Some will opt to downsize their lives
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The recession has forced many people to adopt lifestyle changes, making adjustments for a sudden reduction of income after losing their job, business or investments -- or even the fear of a job loss.
But after the recession passes, many middle-income consumers will re-examine their lifestyles and decide to permanently downsize the way they live, Harvard Business School marketing professor John Quelch predicts.
He calls them "simplifiers."
They had bought into the notion that they should work hard and live well all their mid-years while saving for a blissful retirement.
Now, shocked by the meltdown of their 401(k) retirement plans and other assets, some of them will ask themselves: "Did it all make sense?"
"There are going to be a number of consumers looking at their lifestyles in the mirror and saying, 'I really don't want to go back on that treadmill and go through this again,'" Quelch said.
They will change their mind-sets and realize that things that they once regarded as necessities were luxuries.
Simplifiers will no longer want to spend a lot of time maintaining "stuff," he said.
They will downsize their lives -- trade in the big vehicle for a smaller one, buy a smaller home, take one vacation instead of two. Some will shift from fresh produce to frozen, premium brands to house brands. They will hold on to appliances longer.
They will shun conspicuous consumption and focus instead on making memories and experiences.
Not everyone will become simplifiers, Quelch said. Some will wait for the recovery and return to their former lifestyles and spending patterns.
But the longer the recession lasts, more and more people are likely to adopt the simplifier approach, he said. And the simplifiers will likely maintain their frugal lifestyles. "They are not going to revert," Quelch said.
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Also, you may want to consider this…Now as I stated before, the original article was somewhat mis-leading but consider this:
You are in a situation where you are trying to salvage what is left or what you may have going for you in reference to your credit report so that you can modify/refinance your home in order to reduce the output of cash from you monthly income. Here are your options:
1.)If you sell the boat you will still be responsible for monthly payments that make up the difference of what you owe and what you can sell it for, thereby not improving your situation AND negatively affecting your credit.
2.) You may consider a voluntary repossession in which they retrieve the collateral, they sell it at auction and you will still be responsible for the monthly payment that make up the difference of what you owe and what you can sell it for, thereby not improving your situation AND now your credit history reflects a repossession (regardless of whether it was voluntary or not).
3.)You may acknowledge that you are going to miss a payment or two and if you can work something out with the creditor to wheather through a couple months until resolution is found to an otherwise temporary sitation while maintaining ownership of the boat, yor credit history is negatively affected with late payments. And I ask you, which has more of a negative affect, late payments or repossessions?
Which option do you take?
Interested Read-
Please understand that the story as it was written is just a little mis-leading. If you will take a moment to refer to my comment on the piece.
In the photo I noticed a boat and trailer in the driveway. Do they really need a boat when they are hard on their luck? That’s one extravagance they could do without, at least until they get back on their feet.
Funny how families who complain of how the economy is impacting on their lives have the very items that are bleeding them to death, expense-wise. Do they have expensive cable?
Oh, I forgot, they thought these were necessities!
Wow, how insightful. People who get lower-paying jobs after months of unemployment will choose to simplify their lives. Thanks, RTD, for enlightening us with such unique and interesting observations from a Harvard professor.
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