The downside to cutting back
My recent story on how to cutback your budget suggested you stop eating out as much, reduce visits by your maid and/or gardener, and split a nanny. I didn't think it was controversial stuff, but one reader felt otherwise and told me sol.
"Ms. Scott's intention is to show people how to save money in this precarious economy but in doing so, albeit inadvertently, she is adding to the recession," wrote Gary, the contrary reader.
"When people buy more, it creates jobs as more production is needed to fill the demand," he said. Indeed, many of my recommendations were to cutback spending on other businesses (gyms, salons, nannies).
The question is whether these types of cutbacks will have a small effect (businesses lose a few customers but you save money) or a big effect (job losses across the economy.)
No matter what effect cutbacks like this will have, each person or family has to decide...
...whether their spending (and saving) habits are appropriate for them.
If you are going into debt to pay for many of the things I suggested cutting, scaling back is probably a good idea. It is extremely difficult to save money when you are paying double-digit interest rates on your credit card balance. Without savings, you are putting yourself at risk.
If, on the other hand, you have a comfortable nest egg and stable jobs, severe cutbacks driven by fear may not help you or your community.
I respect Gary as a fellow bargain hunter, even though he has a different opinion than me. What won me over was that he took the time to share his own suggestions for cutting back (some of which you might remember from past blog posts on the Bargain Hunter):
-Drive less and save on fuel costs by driving more efficiently and pooling errands
-Stop using plastic water bottles and grocery bags. Instead reuse glass bottles and cloth grocery bags
-Have a garage sale or a neighborhood flea market to clean out items and make a few bucks
-Drink brewed coffee instead of fancy drinks like lattes and espresso
-Replacing paper towels and sponges with rewashable small hand towels
-Save scrap paper so you can use the one remaining, good side
Thanks, Gary!
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About The Bargain Hunter
Daily News staff writer Julia Scott loves to find bargains on everything from groceries to Gucci. Her tips will help keep your hard earned cash where it belongs - in your pocket.
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I agree with Gary to some extent. Cutting back your nanny's hours or your yard service is essentially giving someone else a layoff. You're passing on economic distress to someone else who may have less of a cushion than you do.
What about using more coupons or using less electricity and other utilities to help cut bills? This would be a good winter to make sure your hot water heater is wrapped and your windows are sealed.
I think it's all a matter of priorities. A family who is struggling may cut back on vacations, entertainment or shopping in order to keep up on the mortgage on their house or their kids' school tuition. And really, in these times, is it wise or ethical to encourage overspending by only offering 'buy one, get one at a discount' coupons?
I appreciate the money-saving tips on the Bargain-Hunter blog, even if I have read some of them before...
I was laid off almost a year ago so I had already started cutting back on things, but I continued to support (if to a lesser extend) those places that I already knew I received good service, good value and good memories. One restaurant (a favorite since 1984) I made it a point to let them know that while the economy was tight, I did appreciate what they offered and would continue to support them in such ways as I could. I wanted them to know that they had a customer who did not value them less--the customer just had less money to spend. I think we can show our support to such places but we need to let them know we are making conscious choices, and why, so they know perhaps where they can cut back a little...or a lot.
Also: when it comes to services like maids and gardeners, they must be aware of the situation since others are no doubt cutting back some on their services as well. Check with your neighbors to find out if they might have use of such services...on the same day the maid/gardener would be coming to your place. Perhaps a new deal could be arranged so the service provider has the same costs (travel, etc) but more people to serve...and hopefully in better times, more money. Be willing to try to re-negotiate...if you were given options in your own job to work less hours but still keep your job, wouldn't you consider it?
Think creatively about your own contributions to the work...instead of blowing/raking leaves, etc, bagging them to be hauled away..start a compost pile (there are ready-made bins which are not unattractive)
Try to help your service providers if you can: I have seen postings on a local Yahoo group (nelalist) that their maid is available at such and such a time and she comes with very good recommendations. Someone else who uses her posted an additional recommendation too so both were giving support and assistance where they couldn't provide employment.
Here's the example (and check out other posts on the list then find out if there's something similar for your neighborhood. The NELAlist is the first place I check for advice, info AND saving money...
http://groups.yahoo.com/group/nelalist/message/22565
good luck,
Lynda