According to Federal Reserve Chairman Ben Bernanke, The Great Recession may technically be over. But what's clear is that, no matter what the GDP may be, people are hurting financially. In The New Frugality, Chris Farrell, personal finance expert for American Public Media's "Marketplace Money" and contributing economics editor for BusinessWeek, presents a new paradigm for surviving the greatest economic crisis in a generation.
The embrace of what Farrell calls the New Frugality signals that half a century of people spending with abandon and borrowing as much as possible is done. Profligacy is out. Frugality is in. Also, The Great Recession comes at a time of another great crisis related to our over consumption: global climate change. This convergence of crises creates opportunities and new ways to be frugal. In everyday money decisions, it turns out that being frugal and being green are synonymous.
Farrell suggests we should focus not only on what's affordable in the short term, but also on what's sustainable in the long term. If you're thinking about getting rid of your car and buying a bike to save money, there's no reason you should buy a two-wheeled clunker from Craigslist that needs a trip to the bike shop every other day.
As Farrell demonstrates, there's a difference between being frugal and being cheap. We'll still need places to live (do we buy or rent?), to save for college, and every now and then go into a little debt. How we make these choices will be as important as the choices themselves.
The New Frugality offers smart, sustainable, and ultimately more fulfilling ways to approach our personal finances and get more out of spending less.
Chris Farrell is a personal finance expert for American Public Media's "Marketplace Money" and contributing economics editor for BusinessWeek.