Consumerism and savings

[nadinbrzezinski]

Well, there used to be a time when we emphasized silly shit like... paying yourself on pay day... aka putting money in a saving's account for a rainy day. I hear it all the time... but I NEED to pay for this, that and the other... yes, yes you do. And I will tell you what I told many a Navy wife saying this... get out of debt, save up, and don't buy unless you can pay cash.

But, but what about those 500 bucks that I had to spend to fix the car? I get the same exact bills. I am not better than most of you... and we are not not rich. OK... hubby is a postal worker for crying out loud and a Union Member. Still EVERY pay day, I put some of his pay into a savings account. And when I have those emergencies that come with life... I tend to have the money to pay for them.

Yes I stress as to WHEN to pay for them, but they are paid in full every time we have that expense.

Here is the deal. Even if all you can put away is ten bucks a pay day, that is 20 a month... so it does not sound like a lot... but it is money you are not spending.

There are other things you can do to increase those savings.

You can cut down on extra expenses. Yes I still treat myself to coffee, but I no-longer buy an expensive drink, just coffee. If I want an espresso drink, I got a 25 year old machine that works just dandy at home. In other words I make it at home.

But this is the main thing... we are trained from early on to SPEND... and not to SAVE. And the national savings rate tells the tale. The US has one of the lowest saving rates in the western world. And yes, our economy depends on you living, quite brutally honest, on credit. And in the aggregate if people started doing what we do, it might hurt the economy... it is the way it is structured. So be it. But if you want some peace of mind... pay yourself every pay day... like clockwork.

That way when those 500 buckaroos that you need to spend for the car, or the washing machine or what have you, come up... you'll have some money. Hell, more importantly, you will have SOME MONEY and if an emergency arises you will be able to handle it... or pay for a vacation from savings... or have money in your older years. That does not mean that you could not lose all in a medical emergency... where we need serious reforms... but saving is a habit.

Oh and thanks dad... he taught me that one. And lord knows in my twenties I was like terrible and shit with doing that.

[SoCalDem]

1. At 18, with $100 to open an account

putting in $100 a month for 47 years @0.03% interest yields $56,832.05

Sure, there are probably more ways to "invest" that $100, but at age 65, it would be nice to get that $56,832.05 to pay off a lingering mortgage, or maybe buy a new retirement car or take a great vacation...

[nadinbrzezinski]

2. And once you hit 10K start doing more productive things with it

absolutely.

[Dappleganger]

7. Speaking of 10K

Dh received that much from his grandmother who died recently, which had been 'invested' for him by his brother in a money market account. We just got the first statement a whopping ONE CENT of a return.

Damn, the dust mites under our mattress give a better return than that!

[nadinbrzezinski]

12. Talk to a money manager, serious

[Dr Morbius]

3. What do you mean, you don't have a cellphone?

Or cable TV, or Twitter, or a thousand other things that you really don't need but feel pressured to buy?

Great post. Recommended.

[nadinbrzezinski]

13. Well Twitter is free, but that is besides the point

:-)

Great place to find what is going on in places like Iran.

[Ozymanithrax]

4. Grew up in the late 50's and 60's in Oklahoma...

I was told by my grandfather that the only things you ever buy on credit was a car and a house. If you can not afford it, don't buy it.

I haven't always followed those rules, and when I chose to be a good little consumer I ended up in deep trouble.

I now follow those rules.

Consumerism uses that natural ability for credit cards to print money, and gets consumers to spend all they can. The system must stay liquid. We no longer base our economy on trade. If Americans quit spending the economy would collapse. As little as I would want that, I call on everyone to quit spending, quit buying manufactured demands. Nobody listens.

[nadinbrzezinski]

21. We got to keep up with the Jonesses's

I know...

You grew up in a different world... and in many ways so did I.

[JackintheGreen]

5. Bully for you, I guess.

Not to be too prickly about it, but it sure as heck sounds a lot like what I do, yet it doesn't ever seem to work for me. Last thing I bought on credit was my house, three years ago. My vehicles are paid off. I haven't bought new clothes for myself in two years. I kept my car parked for 8 months because I knew it would need repairs before it would pass inspection. And it did, to the tune of $1,000. Thanks god for Obama's tax cuts.

I don't leave the house unless I need to. I don't turn on the heat unless I need to. I don't ever use the AC. I spend about $100/week on food for three.

Yeah I sure live a luxurious life. That must be what happened to my savings.

(sorry for the tone of this, but it just makes me sad when people explain to me my "failings" in such self-evident terms. Please don't tell me the reason I don't have savings because I fail to put $10 in the bank every two weeks.)

