Janie BoschmaEarlier this week I was fortunate enough to come across a quite lengthy article on MSNBC.com. It was part of a special report series called “Gut Check America” and the headline of the specific article I read was “Life is harder now, experts say.” My gut check told me that idea was a load of . I’ll let you finish the sentence.
The gist of the article is that economically, life is more difficult today than it was thirty years ago in the 1970s. The author of the article led off expressing my exact viewpoints. He said something along the lines of how malls are busier than ever; restaurants are busier than before and people are still buying the newest Air Jordan’s, Prada and Gucci. They wear designer clothing and are constantly in line for their $4 latte at any gourmet coffee house. Yet they all still complain that they pinch for pennies and they can barely make enough money to stay afloat.
In the midst of record foreclosures on homes and the Federal Reserve bumping down interest rates by a half of a percent, it is easy to see this struggle.
However, experts such as Harvard law professor Elizabeth Warren claim that people are spending a significant amount less on discretionary items such as the lattes, expensive cloths and entertainment than was spent in the early 1970s. She claims, through her research, that the basics such as mortgage payments, health insurance and the like, take up about 75 percent of an average person’s monthly expenses, where as in 1973, that number was roughly 50 percent. That, she says, “leaves little left over at the end of the month – leaving no cushion in case of job loss or a health crisis.”
This all may be entirely accurate. People might be spending a smaller portion of their income on discretionary items and spending more on homes, and other mandatory expenses.
I feel a portion of this is a reflection of our society’s mentality that everything must be bigger and better and that we need more of it.
Depicted in the article was a mock budget for a family in the 1970s and a family today. It showed how 30 years ago the husband was the only one gaining an income while the wife stayed at home, where now both are in the work force. It also depicted how we now typically pay for two cars as opposed to one.
Today’s society feels it is a necessity to have two cars, both of them new SUVs. No wonder people feel squeezed – they go out and buy the extravagant, unnecessary things. There might be a need for two cars now that both spouses are in the work place, but they don’t have to be new and certainly could be more fuel efficient than a clunky SUV. Spending $100 every two weeks as opposed to $100 every week on fuel saves $2,600 a year. Money that could instead go towards that house payment or the insurance bill.
When looking beyond vehicles, I believe our “bigger is better” mentality plays a role in the increasing cost of homes. My grandparents live in a cozy, three-bedroom, ranch-style house, which today could probably go for, staying on the conservative side, $100,000, but most likely much less. Today, people don’t want a ranch-style home with an unattached garage. Instead they want a two-story home with triple the square footage and an attached three-car garage to store their two BMW SUVs and a their boat, or their children’s car, which they could go without. I grew up driving my parent’s cars and shared with my brother and now I don’t have a car. Yes it can be done.
People need to stop spending their money so frivolously. If they are finding themselves in a pinch, not being able to afford health insurance, which has only gone up $840 since the early 1970s according the article’s budget, then they should stop going out to Starbucks and buying a frappuccino, buy a more fuel efficient car over an SUV and stop trying to keep up with the Jones by buying a new plasma HDTV with DVR and other alphabet soup technological gizmos.
I am one who, when he came to college, had freedom of his money. It was extremely easy to spend that money on things that were definitely not necessary, such as the Dave Matthews Band box set Live at the Gorge, which I don’t listen to hardly, if at all, anymore. However, I have learned over these years to control these spending urges if I want to be able to afford things necessary to my survival in the future.
I am in my second year living off-campus and the realization to be more frugal has hit home even more. Now I have to pay rent, electricity and groceries. If I want to make sure I can afford all that on the peanuts I make at my jobs, I need to be attentive to unnecessary spending. I save $60 each month by not having cable. I make sure I get my out-to-eat fix when relatives visit and the last CD I bought was a year and two months ago. I’ve made sure that discretionary means unnecessary in my vocabulary. As a result I have seen savings increase, despite the increased fixed expenses. Coincidence, I think not.
Now I know there are people in this country who are legitimately trying to cut expenses, only buying what they need to survive and still struggling to say afloat, but there are also people who are complaining for the sake of complaining.
People can increase their savings, despite the fact that Warren says it is difficult because of increased fixed costs. All it takes is to cut out unnecessary lattes, Ralph Lauren polo shirts and new gadgets every week. Giving up a new car when you can buy last year’s model for a few thousand dollars cheaper will ease that house payment and making daily cuts will really bump up your savings. And then hey, go treat yourself to the new Jimmy Eat World CD for money hard saved.
