August 21, 2012

Drought 2012 - The News Isn't Good

In 2007 to 2008 we experienced our first “Rainy Day” in a long time in this country.  It came in the form of a profoundly severe economic crisis.  It was this Rainy Day that those who lived through the Great Depression and World War II would have said that we needed to be prepared for.  There was a lot of heartache during that timeframe and it was in the fall of 2008 that I learned that I would become one of millions who would be unemployed in 2009.  We went into crisis or Rainy Day mode to get debt reduced and some money in the bank so that we could live only on my husband’s income.  Hence, this blog, The Path to Frugality was born almost 3 years ago in September. 

I have noticed something in the past year and it is that people believe that frugality is for “weird” people.   From 2008 to 2011 frugality was the trendy thing to do but as people got tired of feeling deprived (when they really didn’t need to feel deprived), they headed back to the stores with their credit cards.

Well, another rainy day has arrived and if you haven’t been getting prepared, you need to start preparing your family now.  It’s not just with food, but you need to get money into savings to prepare for job losses, rising costs of everything.  Yes, everything.  We live in a cause and effect economy and if you have a shortage on corn, everything that has corn as an ingredient will cost you more.  The same goes for meat in which corn is used in feed.  There is also a trickle down effect on jobs.  Farmers aren’t going to be able to purchase new farm machinery which will lead to manufacturer’s of those machines laying people off, which will affect communities as those workers will not have money to spend in the community and so on and so on.

This new crisis of drought goes one step further beyond the rising costs of food, gasoline and other commodities.  It is shortages.   Yes, it is the shortages that are costing us more at the grocery store.  The news has reported that the average family of four will spend $615 more next year in groceries due to the drought.  Also it was reported that the total number of cattle in the U.S. is the smallest number in 60 years due to ranchers selling off their herds because they can’t afford to feed them.  Those ranchers are now getting $150 less per animal. 

One poultry producer reported that they are paying $9 for a bushel of corn which is the highest they have ever paid for corn (up a total of 40%).  It takes about 12 weeks for a chicken to grow to the point of being butchered.  We will be seeing poultry at record prices in a short time.

On this site I have given numerous tips over the past 3 years on saving money.  Other sites that I follow do a very good job of money saving advice.  Frugality is going to be the way of life for many of us and that is, as Martha Stewart would say “A Good Thing.”  It’s not bad or shameful to be frugal, instead it is being mindful of your resources and it brings freedom.  What kind of freedom?  Freedom from worry.  If you are prepared, you don’t worry about your future as you know you have a sense of security because you can weather a job loss or a loss in spending power.

Continue to take care of the resources you have.  If you need a new couch because it is worn, sew a slipcover or purchase a slip cover if you can’t sew.  Learn to fix things on your own where practical.  Avoid purchasing what you can and put as much money into savings as possible.  As you are saving if you do come across a great deal on food, then stock up. 

Continue to make your own cleaners.  If you run out of your favorite laundry detergent, try making your own own laundry soap to save money or mix your detergent with a generic brand. 

Search this site for other money saving tips or check out my blog roll and look at the other blogs that I follow for ideas.  I can guarantee that if you put your head in the sand now, you will regret it in 6 months.


John D. Wheeler said...

uThat is all great advice -- on a personal level. The problem with it is when everyone does it. That money you're not spending is income someone is not getting. That's why it's called a deflationary spiral. Ultimately from this point there is no way to avoid the pain, it just has to be endured. We as a society got addicted to debt, and the only way to avoid withdrawal is death -- literally.

Juhli said...

I think you are absolutely right with the points you are making. Perhaps you see it more at this time because of where you live. There is very little coverage of the impact of the drought on farmers and food prices in the media in the city where I live. Even incorporating more meatless meals into ones diet will only help to a small extent in terms of cost. We have had "cheap" food in the US for a long time compared to many other Western countries in terms of % of income spent on store bought food. A change in that is going to come as a surprise to many people.

Martha said...

@ John:

I know I am preaching against what the economists say is necessary and that is for all of us to have the confidence to spend money and boost the economy. I have read "Too big to Fail" and I have studied many different sources about the events that led up to the Great Recession. I am waiting for the Jackson Hole meeting to see what Bernanke may say in his speech there. I still have his speech to Congress from last month taped on my dvr. I totally agree with society being addicted to debt and credit. IMO it was the greed on the part of some buyers who thought they could afford homes that they really couldn't and got into crazy mortgage loans and then took excessive equity loans out. Then it was greed on the part of some bankers who subjected consumers to predatory lending. And let's not even get into credit defaults and derivatives. There is a lot of blame to go around. Now is the time to spend on the necessities and put the extra money in the bank because it is only we as consumers that can take care of ourselves when times are tought

Anonymous said...

Dear Martha, Once again I believe you are right. I still see people in the area I live in, a suburb of L.A., driving brand new European luxury cars (one of the worst ways to spend money by putting tens of thousands of dollars into something that only depreciates), etc... and I know there aren't be that many multimillionaires around since they should be the only ones who could actually afford buying cars as frivolously as that. I'm afraid there is a lot of denial going around and it seems like people are trying to give the image of wealth. Well, we all know the real statistics of the debt a lot of us carry. I wish everyone would read Aftershock by David Wiedemer (no, I am not affiliated with the book). I may check it out from the library again as a "kick in the pants" to motivate myself even more to save money. Here's to hoping everyone gets their finances in order. We did it, so can everyone else!

Joan J said...

I appreciate this article. Although I lead what I consider a far more frugal life than average, you've given me a lot to think about. Your blog has always give good suggestions and perhaps it's time to really put them into action.

Anonymous said...

Yes, like you, I do believe we are in for severe shortages and price hikes. Thank goodness I have an Aldi close by and cook from scratch including many, many meatless meals. I could stand to lose a little weight but my hubby and kids shouldn't:). I don't believe that I should spend my surplus in order to keep another person employed.