Time Magazine recently got it right it right though, and that’s because they asked the Nielsen Company (famous for TV ratings) what people are buying in stores like Wal-Mart and Target. Rather than interpreting the data, they let the numbers speak for themselves.

Here’s a summary of their findings:

Increasing categories:

• Seasonal general merchandise – up 32% (includes thawing salt, body warmers, gift packages, and candy)
• Canning, freezing, and food prep supplies – up 11.5%
• Family planning – up 10.2%
• Fresh meat – up 7.3%
• Vegetables and grains – up 5.5%
• Pasta – up 4.4%
• Cheese – up 1.1%
• Wine and liquor – up, but no numbers given
• Baking supplies/mixes – up, but no numbers given

It seems like people are just cooking at home more in general, and are also downgrading their gift purchases. The “seasonal general merchandise” category includes things like holiday gift sets, so it seems like people may be skipping out on the flowers and jewelery for something a little more economical.

Decreasing categories

• Film and cameras – down 31.5%
• Sports and novelty cards – down 26.5%
• Magazines – down 17.1%
• Canned seafood – down 13.3%
• Jams, jellies, and spreads (including peanut butter) – down 12.1%
• Bottled water – down 11%
• Cookies and ice cream cones – down 9.7%
• Home accessories (includes kitchen gadgets, lawn and garden items, buckets, bins, and bath accessories) – down, but no numbers given
• Air fresheners and deodorizers – down, but no numbers given
• Insect repellent – down, but no numbers given
• Flu and cold remedies – down, but no numbers given

It’s pretty easy to cut non-necessities in a pinch.

It’s worth noting that the jams, jellies, and spreads category is skewed because of the various salmonella scares that have occurred recently. Otherwise I’m sure this one would be up.

I was surprised that canned seafood is down so much. Canned tuna is one of the cheapest (and healthiest) meal bases you can buy. I thought this one would’ve been on the increase, especially because fresh meat sales are up.

What it says about income

The authors also had some interesting takeaways. First, they said that the trend applies to all income levels.

People think they have to hunker down, no matter what their socioeconomic status.

I find that surprising, but encouraging. Hopefully people of all incomes are realizing the importance of having a solid financial base, including spending more responsibly. Not necessarily spending less, but more responsibly.

What it says about long term habits

Another conclusion they reached (that I disagree with), is that:

What’s more, experts say… lagging products shouldn’t expect a rebound anytime soon. The back-to-basics movement is here to stay.

I don’t agree with this. I think that people will change their habits as long as they feel the pressure, but once things are back to normal and they’re not worried about their job, they’ll return to their old ways.

If there’s any change, it might be that consumers build a bigger emergency fund, but nothing else will be different. People have a short memory, and history tends to repeat itself.

If we learn from our mistakes, why wasn’t there a sustained push for energy independence after the oil shortages of the 70s? Why did the dot com bubble of the 2000’s lead right into a real estate bubble?

I think it’s great that people are acting more responsible now, but I don’t think it means that the changes are permanent by any means. For a more detailed discussion about why I feel that way, check out my post on Consumers Cut Back, but Have they Changed Their Ways?

To give you the back story, I signed up for a two year gym contract in January 2007, and recently received a letter in the mail saying that my membership was about to expire.  It also had some information about how to renew it, including payment options.

After I saw this, I assumed they would stop charging me.  Big mistake.

Come February, the $58 charge came out of my account yet again.  I was puzzled at first, then realized how foolish I was to expect a company to do the right thing, especially when they have automatic access to my bank account. 

I wasn’t sure why they were still charging me, so I logged into the gym account website, and saw that they had extended my contract for 30 years.  30 YEARS.

After I saw that, I went to the gym to cancel my membership.  They said that they couldn’t do it – I’d have to call the company that processes all of their billing.  So I called them up, hoping I could get a refund of the fees they charged after my account had expired.

First, I asked why they had charged me after the expiration date.  They pointed out a clause in the contract that said:

Services purchased under this contract shall expire on January 31st, 2009.  Thereafter, the term of this membership may be extended from month to month by paying a monthly fee…

Basically, they had the right to extend my membership as long as they wanted.  There was no way I could get a refund.

So next, I asked to cancel my membership.  They said they could do it, but they had to charge me the next month’s membership fees anyway.

“Why?” I asked, trying to to mind my temper.

The operator said that they required a 30 day advance notice, and she read the clause of the contract that specified this:

Buyer may terminate month to month membership at the end of any month, upon at least 30 days prior written notice from buyer to seller.

