Here's why I'm not interested: I don't want a daily temptation to spend money I should probably be saving. Sure, it's possible that Groupon would one day send me an offer on something I need to buy anyway, saving me a few bucks. But the main purpose of coupons and every other kind of retail come-on—whether delivered by catalogue, email, cell phone alert, or teleportation—is to separate consumers from money they'd otherwise put in the bank. Consumers don't need to be persuaded to buy things they need; the whole purpose of marketing is to convince people to buy things they don't need.
Marketers have done an awesome job of that over the last 60 years, convincing Americans to pay for homes, cars, clothing, gizmos, vacations, children's camps, and hundreds of other things that go far beyond what most of us require to live a satisfying life. They were so successful that for a while, Americans stopped saving money altogether, spending literally every dollar they had. That's great for the economy in the short run, but it leaves consumers saddled with debt and highly vulnerable if something goes wrong. The typical U.S. household, for instance, has racked up nearly $120,000 in debt. Some of that helps pay for basic shelter, transportation, and other necessities. But Americans have also borrowed money to pay for kitchen islands, cruises, BMWs, and closets filled with mall goodies. During the glory days of easy credit, it seemed like it could go on forever.
The recession ended that, and now Americans need to pay down debt and learn the forgotten art of living within their means. Marketers debate whether the "new frugality" is here to stay, or ebullient consumers will go back to their free-spending ways. But it's more a matter of simple math than a question of attitude. There are many reasons to believe it will simply be impossible to sustain the spending levels we've gotten used to over the last decade or two. For starters, banks will no longer lend money to anybody with a pulse, with many consumers only able to get credit at prohibitively high interest rates that curtail their ability to live on borrowed money. To buy a home these days, you need to save money for an actual down payment. Perhaps half of all baby boomers are unprepared for retirement, which means the most profligate spenders of the last two decades have little choice but to become big savers—unless they're willing to accept lower living standards during their golden years.Forget about the government plugging the gap, since Washington has its own enormous debt problem. One recent study found that new taxes, which seem inevitable at some point, could reduce the typical American's disposable income by more than 4 percent. That could happen at the same time the government will have to extend the Social Security retirement age and cut back on Medicare and Medicaid subsidies, raising out-of-pocket costs for millions. Plus, the income-tax cuts passed at the end of 2010 will expire at the end of 2012, pushing taxes back up by about 3 percentage points, on average. Add it all up, and the typical family might need to cut its spending by 10 percent or more, just to stay even. [Emphasis added--E.M.]
Call me a killjoy, but it seems like a lousy time to be chasing daily deals on manicures or éclairs, just for the thrill of the hunt. Sure, the economy is recovering, but it's not heading back to prerecessionary euphoria any time soon. Unemployment will probably remain elevated for years, and the housing bust that has decimated many Americans' net worth is still far from over. The next five or 10 years will probably be an era of slow growth, stagnant incomes, and digging out. Some Americans seem to realize this, one reason the savings rate has gone from nearly zero in 2005 to about 6 percent today. But that probably isn't high enough. Some economists think it needs to hit somewhere between 8 and 10 percent, and stay there for awhile, in order for Americans to properly repair their finances. If you could save 20 percent of your disposable income, you'd be smart to do it.
It's nice to think about saving 20% of one's income, isn't it? Sadly, that may not be an option for many people, since inflation has risen but wages have remained stagnant. According to the article at this link, what's really hurting consumers is the rising price of necessities, not of restaurant meals or spa visits: gasoline, up 19%, ground beef and butter increased by 10 and 23% respectively, all in the last year, to cite some of the article's examples. When the cost of living increases and wages remain flat, it makes even less sense to sign up for services that exist to tempt you to waste money on luxury items.
But American consumers, it seems, have always been suckers for that "good deal" that promises to save them money--even if they have to spend money to get the deal in the first place. Plenty of retail establishments, from grocery stores to department stores to electronics stores and so on, will even print at the bottom of your receipt the triumphant declaration: "You saved $23.61 today!" instead of pointing out that you just spent $87.54, and that the "savings" were really just a reduction in the store's already overinflated prices. A more honest receipt message would be "We failed to fleece you out of $23.61!" but I highly doubt any retailer would be that forthcoming.
The real trouble for many American families, though, is not that they are falling prey to clever marketers who want to sell them luxuries they can ill afford; the real problem is that the way things are going, as the piece by Rick Newman says, the average family might have to decrease their spending by 10% just to break even--that is, to compensate for rising prices, higher taxes, and stagnant wages. Families who are at the breaking point who can't even manage to save 10% right now, are going to be fighting to keep from going over the edge into financial ruin in the very near future. How prepared we'll be as Christians to help each other in the days that lie ahead may put the whole notion of Christian generosity and detachment to earthly goods to the test in many of our parishes and communities.