« Do we need the Federal Reserve? | Main | An explanation for oil prices »

April 29, 2009

Cautions on cutting back

An author recently listed how people could save thousands of dollars annually if they simply stopped using many modern gadgets that weren't available years ago. The author's point was, "Hey, we survived without these then. Why not now?" Does this advice sound too easy?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, I would argue it is. I think, obviously, there are a lot of modern gadgets that we now have that we didn't have 20 or 30 years ago. But 20 of 30 years ago there were a lot of things that we had then that previous generations didn't have. So it's just a fact of life that we continue to improve our standard of living over time. I think before I went ahead and took this advice at face value - things like getting rid of your cell phone, only eating at home . . . another piece of advice I heard was, if you're sending a child to college, make sure you send that child to a college locally so he or she can live at home - before I would do that I would look at the benefits. Always look at the benefits of cost of something. For example, if you got rid of your cell phone and you were a business person, you might miss important calls. I know many of my friends who are business people are constantly getting calls on their cell phones and making important business decisions. If you're going to say, well, we're going to eat at home and not eat out, recognize that means you're going to have to put more time into preparing those meals. Maybe this is time you could be using better in a side business or in a second job. And as far as sending your child to college, maybe it is a college that is away from home that is going to be best for that child, that has the major that child wants and is going to lead to a better career for that child. So my point here is always look at the benefits you're giving up if you're going to give up some of these modern gadgets or conveniences and compare benefits and costs."

Posted by Dave at April 29, 2009 08:08 AM