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The current economic crisis has altered the behavioral patterns of everday consumers, but some people really take it to the extremes. Meet the ultra-tightwads:
Amy VanDeventer has always been a cheapskate. The recession is taking her to new extremes.
Before the economy tanked, she was still wearing maternity clothes from her last pregnancy, clipping coupons and using hand-me-downs to dress her daughters, ages 2 and 3. Now, she’s salvaging bagel scraps left on their plates for pizza toppings and cutting lotion bottles in half so she can scrape out the last drops.
“I was already cheap,” said VanDeventer, a 36-year-old mortgage loan underwriter from Broomfield, Colo. “Now I am neurotic about it.” [...]
What surprises frugality bloggers is that many cheapskates such as VanDeventer haven’t lost their jobs and are not in danger of losing their homes. Many have stashed a good chunk of cash away. But the economic uncertainty is catapulting them to new levels of thriftiness.
“I do it out of fear because I would rather put that money in the bank or purchase something we really need,” said VanDeventer, who now saves about 50 percent of her take-home pay, up from 25 percent before the recession began more than a year ago.
(Photo: Ed Andrieski/AP)
From the Upcoming 
ueue, submitted by 
Jack Hough of Smart Money weighs the pros and cons of renting versus buying a house, and concludes that renting is better. He gives 5 reasons:
1. Houses produce lousy returns, while stocks produce good ones
2. House prices have further to fall
3.Many houses for sale today seem designed to waste money
4. Big houses are targets for future taxes
5. Neighborhoods are changing in unpredictable ways
As a renter and a former buyer (twice), I tend to agree with him. What do you all think?
From the Upcoming ueue, submitted by
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If the economic crisis is getting you down, take heart: even the Oracle of Omaha and arguably one of the smartest businessman alive today is also having a tough year:
Berkshire Hathaway reported today that its net worth fell in 2008 by $11.5 billion, a decline reducing its per-share book value by 9.6%. That was Berkshire’s worst result in the 44 years that Chairman Warren Buffett has run the company and, in fact, only the second decline in that period. The other drop was 6.2% in 2001, a year hurt by 9/11 and other problems in Berkshire’s insurance operations. [...]
In his chairman’s letter, Buffett states that 2008 had good points mixed in with the bad. But in an unusual admission for the opening pages of the letter (a point easily recognizable by this writer because she has edited Buffett’s letter for 32 years) he says bluntly, "During 2008 I did some dumb things in investments."
The dumbest, he said, was buying a large amount of Conoco Phillips stock when oil prices were near their peak and in no way anticipating the dramatic drop in prices that subsequently occurred. Buffett said he still thinks the odds are good that oil will sell in the future at much higher prices than the $40 to $50 per barrel now prevailing. But even if prices should rise, he said, "the terrible timing" of the Conoco purchase has cost Berkshire several billion dollars.
Unlike you or me, however, Warren Buffett can drown his sorrow by counting his remaining bazillion dollars. Carol Loomis of Fortune has more: Link
When the times get tough, the tough goes … naked? Here’s a story of one Donald Crabtree of Vassalboro, Maine, who combined coffee and nudity for his recipe for success:
On Monday, Donald Crabtree opened Grand View Topless Coffee Shop in Vassalboro, Maine, where the waiters and waitresses serve their customers topless.
In a town with fewer than 4,500 residents, the topless coffee shop is booming with business. Paul Crabtree, the owner’s brother, describes business so far as "fantastic."
"It’s just been crowds mobbing in," he said.
Laurie Segall of CNN has the story: Link (Photo: WGME)
In a world filled with headlines about CEO’s and executives running their companies to the ground, and holding lavish parties and getaways on taxpayer funded bailouts, here is a refreshingly touching story of one very different individual.
Leonard Abess Jr., CEO of City National Bank in Florida, sold 83% of his stake in the bank to a Spanish company, and then used the proceeds to reward his very own employees.
At a time when bankers are being pilloried on Capitol Hill as heartless and greedy, Leonard Abess Jr. stands apart.
After selling his bank for a fortune last fall, he quietly handed out $60 million in bonuses from his own pocket — and not just to top executives. In all, 471 employees and retirees, including tellers, clerks and secretaries, were rewarded, receiving an average of about $127,000 each.
“I think everybody was surprised. But knowing Leonard, the type of person he is, I can believe him giving it away,” said retiree William Perry, who spent 43 years at City National Bank of Florida, rising from janitor to vice president. Perry, 78, got $50,000, which he is using to help his son pay for law school.
