CalorieCents

Last week there were two articles, one in the New York Times and the other in the Wall Street Journal, that certain statistics suggest that the American consumers are changing their spending behavior.

Though the Times says this could be “a period of involuntary thrift,” and that the “nation…confront an unfamiliar imperative: more Americans must live within their means,” I’m hoping this trend is more permanent.  I feel for the two families mentioned in the Times article. Changing your behavior at the midst of an economic recession must be very difficult. Ms. Barbaro’s situation is especially compelling because “her house demanded work” and her kids needed $25,000 worth of after school programs. It also mention medical bills but I assume the amount and reasons for those expenses were highly personal. With the exception of the medical bills, this is definitely a prime example of “keeping up with Joneses” and that is a great recipe to have your debt spiral out of control.

The Wall Street Journal article is slightly more alarming as it states that credit card delinquencies are increasing. In December, an average of 7.6% of credit-card loans were either at least 60 days delinquent or had gone into default, up from 6.4% a year earlier. The article also suggests that lenders are fairly skittish in lending out more money especially with the subprime mortgage meltdown earlier this year. A woman mentioned in the article has already reduced her Latte Factor and one man cut down his excess spending on DVDs and other electronic gadgets. I was most confused and alarmed when the article mentioned that some people will pay their credit cards first before their mortgage. Talk about getting your priorities straight!

I really do hope many people will learn from this situation and make sustainable, effective and permananet changes in their personal finances so that the next time an “economic crisis” occurs, they won’t need to make any drastic changes because they will be prepared and not rely on credit to get through the tough times.  Everyone must remember the most imperative personal finance principle: Spend less than you earn.

Are we starting to get it?

I believe the same day the Wall Street Journal article was published, the President had proposed a budget that increased the national deficit. Anyone enjoy mixed messages?