So not only could I not get a refund, but I had to pay another month of fees for a gym I wasn’t using.  I was seriously pissed off, but there was nothing I could do.  I had signed a deceptive contract.

The only options I have are to help prevent this from happening to others (hence this post), and to file complaints with the local chamber of commerce as well as the state attorney general.  I doubt anything will come of it, but I might have a case since they mailed me a letter suggesting that my contract had ended.

As frustrating as the gym membership has been, it’s finally over, and I’ve learned a few lessons, even if they were expensive.

1. Don’t sign up for long term contracts, assuming that you’ll change your behavior to take advantage of it.  I used the gym regularly for a solid year, but that’s it.  Two years was just a waste.
2. If you want to cancel a contract or subscription, submit notice in writing at least 30 days in advance.  Mail it by certified letter, and keep a copy for yourself.
3. Don’t give anyone automated access to your account unless its absolutely necessary.  You’re giving up your first line of defense if you do.

I hope this can serve as a wake up call for others to be careful with contracts.  I wasted $116 when I cancelled mine, but you don’t have to make the same mistakes.

Lee Scott, CEO of Wal-Mart – one of the few retailers with strong sales – thinks that consumers may have changed for good.

I’m not necessarily convinced that just when all this liquidity and things hit, you’re going to have the same immediate desire to go back to consumption and debt.  There are a lot of young  people who have learned what it’s like when you are living on the edge and the bad times come.

So has a paradigm shift taken place?  I doubt it.

What we’re seeing is a lot like what happened to driving habbits after gas shot up to $4 a gallon.  For a short time, people drove significantly less.  The media covered the need for energy independence  and fuel efficient vehicles.  Then gas prices dropped again.  People drove more, and the media found other topics.

Why do I feel that financial responsibility is just a fad?  People are doing the same things they did before – they’re just trying to do them a little more cheaply.  Here are a few examples.

First, consumers are still buying big screen TVs.  They’re just buying them at different places.  The NY Times reported that while Best Buy had an unprecedented drop in big screen TV sales, Wal-Mart actually had an increase in the same area.

Second, people are still going out to bars to drink.  They’re just going during happy hour.  According to Kip Snyder, beverage director for the Yard House chain of restaurants:

We don’t see a change in what people are drinking as much as seeing a change in the time they are drinking.

People are still doing the same things.  Just at different times and places.  It’s a good way to save some money, but definitely not an indication that people have adopted financial responsibility as a way of life.

People will change their patterns as long as the economy is down.  But after it improves, most will just go back to their old ways.

If you’re unhappy with your financial situation, you need to remember that.  People who learn to fail from history are doomed to repeat their mistakes.  Your goal should be to make lasting changes.

Try writing down your financial goals, and revisit them regularly – even after the economy recovers.

1. Smart phones – new cell phones can easily become a source of entertainment, and for some it’s a business requirement
2. Video games and consoles – I really like video games.  They give me something I can do at home for extended amounts of time.  It’s really not a bad deal, especially when staying at home is cheaper than going out.
3. Gym memberships – I would’ve expected this to be one of the first things to go.  I know mine will be at the end of the month.
4. Personal Care – including “everything from shaving cream to perfume to hairspray.”
5. Toy building sets – constructor sets like Legos have been increasing in sales
6. Car maintenance – this could be a indicator that more people are planning on keeping their cars for the long term.
7. Dress casual shoes – apparently shoes that you could wear to work or out on the weekends have been increasing slightly in sales
8. Restaurants – another surprise.  The explanation is that people are looking for cheap, convenient, and quick ways to eat, and that often leads us to fast food restaurants.
9. Movies – the author says people are cutting back on going out, and movies make for a cheap night on the town.  But I say maybe people aren’t going out less – they’re just spending less when they do.
10. Netbooks – sales are up for the $300 computers that do little more than get online and process documents.  As people look to cut back on spending, they may be considering more cost effective electronics, rather than getting all the bells and whistles.

It’s interesting to see where people are spending their increasingly hard earned dollars.  I can’t help but notice that people are actually spending more money on non-essentials.  It makes me think that people are spending less, but they’re not changing their lifestyles.

One of their recent lists – “D**k-onomics – How 5 Everyday Businesses Trick You” had some great insights.  Since the site isn’t exactly family friendly, I’m going to summarize their list.

Here are five everyday businesses that try to trick you into spending more.

1. The Bar

Bars don’t want you talking to other people, because it means you’re not drinking.  That’s why they keep the music pumping and the lights low.  It discourages conversation, especially with strangers.

