Article published Feb 23, 2009
Expert says consumers should save for future, spend smartly.
By KIM KILBRIDE Tribune Staff Writer
Terri Sibaja has come up with her own version of unemployment insurance: Shelves stocked with enough food to feed her family of three for the entire winter. Tucked away in a small room in the basement of her Cape Cod in Mishawaka is an unexpected storehouse of food.
Shelves spanning 15 feet across, from floor to ceiling, are packed full of canned soups and vegetables, dried beans, rice and pasta, flour, sugar and evaporated milk.
It's all about saving money, she said, taking advantage of sales and stockpiling during the warmer months when her husband, Jose, a painter, is busy.
Now, the family can eat almost exclusively from its reserve to make it through the cold-weather work slowdown and the recession. South Bend mom Tama Crisovan belongs to a cooking group that meets monthly to swap homemade frozen meals."
As the economy has tightened," she said, "rather than making six meatloaves (to exchange), we'll cook beans from scratch and bring six containers of chili."
It's hard to say how much money she's saved by the endeavor, she said."But, I don't have to have that pizza night where I spend $20," she said. "I have ready-to-go entrees in my freezer."
From scaling back on cable and Internet services to brown bagging it to work and cooking more meals at home, it seems everywhere you look these days, people are finding ways to cut corners. In some cases, folks who once were loyal donors to local Salvation Army thrift stores are now the customers.
From October of last year through January of this year, Maj. Timothy Best reported, sales at the Salvation Army's seven area thrift stores were up 12 percent to 15 percent."
Anecdotally," he said, "we're hearing people can't afford to shop elsewhere."
Goodwill of Michiana, which operates some 20 thrift stores, also reports an increase in sales since last fall.
Across the country, people are also saving more -- 3.6 percent of their income in December compared with negative numbers just months earlier -- because they're somewhat uncertain about the future and they're concerned they won't be able to draw on easy credit to finance major purchases.
Heck, even Oprah recently featured "The Thriftiest Family in America" on her show. It seems that frugality, once a term reserved for miserable misers, is now stylish. But, is what's good for families also good for the economy?A flip side to thrift?
Grant Black, an assistant professor of economics at Indiana University South Bend, explained what's known as "the paradox of thrift." There are two opposing schools of thought on whether spending or saving is best.
One view, he said, is that spending in the short run is good because it drives a lot of economic activity. More consumer spending leads to an increase in output among businesses and potential job growth.
On the other hand, Black said, savings allow financial institutions to loan money to businesses and individuals." This is important for longer-term growth," he said.
Can a healthy balance be struck between mindful spending and saving?" People need to be smart spenders," Black said. "It's not good to sustain high levels of debt."
That said, even during recessionary times, prices and interest rates can drop. Then, he said, "People can spend a little more or borrow a little more with lower prices and easier lending (terms.)"Will it last?
Will Americans who adopted newfound saving ways sustain them after the recession?"
It's unclear," Black said. "I think we're going to have to wait and see." Unlike their predecessors who lived through the Depression, he said, today's generation tends to have the view that everything will always turn out OK.
Sibaja, meanwhile, said she figured out a way to strike a balance between curtailing her family's spending on food this winter and enjoying an occasional meal out. She asked for gift cards to restaurants for the holidays.
"Some people think that's impersonal," she said, "but it didn't feel that way when we were (out at a restaurant) eating our steaks last week."
Asked about her new, in-vogue attitude about money, she laughed. "I don't feel sexy. It's just necessity that's caused me to use what we have instead of going out to shop.
"When the recession's over?
"Yes, since I'm on the 'Dave Ramsey Debt Diet,'" she said, "my miserly ways will continue."
Staff writer Kim Kilbride: email@example.com (574) 247-7759