Due to the recession, many folks have cut back on spending. As the economy picks up and people become employed, do you think once they get caught up, they will go back to their poor spending habits and go back to borrowing beyond their means?
I will say that I am not sure that some of them will have a choice because even though many people got a job, it was less pay than the one they had before.
But I will say that it is mostly an additude that people have. I think a few people have had a change but I think most will go right back because there is the sense of entitilement that pervades our society.
Yeah, I do. I think it actually might be worse for awhile even. I think a lot of people will be tempted to go overboard and justify it with, "Well, I haven't spent any extra money in X amount of months so...why not?" I obviously hope that those who overextended themselves before won't do it again, but....I don't know. In any case, I don't think lenders will be loosening their purse strings on LOC's to those that are less than credit worthy anytime really soon...so maybe that will help.
The human nature is to adapt in times of crisis and to be more lenient when the crisis has passed. For those who have a head on their shoulders with a smart brain inside of it, they'll continue with the ways if it shows them that they'll prosper better than before.
But for the rest of the dumdums out there, it won't last.
I think a lot has to due with how long the people were without a job and how "deprived of stuff" they feel. The younger generation (20's & 30's) will have a tougher time with this because they have been given everything they wanted from the begining and still feel they are entitled to have everything they want.
I think the very young (those under 20) whose families have experienced the ecomonic uncertainty of the last 5 years, will have a different attitute toward money. I'm talking about the ones whose parents were making a good living, then lost their jobs, houses and most personal possessions, NOT the ones living on welfare prior to the economic mess.
I don't think that the lenders will be so free to lend as they have in the past. Even if we make it through this crisis, without much more backlash on the lenders, I think the govenrment may try to place guidelines/regulations for lending institutions in regards to qualifications for loans in the future.
I think we are in for a VERY, VERY long and bumpy road ahead and things never will be the same again in this country. We CANNOT rely on the government to solve all the financial problems created by the greedy elite Wallstreet fatcats. We are going to have to adjust to living with much less, without all of the comforts we have become accustomed to over the last 50 years.
We live in America the land of opportunity. As soon as we have the opportunity to spend money, we will spend it!
I do not mean to be cynical but economy is based on consumer spending. The problem is when people, this includes businesses, spend/lend beyond their means or on credit or businesses grow too fast and they do not have enough capital for the rough times. This leads us to believe our economy is growing then people get in over their heads and a recession starts.
So yes, lots of Americans will deserve or need all kinds of new goodies and vacations and such. As for me, I will not change my ways. I want my EF to grow and who knows? Maybe I'll get some of those goodies the spenders tire of and drop at the thrift store.
We are an "I want it and I want it now" society. So, I think people will probably go back to there old ways and may if go further to "reward" themselves for having to cut back.
"They" have already said that was part of the reason for the increase in sales at Christmas........."done without long enough" --"needed a reward".........and that people were spending more on themselves this year.
Hopefully...........this won't be anyone here at FV!!
Well, we've been living like this for nearly 10 years now so I don't see it changing soon, for us personally.
I've got friends though who just don't get it. Told me yesterday they can't make their mortgage this month. And yet they are considering putting a new computer on credit....
DH works with a guy who can't make his utility bills each month. About the same paycheck, but we are debt free and he can't figure it out.
On one hand I'd like to think people have gained wisdom through this. On the other, if they have, it will make it far harder for us to get our feet back on solid ground. My DH's work is based on consumer spending. So as much as I hate to see people do stupid things with their money, this little voice in my head is screaming, "spend people, spend!" 3+ years is way too long to be without a steady income.
Not that long ago it was Christmas & all I kept hearing about on the radio is how people are spending alot more than they did last year "to feel better". I think the usual suspects that like to spend will spend but a few have crossed over to the smart side and have decided to save for that rainy day and live a bit more conservatively.
Good question Russ - While I hope that we all will have learned from what we are living through now and in the recent past, my only concern is what my DH and I will do. Am being tested right now and am very happy with how we are handling things.
