Is the Recession Over? Knowing When to Spend

Big Confidence Results in Big Spending: A Look at the Recession with Nine Year Mortgage

Have you ever heard the saying ‘Old Habits Die Hard’? Nine Year Mortgage defines a habit as an acquired behavior pattern regularly followed until it has become almost involuntary. Most wouldn’t call spending money involuntary or a habit, but in all actuality it is. For the past few years we have been in the middle of an economic recession, fueled by overspending and living beyond our means, large mortgages, and credit card debt. Some say that we are finally coming out of this recession, and store owners are agreeing after the past few months.

Nine Year Mortgage Advises to Avoid Unnecessary Expenses

The holiday season is over, but stores are not seeing a major decrease in spending by consumers like they have seen in the past. Contrary to thought, consumers are not planning on slowing down when it comes to their spending this year. This may be because consumers have been incredibly frugal the past couple years,  trying to eliminate debt and improve household spending sheets. Many consumers now feel like they have saved enough and as a result the classic Flintstones phrase of “Charge It!” is working its way back into our daily vocabulary. A MasterCard and American Express survey has determined that consumers are planning to spend more this year than last, but most importantly, consumers have drastically cut their savings goals. Consumers are planning on setting aside on average only $2,600 into savings in 2011 in comparison to last years average of $14,000.

Nine Year Mortgage believes a contributor to this drastic decrease in savings could be due to an increase in the workforce’s disposable income after an increase of 0.3% in average salary after taxes. Because the unemployment rate is improving, less people are using unemployment benefits and companies are planning to hire. The impact of these combined factors is resulting in a sense of comfort with spending once more among Americans. In October through December of 2010 there was a drastic increase in automobile sales, and luxury and durable goods sales, which goes to show that consumers think that they are ready to become big-spenders once again.

Don’t be fooled with all this talk of increased sales and large savings accounts; credit card applications have been rising since 2009 and have been soaring since the fourth quarter of 2010. Odysseas Papadimitriou, the CEO and founder of Card Hub said “Consumers have much less debt in their wallets than they used to, but the reason they do is not because they paid it down, but rather because they charged it off. The reality is that consumer credit card debt is now the same or more than it was shortly before the recession.”

6 Easy Steps to Break Bad Spending Habits with Nine Year Mortgage

So the real question that Nine Year Mortgage has,  is why do consumers feel it’s O.K. to start charging and using their credit cards again when really none of their debt has been paid off, just deferred? Mark Twain once said “Habit is habit and not to be flung out a window by any man, but coaxed downstairs a step at a time”. This is a universal theory that is even applicable to spending money. Consumers have been frugal and cautious on their spending for the past three years and to many it seems they had no choice. Given the economic trends it became a necessity to save more money than normal, with out very much warning.  It seems that consumers were ‘flung’ into saving cold turkey instead of having time to mentally prepare themselves and start cutting back a little at a time. Some might call this increase in spending a relapse from those who were unprepared and unwillingly saving for these past few years. If you have had a difficult time managing your spending, Nine Year Mortgage can help; below is a list of the six most common bad spending habits and how to break them.

1. Don’t Carry Lots of Cash: Carrying a lot of cash can become a very bad habit;  it often leads you to believe you have extra money for spending.

  • Nine Year Mortgage suggest that you only carry enough cash for what you need. If you plan on using cash for all of your purchases, use a budget and separate the cash into categories with envelopes: one for groceries, one for school supplies, etc.

2. Avoid Emotional Shopping: We’ve all experienced a rough week or a great day where we feel we  need to reward ourselves. Going shopping is an automatic response to this feeling but letting your mood dictate what you buy is the fastest way to spend unnecessary money.

  • Instead of rewarding yourself with a shopping spree, treat yourself with a nice bubble bath, time at the park  or relaxing with a loved one.

3. Steer Clear of Window Shopping: Here at Nine Year Mortgage we are aware that it is fun to browse through your favorite stores, whether it’s in person, online, or through catalogs. But we also know that it is hard to resist your weak spots, even when you weren’t in the market for anything.

  • Stay away from those favorite stores and websites of yours if you don’t need anything. Unsubscribe from your favorite retail store emails and catalogs. Ask yourself “Do I need it and can I pay for it in cash?” If your answer is no to either question, you don’t need to buy it.

4. Don’t Go Crazy Clipping Coupons: There is a benefit to clipping coupons, but heading to the store with a big stack is definitely not ideal. More than likely your eyes will go right to the item you can save fifty cents on with a coupon and you will forget to look at your other options. Usually by buying the generic brand in comparison to a name brand will save you more money, even if you have a coupon.

  • Make a shopping list before you go to the store, then check to see if there are any coupons for the items you need. Bring only those coupons for the items that your grocery list determines you need.

5. Don’t Save Your Information with Vendors: Online shopping sites have made it all too easy for you to purchase their inventory by saving your addresses and credit card information. This makes buying everything online seem so insignificant since all you have to do is click one button and the deed is done. If you have to enter in some information to complete the purchase, you have more time to consider if you really need it.

  • Nine Year Mortgage would strongly advise you to avoid saving your information with any online vendor. Once again, unsubscribe to emails and catalogs- all they will do is tempt you to buy something you don’t need.

6. Have A Plan: After coming home from a long day at work the last thing you want to do is think of what to cook; takeout is a much easier solution. Although this may be true, the average American family spends more than $4,000 a year on eating out.

  • Nine Year Mortgage suggests that if you want to save thousands of dollars each year that you should make a grocery list each week with a menu planned out. This way you can get all the ingredients you need and have them on hand at a moments notice. Another way to keep you from indulging on takeout is to cook meals in .

Spending money just because is becoming a growing issue among our nation. It has become habit for many to swipe a card or spend the cash that is in their wallets. It would be wise to remember what caused this recession in the first place: casual spending. There is no need to be “Keeping Up with the Jones”, especially if you can not pay for your luxuries in cash.

Safe Spenders

It may be safe to say that now is an okay time for those of you who never lived beyond your means to start spending your money. If you minimized your spending in this recession to lower your risk of being affected then you are sitting well. Nine Year Mortgage suggests that before you start spending, make sure to have enough in your savings in case you have to endure another recession or difficult time. It is wise to have at least three to six months of living expenses in savings, just in case. If your savings is set and you are ready to start making purchases, make sure it is something you need and that it fits into your budget. Remember, just because you have money, doesn’t mean you need to spend it.

Nine Year Mortgage Wraps it Up

Analysts may be jumping the gun by saying that this recession is over. Keep in mind that although unemployment rates are decreasing, it is happening slowly. Don’t get caught up in the fad of starting to make bigger, unneeded purchases. Credit card applications have been dramatically increasing, so more than likely those who you see spending larger amounts of money do not actually have that money right now. Make sure there is enough money in your savings to weather another storm and always ask yourself, “Do I really need this?” before you make any purchase. Start breaking that bad habit of unnecessary spending today and be prepared for the many curve balls life sends your way.

Read another article from Nine Year Mortgage for more tips on “How to Save Money.”

To find out if you qualify today!

Nine Year Mortgage Representatives are standing by to answer all of your questions about our program, including how soon you will be debt free, and how much money you will save in interest!

Comments on Is the Recession Over? Knowing When to Spend Leave a Comment

February 10, 2011

Mark Schaffer @ 1:05 am #

I don’t know if the recession is really over, but it’s never a bad idea to trim your expenses. Nice work on the article.

Leave a Comment

Fields marked by an asterisk (*) are required.