Monday

3 paydays in April

April has come and gone and I've been a very bad girl during that month with my financials. My company issues a paycheck to us every other friday which equates to 26 paychecks in a year versus 24 paychecks to those that get paid on the 1st and the 15th of the month.

This translates into a lesser paycheck amount but it does make it up for it in quantity. My next 3 paychecks would again be in October.

To my dismay, I was only able to save 1 of 3 paychecks.

I saved my first paycheck entirely. My second paycheck was used to pay for the mortgage. My third and final paycheck was spent...well.. on vacations. Yes, that is vacation with an "S". But these are just small vacations that I will be taking very soon later this month.

One to Dallas and the other to Cancun Mexico. But all in all, both trips cost under $1500 for airfares + hotel.

How was everyone else's month? Any upticks on your financials.

Why the well-offs are not spending

Even as the economic recovery plods ahead, many American consumers are refusing to come along. They're not spending freely -- and they have no plans to.

Many of them have steady income. They aren't saddled by high debts. They don't fear losing their jobs. Yet despite recent gains, they've lost so much household wealth that they're far more cautious about spending than before the recession.

Their behavior suggests that the Great Recession may have bred a new frugality that will endure well into the recovery. And because consumers fuel about 70 percent of the economy, their tightfisted habits means the rebound could stay unusually sluggish.

They had in mind people like Marjorie Feldman of suburban St. Louis, who retired three years ago as a systems analyst for a utility company. The stock investments in her retirement account have sunk 15 percent from 2007. The value of her home is down 20 percent.

"I had retired assuming I'd make money" off the investments, said Feldman, who's in her early 60's. "I just don't feel as confident in the economy, and I never will again. I won't spend money the way I used to."

Feldman's husband works full time in academia. She has a part time job preparing tax returns at H&R Block. But her prime earning years are behind her. "I don't think it will ever get back to where it was before," she said of her nest egg. "I won't spend money the way I used to."

To be sure, many shoppers, especially the wealthy, are buying into the recovery. Partly on the strength of consumer spending, the economy emerged from recession last year and has been growing steadily, if moderately, since. Major retailers logged solid sales in March. Employers have begun to add jobs, including a net increase of 162,000 in March. The stock market has risen 70 percent from its low in March 2009.
Yet many who became penny-pinchers during the recession are in no mood to start shopping again with abandon for clothes, cars and home additions. They've discovered the peace of mind that comes with rebuilding savings, shopping more prudently and learning to live with less..

Interviews with ordinary Americans suggest a new frugality endures even though consumer spending has risen for five straight months and retail sales for three. In the AP's new quarterly survey, a majority of economists agreed that a new frugality will persist even as the recovery gains firmer footing.

"Consumers will not run up multiple credit cards to their limits, and when buying a house the objective will not be to get the maximum square footage for which they can afford the payment. A higher savings rate will be in place for several years."
Jeff Thredgold, an economist at Thredgold Economic Associates, predicts "less impress-my-neighbor-type spending" in coming years. He isn't worried about losing his job in business development at an information technology company. What's led him to cut back spending is the sunken value of his condominium. He bought it in 2005 for about $270,000.

"I doubt right now it's cracking $100,000," Flowers said.
Household net worth -- the value of assets like homes, checking accounts and investments minus debts like mortgages and credit cards -- has risen for three straight quarters. But economists say consumers would need a stronger and prolonged increase in wealth to lead them to ratchet up spending. Net worth would have to rise an additional 21 percent just to get back to its pre-recession peak of $65.9 trillion.

Some economists put their hopes for the economy in the rich, who are spending more freely than the rest of the population. They hold out hope that this will encourage more hiring and stimulate spending by the less wealthy. More spending could increase companies' revenue, which allow them to boost hiring and pay. And that would lead their employees to spend more.

Royal Caribbean Cruises Ltd. returned to a first-quarter profit as more travelers vacationed on its ships and spent more money on board. And makers of luxury goods are benefiting from a release of pent-up demand for jewelry, watches and high-end furnishings.

High-end retailers have reported blowout results. Nordstrom's revenue in stores open at least one year jumped 16.8 percent last month. Saks' surged 12.7 percent.
McClaren Automotive has announced it will debut a $200,000 sports car in the U.S. next year. And business is picking up faster at high-end hotels than at mid-priced and budget hotels.

Whether spending by the wealthy will cause the less-well-off to spend freely, too, remains unclear. For now, though, many people have embraced a more frugal approach to spending.

Or maybe they've just learned to go without.

Jan Iris Smith, 57, and her husband of Cabin John, Md., put off furniture and clothing purchases after the stock market's collapse in early 2009. "We were counting on our income from our investments," said Smith, a psychotherapist whose husband is retired. "We just stopped pretending everything was going to be OK anytime soon."