Could Baby Boomers, notorious spendthrifts that they are, be leading the United States into a new age of frugality? BusinessWeek magazine thinks that may be the case.
The business pub profiles the Ingram-Behre family of New Hope, Pa., an all-American household of two 40-something parents with good jobs. (Technically, the Ingram-Behres are GenXers on the cusp of Boomerdom, but the article interviews several other newly parsimonious families that are in the Boomer cohort.) A year ago, the family was trapped in a lifestyle of mass overconsumption: dining out, shopping for entertainment, taking expensive cruises and trips to Disney World. They regularly busted their budget and ran up their credit cards, which they paid off by tapping the equity in their house. In sum, the Ingram-Behres epitomized the mighty American consumer who kept the global economy humming by racking up ever-mounting debt.
It didn't take the sub-prime mortgage crisis, or even the recent melt-down of their 401k plans to sober up the Ingram-Behres from their spending binge. Reality hit home a year ago when they sold a house that had doubled in value to $490,000 and netted only $60,000. "I was practically nauseated when I realized what our out-of-control spending had done," said Ingram, the wife.
In a remarkable turn-around, the family started eating more meals at home and reining in the shopping-for-pleasure habit. The Ingram-Behres now buy clothes at the consignment shop, turn out the lights and often walk places instead of driving. Earlier this year, they saved enough money to pay off one of their auto loans. Writes BusinessWeek:
Ingram and Behre are harbingers of a dawning Age of Frugality. People who overconsumed during the past decade are now rejecting extravagant lifestyles. They're spending less, and more wisely. Some are getting their finances in order. Others are fearful of losing their jobs, shocked by investment losses, or hunkering down amid the general uncertainty.I've been a tightwad all my life -- at least that's what my wife and kids tell me. I pinched pennies while the rest of the country was on a credit-card bender. I guess I never understood the joys of mass overconsumption. I never saw why people bought so much "stuff" they didn't need, or didn't even want a week later: stuff that accumulated in closets, attics and garages. So much stuff that people rented self-storage units to hold what they didn't give to Good Will or cart off to the landfill!
The greens have been telling us that our addiction to buying "stuff" was ruining the world by consuming way more resources than we needed to. More stuff = larger carbon footprint = global warming. Economists have been telling us that the trillions of dollars of indebtedness -- much of it owed to foreigners -- eventually would be the ruin of the nation, as we nearly saw this past month. None of those jeremiads made much of an impression, but the culture does finally seem to be shifting.
If Baby Boomers have any sense whatsoever, they'll confront the yawning gap between their savings and their ambitions for later in life and realize that something has to give. As we have pointed out on the Boomer Consumer blog more than once, many Boomers have come to accept the idea that they'll have to work longer in life than their parents did to maintain a comfortable lifestyle. But staying solvent into old age may take more than hard work. It may require an old-fashioned virtue that has never been a big part of the Boomer ethic: thrift.