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How's your bomb shelter doing?
Old 02-02-2009, 08:32 AM   #1
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How's your bomb shelter doing?

It's not just an emergency fund, it's a bomb shelter:

Americans start saving again _ when the economy needs them to spend -- chicagotribune.com

Some experts say consumers have been so shaken by how fast their wealth has shrunk, so burned by credit card debt, that they might not resume their robust spending for years, if ever.

"People are not saving; they are building financial bomb shelters," said Mark Stevens, who runs a management consulting firm, MSCO, in Rye Brook, N.Y.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-02-2009, 08:44 AM   #2
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indeed. Anybody who thought in years past (not me, but many WS wonks) that the 25 year consumer overspending was a sustainable trend was a fool.
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Old 02-02-2009, 08:47 AM   #3
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What a surprise that some people are learning that The Piper Will Be Paid.
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Old 02-02-2009, 08:49 AM   #4
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The unfortunate thing is that this economy has needed to go on a "spending diet" for a while back into fiscal sustainability... but it didn't need for the shift to happen this drastically and violently.

The "velocity of money" needed to slow down.... but not to the point of running into a brick wall and crashing.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-02-2009, 09:24 AM   #5
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Damned if we do (save), damned if we don't....

In early October we were in Europe and America were getting lambasted by the people we were with because they said our savings rate was the lowest in the entire universe.
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Old 02-02-2009, 09:28 AM   #6
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Some experts say consumers have been so shaken by how fast their wealth has shrunk, so burned by credit card debt, that they might not resume their robust spending for years, if ever.

I doubt it.
Go back and read the news articles after 9/11 and how that was going to change US population's behaviors. It didn't.

Yes there will be some decline in spending. This will result in pent up demand. Then there will be "relief" spending when the economy picks up or people believe they will be OK i.e. not laid off.

A better predictor of people's spending patterns is age - people spend less as they get older. So a society with an aging population will spend less. The USA's population is getting older but not at a rate to be concerned about now.
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Old 02-02-2009, 09:29 AM   #7
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So saving is wise only when it’s a contrarian thing that just a few actually practice?

Would a 2.9% savings rate get you to FI? Not I.

I recently made of list of places where I could either increase income or reduce spending, it is 19% of my allotted RE budget. If the entire baby boomer generation does this, whoa, it’s down the rabbit hole we go until we see a note, “eat me”?

Quote:
...he knows of people who drive a BMW or Mercedes and eat macaroni and cheese for dinner several nights a week.
I crave mac and cheese but don’t allow myself to eat it! If I gave in to that, it might help the medical industry.
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Old 02-02-2009, 09:29 AM   #8
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I doubt it.
Go back and read the news articles after 9/11 and how that was going to change US population's behaviors. It didn't.

Yes there will be some decline in spending. This will result in pent up demand. Then there will be "relief" spending when the economy picks up or people believe they will be OK i.e. not laid off.
My gut feeling is that we're not going to become the second coming of the Depression generation, but I do think there will be enough people who have this memory burned into their psyche that the truly free-spending days won't return for some.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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Old 02-02-2009, 09:48 AM   #9
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My gut feeling is that we're not going to become the second coming of the Depression generation, but I do think there will be enough people who have this memory burned into their psyche that the truly free-spending days won't return for some.
I hope the free-wheeling days never come back. Credit cards didn't exist really until 1965. All it took was about 40 years to bankrupt the richest nation on earth...........
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Old 02-02-2009, 10:12 AM   #10
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I hope the free-wheeling days never come back. Credit cards didn't exist really until 1965. All it took was about 40 years to bankrupt the richest nation on earth...........
Mom called them department store "Charge plates" in the '50s. No visa or MC back then? Interesting history.
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Old 02-02-2009, 10:46 AM   #11
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I remember when lay-away was the big thing for crap you couldnt afford
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Old 02-02-2009, 10:50 AM   #12
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I remember when lay-away was the big thing for crap you couldnt afford
And it's no coincidence, perhaps, that it's making a bit of a comeback.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-02-2009, 11:22 AM   #13
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I doubt it.
Go back and read the news articles after 9/11 and how that was going to change US population's behaviors. It didn't.

Yes there will be some decline in spending. This will result in pent up demand. Then there will be "relief" spending when the economy picks up or people believe they will be OK i.e. not laid off.

A better predictor of people's spending patterns is age - people spend less as they get older. So a society with an aging population will spend less. The USA's population is getting older but not at a rate to be concerned about now.
I agree with Dex. Spending is in the fabric of our culture. Spending, buying, possessing are important ways to measure self-worth. They will not be easily changed.
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The Horror!
Old 02-02-2009, 01:44 PM   #14
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The Horror!

With my life-long savings rate of roughly 50% compared to the average, horrifically-high 2.9%, I'm more evil than 17 average folk put together.

Because of my lack of patriotism, somewhere between 25-50 people will have to go to the malls and spend more "robustly" to save this economy.

Holy cow, I'm not just building a 2.9% "bomb shelter," I'm hunkering down in a personal Cheyenne Mountain Complex!
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Old 02-02-2009, 07:15 PM   #15
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If you have alot of debt you should be paying it down and not buying anything.

The trouble comes IMO when even those with savings who have lived frugally and have little debt are even too afraid to spend.

If you do have the money now is a great time to buy anything. Its all on sale.
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Old 02-02-2009, 08:46 PM   #16
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If millions of folks start saving, some industries will do well. One would think banks and credit unions will start paying hefty dividends once all the toxic junk works its way through.........

However, NOT a good time to be a retailer, unless you're WalMart......even Target is struggling..........
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Old 02-02-2009, 08:52 PM   #17
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If millions of folks start saving, some industries will do well. One would think banks and credit unions will start paying hefty dividends once all the toxic junk works its way through.........
How so? If people are saving more, supply of savings rises...seems like it would result in craptastic rates for savings.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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Old 02-02-2009, 08:54 PM   #18
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Well buck up folks - still trying to change my ways - now that it's not the 90's anymore.

I'm going to make a real effort to spend more than I make(from investments) - cause at 65, not getting any younger and 16th year of ER like that old wide receiver hearing footsteps - there is this vicious rumor that you can't take it with you.

Now that's silly right? Maybe I should send some ahead just to make sure?

I'm sure some forum member has the address.



heh heh heh -
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Old 02-02-2009, 09:12 PM   #19
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I've always felt incensed at being labeled a "consumer." My belief has always been that I'm a net contributor to society by a wide margin.

I don't need to tell any of you that spending isn't everything. Anyone who views us as mere "consumers" has an exceedingly narrow and insulting view of the human race. It's critically-important that investments in the future of our society are made.
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Old 02-02-2009, 09:27 PM   #20
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It's critically-important that investments in the future of our society are made.
Amen to that. We need to find a way to be net producers again, not just consumers and churners of stuff and services. New energy sources are the future of a sustainable planet. I sure hope we make some significant strides very soon. There are certainly promising developments around so I'm optimistic.
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