Is Frugality The Anti-Stimulus Plan?

Last Friday, the government released statistics revealing Americans are saving money at a rate nearly triple that of the same period last year.  In the final quarter of 2008, Americans saved 2.9% of their net incomes, compared to less than 1% from the same time last year.  Apparently, frugality is to blame.  According to economists and a quote from a recent story appearing on, this is known as the “paradox of thrift. What’s good for individuals – spending less, saving more – is bad for the economy when everyone does it.”

This all sets up to make us frugal types feel guilty over the current state of the economy.  As if it is our fault that people borrowed up to their eyeballs (and then some) for two decades while our government leaned on banks to be even more liberal with lending policies. Sorry, but I’m not buying it.  In fact, if frugality had been popular years ago perhaps we could have avoided the current crisis we are in.

How Did We Get Here?

We are all guilty of biting off a bit more than we could chew.  Often driven by the inflated lifestyles depicted in Hollywood, American consumers adopted a voracious appetite for all types of luxury items, and quickly became debtaholics to afford the lifestyle.  Borrowing against inflated home equity was “in.”  Creative financing was “in.”  Saving money and paying off debt was “out.”  The prevailing attitude was, “We’ll just save money and pay off our debt sometime in the future.”  Well, the future is now.

I wasn’t immune.  I spent much of the late 1990s and early 2000s trying to figure out a way to get rich quickly.  I even resorted to borrowing to invest because hours of watching CNBC made me feel like I was missing the boat.  I caught the boat, but the hope of sailing home free quickly became a ride on the Titanic.  I suspect many others went down with me.

How Do We Move Forward?

This period of reduced spending is likely to last.  Many baby boomers have seen their retirement funds decimated.  Many Generation X and Y workers have seen practically everything they’ve saved in a decade of work vanish in a few months. It is sobering to watch, and it will have long term effects on consumer psyche for some time.  But here is the $64 million question:  Is that really a bad thing?

Perhaps we all needed a little cold water thrown in our face.  Granted, we didn’t need to be hit by a fire hose that was the 2008 recession, but I think this might be a wake-up call that was long overdue.  We simply cannot continue to borrow our way to success – as individuals, nor as a country.  I know this is a politically touchy subject with the current debate on the much-maligned stimulus bill, but it really is the truth.  We are leveraging our entire futures in the hopes of a short-term gain, much like individual consumers did in the 1990s, and we’ve seen the consequences of those actions.

Should We Feel Ashamed By Our Frugality?

I’m far from the authority on frugal living, so I only speak for my family in saying no, we should not feel ashamed over being frugal.  What’s odd is how things have come full circle.  In the mid to late nineties when things were really clicking the idea of living frugal was a joke.  Frugal people were made fun of for their thrift, or dismissed as being cheapskates.  Then when things began to turn south suddenly frugality was cool again.  Now, some are beginning to resent those of us who choose not to boost the economy by buying a plasma television we can’t afford.

I suspect this article will be the first of many from the media, who will soon begin to blame frugality for lack of economic recovery.  I believe that blame is misplaced. They should be blaming themselves for perpetuating negative financial news for months on end.  They should be blaming Hollywood for selling us on the idea that borrowing and irrational spending is sexy, and saving money is boring.  They should be blaming politicians on both sides of the aisle for continuing to borrow and spend our hard-earned money on their own frivolous pursuits.  And we should blame ourselves for falling for it.

If our economy is going to turn around we must first turn around our own personal balance sheets.  Continue to build your emergency fund.  Continue to get out of credit card debt.  Continue to spend wisely.  Continue to look for new side hustles.  Once a thriving breed, the number of frugal followers may begin to shrink under the “patriotic” calls to spend beyond their means. Hold the line, my frugal friends, for this will be an epic struggle.


  1. Right on the money again FD. Who would have thought frugality would be cool, frugal people featured on Oprah and books about living frugally would be flying off shelves.
    After years of hiding frugality I’m letting my flag fly freely!!!!!

  2. Great post! I think this recession is what was needed to wake America up. We had a few warnings and they kept getting swept under the rug so it was going to take something drastic.

    IMO all this saving will “hurt” the economy at first, but I think it will actually free up spending again in the long run. I know I feel more confident shopping and purchasing when I know I have a full emergency fund behind me :-). And it’s better for the whole economy overall once we get there. We just need to suck it up in the short-term and do the right thing.

  3. Great post I totally agree with you. Most of my friends fit into the spend spend spend category and now most of them are broke broke broke. I don’t make nearly as much money as some of them, but being a Frugal Guy, I have more than I could ever ask for. I am happy the way I live its my lifestyle I was raised this way!!

  4. Consumerism got us into this mess to begin with! Honestly Fox has it’s head up it’s ass if it can’t see that! We make purchases but we make informed purchases, we don’t fall into the want want want trap. But then I’m a non-american living in america so I guess I’m ok with being called un-american 🙂

  5. Wow, you really hit the nail on the head. If it’s unAmerican to shop at thrift stores and drink from a Brita pitcher, well, then I guess I’m happy to be labeled unpatriotic. Since patriotism = irresponsibility.

    God bless America.

  6. I know what you mean. I wrote about this and the Paradox of Thrift the other day. It’s interesting because both extremes are obviously not good for the economy, but I still think that it would be best for us to be closer to the frugality edge than the other side….

  7. Just like the tech bubble burst in 2000, I think the American lifestyle of living above their means (with credit) has burst. I don’t think living frugally is hurting the economy, but it some instances, isn’t helping.

    Hopefully, we will all learn from this and be better off in the future.

    Stupidly Yours,


  8. I’m frugal not by choice, but by circumstance. But watching the economy collapse has reaffirmed that if I ever were to have the choice, I would still be frugal. Having grown up in poverty, I know what I need, what I really want, and how to save for both. If others would have learned that lesson years ago, we wouldn’t be where we are today, with people losing homes they could never afford in the first place, and others whining because we aren’t buying plastic crap that falls apart after a month.

  9. Unfortunately, those people who are saving now should have been saving during the great period before the recession. Saving now does have detrimental effects to restoring our economy. If people don’t spend money (not overspend) then it gets locked away in bonds/cds/savings accounts and doesn’t flow through our economy. People relying on the government to fix the situation are in for a long wait. I am also fearful of those people who have taken to paying the minimums on their “over-the-limit” debt burden and are saving the extra money rather than using it to pay down debt. Paying minimums is just going to keep them in debt longer and it takes much-needed money from the economy and locks it away in an account somewhere to be used 20-30 years down the road. Here’s a suggestion, save during the good times and try not to hoard so much during the bad ones. That way we can hopefully keep the economy on a more even keel in the future.

    As an aside, the car manufacturers don’t need the government to help sell cars. What they need is a good swift kick in the ass because never have I seen so many manufacturers with so many different models on offer. I think last year there were over 300 different makes and models which is just ridiculous. Just 12 years ago, it was half that. Let’s see, I think we can cut back on manufacturing costs by offering fewer models on concentrate on making them less expensive and more efficient. Or is that just unAmerican too?

  10. Our economy is the problem. Our current system is almost completely driven by consumer spending. There’s no concept of sustainable industry or long-term thinking or quality of life for citizens. We are pressured to buy buy buy so that we can work work work in order to make all the things we all have to buy buy buy. You can blame the media or advertising, but without that work/spend behavior our economy has nothing left to drive it and we’re all screwed.

    I won’t feel guilty for being frugal (I will feel guilty for not being frugal in the past by the way). But we have to realize that this is the only tool the government and industry has right now. SPEND! Or else everything will collapse.

    What we really need to be thinking about (as a country) is how to rework our economy so that this stops being an issue. Because an economic system that relies on people being borrowing, mindless, overspending sheep in order to even function is not going fly. We’ve reached our limit.

  11. I just think the frugality is bad view is so short sited, just like going out and buying a new car on credit. It comes back to haunt you. If we all went to a cash based system right now, it would be tough for years, but in the long term it would give us all more power to buy goods without doing harm. See the housing debacle to see were short term thinking gets you.

    That is part of the reason the bailout is not a great idea, markets need pullback, regrouping and reevaluating. Trying to keep over inflated markets puffed up isn’t good for anyone.

  12. Frugality may hurt in the short term but it will sustain us individually and as a nation in the long run. Those businesses who make and sell things that are important will thrive. Those who make and sell mere “stuff” may not.

  13. I’m sorry but the make, sell, buy, and make more cycle is exactly what an economy is and what defines it. Trying to claim we need to change the way our economy works is like trying to grow gills by changing the way you breathe. An economy is driven by supply and demand. One of the main reasons for this current recession is that the risk factors at the supply end of the equation were basically nullified by the government saying “oh, we’ll back those overvalued houses, so don’t worry about it.” Lo and behold the backing companies (Freddie Mac and Fannie Mae) basically went bankrupt. Without the risk, the banks over-lended to consumers and themselves folded. It is a delicate balance and so the risks must be held in place at every point. By the way, we DO manufacture quite a bit of product in our own country. Just because you don’t see it on the shelves at Wal-Mart doesn’t mean it isn’t there.

