Save the economy. Buy the right things.
Posted on February 11th, 2009 – 4:37 PMBy Kara McGuire
To spend or to save, that is the question. At least it’s the one that’s on my mind, oh, about all the time, lately.
On one shoulder sits the spender, wanting to go out and take advantage of good deals and do my part to stimulate the economy. The saver perches on the other shoulder, reminding me that as someone who saved through the past decade, buying a home I can afford and waiting until I could afford a flat screen TV instead of charging it, why should I change my prudent ways now?
So which one is the angel or the devil in this recession? That’s a trick question, argues David Leonhardt of the NYT.
The topic of his column? Stimulate the economy while improving your “future self’s” financial circumstances by buying items that will save money down the road.
Example: A programmable thermostat that costs $50, but will save on energy bills. Our household did this a few years ago and we have seen our bills go down because we set it so the heat goes down when at work and asleep.
Example: A $55 Costco membership that you can make up in mere months depending on your buying habits. But be careful, you can stimulate the economy much more than you might want if you’re easily tempted.
Example: A seltzer maker for those addicted to San Pellegrino. This is a tempting one for me.
Here are a few examples I could think of that Leonhardt didn’t mention. Share your own spend to save pairings below:
Buy stocks. Heaven knows the market can use an infusion of cash. Find a couple of stocks you like and invest. Hopefully, over the decades, your small purchase will grow.
Invest in education. A class that would improve a skill and increase your workplace worth down the road would stimulate the economy now and improve your financial circumstances in the future.
Get yourself a bike. Commit to riding to work and driving less and you’ll save money on gas.
5 Responses to "Save the economy. Buy the right things."
I’d suggest investing in a bicycle and/or a Metro Transit “Go To” card and leaving the car idle for short trips (which comprise the majority of our region’s total trips). Reducing excessive motoring will save fuel costs, maintenance costs, and insurance costs (both auto and health).
If one doesn’t live in a location connected to transit or hospitable to bicycling and walking, another suggestion would be to look into real estate in a location where daily needs can be met without relying on driving the car. An urban lifestyle can save boat loads of money on energy costs across the board while supporting the local economy.
You don’t need to completely give up driving private automobiles to realize significant savings, but you can. Many people have in our region.
I see that I missed your final suggestion Kara; I agree! The rest of your suggestions are great as well, I thought it went without saying.
It is REALLY hard for me to take casual discussions like the linked article seriously. We owe NOTHING to ANYONE to spend a penny.
The current bailouts/stimulus efforts put EVERY SAVER ON EARTH to shame. The pyramid scheme has broken. The game is over, but we just don’t all know it yet.
All this bailout/stimulus is nonsense. No amount of money or spending can restore a system of illusionary wealth. What we need to be talking about is “debt forgiveness”.
I suppose if I were King Obama, I’d declare all revolving debt VOID. Then people would no long have that burden holding back their needed spending, but also no more living off future income. They’d be able to spend exactly as much as they earn.
As a lifelong saver, it is a repulsive option, to reward those bad bad people who accumulated credit card debt, but this repulsion is offset by the attraction of punishing the banking industry for their evil lending practices that prey off people’s weakness to wishful thinking.
But I know that’s not nearly enough, since its the government itself that is now something like $12 trillion in debt. Well as King Obama, we’ll just PRINTUP $12 trillion in new money, and pay off all the holders, in effect devaluing the existing dollars, but so what? At least that is HONEST - taking money away from those who have the most of it. If inflation cuts our collective wealth to 1/3, at least all us savers will have or $0.33 on the dollar.
Well, I’ll keep on my holding pattern, and in solidary of those who are too poor to save, I’ll hold on to my savings. Then when my plan finally happens, I’ll be the one who pays in the devalued savings, and I’m just waiting to pay, just waiting!
How about buying services? Many in the trades are slow right now and I’m getting work done at rates lower than in 2002. In addition, material prices are down from their peaks (e.g. Copper). While I don’t expect a lot of return on my investment in the financial sense, no one can tax my dividend that’s called “enjoying my home”.
Kara, as I understand we need 3% greater income and 3% inflation every year to service the debt load. When this is not happening, like now, the debt will continue to engulf and weaken the economy. Is this right?
I agree with Tom, we need to somehow wipe out debt without nationalizing banks!
What if all home mortgages were rolled down to 4%, would that free up enough money to pay down consumer debt and encourage enough spending?
Just my thoughts, Kara, hope you are feeling well!
Tracy
