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Samuel Freshman and Heidi Clingen: Saving, not spending, is smart nowadays


Posted: March 25, 2011 1:55 a.m.
Updated: March 25, 2011 1:55 a.m.

DEAR SMARTIES: My parents were children of The Depression. They taught my sisters and me to buy only what we could pay for and to not depend on credit cards. I have a friend who wants me to help her “stimulate the economy by shopping.” She wants me to go on a spending spree with her rather than to save.

But it’s hard to feel obligated to go out and spend money just to “save” the economy. I have to save myself before I save the economy.— Stimulated by Saving in Simi Valley

SAM: I, too, was raised by frugal parents. I was born in the middle of The Depression, so it didn’t seem unusual to me that everyone was very careful with their money. These days, there is a lot more financial information available.

Nevertheless, people still need more experience in living frugally and keeping money safe.

You are on the right path. Rather than spend extra money with your friend, save it and invest it to gain financial independence.

HEIDI: Like Sam, I was raised to “pinch pennies” and not be ashamed of my circumstances.

To make up for my childhood of hand-me-downs, at one point in my life, I was a personal shopper. I loved to help other people shop and spend their money.

With your shopaholic friend, maybe you could compromise. Tell her that you will shop with her if she lets you help her make good choices. Then bring only a few dollars to take to buy yourself a little treat, so you can have a memento of the day. Since your friend is in such a hurry to spend her money, see if she’ll buy you lunch, too.

DEAR SMARTIES: Many people’s savings, investments, retirement funds and college funds have tanked over the last year.

Where do we go from here? — Caught by Surprise in Cerritos

SAM: Back to basics. Keep your safe money safe. Don’t put the money you need at risk.

Save as much as you can in cash, especially right now, until we see which direction the economy is going to go. Markets fluctuate. Historically, that’s what they have always done. “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist,” said economist Kenneth Boulding.

HEIDI: The pressure to get into the market was fierce. The assumption was that without stocks, retirees would never have enough money to retire. I am very concerned about those who became overly confident in their market-tied investments. It became very easy to trust “happy” statistics and make the assumption that past performance somehow guaranteed future results.

DEAR SMARTIES: My husband just got laid off. I’m glad we didn’t try to keep up with Jones. Instead, I saved for a “rainy day.”

Well, get out your umbrellas, cuz here it comes.— It’s Raining in Rosemead

HEIDI: Umbrella, indeed. How about a tent or cabana, something you can live under for awhile? This mess took years to create, it will take years to fix. There is a term being used lately, “the New Normal.” Nothing feels normal anymore, but we will all learn to adapt.

SAM: We’re glad you saved for a “rainy day.” Good for you! The economy may not turn around for awhile. In any case, everyone needs financial reserves.

In good times, they can be invested to provide income. In bad times, they will help get you through until the good times return.

Heidi Clingen is a long-time resident of Stevenson Ranch. She is the co-author of “The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It,” with Samuel K. Freshman. They offer only their opinion, which does not constitute professional, financial or legal advice. To receive a copy of The Principles of Financial Independence or to submit questions, email


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