This week my friend and fellow Elevenmom, Lynnae founder of Beingfrugal.net was featured in an AP article called “Tightwads Embrace Frugality to New Extremes.“ The article referred to pennypinchers as becoming neurotic in current economic times regarding money saving.
A couple of weeks ago, fellow elevemom Amy, founder of MomAdvice, wrapped up her monthly non-spending challenge. She started this challenge because she wanted to get her family finances back on track. As a result of her challenge and the savings she generated she was able to save her family $90,000 in interest by switching from a 30 year mortgage to a 15 year one. Despite this, she faced some criticism from people who felt that this type of non-spending challenge put a strain in the economy.
This past week Meredith founder of Like Merchants Ships shared with her readers her new roof. Meredith was very proud, as she should have been, of having been able to pay for this expense out of savings and also been able to help her local economy by creating jobs. Yet, she was also criticized by some readers that felt speaking of such a big expense was “insensitive” in times when other people are facing very lean times.
Let me give you an example at the other end of the spectrum to help you realize the types of spending behaviors that got us in the mess we are in. This family has a $250,000 mortgage on a $50K yearly annual income. How does she pay this mortgage every month? First, they have a sub prime mortgage with a negative amortization schedule. With this mortgage they can make “minimum payments” on their mortgage and any interest amounts left unpaid get added on to the principal value of the loan. But they can’t still afford these minimum payments. So they take cash advances on their credit cards to come up with the cash they need every month to live. You would think that’s bad enough right? Well, it isn’t. This family thinks that because their children “are at that age” they should be taking a trip to Disney World.
So, I ask you this, are we bad citizens if we choose to stop spending money so we can get our finances in order? Or are we insensitive to other people’s struggles if we spend money responsibly from our own savings, in a necessary expense no less, and stimulate the economy in the process? My answer is, of course we are not. I think that it is exactly this type of behaviours what will help our economy make a come back. So sure, some economists may be upset that savings rates have gone up and spending has gone down in a time when we need to be spending money to help our economy grow. But if what we need right now is tighten up our belts in order to improve our personal finance situation, then let’s take the hit right now. But becoming less indebted and leaving frugally and spending within our means will mean that in the future we will be able to spend money in a sustainable manner for a long term basis.
Hi! I am Mercedes and this is my blog Common Sense with Money! Helping other people live better, spend less, and save more is something I am very passionate about. I combine simple frugal living tips and smart shopping techniques to help moms across the U.S. become better home economists. Thank you for visiting my blog.
Fantastic post! I totally agree. I saw this coming for a couple of years and told my husband we needed to prepare. We paid off all our debt (except house), got rid of credit cards and started adding to our savings. In that time we’ve also built a chicken coop, got chickens, and had full tune ups on our cars. There are other things we’ve bought to make ourselves more self-sufficient – we could only do that because we were debt free and could afford it! People need to start living within their means. One way or another. We are very lucky that my husband earns a good salary, but he has coworkers who are freaking out right now because they’ve spent their salaries and then some – had to live the ‘lifestyle’ and keep up w/the Joneses. Thank goodness neither one of us cares what the Joneses have or what they’re doing. They’re probably in debt up to their eyeballs!
Let me add a hearty “Amen!” Those of us who choose to live frugally and responsibly, and within our means, should not be criticized. Thanks for being so honest!
I saved my money and bought a $25,000 car which I paid off in less than a year thanks to serious savings. Anyone who has a problem with me spending my money that I earned and saved on my own can flippin bite me.
Great post!
Great article. I think the other writers are just trying to demonstrate something that some still do not understand-the power of saving and living within your means.
I think we all stimulate the economy in one way or another. My family chooses to eat/prepare all but one meal/month in our home, buy our clothing at thrift stores, drive our cars ’til they explode, buy minimal “stuff”, etc. We don’t have credit cards or car payments. Our savings could be better. We do spend a ginormous amount of money on education classes/materials for our teens, patronize many local arts programs (avid opera/theatre fans) and charities. Our spending choices surely are contributing to some folk still having jobs in the weak economy!
Rhonda
This article is great! We have been working on paying off debt for more than a year now. It’s been a snow ball of an experience in that we had to move, sell most of what we owned, start anew, etc. Let’s face it, yes, the economy is in the toilet. People are spending less to pay off debt or save.
It is not acceptable for individuals to point fingers and say the things they have in the comments that were posted to each of the individual’s referenced. We have to cut costs, live lean, and make a difference in the world- all on a shoe string budget. I think it’s admirable that the individuals above had shared their stories so that others know “hey, I’m not alone! There are others spending money responsibly, saving responsibly, and making good choices too!”
It’s imperative to stop spending and get finances together. It’s important for families to have a bit of cushion to have the chance to do things together, but it should never be at the expense of keeping up with the Joneses.
Love it: “But if what we need right now is tighten up our belts in order to improve our personal finance situation, then let’s take the hit right now.”
Allie Z
Great post! Amen!
There was a great article in Kiplinger’s magazine (which I get free, BTW, I’m not spending money on the subscription
that said if you have a secure job, are making the same or more as you always have, and are saving money wisely, that you should be spending money at your normal rate or slightly higher to offset those that can’t. It made sense (and I always appreciate the green light to go shopping!) The fact is that nobody should be criticising people for making spending choices wisely and to suit their own family’s needs. No one is entitled to make the same amount of money as the Joneses. Likewise, if it is in your family’s best interests to save money or tighten the budget belt for a while, nobody should be critising that either! The government could learn a few things from the frugal community about living with your means!!!
