Families learn new ways to cope with recession

When my cousin found out her husband was laid off, she was hysterical and she had reason to be. Their household income of $85,000, most of which went toward paying a massive debt and sky-rocketing New York City rent was cut in half. And she was three-months pregnant.

Coping With the Economy

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    You don't have to just let unwanted gifts sit around in your house, gathering dust. With belts tightening, you need to make use of all your assets, so a new site, barterquest.com has found a way to match up people and their stuff to barter.

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    To deal with the rising cost of food, Royal Caribbean is adding a surcharge for steaks served in its dining rooms.

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    Hybrids are one option for fuel-conscious drivers, of course, but many are now opting for even smaller vehicles: scooters. Sales are up 66 percent so far in 2008. Honda is releasing its 2009 model early to capture as many customers as possible.

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    Blaming inflation and rising food and energy prices, the 99 Cents Only discount store announced it was bumping its top price to 99.99 cents -- or one-hundredth of a cent less than a dollar -- the first price increase in the chain's 26-year history.

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    As economic troubles keep diners at home, restaurants are starting to cut back on portion sizes and are using cheaper ingredients -- even high-end hot spots. In New York, restaurant owners admit to shrinking lobsters, subbing shiitake mushrooms for morels and offering discount appetizers.

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    To combat high food prices, many shoppers are turning to bulk purchases, which is driving up sales of stand-alone freezers. A new study shows that sales were up 7 percent in the first six months of the year.

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    Soaring prices for scrap metal may make demolition derbies a thing of the past. Owners who used to sell their worn-out wheels for $50 to $100 are turning to scrap dealers instead, getting nearly triple the price.

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But after six hours of fatalistic talk and four boxes of tissues later, my cousin saw this event as an opportunity to strengthen her relationship with her husband and learn the ropes of being a savvy consumer and an exemplary mother. (Thank goodness for the unemployment checks.)

Her situation isn't a shocker. Many U.S. families have suffered from the heavy weight of the recession. In fact, the fraction that hasn't experienced layoffs and reduced income mentally prepares itself for sudden unemployment, says Catherine Williams, vice president of financial literacy for Money Management International, a non-profit, Houston-based credit-counseling organization. "People are seriously planning on losing their jobs. 'I'm going to lose my job sooner or later,' they say. They're getting ready for it," she notes. Pessimism? No -- practicality. Had my cousin been prepared for a possible financial "slap in the face," she might have handled the news differently.

So how should families cope with the economic downturn? Through open dialogue, mutual support and lots of cutting back, says Williams. "Consumers are really making serious choices about how they're spending their money," she notes. When going out to eat, families she works with don't order appetizers and dessert, for example. "And that just travels through everything," she adds. What seemed almost unheard of a few years ago -- clipping and downloading coupons, recycling cans for cash and opting to celebrate birthdays at home instead of a restaurant -- is becoming part of the daily routine for many American families. And what better way to teach one's children the value of money than to show how little of it is available?

The first thing Williams advises moms and dads who lose their jobs is to be honest with their kids and families. Obviously, the levels of understanding between a first grader and a high schooler are very different, but it's imperative to let children know that there are going to be changes. Emphasizing that the decision not to dine at a restaurant was made out of necessity and not because a parent didn't want to go out to eat is key. Also, letting teens know that they might have to work more or expect less allowance and less spending money from their parents is of equal importance. People are looking at absolutely everything: can they cut back on a cell phone plan? Can they cut out a newspaper subscription?

But that's not all. Children's education has become a major concern as well. Many hardship-stricken parents whose children attend private school are pulling their kids out and frantically applying to public gifted and talented programs as the next best thing. Hunter College Elementary, for example, a publicly-funded school for gifted and talented students in New York City has seen a record number of 1,550 4-year-old applicants over the last year who competed for 48 available spots.

Families are doing all they can to cut costs without completely eliminating their accepted lifestyle. And with that, they grow closer, wiser. A few months have passed since my cousin's news. She is still pregnant and her husband is still unemployed. The major difference in their lives, however, was the discovery that having two parents raising a child at the same time is a rarity and should be embraced.This experience allowed them to air their differences and come up with compromises that work for their expanding family in tough economic times. Although buying brand-name diapers seems convenient, trekking to Costco and saving a few dollars turns out to be a great cost-cutting measure.


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