Oct 15 2008

This recession can ultimately be a good thing

I haven’t written much about the current global economic situation, but I’d like to now.

As I’m sure you know, we’ve seen unprecedented actions on Wall Street in the past few weeks. These turbulent times can be a bit scary, especially for people who might lose their homes or people close to retirement.

I’m betting that we have a long ways to go before the economy is back to normal and prosperous once again. It took a while for things to get in a mess, and it’s going to take awhile to clean up.

Still, I’m hopeful for the future, and I think we can all end up better than we started off.

People are spending less. Sure, that’s not a great thing for the day-to-day economy, but it’s great for individual’s bank accounts. When people spend less, use cash, and save more, their personal financial situation will likely improve.

Speculators claim that Christmas shopping will be down this year. That’s fine by me! Again, it will immediately hurt retailers, which can have a trickle-down effect, but Christmas is not about toys, gadgets, new clothes, decorations, or presents. We’re supposed to be celebrating Jesus’ birth. Maybe we can all focus more on that this year instead of how some little kids might not get a Wii or a Tickle Me Elmo or whatever the “hot item” would have been this year.

It’s harder to get loans. In the short-term, that means car dealerships and retailers will see a drop in sales. Maybe their losses will be so significant that they’ll have to lay off workers and cut production. When that happens, it’s hard on many people obviously.

But if people can’t get loans, maybe it’s because they’re trying to borrow more than they can afford. Maybe they aren’t so deserving of credit to begin with. Maybe that person who needs a new car will find a cheaper used model, pay cash for a car, or use public transportation. Not as fun as driving a brand new flashy car, but hey, it’s better to live within your means anyway.

People are eating out less. If they’re eating meals at home, then they’re saving money on gas to get to the restaurant, money for the food, and tip. Their meals might be healthier, and they’re likely cheaper than a restaurant would have charged. Yes, this hurts the wait staff, other restaurant employees, and certain food distributors. But sorry, if I don’t have any money to go out to eat this week, I’m not going to put it on my credit card to save the restaurant economy.

More people are starting to see the value of getting out of debt. Credit card debt really is the pits. I’ve been there, and I don’t wanna go back. If more folks start to save up for purchases and pay off their credit cards for good, that’s a great thing for the average person and a lousy thing for credit card companies.

Maybe a few years from now, this whole thing will have blown over and people will be back to their old ways. I hope not. I hope we can all learn from this situation — policy makers and average people alike.

If we’ve learned that hey, you really do need to have a “rainy day fund,” get out of debt and stay out of debt, not drive a car you can’t afford and certainly not buy a house beyond your reach, then I think this whole slump would have been worth it. There will be another bubble bursting in the future. There will be more recessions in our lifetimes. We can’t personally control the economy, but we do have a bit more say in our financial situation.

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10 Responses to “This recession can ultimately be a good thing”

  1. Amen! This is exactly what I’ve been thinking lately. I’m hearing all over the place that the best thing we can do for the economy is to keep spending. I don’t think so. I think that’s what got us into this mess to begin with. If this crisis forces every one to be more frugal, it will have a negative impact in the immediate future, but if we maintain that mindset, it’ll ultimately be a positive thing when the economy eventually stabilizes.

    Karen @ Living Well on Less’s last blog post..Time to redeem MyPoints … what to do?

  2. Hi Kacie,

    I do feel badly for those that loose employment, etc due to this crisis. BUT I totally think some good things are happening.

    The citizens of our country are stopping to THINK about where their money is going. And PLAN their spending. Oh, how much better our country’s financial situation would be if we all did that regularly!

    I am especially happy about people choosing to spend less money at Christmas. Gifts and fun celebrations are things we enjoy doing but Jesus is our main focus and the reason we are celebrating the holiday. I recently wrote something about a simpler Christmas.

    Here is the link for anybody that’s interested.

    http://farmhomelife.blogspot.com/2008/10/getting-ready-for-christmas.html

    Take Care,

    Trixie

  3. Great post. Stumbled.

    PT’s last blog post..Prime Time Money

  4. Hi Kacie, I agree with a lot of what you’ve said here. Obviously it’s never good for the economy to suffer, but I do think it’s a good thing to see things correcting themselves after such a long period of cheap and easy credit. I also think it’s a good thing that people are returning to the habit of saving for things rather than continuing with the buy now pay later culture which is what started most people’s problems to begin with.

    Really great post. :)

  5. What’s funny is that Christmas spending is projected to only rise about 2 percent, whereas it WAS projected to rise 4 percent. Headline?

    Christmas Spending Cut In Half!

    Things aren’t really as bad as everyone (read: government) wants you to believe. I have several friends in the financial industry, one of who is the president of a large bank and they all say that there is still plenty of money available, you just have to qualify now. Imagine that. QUALIFYING for a loan! LOL!

    Ron@TheWisdomJournal’s last blog post..Smart Moves and Hedges in a Bad Economy

  6. You make some great points, Kacie. The country seems to be in “consumption overdrive”–consuming more than we can afford, spurring production that isn’t really warranted, and therefore not sustainable….the pieces had to start crumbing sooner or later.

    If you look at the generations who experienced the Great Depression and WW2, they are some of the most grounded and frugal people out there. A country with more grounded and frugal people would be a good thing!

    Michelle’s last blog post..A Good Problem to Have, Sort of…

  7. I am with you on the Christmas thing. Last year we basically went nuts and ended up having to pay for our Christmas shopping with money we got for Christmas. Stupid! This year we are making gifts and buying the rest off of Etsy or making donations in the recipient’s name.

    Jenny’s last blog post..Breastfeeding and Poverty: An Ounce of Prevention

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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