How to get out of this financial mess.

[swampy]

This economy should be good for trades people like reupholsters, cobblers, sewing machine and pattern companies, small appliance shops, etc.

I've never had a maid or gardner. What's with that? Not to say that I haven't hired someone from time to time to do the heavy work once or twice a year. I'm glad my son, who can afford to hire a yard man, still finds satisfaction in pushing a rotary mower and washing/waxing his 13 year old Honda.

Another thing that some people do to "save money" is buy cheap. Like furniture. Better to save your money and buy good furniture that will last and can be refinished or reupholstered. I still have prized pieces and accessories that are over 50 years old and went through 22 moves that I'm now shipping to my son and his family because I'm down sizing and he has purchased a home and started a family. We just "swapped" dining room suites. I took his apartment size table, chairs and side board, and shipped him the table, 8 chairs and hutch that I inherited from my grandmother. I don't entertain that much any more and only need a table big enough to do jigsaw puzzles on. My DIL is thrilled with her new solid cherry dining room suite with the rush bottom chairs.

[Mac1337]

kj wrote:
I agree with rog. We're going to have to get used to having less. I don't think that's such a terrible thing, myself. kj.

I am always amazed at how some people are so predisposed to the idea of going small and doing with less. Looks across America and see for yourself if thinking small could have made the country what it is today. Thank God our forefathers weren't thinking like this. We'd be living in huts, riding mules and burning wood. All signs of small and frugal living.

[swampy]

I don't see a correlation in 'going small' and 'thinking small', DK. I think our modern technology and life style was the result of individual creativity, sometimes born of a need to find an easier way to do things or solve a problem. Simple living doesn't necessarily preclude creative juices.

We've had many advances in lifestyle and technology born out of hard times and circumstances. War, disease, draught, famine are examples that engendered discoveries and inventions that have made our life better.

[Black Landlord]

[Mac1337]

swampy wrote:
I don't see a correlation in 'going small' and 'thinking small', DK. I think our modern technology and life style was the result of individual creativity, sometimes born of a need to find an easier way to do things or solve a problem. Simple living doesn't necessarily preclude creative juices.

We've had many advances in lifestyle and technology born out of hard times and circumstances. War, disease, draught, famine are examples that engendered discoveries and inventions that have made our life better.

Well, that is certainly the reasonable way of looking at it. However, there are wide segment of activists who believe that there is virtue in almost a nomadic lifestyle. Near zero pollution, energy use, impact on environment etc., etc. They may be in extreme minority but they drive public policy. School cafeterias are removing trays to become more earth-friendly. Turning this cockamamie idea into school policy shows a huge influence. So now you have to balance your food while standing in line. I am not against conservation but there seems to be no floor to it. No amount of conservation seems to be enough for some.

[Ted King]

I hear a lot of talk about doing virtuous things like doing with less but the thing is that what may make sense on an individual level in typical times (and are practices that I generally try to uphold) are not the kinds of things EVERYONE should do when times are the way they are now. Sure, people with lots of debt should make do with less - even a lot less - to get out from under so much debt. But when even those who can afford to spend cut down on spending it really hurts the overall economy. And when it hurts the overall economy it doesn't hit evenly throughout. It's not like if economic activity drops by 10% that EVERYONE has to do with 10% less goods and services - no, much more likely is that at least several more percent of people would completely lose their jobs. We could easily end up with something like 12% - 15% joblessness (something like one out of every eight people not having a job at all). Those people will suffer awful hardships - it won't be everyone sacrificing by having to do with a bit less. So, as odd as it may sound, it really is better for everyone in general if those who have savings use some of it to buy goods and services now rather than cut back. Hoover did the virtuous things during the early phases of the depression and they made things a lot worse. This is one of those times when conscientious savers/consumers need to go against their inclinations and spend more than they might be inclined - the flip side of what needs to be done by those whose inclination is to spend money they don't have.

[swampy]

You might be right, Ted. I just can't think of anything (non essential) that I need or want to spend money on. It's not that I am a miser or scrimp. I'll pay a higher price for Jiff peanut butter because it's what I like. I guess I could buy a new car. But I don't need it. My 13 year old Pontiac is running fine and has all the features I want or need. I don't even think they make a Bonneville any more and I really like the car and the way it drives. I don't mind spending money to keep it maintained and filled with gas.

I'm sure there are others out there like me. Come to think of it, I could probably go ahead an buy the new water heater I'm gonna need soon.

[Black Landlord]

Ted King wrote:
I hear a lot of talk about doing virtuous things like doing with less but the thing is that what may make sense on an individual level in typical times (and are practices that I generally try to uphold) are not the kinds of things EVERYONE should do when times are the way they are now. Sure, people with lots of debt should make do with less - even a lot less - to get out from under so much debt. But when even those who can afford to spend cut down on spending it really hurts the overall economy. And when it hurts the overall economy it doesn't hit evenly throughout. It's not like if economic activity drops by 10% that EVERYONE has to do with 10% less goods and services - no, much more likely is that at least several more percent of people would completely lose their jobs. We could easily end up with something like 12% - 15% joblessness (something like one out of every eight people not having a job at all). Those people will suffer awful hardships - it won't be everyone sacrificing by having to do with a bit less. So, as odd as it may sound, it really is better for everyone in general if those who have savings use some of it to buy goods and services now rather than cut back. Hoover did the virtuous things during the early phases of the depression and they made things a lot worse. This is one of those times when conscientious savers/consumers need to go against their inclinations and spend more than they might be inclined - the flip side of what needs to be done by those whose inclination is to spend money they don't have.

Is that the best thing to do with one's savings though?
Go to Best Buy and buy a Tiawanese-made electronic of some sort?
Who does this really benefit?

Serious question-- what about taking savings and investing in a new small business startup? Pros/cons? (personal situation)

[mattkime]

Dakota wrote: I am always amazed at how some people are so predisposed to the idea of going small and doing with less. Looks across America and see for yourself if thinking small could have made the country what it is today. Thank God our forefathers weren't thinking like this. We'd be living in huts, riding mules and burning wood. All signs of small and frugal living.

I was going to say the same thing, but for irony.

Not all spending is the same. Investments are a productive use of capital, simple consumption is not.

[Ted King]

Black Landlord wrote:


Is that the best thing to do with one's savings though?
Go to Best Buy and buy a Tiawanese-made electronic of some sort?
Who does this really benefit?

That definitely is a valid point. I was speaking too broadly. More specifically, to give the greatest aid to the American economy it would be most helpful to buy goods produced here and/or buy services provided by American wage earners. My wife and I are looking to put new windows on our house - American made windows installed by American labor. It should save energy in the future and increase the value of the house close to the amount invested. I'd love to be able to take savings to put solar panels on the roof but we will probably be moving in a few years and the return on the investment would less than with replacing the windows and, unfortunately, our neighbor has really tall redwood trees that would block the light to the solar panels (they look great and help keep shade the house on hot summer days, but they make solar panels somewhat impractical).

Black Landlord wrote:

Serious question-- what about taking savings and investing in a new small business startup? Pros/cons? (personal situation)

Sure, that would be good as long as the business you foresee starting offers goods and/or services that have a big enough market and demand to make it viable. If so, it would provide jobs and should give you a decent return on your investment. Win- win. But I'm not sure starting a business that doesn't have a good market and demand would make sense for the economy as a whole and certainly doesn't seem like it would be good for you as an individual unless you needed to do one of the weird tax write-off schemes.