Bartenders have their own tricks too.  Tall, thin glasses appear bigger to the eye, but actually hold less.  Even straight liquor isn’t safe.  The measuring cup for shots could have washers in the bottom, and the pourer on bottle is intentionally narrow to ensure a longer pour – giving the illusion of more alcohol.

2. The Grocery Store

Grocery stores are designed with one purpose – to keep you there as long as possible.  Have you ever noticed how the milk/eggs are in one corner of the store, while the bread is in the opposite?  It’s no accident.  Other tricks to keep you there longer include carpets that slow your carts, and tiles that make excessive clicking sounds (which make you think you’re going faster than you really are).

Groceries will also use your kids against you.  The brightest and sweetest items are normally kept at the eye (and hand) level of little kids. 

If that wasn’t enough, many sales are misleading.  Sometimes they mark up prices just so they can put it on sale.  And of course, the scanner may be inaccurate, whether intentional or not.

3. Restaurants

Many restaurants just try to get you to eat and leave as soon as possible.  That’s why the seats are intentionally uncomfortable, and the restaurant noticeably cold.  Bright colors and tables that lack privacy also encourage you to hurry up and go.

Restaurants have been hit by the economy too, so don’t be surprised if they cut back on their food budget.  The quality of the ingredients have gone down, as have the portions.

Menus are another trap, in that the most expensive dishes tend to be on the upper left corner.  The article claims that the third dish down on any menu is always the most popular.

The check can cost you even more, as it maybe be inaccurate, and some restaurants add gratuities without letting you know.

4. Malls

 Malls are set up much like grocery stores…they want you to walk as much as possible.  The escalators are never next to each other, and stores are never grouped in a way that makes sense.  The end result is that you have to walk past as many store fronts as possible, tempting you to spend, spend, spend.

You’ll also notice a lot of mirrors.  The reason is two-fold.  First, we like to look at ourselves, so it will slow us down.  And second, we probably won’t like what we see in the mirror (especially in florescent lighting), so we’ll be more likely to buy clothes to compensate.

And one thing I never thought about before - most stores by the mall entrance sell small impulse items.  It’s psychological bait.  Once we buy that first item, regardless of how big or small, we’re likely to keep spending.

5. Casinos

Not really an everyday business, but still interesting to take a look at.  They employ a lot of techniques that retailers do.

One thing you’ll notice about casinos is that they lack windows and clocks.  It makes for a disorienting environment with no sense of time. 

Once inside, they try to lull you into a gambling trance.  The music is comforting, and repeats itself.  Intentionally ugly decorations – like those awful carpets and chandeliers – keep your eyes looking forward on the games.

Another trick is to have slot machines randomly play the sound of coins clanging.  If you play the slots, you’ve probably noticed how many times you almost hit the “big one”.  Guess what?  They’re programmed to do that too.

These may not be everyday businesses for you, but you can still learn a lesson from their tactics.  If you understand how businesses try to trick you – and the psychological reasons why it work – you’ll be less apt to fall for their tricks.  It’s like the reasoning behind the book “Why Smart People Make Big Money Mistakes“.  By learning why we fall into money traps, we’re less likely to be taken in.

To stop and think about what and how much we buy effects the environment, our own well-being and people in developing countries. By participating in the global BND, you make a statement for a new kind of lifestyle, culture and politics:

- A personal life that is not just about making and spending money

- A public culture that is diverse and open for many ideas and concerns, not dominated by pro-shopping messages

- Politics based on global peace and fairness, and true cost economics (not neo-classical GDP economics)

I know it sounds a bit extreme, but don’t jump to conclusions.  It’s not a protest.  After all, people will just buy/spend more on the day before and after.  This seems to be more of a wake up call – to think about the consequences of our actions, especially our consumption.  Their homepage even acknowledges that people will buy things on other days.  They’re just trying to create synergy.

If you don’t appreciate the goals of Buy Nothing Day, I hope you can still recognize the benefits of not spending any money for a day.  Most people (and companies) have been spending wrecklessly for too long.  You don’t have to agree with its ideals to reap the benefits.

Instead of going out to the malls, spend a day at home with family and friends.  Appreciate how much you enjoy their company, and how lucky you are to have them.  Play a game or watch a movie that you already own.  Cook some food that is already in your house.

Buy Nothing Day is not about a revolution.  It’s about being a person first, and a consumer second, if only for a day.  I think we could all benefit from it.