[lumberjack_jeff]

9. For a lot of people, myself included...

When times are good, money is spent as if times are good.

I've found that good times are always temporary.

Everyone has a different good times/bad times ratio, and of a different magnitude, but the logic is still sound.

[JackintheGreen]

10. No, I agree, the logic is sound

But I've always done everything "right," according to the Horatio Alger crowd. Went to school. Worked three jobs to pay for it. Busted my ass some more. Got into grad school with full support and a little stipend. Paid off my wife's car. Paid off my car. Bought a house. Bought nothing for myself. Ever. But the pile in the bank never gets any bigger.

I guess it's my fault. I always wanted to "help people" and "make the world a better place" and "live for others." That shit never puts money in the bank.

But at least I can sleep at night. That's something.

Cheers. :toast:

[nadinbrzezinski]

14. Well funny thing is that this is not Horatio Alger

my dad would not know who the hell that was... he grew up in Poland, and I grew up in Mexico.

:-)

[JackintheGreen]

19. Way to completely miss the point n/t

[nadinbrzezinski]

20. I know the point you are making

and yes, people at the individual level are doing what they are supposed to do. Time we reassess the social pressures. They come from what to consume to what schools to go to, et al. This is MY POINT.

And saving is STILL a good habit.

[Dappleganger]

6. My mom taught me about the mattress safe.

The envelope system, pay yourself first, rice-n-beans, work your way through college.

That was before college prices skyrocketed, health care prices went the same direction while jobs went bye-bye to Mexico and China (not to mention depressed wages).

So yes, what you said makes sense IF you aren't saddled with a ginormous student loan, can afford your health care and have a job.

Otherwise, it's like everybody else...deciding to pay for the electric bill, rent, gas to get to work (or bus fare) or eat.

[LiberalLoner]

8. Exactly. I am very lucky, but also very aware that many people out there (if not

literally most) are hanging on by the skin of their teeth and even dumpster diving at the end of the month for food to make it. Wages for many, many people are so extremely low, and housing/transportation costs so high, that many people work two or more jobs and still barely survive.

[nadinbrzezinski]

15. You think the wife of an E-3 had that much?

I told them exactly what I just told you. And most had all kinds of reasons. Two listened, and it was amazing just how much better they were doing after they started doing that.

Oh and yes, there were student loans too.

A lot of this is... the way we are pressured to keep up with the Jonesess.

Look simple example... my TV is fourteen years old... and it will be changed ONLY when it finally dies... not a second before...

Cars are on average fourteen years old, and they are changed when again, we have no choice.

It is a matter of making choices. Keep up with the Jonesses, and we give a rats ass, or not.

And a lot of it is social pressure to have the latest et al.

We, collectively, need to change how we do business.

[onethatcares]

11. the amazing thing is that once you have 1000.00 in the bank

for those emergency things that always pop up, they don't seem to pop up that often, which allows you to save even more. If that makes any sense.

[nadinbrzezinski]

16. Oh yes it makes sense

doing things like regular maintainance on the car becomes second hand, so the emergencies are less often.

[pitohui]

17. there's a failure to grasp simple mathematics

maybe you are of my generation, because yeah i used to do this, put away a ten or a twenty each pay day and at the end of the year you actually have something, hell, i could throw a tent in the back of the car and have a week's vacation with the savings

however, a few decades of inflation later, and if i put away a ten or a twenty each of my husband's pay day then, hmm, two paychecks a month, that's 24 pay periods in a 12 month year, that's a grand total of $240 if i'm saving the $10 per and $480 if i'm saving the $20 per...in other words, what was a great and helpful habit in olden times does fuck-all, one big car repair is way more than $480...! hell, on another thread, people were talking about $3K for vet bills, you can't even afford to save up and own a damn dog just by working hard, denying yourself any little treat other than coffee, and saving your money

don't you see the problem? middle class people used to be able to afford to keep a dog, now they're being told they're greedy if they want milk in their damn coffee

we are asking people to deny themselves their one and only life...for nothing, for peanuts, for a sum of money that makes no difference

that $20 a month i socked away in a secret place was a great idea in 1977, it's useless in 2010

i wish i wasn't so negative, and i'm not trying to be negative, but you can't just SAVE money, you have to be constantly looking for hustles to make extra money, because normal average salaries just don't cut it these days

savings are fucking useless, i look at a lifetime of savings now and it's (on a larger scale) just nothing -- you have a postal worker's pension but we don't have that, my husband works for a small company and has the small company equivalent of a 401(K), even deferring a significant percentage of his salary, because the interest rate is so low and the stock market has gone nowhere since the clinton years, it isn't enough and i don't see how it would EVER be enough -- and we are lifelong savers, in some years having saved more than 20 percent of income, which is flat out impossible for most people with children (we don't have any)

again, sorry to be so negative, but telling people that if they drink regular coffee instead of a latte, they'll be a millionaire, that's a lie that was designed to sell books, seminars, and other such bullshit, you can bet your last penny that the people selling this bunk do not deny themselves their one and only lives to save a few pennies

