Does America Need to Wake Up Financially? |
17 Comments |
I might not have mentioned it, but I’m in Los Angeles this week, staying at a swanky hotel called The Omni. (I’ll tell you more about it after my stay, but it’s essentially free.) They dropped off a copy of USA Today yesterday and for the first in months, I read a physical newspaper. It’s a general interest newspaper, but the front page seem dominated by financial concerns. There is a “Nation’s gas gauge” in the top left showing how much the price of gas has changed in the last day and the price a year ago. (It’s 37% more expensive for the regular stuff in case you were wondering.) The cover story was, As food costs soar, it’s back to basics for meal planners. At least they didn’t have an article on adjustable rate mortgages rising and people foreclosuring on homes. Maybe the editor didn’t want to depress everyone on the same day.
That’s what America is faced with today. Food prices through the roof. Gas prices through the roof. Home prices through the roof. It’s going to cost you more money to commute to your job. The money you make there is going to less quantity or quality of food. Then you come home and worry about how you are going to pay the mortgage. At least basic clothing is relatively cheap, right?
As Ben Stein says, this isn’t so much of a problem for the highly skilled/educated lawyers, doctors, investment bankers, etc. When you bring in six figures or more, you can usually a few hundred dollars a month. However, if you are on the lower pay scale you likely have bigger problems. The rise of gas and food is huge. When you might have been scraping by before you might be in even bigger trouble now. In the aforementioned article, Ben Stein is quick to point out that “Since [1974], real wages both hourly and weekly for all non-government workers, on average, have fallen by about 5 percent, very roughly.”
I’d like to revisit that USA Today article on food costs. It is filled with anecdotal evidence of people reacting to food costs:
- Retirees Sally and Robert Jones reverted back to some of the menus that got them through graduate school, living on beans, stews, and soups.
- Nancy Sierra eats peanut butter and jelly sandwiches for lunch.
- Tiffany Nicosia whips up new recipes with whatever is left in her refrigerator.
- Rebecca Woods and her family of five saw their grocery bills double from $800 to $1,600 a month.
However, the part that I want to focus on is the Rebecca Woods quote:
“We were eating whatever we wanted — yogurt, bagels, name-brand cereals. I wasn’t looking at the price of anything. I was at the point where I bought the same thing every week. I ran into the grocery, I bought what I needed and ran out.” Later she says, “I realized we were sinking financially and couldn’t go on that way.”
Are you like Rebecca was - spending money without looking at the prices? Do you know someone who is? Do them a favor and use the little e-mail icon at the end of this story to send them this article.
This post deals with:adjustable rate mortgages, food costs, food prices, gas prices, mortgage
... and focuses on:Economy
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July 13th, 2008 at 11:17 am
The examples newspapers offer in these types of articles are always so underwhelming to me. The headline screams doom and destruction, and the example is someone is having to clip a coupon, give up a croissant once a week, or not buy mega-premium dog treats. It seems like a disservice to the stories themselves and to the people who are really struggling to save every dollar to focus on such minor “problems.”
July 12th, 2008 at 2:30 am
I think they weren’t using coupons, store circulars, or any cost-cutting methods. Pick up some nice steaks and cheeses and maybe it can get to $1600 a month if you aren’t looking to save.
July 11th, 2008 at 10:40 pm
I should add that the aforemtioned accounting is for two people per week. I’m sure you could do much better non-organic, but when your body knows ‘good’ from ‘bad’ it’s hard to go back to the regular nasty!
July 11th, 2008 at 10:38 pm
I hate to pick at someone else’s life, but I guess I will anyway: how on earth do you spend $1600/month on a family of five’s grocery bills?!
We eat about 75% organic, down from 100%, and I now carefully spend max $100/week. On a stock up month, I could go $200 on a Whole Foods stock-up trip that lasts at least 3 months–also cutting out that particular week’s trip. (And belive me, coupons & store circulars are flying in the process!)
Perhaps food diaries are in order here?
July 11th, 2008 at 2:00 pm
Or perhaps how much they spend on fuel and food that they don’t have anything left to spend on other things.
Until we spend so much on basics that we can’t afford the TVs, additional cars, and other extras, I don’t think we have too much to worry about.
July 11th, 2008 at 1:36 pm
I think this reflects how little some countries have to spend on things other than food and fuel.
July 11th, 2008 at 1:28 pm
How about a little perspective:
http://www.economist.com/daily/chartgallery/PrinterFriendly.cfm?story_id=11693372
I am about to head to one of those red countries for ~10 months, with a 75% pay cut. Maybe I’ll start noticing how tight my budget is then.