In a shady alley in New Hope, Pennsylvania, a silent revolution in American culture may be taking shape. There, a family of four lives in a white Colonial-style building, in a way that until recently would have been considered quintessentially American but recently has come to be seen as odd: they live frugally.
We present to you Leah Ingram, Bill Behre and their daughters Jane, 13, and Annie, 11. They walk most of the time, rarely go to restaurants, sometimes buy their clothes at consignment stores, and they turn off the light when they leave a room.
Their story is not the worst one can find in the midst of a recession. The Ingram-Behre family are middle-class, full-time workers, and not directly threatened by the panic gripping Wall Street. Bill, 43, is dean of the College of New Jersey and Leah, 42, is both a bestselling author and an expert in American etiquette. They have no debts on their credit cards.
A little over a year ago, the family was trapped in the culture of “consumer-at-all-costs”. When real estate prices were stable and credit was easy, they took out a $101,000 loan for a previous home and spent lavishly to improve their standard of living (they went on three cruises in two years, and took the children on annual pilgrimages to Disney World). “After 9/11 it became patriotic to shop, and we became just as patriotic as everyone else,” laments Bill, sitting in his dining room after a meal of sautéed chicken and tap water.
Leah and Bill are precursors to the dawning era of frugality. People who consumed excessively during the last decade now reject their extravagant lifestyle. They spend less and more wisely. Some are getting their finances in order. Others are scared of losing their jobs, shocked by the depreciation of their investments, lost amid the general uncertainty.
Greed is already making its appearance. This quarter could be the first decline in household consumption in 17 years. With the credit crunch and the fact that Americans are already heavily in debt ($2.6 billion), consumer lending has crashed, something that hasn’t happened since 1991. Menzie D. Chinn, Professor of Economics at the University of Wisconsin estimates that consumers will no longer spend freely in the next five years.
Which brings us to what John Maynard Keynes calls the paradox of thrift. What is beneficial to the individual, explains the famous economist, can ignite or worsen a recession. However, this will not deter new frugals. “I can’t help the economy,” said Kim Schultz, a resident of the hard-hit town of Avoca, Michigan, who, along with her husband Jon, is $40,000 in credit card debt. “I have to solve my problems”. On the other hand, this new austerity “could” turn American spenders into savers. This could help the economy get back on a healthier footing, but it will take some time.
Savings have had mixed fortunes since the country’s creation. In the 19th century McGuffey Reader, Benjamin Franklin was held up as a model of virtue by his frugal lifestyle. Later, people who went through the Great Depression were somehow scarred for life by this experience. A case in point: Bernard Handel, an 82-year-old resident of Poughkeepsie, New York, who grew up in the Bronx. In the early 1930s, his father’s grocery store went bankrupt and he could not find a job for several years. To this day, although having become rich, Handel uses discount coupons for his groceries, drives a Honda and prefers to take the subway rather than a taxi. “I don’t believe in throwing money away,” he explains.
A BRUTAL AWAKENING
The baby boomers that followed grew up without the trauma of the Depression. And their children were born during a time of abundance, ease of obtaining credit and appetite for luxury. It is therefore no longer surprising that the sudden need to save represents a real shock for many citizens. Some believe that an awareness campaign is necessary in view of the success of the campaigns against drunk driving and against smoking. “We want to rehabilitate saving in our culture so that it is no longer perceived as strange but rather as a boost for later,” explains Barbara Dafoe Whitehead, member of the think tank “The Institute for American Values” and co -author of a report on savings recently published by the group For a new thrift.
The road to a less wasteful lifestyle is strewn with certain difficulties. For example, Bill Behre takes a mobile phone out of his pocket and manipulates it to stop the flickering of the fake diamond glued by his daughter Annie, while waiting for her to have a new device. Bill’s phone was damaged in a storm, which is why he’s been using this colorful second-hand phone until he can get a free replacement next March. “It’s the ultimate in frugality,” he exclaims.
It all started with Leah. She was raised by a very thrifty mother, but as soon as she married Bill, her mother’s influence waned and she was left with $30,000 in credit card debt. No control of expenses took place until the early 2000s, when the family was seized with a buying fever.
Things took another turn when they moved into their new home. Despite the raid on their retirement fund, they ended up with higher monthly repayments. Leah still remembers May 24, 2007, the day they sold their previous home, and realized her family would only get back $60,000 of the $490,000 from that sale. “I was sick of it when I realized the impact of our way of life,” she says. She then made a pact with her husband: they decided to live more frugally. Then they broke the news to the children. No more cruises or stays at Disney World. They will have $20 pocket money every month and now walk to school, shop or visit friends.
The girls were surprised at first. They then realized that their comfortable, materialistic life was changing. Annie whose parents tolerated all the whims suddenly had to go to the second-hand store “Plato’s closet”. Now the girls have gotten used to their new way of life.
However, staying the course requires vigilance. When Leah allows herself to drive, she’s always trying to figure out if driving a few more miles to reach a cheaper gas station would benefit her. And the few times they go to a restaurant, she feels guilty. “I want to continue to be responsible,” she explains, “I don’t want to do it again.” So far, the new system is working. Before, the family was overdrawn by an average of $300 each month, and dipped into the funds collected from the sale of their previous house to balance it out. Now they manage to save $800 a month. Since the implementation of the big change, they have accelerated the repayments of the loan taken out for their car and managed to pay it off in full.
Leah maintains a blog, titled “The Lean Green Family” where she urges others to live more frugally. She and her husband admit to having learned many lessons from it. One of them is to be flexible: indulge yourself once in a while. Another is to have a goal. They are saving to afford a recreation room. “Living frugally is equivalent to being on a diet” explains Behre, “the project is more viable if you have a goal”.
With rising unemployment, many Americans will personally learn their own lessons in frugality. This is the story of Ned Penberthy, 53, a representative who lives in Pelham, New York. He recently got a new job, took a pay cut, and has since lived a most austere life.
Penberthy says it’s for a while and wants to save as much as possible for years to come. He installed energy-saving light bulbs in his apartment and replaced most of his household appliances with ones that consume less energy. For him, there are no small savings. For example, he replaced his shaving foam with a shaving toilet bar. He claims to save $6 a year this way. “It’s not huge, but the benefit I derive from it is psychological.”
Like many baby boomers, Ned has a nest egg, a little nest egg, but many people in their twenties and thirties have very little to spare. To sustain themselves, they must learn the difference between necessities and discretionary spending. “They need to go back to Maslow’s hierarchy of needs: food, clothes, shelter, and travel,” says Kristine E. Miele, a “financial planner” who offers “life lessons” classes to wean young consumers. of their spending habits, a luxury these days.
Before, people went shopping when the weather was nice. And today ? Consumer behavior studies show signs of change. Booz and Co recently conducted a survey of approximately 1000 households. Among other results, 43% of people surveyed claim to eat more at home and 25% claim to reduce their spending on leisure and sports activities. In both cases, the majority say they will continue to live like this even if economic conditions improve.