You can bring a horse to water but you can't make him drink. Those that willingly made changes, rather than forcibly, are more likely to stick with it. Those that are only changing to get through each day, and then fall back into money, will likely go back to old ways. Their change was due to the necessity at the time. :dollar:
I completely agree. I hear people around me talking about how they plan to get this or that or spend money on this or that as soon as the economy recovers.
I think it is just a cycle that everyone lives through. My parents saw it after the depression. I saw it after the 70's. So here we are now. Someone will be saying it happened in the 20's. People had to cut back and really decide what to spend their money on because of the lack or high cost of everything. Why didn't people remember what happened before.
That's a hard question.
It will depend on the person and what kind of lesson they got from this recession. If they had a good job, and kept it, they probably won't change their own spending too much.
If someone has had or is having quite a struggle with things, then hopefully when they get back to somewhat normal again, they will remember how hard things were and know sticking to a budget is a good thing.
You can splurge on a few small things, now and then, but you have to remember to keep your future plans in place.
I think it depends how they got into financial trouble in the first place. For me, it was a failed business. I didn't spend my way out of my home with frivolous purchases. I borrowed to invest in a business that failed, which caused me to lose the assets that I had. Now, as things are getting better and I've found fulltime employment again, I find that I am extremely cautious with my spending and working hard to build up the EF that I lost.
For those who just borrowed and borrowed and borrowed for vacations and things they "deserved" I'm afraid that this has just been a hiatus and that as soon as income increases again, so will spending. I also worry because the money floating around the US is "imaginary" - it isn't backed up with anything. That allows lenders to still increase credit lines even though people don't have the money to pay the debts they have.
Like many of us, I'm the child of Depression era parents. We were raised very frugally. I still remember the first time my DH came to our house when we were dating: the toilet wasn't running smoothly, so he lifted the lid to fix it, and found my dad's fix -- a 7UP can that had been serving quite nicely for quite some time. DH ran to the store, spent an entire $7, and fixed it properly. (Don't ask me the nature of the plumbing issue -- I'm all thumbs
And so our house went -- taped this, bandaged that, home sewn clothes, meals from scratch, older cars (plural when we finally got a second).
DH was raised without extra bucks either, but he was a bit amused (not in a patronizing way, just amused) at just how far we took some things. But! There were five kids, there was little money, and so on.
Despite many years of improvement, DH and I remain true to the heart of the -- frugality? economizing? living simply? being smart? being green? all of the above? -- way of thinking. Although I still amuse him. A lot
Like so many others, we lived paycheck to paycheck, often times filling in with a credit card for things we felt we 'deserved' because life was so hard. If I could go back and give myself a swift kick in the rear I would do so! We have managed over the years to put together a sizable emergency fund and have at least 4 month's worth of bare minimum expenses saved. We have a good start on a stockpile, and have curbed many of our bad spending habits over the past few years. While we still somewhat live paycheck to paycheck, we have a plan in place and are making it work for us. We are living on less than we make, and reaping the benefits. I'm never going back to the old ways!
Alot of people who have become employed again aren't employed at the same rate of pay that they were before.
I, for one, don't believe the recession is over. Hubby has to follow/watch the metals market very close due to his job. The same crap that was happening in beginning of '08 is happening now and it is scaring us.
It's not something that most people watch.
Will the public go back to the old ways? ... if it recovers, and it would take along time to get back to where it was, yes, I believe the majority will go back to credit ( I mean, alot of people haven't stopped yet ).
Will we? ... Well, I won't feel guilty for stopping at Dunkin Donuts and getting my favorite coffee. I won't feel guilty for going out to eat once in a while. Or spending $5 on something I want.
What I won't do is go out and buy a house full of furniture that I don't need. I won't go out and buy a new car. I WILL do things/ spend a little to do things to make my life enjoyable. If $2 at Dunkin Donuts makes me happy then so be it. Somewhere in there has to be a quality of life and if small things make it...then that's good.
There is no stopping people from going back to their own ways...unfortunately. I think a lot of people will go back to spending more than they should but I'm vowing to keep my spending to a minimum as I have been in the past couple of years and save money.
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