Save Big with the Flashback Budget
By Liz Pulliam Weston
Imagine it's the '70s, only without bell-bottom jeans. You'd probably have no cable bill, a smaller home and just one car. And you'd save a lot of money. Last week's innovation becomes yesterday's luxury, which quickly becomes today's necessity.
Just think of air conditioners. Or televisions. Or microwave ovens. Or personal computers.
Each started as a novelty. Now each is considered a requirement of daily living by a majority of Americans, according to a recent Pew Research Center survey. (Cell phones almost made the necessity list; 49% considered them so.)
|Home air conditioning
|Car air conditioning
But clearly, people lived rich, fulfilling, functional lives before any of these gadgets came along. So we here at MSN Money thought it would be fun to dial the Way Back Machine to one of those times, to see how much money we could save.
Those were the days . . . of 'Muskrat Love'
We picked the 1970s -- era of Watergate and disco, "The Brady Bunch" and pet rocks, streaking and "Muskrat Love" (if you have to ask, you really, really don't want to know). It's the era when I grew up, and I have photos of the frizzy, Barbra-Streisand-in-"A-Star-Is-Born" perm to prove it.
And here's what we found:
We were living small. The average new home in 1970 took up less than 1,500 square feet. Today, new homes average more than 2,400 square feet, and there are fewer people living in them (about one person fewer, compared with the 1970s). Smaller homes cost less to buy, insure, heat, cool and maintain. Since the typical American household spent $15,167 on shelter and related costs in 2005, trimming even 10% of that bill would save you more than $1,500 a year. (If you could actually save a proportional amount -- 1970s homes were about 40% smaller -- that would be about $6,000 in savings.)
We drove smaller, too. The 1973-74 oil crisis led to lines at the gas pumps and a new interest in fuel-efficient vehicles. But most households didn't have multiple tanks to fill. At the start of the 1970s, only 31% of households had more than one car, according to the U.S. Census Bureau; more than a quarter had no vehicles at all. By 1995, 60% of households had more than one car and only 8% were carless. The AAA tells us the average car costs about $7,800 a year to finance and operate, so one fewer vehicle could save you a tidy sum.
We ate at home. Food in general used to take up a lot more of our budgets. Food costs declined from 20.2% of the average family's expenditures in 1960 to 16.3% in 1972 to 12.8% in 2005. But even as food costs have dropped, the portion of our budgets we spend on eating out has grown considerably. That gibes with my family memories; eating out used to be a fairly rare treat. Eating out just one less night a week could save a whopping $1,560 a year (and that's in today's dollars).
We vacationed closer to home, too. U.S. airlines weren't deregulated until 1978, and before then flying was a pricey proposition. Most of my family's vacations were camping trips to national forests within a day's drive of our Washington state home, with an occasional train trip to visit relatives in the Midwest or (O glorious day!) Disneyland in California. You don't need to give up Southwest Airlines for the Greyhound bus -- for all I know, Southwest is cheaper -- but if you skipped just one flight a year, you'd save $300 to $400 a person.
Phones and entertainment
"We don't care. We don't have to. We're the phone company." If you got that reference, then you remember Lily Tomlin's obnoxious Ernestine the Operator character from the hit show "Laugh-In," which ran from 1968 to 1973. (She reprised the character for "Saturday Night Live" a few years later.) The joke was on us, since back then we all rented our telephones from one big monopoly -- AT&T -- and paid through the nose, especially for long-distance calls. A federal judge ordered the breakup of AT&T in 1984, and clearly life is better now that we can choose from several phone companies that don't care. I wouldn't suggest returning to Ma Bell era, but you could realize some savings if you recreated the days when families had one phone number, rather than half a dozen. Figure $360 or so in savings for every line you drop.
Entertaining yourself. As one of the 3% who consider iPods necessities (or at least close to it), I wouldn't dream of telling you to swap yours for an eight-track player. There are some sacrifices no one should have to make. But downsizing your expectations as far as your television could save you some serious bucks. Back then, a 27-inch screen was considered huge, and most of us watched three (count 'em, three) network channels with maybe a public broadcast station thrown in. TV was free; most people picked up stations with an antenna attached to the roof. Cable television didn't really take off until the late 1970s, and it wasn't until the 1990s that most folks paid for TV. VCRs weren't introduced until the late 1970s, either, although we did have video games like Pong and Tank (ask your grandpa, kids). I won't insist you get a black-and-white set, since by 1972 half of U.S. homes had a color television. I'll just note that ours wasn't one of them; I didn't realize the "Star Trek" crew had different-colored uniforms until I was in college. Anyway, unplug cable for a year and you'd save $600 or so.
Had enough? I certainly have. Living through the '70s once was more than enough. And now I can't get "Muskrat Love" out of my head.
Reproduced with permission of MSN Money.com, from Save big with the flashback budget, Liz Pulliam Weston, 2007; permission conveyed through Copyright Clearance Center, Inc.