For his generosity and humility, Abess was singled out for praise by President Barack Obama in his congressional address Tuesday. Abess attended as Obama’s guest.
From the Upcoming ueue, submitted by Geekazoid.
For homeowners caught in the nation’s housing collapse, having their homes foreclosed is like a nightmare that they can’t fight … or can they?
Chris Hoyer, a Tampa, Florida, lawyer told homeowners that there are three simple words that they can say to stop the foreclosure process, or at least delay it for a while: produce the note.
Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.
And just like that, the foreclosure proceedings came to a standstill.
Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.
During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.
Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.
(Photo: Chris O’Meara/AP)
Five months after being laid off from his job as a mechanical maintenance engineer, 39-year-old Jason Fruen had tried almost everything to find another job. Finally he made a sandwich board sign advertising himself and his phone number, and spent two days standing near a major intersection in Manchester, England.
Surprisingly enough, the ploy worked, and Fruen landed an interview and the company offered him a position. After the interview, he got some other offers as well, and he’ll decide this week which one he’ll take.
BBC News video here.
“I think we’re going to see a lot more people adopting this way of looking for work. I’ve still got a mortgage to pay, and that’s why I was out there doing it.”
From the Upcoming ueue, submitted by Marilyn Terrell.
Graphic artist Jonathan Jarvis has produced a short animated film describing the roots of our current economic crisis today. There have been numerous websites and cartoons attempting to explain the crisis, but this is one of the very best. To the point and easy to understand, there comes a point in the presentation when the reality of what will happen and what has happened will hit you. Comes in two parts (shown above).
Links: Crisis of Credit Visualized website
– via jonnyj
From the Upcoming ueue, submitted by Geekazoid.
Richard Florida wrote an interesting editorial for The Atlantic about how the current economic crisis will shape the future for Americans:
The historian Scott Reynolds Nelson has noted that in some respects, today’s crisis most closely resembles the “Long Depression,” which stretched, by one definition, from 1873 to 1896. It began as a banking crisis brought on by insolvent mortgages and complex financial instruments, and quickly spread to the real economy, leading to mass unemployment that reached 25 percent in New York.
During that crisis, rising industries like railroads, petroleum, and steel were consolidated, old ones failed, and the way was paved for a period of remarkable innovation and industrial growth. In 1870, New England mill towns like Lowell, Lawrence, Manchester, and Springfield were among the country’s most productive industrial cities, and America’s population overwhelmingly lived in the countryside. By 1900, the economic geography had been transformed from a patchwork of farm plots and small mercantile towns to a landscape increasingly dominated by giant factory cities like Chicago, Cleveland, Pittsburgh, Detroit, and Buffalo.
How might various cities and regions fare as the crash of 2008 reverberates into 2009, 2010, and beyond? Which places will be spared the worst pain, and which left permanently scarred?
Will Detroit – currently the 11th largest city in the US – become a ghost town? Will homeownership continue its role as the keystone of the US economy? Read the rest here: Link – via 3 Quarks Daily (Illustration: Sean McCabe)
Did you just sell your car? If the dealership you sold your car to goes under because of the economic crisis, you may find that you’re still on the hook for that car loan:
The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.
When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title.
"It’s devastating for people when it happens because they have two car payments and they can’t afford them," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento-based nonprofit that lobbies on behalf of vehicle owners. "Their credit is destroyed for no fault of their own because the dealer defaulted."
Circuit City, Linens ‘n Things, and Levitz are all victims of the economic crisis – and the question in everybody’s mind is: who’s next?
Yahoo! Finance has a somber article about 15 companies that are in such
precarious financial conditions that they might not survive 2009. For example:
Sbarro. (Privately owned; about 5,500 employees). It’s not the pizza that’s the problem. Many of this chain’s 1,100 storefronts are in malls, which is a double whammy: Traffic is down, since consumers have put away their wallets. Sbarro can’t really boost revenue by adding a breakfast or late-night menu, like other chains have done. And competitors like Domino’s and Pizza Hut have less debt and stronger cash flow, which could intensify pressure on Sbarro as key debt payments come due in 2009.
Krispy Kreme. (KKD; about 4,000 employees; stock down 50%). The donuts might be good, but Krispy Kreme overestimated Americans’ appetite – and that’s saying something. This chain overexpanded during the donut heyday of the 1990s – taking on a lot of debt – and now requires high volumes to meet expenses and interest payments. The company has cut costs and closed underperforming stores, but still hasn’t earned an operating profit in three years. And now that consumers are cutting back on everything, such improvements may fail to offset top-line declines, leading Krispy Kreme to seek some kind of relief from lenders over the next year.
