Common Sense Comeback? Thank The Recession

by Darwin on July 29, 2012

Recessions aren’t too bad if you don’t lose your job. Gas prices plummet, restaurants push inexpensive dinner options, and your dollar really does go further.

So while it may seem like the world is nearing its end, there are always a few things that make an economic slump a little more bearable.

Common Sense Back in Style

Recessions are great for bringing back common sense. For example, I ran into an article on low-cost investing options and an on-going fee war in ETFs. There isn’t much to read in the article, save for this small statement buried inside:

Over the five-year period through June 30, the firm’s assets grew 40% to almost $1.7 trillion. Meanwhile, overall industry assets grew just 10%.

The “firm” is Vanguard – the least expensive fund company on the planet. It’s good to see that people are following probably the most well-known rule in the world of personal finance: all else being equal, go for the least expensive option.

And so this got me thinking about all the changes I’ve seen since the bubble burst back in 2008 and 2009.

Less Stupid All-Around

    1. No more rentals! – I haven’t seen an ad for rims or purse rentals in a very, very long time. I remember back in the bubble years daytime TV was loaded with ads for businesses renting everything that people couldn’t afford outright. Sure, you can still find a Rent-An-Everything on every corner of every inner city block, but the rental stores for expensive purses and car rims are long gone. What are $500 purses and $2,000 rims really worth if you couldn’t afford to purchase either one in the first place?
    2. Banks are out; credit unions are in – This is a fairly recent change thanks to the Occupy Wall Street movement, but credit unions are the obvious choice for most people who run into common banking fees. I’m just happy to see people actually think about who holds their money every day.
    3. “Staycations” vs. Vacations – My own purely anecdotal evidence leaves me to believe that vacations financed by credit cards are probably out. Like a fool, I went to a theme park on a Saturday only to see it completely packed. Just two hours after the park opened, the cars were packed all the way to the three last rows in the parking lot. I’ve never seen it so busy, and I have to think that people are now comfortable enough to spend a little on pleasure, but still concerned enough to write off week-long stays on “brand name” beaches.
    4. Generics are everywhere – Part of this is on the business end – retailers make more on private-label products than brand name goods – but I think a lot of it has to do with a changing mindset towards commodity goods. I’ve noticed far more private-label products on store shelves, which would lead me to believe people have finally taken notice to the fact that $6 Motrin is no different than $2 ibuprofen.

These are just off the top of my head – I’m definitely missing a few. Have you noticed any changes in the way people manage or spend their money?

{ 9 comments… read them below or add one }

Lance @ Money Life and More July 29, 2012 at 10:33 pm

I graduated into the recession so I don’t know how people spent before that as I was too young to really understand and pay attention. There is a place down here where you can finance the rims for your car and I cringe every time I hear the commercial. Why do you need fancy rims anyway? They don’t make your car perform any better… do they?


JT July 30, 2012 at 8:29 am

I’m going to guess that there is some kind of rim out there that makes your car .2% faster, but unless you’re some kind of street racer you’re probably not going to notice. I don’t know – I drive beaters.

From what I’ve seen, it’s pretty much the same business model as any other rental place. They tack on 50%+ then finance it at some disgusting rate of interest plus fees that make the APR unbelievably high. Defaults are probably high, but I can’t imagine that it’s a money losing business.


Kathleen @ Frugal Portland July 30, 2012 at 1:01 am

People could rent rims? Purses I’ve heard of, but rims? Really?


JT July 30, 2012 at 8:31 am

Really! Irrational exuberance at its finest. If cars are a depreciating asset, rims are nothing more than a pure money pit.


krantcents July 30, 2012 at 10:28 am

Being frugal is suddenly more acceptable. Along with that, it is more common to see people bring their lunch to work. I wonder if everyone will change back when the economy returns?


Darwin August 1, 2012 at 5:39 pm

Weirdly, frugality is not good for the economy, so it may not ever return to what it once was. Many jobs are never coming back and the artificial excess cash from debt and cash-out refis is gone.


Cherleen @ My Personal Finance Journey July 31, 2012 at 10:34 am

I believe frugality teaches us to live within our means and enjoy more the simple things that life offers. No more rentals because people are now thinking twice before availing a service or purchasing anything. And I guess the word “staycation” was invented so that people will realize that they can enjoy bonding time with their families in their own place, see the nice places and enjoy the activities in their own neighborhood.


Joe @ Retire By 40 August 1, 2012 at 10:58 am

Staycation instead of vacation is probably ok for the short term, but nothing beats a nice getaway. I guess people are more frugal, but they need to spend more so the economy will recover. 🙂


Darwin August 1, 2012 at 5:35 pm

I agree, especially with the kids. There’s only so much you can do in town that you don’t already do on weekends.


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