Thursday, February 26, 2009

Frugality in These Days

So how does it work to be frugal now? I'm not sure. On the one hand, I want to hang onto my money, knowing that I'm going to be darn short of it in the near future. On the other hand, money is going to be losing its value pretty darn fast, so why hang onto it?

How frugal can a person be, anyway? Normally, we would be weighing the cost of going out to eat against the cost of 2-3 days worth of groceries for the family. Or weighing the cost of a roast for dinner against the cost of a bottle of digestive enzymes that will last the family about a month. Things like that. Is it worth it to buy the season pass to the county parks? Should we buy a subscription to the magazine that would help with homeschooling? How soon can I start hanging clothes on the line instead of paying to run the dryer? Can I continue to live with the flat [ie, unwashable] paint on the walls, or do I spend money (and time!!) on painting? Do we buy high-quality, unrefined foods even though they're more expensive, or do we buy whatever is cheapest? There are many things I think we "need," but when I think of where the economy is going, it's hard to think in terms of "need" when I fear we will be needing rice and beans so that we don't literally starve.

Yesterday we were reading in Penny Candy, and I realized why I'm confused about how tightwaddish to be right now. The author was reviewing the three stages of reaction to inflation. When the government increases the money supply, the first reaction is for people to hang onto their money because they don't like the rise in prices that results from the government inflating. The later response is for people to want to spend their money posthaste, quick quick, before the prices goes up higher. We finally proceed into runaway inflation when nobody wants to have money because it's so worthless, and we just gotta exchange our money for anything --ANYthing-- that has some value and can be traded for whatever else we may need.

So are we now in the stage where we hang onto our money, or where we are ready to get rid of it? And I don't know. On the one hand, I don't want to start spending spending spending, so as to have something --anything-- of value. If the results of the govt's inflation don't set in for a few years, then I want to have access to some money. But if the fallout hits soon, then what's the point of saving anything?

I guess this is part of the uncertainty that the economists talk about. How can businesses (or families) make plans for the future when nobody has any idea what changes the future holds?

1 comment:

  1. This is what we've been talking a lot about lately, and also about what on earth it makes sense to be doing as far as contributions to 401Ks, etc. We have started--slowly--doing some stocking up on things we are going to need whatever happens: batteries, TP, lightbulbs, ammo, cat litter :), I'm watching for underwear & socks on sale, &I'm working toward being three months ahead on our vitamins, etc. This is on top of the food that we keep.
    It is disconcerting because we know the rules as they have existed, and I think that we are only seeing the beginning of the change.