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Archive for the ‘Economy’ Category

Recession reflections

Even in (or because of?) this recession, I find that among twentysomethings I know, most are less willing to trade adventure / soul-searching for security.

  • Example 1: 25-year-old who quits job with decent pay to travel the world in search of the Next Big Wave.
  • Example 2: 23-year-old who uses layoff from the Big 4 to figure out how to break into acting / entertainment business.
  • Example 3: 27-yeard old quits consulting gig to start a start-up. Went from $100K+ paycheck to ramen noodles – but, he’s living his dream.
  • Example 4: Several quarterlifers living the funemployment life.

In all of these cases, these are high-achieving people in college who went after the big jobs during recruiting. In most cases, having worked for a year or two or three, they have saved up enough to fund their traveling costs or start-up expenses. Self-discovery is a lifelong process, but these twentysomethings are getting a jump start on their roaring twenties.

Money can shackle you or liberate you. It’s gratifying to see them out there, pursuing their dreams and trying to figure out what makes them happy and what gives their lives meaning.

Life’s too short not to.

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Recently, it seems as if a new word has entered the recession-inspired lexicon. First we had “staycation,” then came “frugalistas” and “recessionistas.” Now, there’s “funemployment”. Los Angeles Times and SF Weekly both published features on the trend (and I have several friends who are taking time off to do their own thing).

So while all the dismal jobs news makes me feel anxious about my career future, these reports help me feel like, well, the world wouldn’t end if one does not have a job for a little while.

Out of college, everyone (or so it seemed) wanted to “take over the world.” But this deep retrenchment may have given people – especially young, well-educated professionals in their 20s and 30s, a chance to reexamine their ambitions, priorities, and assumptions.

I wonder – if this dismal market has given people the chance to do something differently, chase their dreams instead of the next promotion. Having experienced or witnessed the massive disruptions to our identities as producers and consumers, how will we respond once the recession ends?

One 20something blogger I read is Molly of These Little Moments (who shares my penchant for shoes). She has been unemployed for 6 months after being laid off from her job in public relations. Today, she wrote a very honest post about her experience with unemployment, and how this stint outside the workforce has changed her view towards work and altered her career ambitions.

This recession has affected my thinking too – maybe not as drastically as it has Molly, but it definitely has on several fronts.

The recession has reminded many people – myself included – that family and friends are the most important things in life. My thinking has always been that true love and friendship are hard to find. So once you do you better hold on to them for dear life! I think for me, a rich and fulfilling life can be lived out in both the personal and professional spheres. This recession has reaffirmed in me the importance of financial independence, and my desire to have a career, not a job.

One alumna sticks out in my mind – she worked at several large companies domestically and internationally, graduated from a top business school, and now is in charge of marketing an entire brand in Europe. She’s maybe 35. She’s going to be a CMO or an EVP one day (maybe even a CEO), I can almost bet on it.

I’m impatient, and sometimes, on a bad day, it feels like I’m already falling behind. But I know I can get there.

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McDonald’s and Starbucks are two of the most successful and iconic consumer brands in the world. In recent weeks, I’ve received several new coupons for McDonald’s new McCafe lattes and mochas throuh it’s big marketing push for the new drinks. Starbucks (who has been struggling lately after years of outperformance) must be concerned about its new-found competition.

I came upon this piece on Pierce Mattie PR‘s website (note: I am not affliated with them in any respect), and thought they asked an interesting question:

Will this new campaign help McDonald’s become the coffee brand of choice?

Here’s what I think:

McCafe will not replace Starbucks. The consumers who are seeking the ambiance and the customization that Starbucks offers will not flock en mass to McCafes. McDonald’s, to me, appears “transactional.” People pull up to the drive-through and get a Big Mac and a diet coke, or stop by before work to grab a new latte. Despite the happy characterization of Mickey D’s commercials, few people I know would suggest that as a spot for an after-date drink or a catch-up session with girlfriends.

Starbucks, on the other hand, focuses on the “experiential”. At its best, the coffee giant truly represents the “third space” between home and work where a customer can chat with the barista, order a drink to his specification, then settle in for conversation, socializing, and relaxation. Before he leaves the store, he might pick up a CD or a Starbucks coffee mug

If McDonald’s can woo the consumers who go to Starbucks four times a week and convince them to frequent McCafe twice instead, it will have achieved great success. These consumers are likely to be more interested in a transactional experience even at Starbucks (i.e. the quick morning coffee vs. the drawn-out coffee date or after-work snack).

McDonald’s chose a very opportune moment to push the McCafe concept – in the recession all consumers are looking for a better value-proposition, and McDonalds seeks to deliver that with a lower (than specialty coffee) price point but a higher (than perceived McDonald’s coffee) quality. Before the recession, an office worker may have bought a $4 frappacino before her morning meeting. Now, with a tighter budget, she may instead grab a $2 McCafe latte.

I’m not sure if the McCafe concept as a stand-alone store will catch on – I’ve visited a McCafe, and while the space is nicer and more “coffeehouse-like” than a regular McDonald’s, it’s still a far cry from the styling and the comfort of a Starbucks. I’m very excited to hear that McCafe will be coming out with new drinks over the upcoming months. More coffee drinks are always good in my book!

What do you think? What were your experiences with McCafe drinks, and would you forgo Starbucks for McCafe instead?

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I wrote a hair post in both 2007 and 2008, so I suppose it’s only appropriate to continue the tradition in 2009!

The recession is a major reason why I’ve been neglecting my hair a bit during these past several months: skipping my straightening treatment ($250), trading down my stylist (from $60 per cut to $20 per cut), and spacing out my haircuts (long layers mean I haven’t cut my hair in… I’m too embarrassed to admit how long!).