"the latte factor" is a hoax, $10 every 2 weeks saved on coffee won't save you -- it's the BIG stuff that kills you, the scary spiraling uptick in food, fuel, hell, even my water bill now is something i dread to open, the spiraling property tax, the fees coming at you from all sides for bullshit, the big disaster (the oil spill now would be an example, katrina would be another) that puts you out of work for a significant period of time, the accident or health crisis and somehow there are always thousands of dollars in bills the insurance won't cover, the stock market or financial hoax (how much did people you know lose to worldcom, enron, and more recent scams) -- THAT'S what is killing people's finances, BIG STUFF

it's a math problem, i can't possibly improve my life by saving $20 to $40 a month but, some people, they can at least improve their life or their mood in a small way by spending the $20 to $40 a month

just my humble opinion, and i do wish the world was otherwise, because i'm a saver by nature, but saving money (esp. with today's shitty interest rates) is JUST NOT EVEN CLOSE TO ENOUGH

in 1977 i could save up and buy a car and drive it into the ground, and because of my age and how early i got started, i bought time to save up, but a young person today? you can't just save up $16K before you can buy a car, you've got to have the car

the same with an education, in the 70s who needed student loans? we had grants and scholarships and part-time jobs and that's all you needed, i graduated owing not a penny to anyone -- that's just impossible today, kids come out of school and they're already drowning in debt, just to buy a piece of paper so MAYBE they can get a halfway decent job

the world is not what it was, and just "saving" is a waste of time, in my humble view, you have to find a way to actually get extra money somehow...

[nadinbrzezinski]

18. Add a zero

so instead of 10 you are talking of 100

And instead of 20 you are adding 240

See, not that difficult

Regardless the saving habit at times starts with ten or twenty.

For us it was this simple, when hubby made rank, the differential went to savings... so when he retired and it took him a year to find a new job... we were able to make it.

These days it is 100, or 200 a pay period.

So what you are accounting for is inflation.

But as I told a navy wife who said exactly what you said... start with 20 and add more as you can.

Amazing, as a wife of an E-3, when hubby came home they were able to take two days vacation to meet each other and all of that on savings.

[Silent3]

22. It took me until my early thirties to start spending only within...

...my means, without charging at least a few things on credit cards (typically electronics -- computers, televisions, audio equipment) paid off over time. I never got terribly out of control with spending, but before my early thirties I certainly wasn't saving anything and I was wasting more money than I should have wasted on credit card interest. For nearly 15 years now, a handful of accidental late payments aside, every credit card has been paid off in full every month.

It took a little longer to start getting serious about saving for retirement.

A little longer than that, and I was finally saving not only for retirement but for big expenses like cars, and saving to have a nice cushion of cash for emergencies. The car before my current car was paid 50% cash. My current car was completely a cash purchase.

The only debt I have now is a mortgage I'm paying that off at an accelerated rate, starting from about 50% equity when we bought our current house. When we contracted to have this house built, about two years ago, I had more than a full year's gross salary saved up for the project. The housing crash took a bite out the equity I'd planned to have, but we're still in a pretty damned good position.

To be fair, however, I'm fortunate enough to be able to make good money as a software engineer. Adjusted for inflation, it wasn't until I was bringing home the equivalent of a bit over $60K/year in today's dollars that I started to get disciplined. It takes someone far more disciplined than myself to get serious about saving and controlling expenses with half of that or less.

Still, I give myself a little credit for not getting hugely sucked into the consumer culture the way many people who earn what I make do. I drive a Subaru instead of, like many of my colleagues, something like a BMW or a Lexus or a monster SUV. Most of my vacations are "staycations" or short, cheap trips to visit family -- not skiing vacations or Caribbean cruises or whole weeks at Disney. I seem to know a fair number of people for whom practically every weekend has to be some kind of event. Those people probably think I'm a boring stick-in-the-mud, and perhaps I am, but it's sure easier to save money my way.