Everyone in the industry hopes and prays that the downturn stays within the historic norm of 38 to 44 months, thus making this alternative lifestyle of short duration. However, brokers and agents would do well to recognize that over the longer haul, and for a growing number of Americans, a life of simplicity will be one of choice rather that one enforced by circumstances. When the real estate market does return to sustainable levels, it will bring with it a whole new class of buyers and sellers; who unlike the free spending high rollers (read boomers) that drove the market in the past, are of good financial reason and sensible survival living lives of focused quality and sustainable quality.
This segment of the market has been present as a passionate minority for the past several years. The original members were alternative life boomers and purists “X’ers” whose primary motivation was to avoid the “keep up with the Jones” syndrome that they saw as destructive to the quality and balanced life they so coveted. It is possible that some percentage of the millions of families currently facing foreclosure might have been saved had they undertaken the need to restructure their financial world in order to accommodate their new home and its payments.
However, moving forward, the ranks of the frugal movement will be filled with families whose adult (28 – 45 years old) economic, work and life choices mandate what is now called the “frugal life.” Understanding the philosophies and principles of the frugal life through either practical experience or study will be an essential element for firms and agents who wish to harness this expanding market segment.
The essence of the frugal life can be explained through a few simple concepts. So whether you have decided to try it during the challenging times or to learn about it in order to be more effective working for the future frugal real estate consumer, give the frugal life a shot. Here is some information to get you started:
First of all, frugal living does not mean sentencing you and your family to a life of deprivation. Frugal and cheap are two totally different concepts. Cheap is about an obsession not to spend money. Frugal is about maximizing the effectiveness of your spending to gain a quality and balanced life.
Frugal living isn’t about sacrifice and deprivation; it’s about living smarter, so that you can allocate your economic resources to live the life that you want to live— a life that in your present spending pattern may be nothing more than a dream.
• Frugal living makes money management a philosophy, not just a discipline.
When you carefully track how much money your household has available, how much is coming in, and how much money you need to cover your monthly bills, you can begin to envision and plan for the frugal life. It is all about making better decisions about how your money is spent. While some might mourn the loss of spontaneous spending, most celebrate the ability to incorporate regular rewards.
You’ll also know where you stand with debt repayment, savings goals, retirement planning and investments of all kinds. It’s all about using your money to drive your future vision rather satisfying you’re past indiscretions.
• Frugal living means being smarter about your spending.
With all due respect to fast food and convenience stores, frugal living rejects the popular relationships that exist between convenience and speed in favor of establishing relationships between spending and value and spending and the big picture. It is about using the same level of intellect usually reserved for the top priorities of your life, on subjects as mundane as grocery shopping and entertainment. It is the difference between a ten-mile per hour Porsche and a 30-mile per gallon Volkswagen convertible. It’s taking the money that you have and stretching it as far as it will go. It is about smart shopping.
Sometimes it is about knowing when not to shop—holding off on a purchase that doesn’t fit your current resources, and patiently delaying a discretionary buy until sales, discounts and clearance sales are in range. The successful frugal shopper eliminates emotional shopping in favor of purposeful acquisition; the right item at the right time for the right price.
• Frugal living requires innovative economics and creative life style planning.
Far too many households spend far too little time dreaming, planning and implementing a life style vision and plan. For most boomers, the fantasy was to “have it all.” This concept calls for spending first and planning second. Frugal living is about finding ways to make do with what you have, and learning how to do more for yourself. Should you pay someone to change your oil or do it yourself? Sew a patch on a pair of holey jeans or buy a new pair? Purchase trash bags or reuse your plastic grocery bags? Every day presents new opportunities to recycle, reuse, repurpose and create, and it’s the frugal person who recognizes those opportunities, seizes them and turns them into savings.
If you find yourself cringing at the examples set forth above, you might want to take it as a sign of weakness not of strength. None of the examples above requires one to do without but rather demonstrate a level of thinking that will allow you to have the resources it will take to enjoy a much higher quality of life.
• Frugal living is all about the art of the possible.
Advocates of frugal living love to share the stories of their economic conquests. They regale in the rewards of saving five dollars here and ten dollars there only to spend it all on some really outrageous expenditure that brings them joy and satisfaction. They are quick to point out that spending for convenience and speed is a quickly forgotten and low satisfaction experience.
For the surviving real estate professional, 2009 and 2010 will be all about learning to succeed in a new market environment with a new real estate consumer. To a greater degree than ever before, these new consumers will have taken the frugal living pledge and will have committed themselves to living a creative and innovative life style that reflects their values, not the neighbor’s latest plunge. Working with this client will require more than a basic understanding of frugal living. It will require an appreciation of the discipline, skills and commitment necessary to place this person in your office with a big smile and the announcement; “we are ready to purchase a new home.”