After he was fired from his executive job, Michael Gates Gill was devastated. Soon after he was laid off and got divorced – and when he thought things couldn’t get any worse, he got diagnosed with a brain tumor.
At the lowest point in his life, Michael walked into a Starbucks store while it was holding a jobs fair. On a whim he applied for a position.
Starbucks may be $4 cup of coffee to you and me, but to Michael, it was a lifesaver:
After 26 years at J. Walter Thompson, a leading advertising agency, the then 63-year-old Gill was invited to an early breakfast and was told that he was getting the boot. He made too much money. Someone younger would work for less, he was told.
"Never go out to breakfast," he warns before bursting into laughter. "It’s like the Mafia. You will never return."
He can joke about it now, but Gill says he was devastated by his firing. "I remember walking outside and bursting into tears," he says over a steaming cup of coffee at his current place of employment, a Starbucks in Bronxville, New York. "I was stunned. I knew that that part of my life was over."
That was just the start of a terrible reversal of fortune. In a few short years, Gill, the Yale-educated son of the famed New Yorker writer Brendan Gill, closed the consulting business he started after he was laid off, got divorced and was diagnosed with a brain tumor. He had hit both the rock and the bottom and was continuing to fall.
A trip to Starbucks would irrevocably change his life, he says. Unbeknownst to him, the coffee shop was holding a hiring fair the morning he walked in for his daily dose of caffeine. A manager approached him and asked if he would like to apply for a job. Without thinking, he said yes.
So, the first month of 2009 is almost over and it seems that so far the new year has been nothing but bad economic news after bad economic news.
Last week, the folks at the US watched as big companies cut more than 100,000 jobs (with over 70,000 jobs lost on Monday alone), the stock market tumbled, and home prices continued its freefall. Congress played politics over the stimulus package (it passed the House strictly on party line votes) and – surprise – Wall Street continued giving billions in bonuses and perks ($87,784 for a rug, anyone?)
And you know the economy is bad when more people are searching Google for coupons than Britney Spears (via Bo Cowgill).
How’s 2009 been treating you? Did you lose your job? Have trouble making ends meet? What do you think needs to be done to fix the economy? Can the economy be fixed? I’d love to hear from you.
Senator Claire McCaskill is angry at the Wall Street "idiots" who are giving out $18 billion in bonuses in 2008. So angry that she has just introduced a bill to cap their pay:
An angry U.S. senator introduced legislation Friday to cap compensation for employees of any company that accepts federal bailout money.
Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee would be allowed to make more than the president of the United States. Obama’s current annual salary is $400,000.
"We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer," an enraged McCaskill said on the floor of the Senate. "They don’t get it. These people are idiots. You can’t use taxpayer money to pay out $18 billion in bonuses."
McCaskill’s proposed compensation limit would cover salaries, bonuses and stock options.
Who thinks it’s a darned good idea?
Forget the Year of the Ox, according to Bruce Sterling of Seed Magazine, 2009 is the Year of the Panic. He lists 7 reasons why; for example, let’s take look at insurance:
4. Insurance and building codes. Every year, insurance rates soar from mounting "natural" catastrophes, obscuring the fact that the planet’s coasts are increasingly uninsurable.
Insurance underlies the building and construction trades. If those rates skyrocket, that system must keel over. Once people lose faith in the institution of insurance?—?because insurance can’t be made to pay in climate-crisis conditions?—?we’ll find ourselves living in a Planet of Slums.
Most people in this world have no insurance and ignore building codes. They live in "informal architecture," i.e., slum structures. Barrios. Favelas. Squats. Overcrowded districts of this world that look like a post-Katrina situation all the time. When people are thrown out of their too-expensive, too-coded homes, this is where they will go.
Unless they’re American, in which case they’ll live in their cars.
But how can dispossessed Americans pay for their car insurance when they have no fixed address? Besides, car companies are coming apart with the sudden savage ease of Enron’s collapse. Indeed, the year 2009 is shaping up as a planetary Enron. Enron was always the Banquo’s ghost at the banquet of Bushonomics. The moguls of Enron really were the princes of contemporary business innovation, and the harbingers of the present day.
Buyers for the U.S. Capital visitors center are in a bit of hot water today. They were warned not to buy goods made outside the US, but did it anyway. Now $100,000 worth of souvenirs are sitting in storage, blocked from being sold, and will probably have to be returned to the manufacturer in China.
Will the Chinese manufacturer take the goods back or will the government be out $100,00? Your guess is as good as mine. I'm all for US made products being sold, but in these finacial times is it really a good idea for the government to waste $100,000 worth of goods, that it is probably already stuck with, because of ideals?
