Guzzo the Contrarian

I happen to discover Donna Freedman’s post today at MSN Moneyblog Smart Spending site, entitled: How long will the ‘new frugality’ last?. I like the way Donna thinks. She has a lot of smart things to convey about personal finance, debt and frugal living, and she presents it well.

Well, I haven’t heard this phase “the new frugality” before so I decided to Google it to see if anyone else was using it, and lo and behold, I found out that I’m a little out touch (go figure). It’s the new catchphrase describing consumers’ financial adjustments to this current economic downturn.

We’ve all heard it described before in previous economic crises, except it went by different names such as: cost-cutting, downsizing, retrenchment, rightsizing, and even voluntary simplicity. There’s always a new name for each new crisis.

According to an excerpt from Donna’s post:

Will consumers keep going to thrift stores and eating at places that offer buy-one-get-one coupons? My sources say “no.” I’m betting that a whole bunch of people will go right back to their spendy ways, just as they did after the 1970s energy crisis. We didn’t learn a thing back then, and I’m betting we won’t learn this time, either.

Although Donna considers herself pessimistic concerning her viewpoint, I’d like to think that she’s just being realistic.

It takes a lot of effort for people to change their behaviors. The simple inconveniences some of us are experiencing today are just not serious enough to make an impact on someone’s psyche. It’s just human nature not to learn if there are no long-term consequences.

An economic downturn, a bear market, moderate inflation or even an outright recession may even not be serious enough to make an impact. It’s only when something dire happens that we’ll adjust our attitudes. It’s only when we don’t have enough money to pay our bills, not enough to eat, or a place to live, when we decide to change our ways.

Collectively, we haven’t reached that point in decades, and that’s the reason why we return to our spendthrift ways.

We haven’t yet experienced the hardships that most Americans faced during the Great Depression, or the voluntary hardships people incurred during World War II.

This Great Generation knew the value of a dollar. They knew what is was like to do without. They’re the folks who first coined the term “frugality”. I prefer to describe them as “old-school”.

Once we become old-school, we’ll understand and change our ways. Until then? Status quo ante.