Recently, I thought about getting a digital perm (~$250) because I have a hankering for long loose curls. A few of my girlfriends got it done and they look beautiful. Imagine long cascading waves that tumble past your shoulders. 😉

But I decided to put it off given that I have many uncertainties looming in my life: job and the whole recession doom and gloom, expenses for a possible new business, a new apartment w/ increased rent, the need to save for retirement (or else be reduced to a life of penury), etc.

A gorgeous head of hair is lovely, but I’m not sure it’s so important that I need to get it done right this moment. So, as many others have done, I’m putting off the “big-ticket” items in these uncertain times.

Have you decided to trade down on haircuts / treatments and or products because of the recession? Did your hair budget decrease from what it was in 2007 or 2008?

If I have any hairstylist readers out there, how are you faring?

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Recession fatigue

fatigue

Not just any run-of-the-mill fatigue – I think I’ve got a case of Recession Fatigue.

Some symptoms / realizations:

  • It’s a marathon, not a sprint. I’ve decided to spend more money rather than saving all my dollars for emergency fund. Did that for several months, then realized that the end of the recession is very far off. I am much happier and much more able to keep a consistent level of savings when I’m not going for broke (figuratively speaking) every month.
  • News have become depressingly similar. The bad news is bad. The good news is only good because it’s not as bad as people expected. Talk about the power of low expectations.
  • Feeling surprisingly sanguine about the whole economy and the job market (although I realize that as a single young person, it’s much easier for me to say that than if I were a parent with dependents). If I lose my job, I will adjust. I will survive. I’ll do better than survive.

Do you have recession fatigue? What are your symptoms?

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Frugality is the new trendy?

Reading articles on declining consumer spending and increasing saving rates (and watching new words such recessionista, frugalista, and cheap-chic enter the lexicon) has made me wonder: has frugality gotten too trendy? And, will it stick?

Frugality isn’t an issue I write on, because I’ve never claimed to be frugal – I try to save and invest, yes, but I certainly have my moments. Exhibit A: $200 worth of wool gabardine from J.Crew today (if you follow me on Twitter, you would’ve seen step-by-step how the consumer pummeled the pf blogger in me.)

As an example of some recent coverage of the new return to thrift, Friday’s New York Times article is titled: “In an Age of Austerity, the Miserly Thrive

I cringed a little at the word “miserly”. A miserly person is someone who’s cheapness is inconsiderate and inconvenient to others. Miserliness is not a quality to aspire to in any economic situation. But I see how the title “In an Age of Austerity, the Financially Responsible Thrive” might not have the same ring to it.

Then NYT used this example of an enterprising nurse who took home a duvet off the street.

“My behavior has become less strange and more of a resource,” said Katy Wolk-Stanley, 41, a nurse in Portland, Ore. A practicing penny-pincher for the last decade, she is now spreading her gospel. Last May, she started a blog with tips and tactics for cutting back called The Non-Consumer Advocate.

She knows whereof she blogs. She darns socks, dries clothes on a line she recently hung inside her house (even though it takes a few days for the clothes to dry inside), washes and reuses plastic bags and takes used clothes and furniture people leave on the street — like the slightly torn Garnet Hill duvet cover she found recently.

“It was wet, and covered with dog hair,” she said. “I washed it really well a couple of times and mended it.” Her quest for money-saving ideas “is very energizing,” she says. “You see opportunities everywhere.”

I’m glad she was handy enough to take the duvet (it’s also great for the environment – one less duvet in the landfills). But I’d feel uncomfortable using a duvet I found off the street, “wet and covered with dog hairs.” The ick factor would be too great for me to overcome (curiously, I have no problem buying clothes from thrift stores). I’ll settle for my duvet set from IKEA (bought it during one of their one-day sales for $20).

I guess this confirms what I already know: I’m just not that frugal, I like my creature comforts, and I’m willing to pay for them (although I am willing to pay LESS for them in this uncertain economic climate).

Will Frugality Stick?

As far as will frugality stick? People will always want things (or experiences). That requires money. Real estate in desirable areas such as San Francisco, Manhattan, and Los Angeles will always be pricey. Conspicuous consumption has gone out of style – for now – but who knows?

In 10 or 20 years, if things are good again or we have another bubble – will New York Times be writing about fishing discarded bedding off the streets and washing plastic bags? Will a consultant skip her $4 morning latte at Starbucks? Will the middle-class professional woman be so eager to disclose that she got her holiday dress at Goodwill instead of Neiman Marcus? Will she even go to Goodwill?

As deep and as hurtful as The Great Recession is, can it truly, permanently reprogram us as a culture of frugality? I’m hesitant to say yes. We had a huge, wild party that went too long. Now comes the hangover and the recriminations. But after a while, after we feel a little better, after we promise to never let things get so out of control, we’ll raise a glass (or two, or three) again.

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Question: What is dining out?

Thanks to the economic downturn, many high-end restaurants have been offering great deals. And as much as I am trying to save money, I have also been heartily enjoying the “recession specials” at high-end restaurants.

Several weeks ago I ate at a Japanese place that would normally be stretching my budget. Instead, I got a 3-course meal for $33 including tax & 20% tip. Best sea bass I’ve had in years. YEARS. I still think of it fondly.

Next week I’m going to a swanky French restaurant where I estimate $28 for 3-course meal including tax & tip. Then the week after I’m going to a trendy lounge / restaurant where I can indulge for 50% off the regular prices (probably around ~$30-$35).

I am so excited.

If you are a gourmand and you have some discretionary income (and you can’t get away for long to take advantage of those awesome travel deals), go to a nice restaurant. You will be doing something good for the economy, and treating yourself to deliciousness that would cost far more in better times.

Let’s eat our ways to prosperity!

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