Washington souvenirs worth $100,000 -- including images of the Capitol dome and printings of the U.S. Constitution -- are locked in storage, blocked from sale in the new U.S. Capitol Visitors Center because the items are made in China.
From the Upcoming Queue, submitted by 
You know the economy is bad when Wall Street banker’s girlfriends are complaining about their lives. Here’s a day-in-the-life of members of Dating a Banker Anonymous:
They shared their sad stories the other night at an informal gathering of Dating a Banker Anonymous, a support group founded in November to help women cope with the inevitable relationship fallout from, say, the collapse of Lehman Brothers or the Dow’s shedding 777 points in a single day, as it did on Sept. 29.
In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as “free from the scrutiny of feminists,” that invites women to join “if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”
Ravi Somaiya of The New York Times has the story: Link
(Photo: Rob Bennett / NY Times)
What happens to all those cars that go unsold? Check out this collection of photographs illustrating the growing stockpile of unsold autos world wide.
Pictured is a Nissan test track being used to store thousands of unsold cars.
Carmakers around the world are cutting production as inventories build up to unprecedented levels. Storage areas and docksides are now packed with vast expanses of unsold cars as demand slumps
The economic crisis got you down? Well, here’s the silver lining to the current economic mess we’re in: it makes America stronger.
Walter Russell Mead of The New Republic explains:
Setting aside the flaws in both these overarching theories of capitalism, this analysis of economic crises is fundamentally sound–and especially relevant to the current meltdown. Cataloguing the early losses from the financial crisis, it’s hard not to conclude that the central capitalist nations will weather the storm far better than those not so central. Emerging markets have been hit harder by the financial crisis than developed ones as investors around the world seek the safe haven provided by U.S. Treasury bills, and commodity-producing economies have suffered extraordinary shocks as commodity prices crashed from their record, boom-time highs. Countries like Russia, Venezuela, and Iran, which hoped to use oil revenue to mount a serious political challenge to American power and the existing world order, face serious new constraints. Vladimir Putin, Hugo Chavez, and Mahmoud Ahmadinejad must now spend less time planning big international moves and think a little bit harder about domestic stability. Far from being the last nail in America’s coffin, the financial crisis may actually resuscitate U.S. power relative to its rivals.
Link – Thanks Daniel Belkin!
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Car dealers are desperate for business, and many are getting creative (like this free gun when you buy a car offer). Korean automobile maker Hyundai is trying a new approach. It’ll take your car back (most of the time) if you have a "life changing event," like getting fired from your job:
Hyundai has begun to promote a new program that claims that “if you cannot make your payment because of a life changing event, we’ll allow you to return your vehicle and walk away from your loan obligation – and in most cases, we will cover most, if not all of the difference”. This program is good up to one year, post purchase, and at least two payments must be made in order for it to become effective. But is it a good deal?
20SomethingFinance blog has more: Link | Article at CNN
Students in California are probably cheering Governor Arnold Schwarzenegger’s plan to save $1 billion to help the state’s big budget deficit by shortening
the school year by five days.
In other news, it costs $200 million a day (!) to run California’s schools!
Let’s give them 10 days off and save $2 billion!
Seema Mehta of the LA Times has the story: Link
Loneliness and tough economic times are hurting everyone, including the elderly Japanese, who are now turning to petty crime in increasing numbers:
One hour later, officers stopped a second suspect, an 80-year-old man. He had enough money to pay for all of his groceries, but security officers said he tried to leave the store without paying for medicine for an upset stomach.
"I’m so sorry," he told officers. "I live alone. My wife is in the hospital." [...]
Petty crimes by the elderly are a worse problem than thievin’ teens:
On Japan’s northern island of Hokkaido, more elderly than teenagers — by a 3 to 2 ratio — were arrested in 2006, police said.
Despite the arrest numbers, prosecutions of the elderly in a culture that holds them in high regard are rare. Stores often don’t even report the crime to police, according to security experts.
The 80-year-old man who stole the stomach medicine was eventually led to his bicycle by store security. The security officer helped the man with his groceries and bowed in respect, hoping the elderly man had learned his lesson and would return as a good customer.
CNN has the story: Link – Thanks Tiffany!
To counter Stacy’s Christmas Special posts, here’s a (funny) little Christmas downer for you, from Tarquin Britten and the City Boyz. Have a Merry Credit Crunch Christmas, everyone!
Hit play or go to Link [YouTube], spotted at the Neatorama Forum, original post by mci209.
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