Money Listens

I have to comment on an article in Thursday’s The New York Times. Low Spending is Taking Toll on Economy was the headline. The writer called it “ominous” that Americans were cutting back on discretionary purchases to save their money for necessities. Consumer spending for cars, furniture, recreation and Starbucks has fallen, “reflecting a growing inclination toward thrift.” Since home prices have dropped, families are running up against their credit limits without being able to borrow more against their homes, “forcing many to live within their incomes. [T]he basic laws of arithmetic are now impinging on millions of households.”

Since when is thrift a bad thing? Why is living within your income ominous?

The basic law of arithmetic says that if you spend more than you make, you end up with a negative number. And that number is called broke.

Finally, it looks like some Americans are waking up and finding that saving is the new splurging. Why should you buy stuff you can live without with money you don’t have? Just to help the economy?

About those government rebate checks. Economists agree they won’t do much for the economy. So here’s some advice. That check can do a lot for you. Don’t spend your check. Pay off some debt, put some in your retirement fund, and save some for an emergency fund.

This might make you feel better– here’s another article (in the same Business section).

For Europe’s Middle-Class, Stagnant Wages Stunt Lifestyle

I guess the basic laws of arithmetic apply everywhere.

This entry (Permalink) was posted on Thursday, May 1st, 2008 at 7:01 pm and is filed under Educate Yourself, Spending Less and Less. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response , or trackback from your own site.