mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Saturday, November 22, 2008

The decline of consumerism?

I read a lot of economics-related blogs along with some consumer blogs and finance forums that have an emphasis on frugality. The theme seems to be that most people are spending a lot less money on things, which is hurting the economy even more. Consumer spending numbers seem to be down, as well as sales from a lot of retailers.

This is contrasted with the anecdotal evidence - trips to the store don't seem to find it devoid of customers. This isn't terribly meaningful, though, because people make changes in spending at the margin - they buy less, but they still need food and clothing and the basics. They just spend less on it, and buy fewer luxuries.

I was talking to my dad a few weeks ago about the automaker bailout, and he commented "of course the carmakers are in trouble - everyone on the road has a new car!". Now, keep in mind that my dad drives a '98 Plymouth Voyager with ~130,000 miles - but he has a point. Lots of people - including me - have bought new vehicles in the last few years, and don't NEED new ones - so they are putting it off for another year or two. The same probably applies to a ton of semi-luxuries, like flat-screen tv's, home improvements, and the like.

So in this time of economic strife, what is madanthony doing? I'm thinking of stuff I want to buy.

I've splurged on quite a few things the last few months - brand-name clothes, a new petcam, taking care of some medical needs like glasses and dental work.

And I'm thinking about other stuff. One of those is a new computer - my current rig is a 3-year-old Celeron, and it's getting painful. I really want a mac desktop, and since I want to run dual monitors, I'm probably going to need to spring for a Mac Pro. Luckily my employer gives an interest-free loan for tech purchases, which makes the idea of a new machine much more bearable. I'm still not sure I can bring myself to spend that much money, though.

I have to admit that the other things I'm tempted to buy are completely unnecessary. I've seen a ton of deals on flat-panel TV's. I currently have a Trutech (Target's house brand) 32" LCD. It does the job, and I don't watch a whole lot of TV, and I'm not a big movie or sports person - but who wouldn't want a few extra inches?

And the insanely cheap prices I've seen on new trucks makes buying a new truck tempting. But I know that I don't need a new vehicle - I've got a slightly-over-2-year-old paid-off Ford Ranger which does everything I need it to do. I do eventually want to buy a second car - something sporty - but I'm thinking the best thing to do is wait another 2 years and then look at my situation and see if it's something I can do financially and still want to do.

There is one major thing I was going to spend money on but am reconsidering. When I bought my house, I put 10% down, which means I need to pay PMI, which costs me $83 a month. I've been squirreling away money with the idea of putting another 10% so I can drop PMI. However, I'm not sure that my mortgage company will let me do that without a reappraisal, and given the listing prices for houses in my neighborhood, I suspect if it's reappraised it will have dropped in value and will cost me more than I have saved. I also am having trouble with the idea of having that much of my cash tied up in an asset that keeps depreciating. But I also hate the thought of paying $1000 a year for something I get absolutely no benefit from.

Part of me thinks that I should spend some money. For the last 5 years, my focus has generally been on saving - first to save up enough to buy my house, then to buy and pay off my truck, and lately towards possibly paying off my PMI. But having worked a ton of OT, scrimped and saved, and not gotten very far - with the decline in value of my house, I wonder why I spent so much time saving and working only to lose all that equity. That makes me wonder if I should be spending some of my money on enjoying life - buying some toys, maybe taking a trip next summer that isn't for work or visiting family.

I'm an odd person in that I tend to have dreams of owning nice things but a complete inability to bring myself to spend large amounts of money. So in the next few months and yars I will ahve to do some serious thinking about what I want and how much I'm willing to spend to get it.

Im probably not a great example of anything in the economy for that reason. But my guess is that lots of other people are doing a lot more thinking about how much they want to spend too. That is going to hurt the economy in the short term, but if people continue doing it long-term, it may be good in the long term. I don't have a whole lot of confidence in that, though.


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