|
|
|
MailTribune.com
  • Recession leads Americans to try to save more

    Some are smarting from a job loss, and others have been spooked by the financial crisis of friends
  • As crazy as it sounds, losing a $70,000-a-year job has been good for Marty Morua's finances. The former Wall Street stockbroker says the setback forced him to scrutinize his family budget and snip away at expenses. And soon, even with less income, their savings grew.
    • email print
      Comment
  • As crazy as it sounds, losing a $70,000-a-year job has been good for Marty Morua's finances. The former Wall Street stockbroker says the setback forced him to scrutinize his family budget and snip away at expenses. And soon, even with less income, their savings grew.
    First, he and his wife decided to live on her salary so he could be home with their 5-year-old daughter after school. Without a nanny, they saved $12,000 a year. He dropped services he didn't use on his cell phone — texting and video games — to pocket $250 a year. He took a defensive-driving course for a 10 percent discount on his auto insurance and dropped car-rental and roadside-assistance coverage, for an extra $150 a year.
    For holiday gifts, he turned to thrift stores and gave home-baked cookies. "When I was working, I didn't look at the price tag," he said. "In a strange way," he added, losing the job "has been a blessing to teach me how to become aggressive and wise about saving and ways to save — areas I never would have thought about."
    The recession has caused a seismic shift in the consumer culture, converting die-hard spenders into savers. A growing number of people, either smarting from a job loss or spooked by the financial crises of others, are scrambling to get out of debt, establish emergency funds, and add to their retirement and savings accounts.
    After having taken the first plunge by cutting holiday spending, many are seeking more substantial ideas on how to sustain their frugality.
    With the turn of the calendar, financial planners and counselors typically get an influx of calls from people seeking help with New Year's resolutions to save money. This year, the requests have multiplied.
    "Before, people came to us when they hit a crisis. Now they come to us as a preventative measure," said Emily Appel, director of the savings program at Capital Area Asset Builders, a nonprofit organization in the District of Columbia that mainly counsels low- and moderate-income residents.
    Demand for the services has increased so much, Appel said, that the organization has added classes. Also, she said, more middle-income people and young professionals are signing up. "When you see your friends go through financial crisis, you want to know how to prevent that from happening to you," she said.
    The savings rate in October reached 4.4 percent, up from 0.8 percent in April 2008. And some economists say they think savings will return to the 7 to 8 percent levels recorded before 1990.
Reader Reaction

      calendar