    Something else to think about is that our economy is actually one of the strongest and most resilient in the world. If we can’t do it right, to whom should we turn as an example of how to do it right? Half of Europe (Germany, France, Italy) are basically a hair’s breadth from bankruptcy and a depression. The rest of the European Union would fall with them. Why? Out of control government spending. Japan already had their depression in the early 90’s and it took them 15 years to come out of it. Why? Market overvaluation and over-investment. Though ours has been shaken, it has not fallen despite what the media and our president would have you believe because we DO have the capacity to manufacture and sell product (be it tangible or intangible).

    Hoarding = Bad
    Overspending = Bad
    Spending mindfully = Good

  14. Great post! This is a discussion that my husband and I have had many times. Over the years I’ve watched my young-ish friends buy their McMansions and have new cars. I’ve asked my husband, why can’t I have that. I have a better job and money in the bank….his response was that we didn’t need it and that we were better off saving our money. Now, we’re in a great position financially and joke that we have decided ‘not to participate’ in the recession. We have multiple streams of income and are ready for the collapse of the market. Thank God for my frugal spouse who stopped me from impulsively getting into debt in my moments of weakness!

  15. Ahh…I love a good fight. Great post, my friend. If the media wants to blame me and my debt-paying, emergency-fund-funding family, well I say, Bring It.

    While the whole “spend our way out of recession” argument might look good on the surface, some day the price for overspending must be paid. I’d rather pay it now and deal with the short-term gain than pawn it off on the next generation.

  16. I understand the concept and what people are saying, but there is no way economists or anyone can blame consumers because we do not want to spend, but in fact save.

  17. Americans saying to each other that we are saving too much is like a bunch of herion addicts sitting around chastising one another for not shooting up enough.

    The average Chinese person saves anywhere between 40-50% of their income. How do we plan to compete with a country (a much larger country) if we are constantly blowing our money and don’t have that kind of discipline?

    Spending money blindly will not fix our problems. Investing in the infrastructure, alternative energy, the power grid etc however will pay off in spades in the future.

    The market is not flawed, it’s readjusting and companies and people need to adapt or will drop off. People don’t want to borrow money to pay $1000 a month to drive HUmmers and Suburbans anymore. make different cars. People won’t/can’t pay a million dollars for a California suburban track home; then stop building houses allow the housing market to correct!

  18. I absolutely agree that we should not be ashamed about our frugality. This is an important statement.

    Extremes beget extremes. People are spending too little today because for years they were encouraged to spend too much. When we stop encouraging people to spend too much, we will stop experiencing these economic contractions.

    The answer is not to go back to what we were doing before. The answer is to learn from our mistakes.


  19. @New-Dad-Blog, if you’re trying to compare us to China, you forgot a few other statistics. The “average” Chinese resident does not have access to any sort of modern communication system. They also do not have any sort of electrical infrastructure. Almost P of the population are still farmers or agricultural workers. The average person in China also does not have nearly immediate access to medical assistance if it is required. This is all different for those who live in large cities but that does discount that most of the population lives out on farms and are seen as “the great unwashed” by the government. Many are also illiterate and do not attend school.

    Whereas here in the USA, most of the people in this nation live within 15-30 minutes of a medical facility. Almost 98% of the population owns at least one television. Some statistics point to at least 75% owning a cellular phone. 70% of the population have access to the internet in an unfiltered and (mostly) unmonitored fashion. (Not in China, where the government has blocked access to many non-Chinese sites.) Very few have not attended some sort of schooling and even fewer cannot read. Even the poorest among us here have much more than those “average” people in other nations. Does that make us a bad nation? No, I don’t think so.

    Again, I ask if we cannot do it right (manage our own economy) to whom should we turn? Which countries out there are doing it right? I propose that ours is still the strongest economy in the world and can remain so as long as we use some common sense. Don’t hoard, spend responsibly. If your budget allows you to spend more, then do so. If it doesn’t, then by all means curb your spending.

  20. Frugal Dad – While it may be a “polically touchy” subject, it’s still right on the money.

    Goes back to personal responsibility in spending, and in not overspending.

  21. I’ve been really frugal for years, and I will continue to be so.

    However, I’m thinking about spending a little more on things that I’ve been wanting for a long time (big screen tv). I believe that doing so may help in some small way the economy, and I will have a little extra money to do that (esp. when I get my house paid off which it will be in less than a year).

