Monday, October 20, 2008

The Pain of Not Spending

I was listening to Planet Money on NPR (I recently subscribed to this podcast that updates me on the economy everyday and explains it in a way I understand). The episode was called “The Pain of Not Spending.” They talked about the recession and said spending was down 1.2% in September. It doesn’t sound like a lot, but apparently it is. They said that’s enough for you to notice a drop in inventory and a drop in prices.

A drop in prices sounded great until they talked about the pitfalls of deflation. Spending is an important indicator of a recession and they said in September the American consumer was our last hope for the economy, but people stopped buying things. I haven't felt the pain yet.

So here they are telling me that the consumer is hurting the economy by not spending money. Yet, we’re told not to live beyond our means (even the guy explaining this said he’s cut his living costs). Getting loans that we can’t afford to pay back is a big part of what’s wrong with the economy, right? It’s a big part of all the foreclosures and the banks not wanting to lend to each other, right? So is it people with money that aren’t spending it? Is that the problem?

For a few days now, I’ve been thinking about how much money I spend. I mean, I’m always thinking about what I spend, but lately I’ve realized I’ve been spending a lot more than I usually spend.

I bought 4 items at Costco the other day and spent $60. And I spent $40 at the grocery store the day before – that’s $100 on groceries in two days. I remember in college I got by on $50 a month. I ate a lot of soup and peanut butter sandwiches, but I got by.

I eat out a lot more and I cook more elaborate meals. I also have more money than I used to. But still, I think saving money is fun, so despite what economists are telling me to do, I’m going to stop spending money – for a little while.

I decided to see how long I could go without handing over cash or my credit card. I have a freezer full of food, I have a tank full of gas and I think I’m going to try it. I’m giving myself through Thursday (I have a hair appointment on Friday). So if I count yesterday (and I’m going to) that should be 5 days of not spending. I’ll report back and let you know how painful it was.

Now, don’t get all literal on me and tell me I need to turn off the water and gas and everything – utilities are excluded from this exercise. I went to the dentist for a crown today, but I don’t plan on paying him for awhile.

And if you think it would be funny to tempt me by inviting me to lunch, you’re right. That’s funny. It’s also mean. But I’ll still say yes; I’ll just eat before I go or pick off your plate. Or I have a coupon for a free lunch at La Sage Bistro, we can go there. Or you can buy my meal and I’ll get yours next time.

I’m trying to think of the random expenses that could come up…this should be interesting.


Cameron's Corner said...

That's a great idea. Except we're out of paper bowls at my house. We need paper bowls before I do something crazy like "stop buying stuff".

We also need more Eggo's.

Kristi said...

I'll be interested to see how painful/not painful it is. If it isn't too painful maybe I'll try it. Who am I kidding? I probably won't.

Ilene said...

Dan and I decided to stop spending money on wants for awhile. Of course I totally excluded my hair appointment from that goal. Even Dan agreed (which is a sad statement on my hair).

Steph said...

I think it's so interesting to figure out what you spend money on. I track all my purchases by category (nerd!) and it totally helps me see where I can cut back.

Liz said...

I love this game! I play it all the time, it's called I have a husband in graduate school and we are living off loans! But, in all seriousness, it's pretty amazing to see where all your money goes, and the stupid things you think you need but really don't. Keep me posted on how you do!

Maria said...

I still haven't totally adjusted to how expensive everything is in New York. I'm afraid to do the calculating...seriously. When I just quickly starting thinking in my head, I have to stop at spending an average of $40 on food a day. It makes me sick to my stomach.

Annie said...

I actually went 5 days last week without spending any money and it felt really good! I felt more in control of my money by not spending it on lunches and things that didn't matter. It makes me want to pack a lunch. Of course the fact that there's construction all around and all of the close fast food places have closed also helps.

Kelly Durham said...

We just started using to track our budget a little better. Seeing all the little things I was spending money on REALLY helped me (it analyzes all areas of your spending and makes awesome graphs for you). Before last night (when we hit the grocery store pretty hard), I hadn't spent money in a week! I can't wait to hear how your experiment goes.

Alex said...

I did that in college too. Well I didn't really spend the money because I didn't really have it, but it's the same thing. I tried it when I was living in Vegas and spending money like crazy. It was really hard at first, but I seriously saved up a ton of money by doing this every once in a while. It rocked. Well good luck!!!

SRA said...

Its Tuesday...soon to be Wednesday...hope you're holding out successfully.

For me, it's not a matter of how much I spend, but how much I save. I have managed to overbudget groceries the past two times by about $30 each time. Coupons are great. :)

Also, I closed my savings account and opened a money market account because the interest rate is better and it is helping me to save the 3 months' worth of expenses I'm working on saving up.

I'll continue to spend, but I'm more into smarter ways to save now more than I was even a month ago.

Hilda said...

My biggest cut back was on eating out. I realized I was spending way too much money eating out with co-workers. So I've now limited my eating out to maybe once a week. It's saved me a ton of money!