Wikinvest Wire

A shocking new concept - living within your means

Tuesday, March 18, 2008

From Reuters comes this story (hat tip MM) about a crazy new idea that's now sweeping across the country - living with your means.

The next thing you know, people will actually begin to save money.

After years of living large, U.S. households are finally learning what financial experts thought they never would: to live within their means.

Economists have long warned that the U.S. consumer was on an unsustainable spending frenzy and that savings rates were dangerously low. Now, families are being forced into financial responsibility by the housing downturn and a weakening economy.
Theresa Parks is a case in point. Parks, 36, paints lines on roads and highways for the city of Atlanta for a living. She bought a home in 2006 for herself and her three daughters in the suburb of Riverdale, but fell behind with her $669 monthly payment.

Her lender agreed last September to a repayment plan that required an additional $188 a month through to June 2008.

"We had to cut eating out at restaurants and we had to stop shopping," Parks said. "That was the hardest part for my teenage daughters because they love to shop. But I sat them down and we agreed we'd do anything to keep our home."
As the U.S. housing crisis deepens, many more Americans will be forced to budget to avoid foreclosure, with serious implications for an economy teetering on the brink of recession.

"This is going to take a bite out of consumer spending and is an ominous sign for the economy," said University of Maryland business professor Peter Morici. "We are in a recession that was manufactured on Wall Street by the major banks."
It's the end of life as we've known it, here in the U.S.

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Anonymous said...

wow, those kids are troopers.
To have to sacrifice going shopping for the sake of keeping the roof over thier heads. I tell you, kids sure have it tough, and to keep them from the malls is just another insult this cruel world has thrust upon them.

Anonymous said...

Makes me think of the SNL skit "Don't Buy Stuff You Cannot Afford":

EconomicDisconnect said...

From Bloomberg:

!For Immediate Release!
Federal Reserve Rejects Certain Assets for Use in the TSLF

The Federal Reserve has issued guidelines on the types and quality of assets that can be exchanged at the months end TSLF. To answer repeated queries from participating banks, the following is a list of non qualifying assets:

-Horses with horns glued to their head (not a true unicorn; true unicorns ARE accepted)
-Charmin toilet paper, unscented only
-Enron preffered stock certificates
-Pet Rocks
-Cabbage patch kids
-Ishtar special edition DVD's
-E.T. the Extraterrestrial Atari 2600 video game cartridges
-Free tanning Booth vouchers (we mean it Mr. Mozillo!)

Please contact your local Federal Reserve Branch bank for more information.

Tim said...

Funny! I was trying to think of that half-man, half-donkey thingy when I came across this page at Wikipedia: List of Legendary Creatures. There are hundreds and hundreds of mythical animals for them to consider.

Anonymous said...

Ha, you're right that starting to save would mean the end of America as we know it. No more plastic pumpkins from China, if we aren't consuming ad nauseum.

If people stop consuming on credit and begin saving their money, that would just put more stress on the economy in the short term. But it would be much better for the country, since those savings could be used to finance more productive capacity in the future.

Nothing like being threatened with the possibility of being thrown out onto the street to teach a family to pay its mortgage on time and live within its means. Now if the banks could stop inflating the money supply, those savings would keep some value.


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