When we bought our house 5 years ago, we were approved for a much higher amount with one of those “lovely” lower interest ARMs. We chose our fixed mortgage at an amount we knew we could comfortably afford monthly payments. It was a fixer upper and we’ve done so little by little over the past few years as we’ve been able to pay for it and we still have projects to do. Which will also be done as we’re able to pay for it. My brother and his wife probably make 3 times what we do and are severely in debt (not counting their home and car loans) because they continue to stimulate the economy rather than reducing the unnecessary spending to pay off debt. I don’t begrudge them the things they have. They both work hard. But I’d much rather have my modest house, belongings and family vacations than the debt they have. There is freedom in living within your means.
Can I hear an AMEN??
Why do people feel they must criticize one family’s decisions? If we choose to stop spending for a period of time or to go ahead with a major purchase or home improvement project, why must others point out problems with that choice?
Congratulations to everyone who makes a responsible, thoughtful decision about spending patterns.
great post-everybody needs to mind their own business unless they can actually walk in someone else’s shoes…everyone’s situation is completely unique to them, so other people just need to butt out!
This post really just begs me to say this — “SHAKE THEM HATERS OFF!!!”
It’s hard not to be hurt by the negative comments those few made. But you have to take it with a grain of salt and keep moving forward. Whether they realize it or not, those frugal decisions you spoke about do help our economy and helped those families personally with their finances. I think its great that people can make wise decisions to keep themselves afloat during these tough times. I’d like to know what those Negative Nellys are doing to contribute to the economy. Spending freely to “stimulate” the economy, while not even able to make their house payments???
Shake ‘em off!
I referenced you in my post:
http://mommybrainmarin.blogspot.com/2009/03/life-liberty-pursuit-of-cable.html
Thanks for the article. Always nice to know we’re not alone.
Great article! We cut back in some areas of our lives but also bought a snowmobile and GPS recently. We are going to do some remodeling in our home that we own free and clear. It’s a matter of what is more important for us.
I totally agree with your post. Thank you for being brave enough to stand for what you believe in. I do not have a blog, but I do send out e-mail updates to many people. I need to get the blog!!! Anyways, people in our area have signed up for my FREE information. So, the other day I gave some information about things we will be voting on come May in regard to our state as well as our local school district. I pointed out that I would be sending out more information about the bond they are trying to pass (a ton of money). I got a reply back from one that they were glad/appreciative to hear about the deals/coupons, but didn’t want anything political b/c their kid goes to the school. However, I don’t want any kind of higher taxes right now. My husband is self-employed. We have felt the economy through less work calls. This person is working for someone else. Even though you all don’t know me, please pray for upcoming elections. We need our governments/ISDs to get this same principle. If they don’t we will all find ourselves paying greatly for it no matter what level of government is it. Blessings to all of you!
Here! Here! Great post! One can NEVER please everyone, so one shouldn’t try. I believe we should be good stewards of our money-those in Washington need to remember that! Even the most frugal of us spend money on something. Thanks for your site!
I think you hit the nail on the head with the words SUSTAINABLE and LONG TERM. That’s exactly the type of spending we’d like to do–and whenever possible, in a way that helps our neighbors instead of the next mega-corp.
Thank you for the link Mercedes!
Mercedes, This is an excellent article and I agree wholeheartedly. If we haven’t learned our lesson yet about spending beyond our means than I don’t know what it will take. I don’t think going into debt to “stimulate the economy” is a very convincing arguement. Especially considering credit card companies are closing people’s accounts left and right or reducing limits. If you are counting on credit cards to meet your monthly expenses you might be in for a terrible shock very soon. I posted recently about my experience being laid off. We are at the 8-10 week mark of filing my claim and I am still waiting for a check. Thank goodness we have savings and a frugal lifestyle to get us by but for families living paycheck to paycheck can you afford 2-3 months without any income?
Great post. Lots of information. I agree. We need to be more responsible. And I hope that more people are catching on to be more frugal with their money.
AMEN SISTER!!!! I totally agree with you and the other bloggers you mentioned. If my family wants to save money for our future, then American’s can deal with it. It’s a personal decision for my family, not thier’s. If I need a roof put on my house and use some of said savings, then I did my family a favor by saving that money to begin with. Now we would be able to live without a leaky roof over our heads. This economy will eventually straighten back out, but in the meantime, I am doing what’s best for my family. We live frugally and are little by little paying down debt so that I can save more money for our futures. I have children to put through college and my husband and I would like to retire one day without worrying if we can survive.
Thanks for this great post! I sometimes feel I have to apologize for my money saving practices- I even had someone tell me- how can the stores and the people sending out coupons make money if you’re constantly getting things for free? But it’s just my way to spend responsibly, the stores can always choose to stop having sales, and the manufacturers can choose to stop sending out coupons. Thanks, I’m definitely going to direct others to this post!
Suggesting “insensitivity” over a new roof is shocking to me. Perhaps they have never owned a home before, but replacing a roof prevents greater problems from errupting. I can’t see a better way to spend a chunk of savings during lean times. Would she have been applauded for spending her hard earned savings on replacing leak damage? As homeowners that repalced our roof out of pocket, we faced similar scrutiny, the suggestion tounge in cheek “that it must be nice.” 3 words….YES IT IS! Great post Mercedes
Great article!!! If we REALLY want to look at the “Big Picture”, we can thank our current economy on those that have lived WAY beyond their means. I don’t believe we would be in this bad of a situation had it not been for the mortgage “greedy” crisis. It was the tip of the iceberg that revealed how extravagant Americans were living. We will always have downturns in the economy and those that have learned to live within their means are those that will not feel the “pinch” as much. We should be getting the “Thanks” for our lifestyles and not criticized for “not helping the economy”.
Preach on!!!!
Thank you SO much for linking up to the No Spend Challenge. I could not agree more with your thoughts on this and was also surprised that Meredith was criticized for sharing her news about her new roof. You are, of course, preaching to the choir
It was a pleasure to meet you and to get to hang out with you!!