LukeSnedden.com

How have you spending habits changed since Christmas?

I have noticed that my spending habits have taken a complete U turn!

My willingness to spend on items that I would have regarded as necessities last year has completely diminished.

Case in point: The iPhone.

When the iPhone 3g was released in New Zealand I was going to be the first in line to get one, then Apple and Vodafone announced the price, at about $1100 NZD, now that was quite a shock! I had imagined that it would come in around $700 so I had to wait until I had saved up the extra.

By the time I had the extra cash, the Global Financial Crisis hit.

Now realising that my job was in peril, I decided to hold off spending the money and wait until Christmas before purchasing. Cut a long story short, I still don’t have an iPhone. This was the start of a shift in my spending mindset. Consumerism was starting to die.

After the iPhone the first mindset shift I noticed was my behaviour while shopping at the supermarket. I began to take a harder look when buying anything other than the basics. Our basics are whatever will feed us for breakfast, lunch and dinner, with some very inexpensive snacks thrown in. Before this change in mindset we used to buy  ”treats” such as wine and cheese, and other incendentals which we would eat throughout the week, we may have bought a treat maybe three times since Christmas.

About the time I started writing lukesnedden.com I noticed that online the frugality craze had begun.

Many of the high profile bloggers such as Leo Babauta, Jonathan Mead or JD Roth preach the frugal lifestyle. I have been a little apprehensive, as there are somethings that I thought that I would not be able to give up in order to live frugally. However the frugal mindset seems to have snuck in the backdoor, we did not set out to live frugally however it seems that we are now living this way by proxy!

I think our change in attitude has come from two directions;

• We are living out of a suitcase each.
• The global financial crisis has highlighted how flimsy the world is when it is built on debt.

I am living out of a suitcase, that means I have at my disposal 4 tee-shirts, 2 pairs of shorts, 1 pair of boardies (swimmers/togs etc), 1 sweatshirt, 1 pair of jeans, underwear, 1 pair of running shoes, 1 pair of casual shoes and 1 pair of jandals (thongs). By default I am living frugally, I don’t have any room to do any different. Amanda has the same problem, all be it a slightly bigger suitcase!

The main reason that my mindset has changed however has been the onset of the Global Financial Crisis.

The GFC (that’s what the cool kids call it) has highlighted that when times are tough, you need all the cash you earn to be available. This means that if you have to service a large amount of debt, and the economy contracts you could be left in a situation where you cannot keep up with the repayments forcing you into a situation that requires you to refinance or liquidate. This situation is just as applicable to your personal finances as it is to business.

Our financial goals for this year are twofold;

• Eliminate debt.
• Save for our wedding.

So far the frugal lifestyle has allowed us to eliminate all our debt, which was in the tens of thousands of dollars. Eliminating debt has allowed us to be much lighter on our feet when reacting to financial shocks. Our cash-flow now is irregular, but having no debt has allowed us to implement a system by which our weekly spend is regular and provided for, even if cash-flow is lumpy.

Now we are concentrating on our wedding, if all goes to plan this should be knocked off by November.

So in a way the GFC has helped us reach a goal, debt reduction, which we should have completed ages ago, but due to our consumption habits getting the better of us we weren’t able to complete it. I guess you could say that in our case maybe Consumerism has started to die.

Now the GFC is helping us pay for a wedding, by eliminating debt we are able to tackle this goal much faster.

Our Consumerism has just received a huge shot of adrenaline because a wedding is the ultimate form of consumption, a one day event which has to be just so! (from both of our points of view).

Alas, Consumerism is not dead but it will be really sick for a while.

It will come back, but it is up to us to keep it lean and mean. Remembering to live life in a frugal way can help maintain a lean and mean consumer, we can’t have the return of the Consumerism of old, the overweight, debt laden, bloated pig of a man it was before the GFC.

A lean and mean consumer is not laden with debt that is unnecessary, they may have a mortgage, maybe a small motor vehicle loan that allows them to produce income. But not unnecessary debt such as debt for goods that depreciate quickly as soon as they leave the shop, like big screen TVs or credit card debt for that pair of jeans the just had to have!

We need to remember that while not all debt is bad, but, having to much debt can destroy our ability to maintain our ability to purchase necessities in tough times and reduce our ability to provide for events, like our wedding, which we will remember for the rest of our lives.