For years, you have been spending more than you should on your house, car and fancy vacations. Now the economic bubble has burst, your 401(k) is tanking, your planned early retirement is a distant memory and you have rediscovered the virtue of saving. It's an understandable move in hard times - pragmatic, reassuring and wrong.
Any economist will tell you that too much saving can be just as dangerous as too much spending - it's hard to spur a limp economy back to life. What you really should do is spend in ways that will pay you real dividends and also feed the economy. When tax rebates from the federal stimulus package arrive, resist the urge to deposit them. Spending and saving may sound like a contradiction, but once you get the knack of it, there are plenty of opportunities around.
Consider, for instance, the simple lightbulb. Compact fluorescent bulbs use about 75 percent less energy than standard incandescent bulbs and last 10 times longer, saving you $30 or more in electricity costs over the bulb's lifetime. Multiply that by the number of lightbulbs in your house and you could be talking real savings. Replacing furnace air filters, adding home insulation and purchasing more energy-efficient appliances are other examples. A programmable thermostat can cost as little as $50 and save many times that amount.
Purified-water drinkers can buy a home filter and stop paying for expensive bottled products. Buying the right computer printer can save on costly ink cartridges. Packing a lunch, using an electric razor and joining a food co-op can reap rewards.
That's spending perfectly suited to the current economic decline. It should help keep people employed and shore up household finances. And when friends ask what you think of the stimulus plan, you can tell them it has paid off big for you.