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May 19, 2008

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I wonder if those same people selling everything for pennies on the dollar now will go back out and spend, spend, spend when times are good again? My bet is yes.

I have personally sold a few things but there is alot more laying around the house that could be sold. Should I hold onto this as my evergency "fund"? Will come to the point where everyone is selling and no one is buying?

I wonder if we are at a tipping point for a big change in lifestyle. I made the choice to live in the city a year ago in a smaller apartment because I figured the best way to save on gas was not to get a car that got better millage but to just not drive the car. I also live close to work, and on bus routes. Now, people I know who are thinking about moving are taking bus routes/commute into account along with other factors that were just not considered even a year ago. As the hidden costs of owning a large yet inexpensive house in the suburbs is becoming apparent, people's first response is to sell stuff. Then the real change begins.

It's amazing the cushion and piece of mind that a nice emergency fund provides. With ours inching towards 15k, I must say that it is very easy to sleep at night in our house rented at less than the cost of its mortgage.

Chris - I am exactly one of the people you are talking about. For our next house my wife and I are seriously considering moving near public transportation and closer to my office even though we absolutely love where we live now. I figure we can save at least $1,200 a year on fuel - just on my commute dropping 20+ miles a day. That doesn't even factor in days I would ride a bike/take the bus or saving on my wife's commute 3 days a week. That extra $100 or so a month could buy us "more" house that we originally thought - probably $10k to $15k higher.

Now we just have to decide if that savings is worth moving to an area we may not love as much.

I would also like to share todays timely Paul Krugman piece in the NYT

http://www.nytimes.com/2008/05/19/opinion/19krugman.html

Sometimes good finance is looking for the obvious and not-so-obvious ways we spend money. With the rise of fuel prices transportation suddenly has become a painfully obvious expense. What others are there that we don't see now?

Thanks for sharing, Chris. I went to London a few years ago and was amazed how easy it was to get places with no car. I came back wishing we had the same system here, especially while sitting in rush hour traffic.

Having public transportation is great. When I went to Shenzhen, China for a business trip, all I did was take their rail system and was able to go anywhere in the city with no problems.

I know a lot of people who are supposedly struggling to make ends meet. Some are on SSI/SSDI and living in section 8 housing; others are engineers making six figures. These same people have ALWAYS struggled to make ends meet. Their problem isn't rising gas/food prices; their problem is their mentality toward money -- they have mentalities that ensure they'll ALWAYS be living paycheck-to-paycheck regardless of how much cash they have coming in and regardless of how the economy is doing.

We see these "desperate" maneuvers, like selling heirlooms on ebay, because people won't make the real, systematic changes it takes to get away from a paycheck-to-paycheck life. Give me (or FMF or many of the others on this site) an evening to look over these people's finances, and 99% of the time, we'll find plenty of ways they could make ends meet without having to sell Grandma's dishes.

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