Not very satisfying, is it?”
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To be honest, I'm a whole bunch of things, but mostly I'm an individual who seeks for truth in a world that has become a caricature of honesty. With so much information at our fingertips, the line between truth and conjecture has been blurred. I created this blog to offer ideas and thoughts that assist people in truth seeking. Often, what we find might challenge our personal sensibilities, but nevertheless give us a torch to pave through the darkness of information obscurity. 