Americans Embracing Frugality . . . Because They Have To

by MB on February 4, 2008

Very interesting article in The New York Times today discussing how more and more Americans are taking on a pay as you go lifestyle.

According to the article, they are not doing this because of a newfound realization of the benefits of a frugal lifestyle, instead, it is because they have no other alternatives.

From credit cards, to home equity, many Americans are completely tapped out – beyond tapped out.

The national savings rate has went from 10% in the mid-eighties to slightly negative currently.

It gets worse. Check out this quote from the article:

For the 34 million households who took money out of their homes over the last four years by refinancing or borrowing against their equity — roughly one-third of the nation — the savings rate was running at a negative 13 percent in the middle of 2006, according to Moody’s Economy.com. That means they were borrowing heavily against their assets to finance their day-to-day lives.

Negative 13%! That is simply astounding to me. I can’t fathom the thinking that would go into funding your lifestyle with home equity borrowing, but apparently 34 million people thought this was an acceptable idea.

Leave a Comment

Previous post:

Next post: