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Marketing Lowdown: Living Large in a Down Economy
December 02, 2008
In tough times, it pays to take a look at your personal spending habits and make some smart changes
By Robert Grede
It's tough out there. The economy is tanking. Home budgets are being stretched and purchases delayed or eliminated altogether. What can we expect from the financial future? And how can we sustain our current lifestyle—or even thrive—until the economy recovers?
Our economy is based on consumption (some 70%, according to research conducted at Emory University). But baby boomers, who make up over 40% of the adult population, are past their peak spending years. They already own their home furnishings, new cars and adult play "toys."
Generation X, those born between 1965 and 1980, who are now approaching their peak spending years, make up a much smaller percentage of the population. And studies show that many X-ers have already resigned to living with less than their parents.
So consumer consumption will remain low for the foreseeable future, and any economic recovery will therefore be slow. That means you may have to resort to creative strategies to make ends meet, ones that demand you use your wages wisely and scrutinize each purchase.
Here are five strategies for maintaining your lifestyle while living within your budget.
1. Shop Smart
• Buy generics. Name brands are typically higher in price, but made by the same companies that make generics. For instance, use your expensive make-up just for special occasions and the cheaper generic brands for every day.
• Buy in bulk. If you're going to use it eventually anyway, why not buy a case instead of just one or two?
• Shop the sales. But shop early before all the good stuff is gone.
• Shop online. Craig's List (www.craigslist.com), eBay (www.ebaby.com), or Freecycle (www.freecycle.com). These online trading sites often feature terrific bargains on a wide array of items.
 2. Turn Unused Assets Into Cash
• Got a boat or snowmobile you’re not using much anymore? Try selling it on Craig's List, eBay, or Freecycle. How about the piano? Are the kids still taking lessons? Or is it just filling up space in your living room? The same goes for all your kid's old games, puzzles and even gently-used clothes.
• Here's a novel idea: Use the local classifieds to advertise a winter rummage sale held in your garage. There's virtually no competition, and avid rummagers—especially those needing a rummage fix—will surely find you. (A friend of mine did this on a Saturday last January and sold just about everything within a few hours).
• Turn other usable items into tax deductions by donating to charities (be sure to get a receipt).
3. Pay Down Debt
• Start with your highest-cost debt first. Typically, that's your credit cards. Most credit card companies charge upwards of 20%. Next are the department stores, which often charge 15 to 18%. Your home equity loan is typically tied to the prime rate. So keep an eye on that rate, too.
• Mortgage rates are low right now (many at six percent or less). Consider refinancing your home if your mortgage rate is above seven percent and you expect to be in your house a few more years. This could also free up some needed cash.
4. Avoid Gift Certificates
• A big hit last year, gift certificates are more risky today. Some stores may not be in business for long. Likewise, if you receive one, use it quickly. Of course, the best gift certificate of all is cash, universally accepted at all stores everywhere.
5. Stay Calm
• Fixing the economy will fall to President Obama, so pay close attention to his economic plans and decisions.
• The war in Iraq is a drag on the economy to the tune of $200 billion annually. As the U.S. pulls out, expect economic conditions to improve; but it won’t happen overnight. So turn down the thermostat, bundle up and hunker down. Economists expect recovery in 2009, but when exactly is still a guess.
Meanwhile, spend wisely, and stretch your budget until the happy days are here again.
Robert Grede, author of the best selling Naked Marketing: The Bare Essentials (Marquette University Press), is a Wauwatosa marketing and business strategy consultant. He speaks on marketing, strategy, and new product development at universities, civic organizations, and corporate venues. View a video at TheGredeCompany.com.
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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