    That’s doesn’t mean that I’m going to go into massive debt though, but I’d like to think that I’m helping in some small way.

    Plus, prices are dropping and deals are everywhere. If you have the means, this is a good time to buy things that were previously overprices. Like rental property 😉

  22. Buying just to buy is not a true way to help the economy. Conscious consumerism – buying when it is necessary or when it is something we truly want (and can afford to pay) is a better approach whether one is rich or poor or if the economy is doing well or sinking. This method may not be the quick way to get the economy up and running, but it is a more certain and stable way to grow and sustain the global economy. And this is a better way in the long run for the Earth and individual’s savings (financial security).

  23. Great post, FD…

    While it may be considered by some as un-American, I am saving (hoarding) every cent (even the ones I find on the street) because there will be no government bailout for me in the event I need it.

    Emergency fund contributions are in full force and I won’t let up!

    However, I do have a soft spot in my heart for a MacBook so I will save up (at this pace, it will take me more than a year) and then blow the whole “MacBook” wad to get one.

    Maybe I’m not so un-American after all.


  24. How I’m helping the economy:

    – Depositing money into savings, allowing banks to lend and circulate more money.

    – Paying down my mortgage, again freeing up bank money to lend.

    – Not walking away from the mortgage, leading to forecloser and bank sales.

    – Adding to my retirement account/not withdrawing, helping the market to stabilize.

    – Buying what I can afford, not going into bankruptcy or failing to pay back debts.

    I agree, our country’s newfound thrift may result in some short-term pain. But hopefully we will all begin to adopt better habits, leading to a stronger country and better lending practices. What a thought!

    Someone please call Fox and tell them to run the other side of this story.

  25. I’ve been saying this for 2 years now when things started going bad back in 2007. We, as a society, have been spending way too much for thirty years, not twenty years. There are numerous statistics that show that the average savings rate was actually negative about 3 years ago. NEGATIVE! The average American was spending more than they earned. Four decades ago, the savings rate was 10% or so. In order for us to get back to a 10% or even a 5% savings rate, the economy as a whole will hurt for a long time due to the effect that pretty much 5-10% of all revenue projections for more or less all sectors of the economy. This is a vast oversimplification, but if people are to save more, where will that money come from? It’ll be because they are spending less. I would like to see this country get back on track and actually save money instead of having it ingrained to spend every dollar that you earn plus a few more dollars that aren’t yours, but it isn’t going to be easy to get there for all of us.

  26. I don’t think frugality is to blame for our inability to dig ourselves out of this deep fiscal hole. Collectively, people in this country simply spent more than they had, and now we’re paying a huge price.

    The great thing – yes, great thing – about this crisis is that it’s a reality check for all of us. *Everyone* should be living frugally – everyone should be living below his or her means. It’s healthier for individuals, families, and communities, and I hope that our entire country will eventually be better off for it.

  27. China has personal savings rate of 50% and (while the rest of the world is in deep recession, and contracting), is having an off year because it is growing only 7% (down from double digits). You can look at India also. You hear stories of migrant factory workers who earn $25/week and save fifty percent of it it. In America, people will find something to spend it on, if nothing else, supersized containers of chocolate pudding to fill their bellies.

    While China and India have huge developing rural regions, they are also quadruple our size. They have more “employees of the month” than we have employees.

    The other rich countries (Germany, Japan, etc.) are even worse than the USA, and already are on the path to extinction. Most will be failed states within a decade or two as they implode into stagnancy and self-indulgence, and cannot even begin to compete with the developing world. At least in America, we have immigration continuing to pump in new blood.

    And, Frugal Dad is right, frugality will destroy the American economy. This will be most visible in the housing market, where people realize they no longer need, or can afford an 1800 square foot air-conditioned palace. As the job market continues to plummet, people will be foreclosed from their supersized suburban wooden-frame shacks and squeezed into tight urban living quarters. As subdivisions vacate, utilities such water, electricity, sewage, and sanitation will withdraw as they are no longer cost effective to serve, roads will no longer be maintained, and existing living quarters, even ones which are paid off, will be abandoned and left to rot. The job recovery will begin in about 10 years (after the Baby Boomers finally start really dying off) fueled mainly by construction of efficient new urban living quarters which will make up the new America.

