Posts Tagged ‘recession’

Lessons Learned: The Frugal Future

Prior to the recession, I thought my husband and I were managing our finances pretty well.  Sure, we had some credit card debt, but we’d already paid off a couple of cards and were starting to make inroads on the balances of those that remained.

Then the recession hit and my husband’s job disappeared with the demand for new homes as the foreclosure wave drowned the housing market. My business, which up to that point, had been doing well, was suddenly floundering and we were left with facing the harsh realities of having too little income to make ends meet.

What had been manageable on our prior income was no longer manageable and the delinquencies began as we started to prioritize our expenses. Obviously food, shelter, and the utilities were priority number one. Everything else, including those credit cards that we had been diligently paying down, would have to wait.

Today, after two years of financial devastation, the money picture looks better. My husband is working and my business is picking up. We had to move to Canada to make it happen, but we are much better off financially now than we were six months ago.

The funny thing is I don’t want to spend money, now that I have it to spend. I still cringe even when we’re buying groceries and I see the numbers on the cash register terminal inching toward that $100 mark. My husband wants to buy me warm winter clothing because of the much colder winters here. I  know I probably do need the warmer clothes, having come from California, but I can’t help feeling guilty about buying a sweater. I would rather keep that money in the bank.

While I hope I don’t spend the rest of my life afraid to spend money where it needs to spent, I am glad that I have learned a new respect for the value of a dollar and that I will always think twice before spending. I think that this new found frugality will help us to never, ever again have to relive the devastation that were the last two years of our lives.

What about you? What lessons had this recession taught you and how were you changed by it?

A Rebuttal To “Jobless pay is a privilege, not a right”

In this post entitled “Jobless pay is a privilege, not a right,” Ruben Navarrette argues against extending unemployment benefits, essentially saying that paying people for “doing nothing” is counterproductive.

Far from being counterproductive, unemployment benefits are a critical safety net that prevent people from becoming homeless and unable to feed themselves and their families in times of economic distress.  If you’ve lost your job through no fault of your own, then yes, jobless pay is your right as an American and a human being.


More People Are Returning Home To Live With Mom and Dad

A Mortgage Bankers Association study of 80 metropolitan areas across the United States revealed that 1.2 million households were lost between 2005 and 2008. A household is defined as a single person, couple, or family renting or owning a home. At the same time, populations in those areas increased by 3.4 million. More disturbingly, the study also found that the percentage of homes with more than one person per room grew from 2 percent to 10 percent among U.S. born residents.  Read the entire report here.

The implications of the data in this study are clear: as more families lose their homes to foreclosure and as unemployment remains high,  previously independent adults are forced to return home to live with their parents or are living with other family members or friends.

The study, conducted by Gary Painter of the University of Southern California, forecasts that the number of households will not increase until 2012, when unemployment is expected to decline. However, Painter cautions that even then, a complete recovery will not occur for many years.

A Tale Of Three Families: Do Bad Decisions Lead To Financial Trouble?

A comment left on this entry by’s LaToya Irby got me to thinking about people in financial trouble and how they got there, leaving aside for the moment the catastrophic economy that we’re in today.

In the best of all worlds, no one would ever spend more than they can afford and everyone would be debt free. However, we know that the world is far from perfect and people often make financial decisions based on emotion and necessity.

Consider a young couple with a child living on minimum wage. The husband works two jobs and the wife works one, and together they earn enough money to live with a little extra to spare. They decide to use that little extra bit they’re able to pull in to save towards buying their child an Xbox 360 as a Christmas present. December rolls around and they have the money saved up when disaster strikes. The wife breaks her leg and is out of work for six to eight weeks. Their Xbox 360 fund suddenly becomes a lifeline, but Christmas is still coming and they still want to see their child’s face light up when he opens up his gifts to see that he has a new Xbox 360. The family buys the Xbox on a store credit card.

Then there’s the solidly middle class two earner family. Both parents work in good paying jobs and on that income, they’re able to afford a decent house in a nice neighborhood. They run small balances on their credit cards and are paying part of the tuition for one of their children who is in college and braces for their middle child. Everything is fine until the husband gets laid off. Suddenly, the family’s income is cut in half and they dig into their savings to continue to pay the bills that don’t stop coming simply because of a lost job. Time drags on and the husband can’t find work. His industry has gone under, but the bills keep coming. Now this family is relying on their credit cards to make ends meet.

Finally, there’s the family earning six figures. This family is among the affluent and well-to-do. They live in a large house in a gated community and drive expensive cars. Curiously, just like the middle class family and even like the poor family, when one of the breadwinners no longer has a job, what was a rosy financial picture starts looking dingy and grim.  Because this family had been affluent, there is room for cutting back and for making lifestyle changes to adjust for lower income. They sell their expensive cars and buy cheaper ones. They don’t spend as much money as they are used to. However, some of the bills of the affluent lifestyle remain and can’t be gotten rid of. Among these is the house with the now unaffordable mortgage payment. This once affluent family now faces foreclosure.

These stories are purely hypothetical, but hundreds of them play out daily in real life. In the first case, human emotion and the desire to make a child happy result in what to cold hard facts is an irrational financial choice. In the other cases, it is about continuing to pay the bills that continue to come in the mail even when the income to pay them is no longer there.

To suggest that people in financial trouble got there because of poor decision making is too simplistic. It is never that black or white. Emotions and circumstance play a role and one can’t predict what lies beyond the next turn down the road of life.

Can Bad Credit Cost You A Job?

In a recent CNN report, it was revealed that 60% of prospective employers run credit checks on job applicants and 13% do is as a matter of standard operating procedure. 

Increasingly, many employers believe that bad credit correlates to poor character and therefore justify their use of credit checks as a screening tool to help them find the best candidates.They claim that prospective employees with poor credit are more likely to steal or to cause trouble down the line.


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