Times Change; You Should Change Too

Spend it if you have it and maintain a substantial cushion for unforeseen emergencies, and say no to debt.

You may be lucky enough to have friends and family from the World War I and World War II eras.  Or perhaps you’re part of one of those generations yourself.  These people are known for their toughness, fortitude, resourcefulness and frugality.  Even during the best of times that followed in the ’80s and beyond, these hardy, values-driven citizens held on to their frugality and their money as if it were their last cent.

Yet, I don’t recall many yearning for what they did not have.  Instead they reveled in what they did have:  family, a home, their health and a few well-kept possessions.

Their frugality had roots in their immigrant parents, the Great Depression, unemployment and being without for so long.  Many wondered how they were so satisfied with so little and why the baby boomers are so self-focused and intent on having everything.  Even though today’s recession may be coming to an end, these memories and the times are testing our abilities to act in a similar fashion.

I’m thinking that this new mentality on debt and spending may be with us for a long time.  Forget about a return to normal times when frivolous spending and unnecessary luxuries ruled your mind.  This slowdown may well send another generation or two right back to where our parents and grandparents were on  spending.  Spend it if you have it and maintain a substantial cushion for unforeseen emergencies, and say no to debt.

Potential outcomes from this recession may include lower auto sales forever, the need for fewer restaurants and fewer golf courses, and less attendance at outrageously priced professional sporting events.  The potential positive outcomes may include more house parties and dinners at home, and an increase in the use of health clubs and similar mini-luxuries that cost very little and have redeeming benefits for a long time.

Don’t be fooled by the stock market’s short-term recovery.  Don’t be fooled by banks saying that they have plenty of money to lend, because they’ll only lend it to you if you have a fantastic credit score and really don’t need the loan.  “Spending is down, saving is up, paying off debt is now cool” – and I believe that these fiscal values will be with us for a long, long time.  Please adjust your lifestyle, investments and retirement plans accordingly, and appreciate what you have.

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John P. Napolitano
U.S. Wealth Management
uswealthcompanies.com
Phone: (781) 849-9200
 
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