  28. Frugality will always be popular with me. It’s responsible living. People refuse to live below their means in this country. While I did not vote for Obama I did agree with his inaugural comment about Americans “putting away childish things” aka spending like there’s no tomorrow. Our economy is a reflection of greed and not willing to say no to the wants in our lives.

  29. I have to agree with just about everything you wrote.

    “Hoarding = Bad
    Overspending = Bad
    Spending mindfully = Good”

    Sounds very much like Zen teachings… lol

  30. Nice job!

    Isn’t it great for us frugal types to finally be in vogue instead of the party poopers?

    Gina Pera, author
    Is It You, Me, or Adult A.D.D.?

  31. OK, here’s the deal: The Media do not understand “the Economy” and should not be reporting on it.

    The US needs frugal people, it needs people to pay off their cards and cars and houses and plasmas. The reason is simple, we need more “cash”. The mortgage crisis begat big bank losses, people with “guaranteed” investments had cash simply disappearing. The big bank losses begat tons of CDS problems which meant that even more people had cash disappear. This begat the large scale financial crisis where big companies stopped moving money around b/c nobody knew who actually had cash. Lots of people who thought they had “good as cash” investments just had that money disappear (estimates are well over a trillion such dollars).

    The big picture is reasonably simple. You don’t try to operate your life with your bank account sitting at $1. You keep $100 or $1000 around. Heck you keep an emergency fund around for a couple of months of expenses.

    But much lots of companies were trying to live on the “$1 account” and they got burned on the deal. They kept tiny or inadequate cash reserves (the technical term). In November/December, GM reported having only 2 months of payroll available in cash.

    So when the government gives money to GM, they’re really giving them cash so that GM can make the next payrolls and hopefully get their books in order so that they can break even. In fact, that’s basically the government’s plan. They’re giving out cash, so that cash can start flowing and so that people can start paying off debt.

    And the savers are helping out too. They’re depositing money in the GMAC bank (you’ve seen the ads) so that GM has enough cash to make payroll. You’re doing the same thing the government is, you’re actually propping up the economy.

    So “the news” really have no clue. They’re trying to measure “consumer spending”, but that’s not really what we need to measure. We need to measure economic growth in terms of increased output, in particular in terms of exports to other countries and ratios of cash to debt. It doesn’t matter how much more money consumers spend, what matters right now is the US’s ability to generate more than it consumes.

    For those quoting numbers in China, you must understand a different reality there. They have a whole different set of problems. They’re all saving money to protect against a “rainy day”, but they’re saving too much. People there have been so poor for so long that they’re trapped in “depression” mentality. The country has been through massive inflation as wages keep rising. What’s more is that with everybody saving lots of money, interest rates begin to really suck.

    Imagine if you and everyone you knew had saved 50% of their income for 10 years. What type of interest rates would you expect? Interest comes from lending money to other people, but who needs to borrow money when they have 5 years of income socked away? How can a bank pay interest if nobody needs to borrow money?

    So the Chinese people are saving tons of money, but when inflation rates beat the savings rate people actually start losing purchasing power.

    Look, the US has been through a couple of decades of simply spending too much money. China is living an opposite crisis with people saving too much money.

    What the US needs is a few years of spending too little money to really start resolving this crisis. The banking system needs more cash to help push through “bubbles” and droughts. “The Economy” in general needs to find a way to reverse the trade deficit. Hopefully the government spending will fuel the type of big projects that the US needs to begin “producing” and stop “leeching”.

    For perspective on what’s happening please see IOUSA and check out some very important radio shows from “This American Life”: #1

    @FD, you’re right, we will hear more about this “savings bad” issue. But please don’t take some misguided, under-educated reporter’s words to heart. Saving money is exactly what the US economy needs. Producing things that get shipped to other countries? Even better!

  32. I’ve thought about this a lot, specifically in relation to car purchases. Buying a new car is one of the stupidest purchases you can make, but if everyone chose to buy used cars with 60-80k miles on them, well the whole system would fall apart and we’d simply run out of used cars after a while.

    However, if this actually happened, if significant numbers of consumers opted for used cars versus new cars, then used cars would stop being the great values they are now. The increased demand would increase the price of used cars to the point that the frugal thing might be to purchase a brand new car. Buying a used car isn’t inherently frugal, by buying a used car you’re taking advantage of the many consumers who are willing to subsidize the purchase by paying inflated prices for new cars and view used cars as beneath them, thus pushing the price of used cars down….

    so is what’s good for the individual inherently bad for the group? No, the system would simply change to accommodate any changes in the behaviour of the group.

  33. Very good article. If I spend today to save the country’s economy, whats the guarantee that the country would help me when I am in trouble?

