Futures: Charles Schwab, Barak Obama and me

I understand completely the importance of optimism about the future when it comes to social, political or economic change. One has to believe in positive future outcomes if one is to invest time, money, effort and hope in projects that will not come to fruition for months or years. I get it and, more importantly, I buy into the proposition that tomorrow grants us an opportunity to better ourselves and the world. So why do I find it irksome when companies hype the future, or when commentators pounce on some obscure economic indicator and turn it into the harbinger of prosperity? The new Charles Schwab ad says "Dwelling on the past won't help my future. Do something about it." Very paternal, Chuck. 

I think most people's problems from the economic downturn are not grounded in the past; rather, it's the present and very immanent future that most of us are contending with: drained retirement accounts, loss of jobs, cut hours, lack of available credit... While there is no doubting that years from now we'll look back at the 2008-2??? depression and laugh or grimace, but now is the time to think clearly about what we should be doing with dwindling, threatened or otherwise reduced resources. Pretending, as suggested by the Charles Schwab ad, that we're out of the woods and that our reluctance to go whole hog back into the stock market, or supermarket for that matter, is based on an irrational reaction to past events is foolish to say the least. 

Prudence is called for. While it might be tempting to bet on the stock market or take out more credit to get out of our current financial doldrums, we should be looking instead for sustainable solutions. Americans should not re-adopt their role as the world's economic engine. As we are finding out, the growth in the world's economy from 1995-2007 was largely based on consumers and companies overextending themselves on credit, on insane financial commodities and an irrational belief that real estate can leap in value year after year...forever. What a difference a year makes, no? How about more sustainable investments: a car that uses less fuel, appliances that use less energy, solar tiles for your home, community investments that bring quality of life returns, or an investment in education? These things won't make you rich, but some will allow you to save money and others will contribute to a genuine sense of well-being, which is what all the over-leveraging lo these many years was supposed to do, right? Here's to hope!   

The "new frugality" responsible for economic crisis?

The Wall Street Journal posted an article tagged "The New Frugality Worsens Downturn." The basic premise is that because of 2008's October surprise (i.e. the collapse of the financial sector, plunging stock market and the widespread destruction of wealth), American families, once the dynamo behind global economic growth, are beginning to save more, use credit less and live more within their means--leading to a sustained economic slump.

The author writes, "Americans, fresh off a decades-long buying spree, are finally saving more and spending less -- just as the economy needs their dollars the most." The assertions made by these kinds of statements is that the economy is sick and we need consumers to step up and do what they do best: go shopping. But this Bush-era argument is wearing thin in the days of post-Wall Street scandal. The fact is, Americans have been living far beyond their means for decades. Perhaps, just perhaps, after the illusions of wealth have all been dispelled and employment rates, car sales and stock quotes begin to reflect the reality that growth-at-all-costs is simply not sustainable, our expectations of what life is all about may also become more...reasonable. The GDP does not need to grow every quarter ad infinitum, the stock market does not owe you a 10% return on your investment each year, investment bankers do not need a 6-figure paycheck and nearly all Americans could and probably should make do with far less.

The "new frugality" is a harbinger of a society-wide adjustment of expectations. It is not a social malady, rather it is an opportunity for all of us to make conscious decisions about what kind of world we want to build on the ashes of outdated economic, ecological and social models--you know, the models that promoted the 60-hour work week, the 2-hour commute, over-scheduled kids, spouseless marriages, global warming, suburban sprawl, the collapse of innumerable species the growing gap between rich and poor, etc... No, the new propensity for families to save more and think more about what and how much they buy is an opening to a greener, more sane and sustainable future.

Put on a sweater!

I used to hear it every time we spent Christmas at our grandparents' house. They kept the thermostat somewhere around 65 degrees and one touched it only on the pain of death. As kids, we didn't understand. If it is in the low 20s outside, why not crank up the heat? For our grandparents, who were children of the Great Depression, it was purely an economic calculation. 

Energy prices are even higher today, so by being a little more thermostat conscious we could all stand to save some real money each year. By most estimates, for each degree you lower your thermostat, you will save 1% off your energy bill. The US Energy Information Administration reports that the average annual household heating bill runs about $1000. So, if your heating bill runs around $1000 in winter, and you typically keep your thermostat at 75, by lowering it to 65 you can save  $100 per year...just off of your heating costs! Just think of all the sweaters that would buy! Turning the thermostat down further at night and when you are away will help you save even more.  It is easiest with a digital thermostat (fairly inexpensive to buy and easy to install) which will automatically set temperatures throughout the day, although you should keep the house no lower than 55 degrees to keep your water pipes from freezing. In addition to saving some real cash, you'll be reducing your portion of carbon emissions by thousands of pounds per year (see http://www.stopglobalwarming.org/carboncalculator.asp)! 

For a more detailed account of how to become a world class thermostat tinkerer, see Annie Bond's post at http://www.care2.com/greenliving/10-thermostat-tips-save-money.html