    Better to be frugal, save, and save my family.

    President Obama often says “God Bless America”.
    He is very sure that noone else can help.

  34. The problem is not with frugality or spending. But the problem is living within ones means and finding a balance in it. If we went into a mountain of debts and credit card bills because of the way we without thinking about consequences bought the latest-&-best of things our credit card could purchase though we had the slightest need for it, today it is the reverse. Today we are without the slightest iota of thought embracing frugality without understanding the basic concept.
    Frugality does not mean buy 20 lipsticks for 1$ (after coupons) , it means if you don’t need to don’t buy lipstick or if you really need it buy a local less expensive one than a costly branded one. Frugality is about a simpler lifestyle. But with all the blogs and media-hype/radio-tv talkshows now it is like if you spending money on grocery you are stupid the lady just ahead of you bought a cartload of things (that she absolutely did not need) for 2$ and got 10$ additional gift card for buying all that crap. And you bought your $3 Cereal and $2.50 milk you must be a total dumb to spent your money.
    It has got to a competitive level where-in people nolonger are frugal because of their circumstances or wanting to save some for rainy days but rather about who can hoard their pantrys most with free items. Now being frugal is IN, finding deals because they are bored, being frugal because they want to hoard on freebies.
    I hear people telling that they donate items to salvation army or other charities but what a foolish idea that is. Think for a moment you almost clean out CVS of any sale items they put out in trying times to keep their business and you also promote via your blog other people to do the same. Any business unlike a charity depends on profit (aren’t you hoarding up and buyinmg on coupons for the same?? so why blame business). when CVS sees its profit decrease drastically becuse of all the promotions it has to run to suvive the competition where do you think it will cut the cost ? It will close a few non-profit stores, start to buy from chinese companys which will sell for lesser compared to an american manufacturer. So essentially a bunch of people become jobless pushing recession one step further.
    Ask any of these people would they get their supply from salvation army (the food you donated from their stores) or they have a job. I am sure most would want a job than a pantry of donated good or a pantry of stocked coupon items.
    The problem is not with frugality, the problem is not with buying on coupons/sale but problem is even that needs to be balanced. While reading around news just for a moment take a look at the random frugal/cheap blogs and the pictures of their tables laden with items they may/maynot use hoarded up. Writeups about how they bought 30 air freshners for 0$ and infact 2$ payed to you incash for a minute think if you were running a business would you appreciate that ? You would talk about the greed of the large coglomerate but does greed not apply to you or you disguse it as frugality, sensible thinking etc ? The point is 3 airfresheners for 0$ and 1 $ cash-back ok , but 20 airfreshners for 0$ and 2$ cash back disgusting because always someone has to pick up the tab either it will be the maufacturer or the salesman someone took the consequence of your action.
    If this economy needs to turn around it needs the stimulus of spending (and spending is not bad, spending beyond ones means is). And even if you don’t spend too much (being frugal) don’t atleast continue the competition of who is the frugal of them all? who has the maximum toilet papers stocked up or the maximum makeup removers. That is where frugality turns into the anti-stimulus plan.

  35. @GEoff:Buying a new car is one of the stupidest purchases you can make, but if everyone chose to buy used cars… the whole system would fall apart and we’d simply run out of used cars after a while.

    I actually think that we’re getting there. I’ve been looking around for cars lately and it’s pretty close.

    If I assume that a car lasts 10 years, then I can buy a new Hyundai Accent in the range of 17k. A similarly equipped Accent from 2003 (5 years old) is going for about 8k.

    So we’re talking about an almost even cost per year. With the current options of 0% interest and 100k miles warranty. The 10-year TCO on such a vehicle is actually making it quite reasonable to buy new.

  36. Frugality, to me, goes way beyond the coupon clipping and drugstore rebating that is so trendy these days. I’ve been coupon clipping for more than 20 years anyway.

    No, it’s a mindset for which you are as resourceful with your finances as possible given your family circumstances and your community resources.

    So while I do talk about coupons, rebates and grocery store sales on my blog … it is really only one piece of the frugal living picture.

  37. The “Paradox of Thrift,” as I recall, is from John Maynard Keynes, and this kind of thinking permeates all levels of government. But I can remember the lament years ago over the decline of the American savings rate and the predictions of dire consequences as our manufacturing base eroded and we became more of a consumer society. Major demographic changes are underway in America toward less consumption and more savings. There will be pain in the short term, but long-term it is a positive trend that even the politicians can’t stop.