Updated on 12.11.09

Most of Us Have Never Experienced a True Economic Meltdown

Trent Hamm

My grandfather and grandmother came of age during the Great Depression. They both passed away when I was a young child (not all that much older than my own son now), but many of my memories of them revolved around their extreme frugality. They would buy bottles of the most inexpensive wine they could buy, drink it slowly, then fill it with water to get those last drops of flavor. They hand-painted their car with house paint and a brush (seriously).

One of the most vivid memories, though, is that they kept their money in tin cans in their home, hidden in different places. To put it simply, they did not trust the banks to keep their money for them.

They grew up in the 1930s, where banks failed by the hundreds. The only difference between now and then is that they didn’t have FDIC insurance. If their bank failed, their money was gone.

Their coming-of-age experience was filled with inherent distrust of financial institutions and a well-ingrained idea that they had to protect what they had. This usually meant living as inexpensively as possible – making modest choices again and again throughout their lives.

Since then, three generations have passed. Most of us living today in the United States have never experienced a true economic meltdown. Losing some of your retirement money in your 401(k) one year and then gaining most of it back the next year is not a meltdown. Losing your job and finding a new one – partially supported by unemployment along the way – is not a meltdown.

Without this kind of life-altering experience, it’s unsurprising that later generations are unable to match the frugality of my grandparents’ generation. The idea that a third of the nation can be unemployed, that the bank where you keep your money can just take that money and run, and that if you don’t have a job you don’t get any benefits or support from the government seems completely alien to how we live our lives today.

We inherently rely on these institutions and they allow us to live less frugally and carefully than we otherwise would have.

Yet they had the things that mattered. They had people to love – and people who loved them. They had food on the table. They had the entertainment that they needed. They had a roof over their heads.

In the end, what else do we really need? Whenever we go beyond that, we’re simply chasing more of the same – and risking the security of everything we hold dear to do so.

Lately, I’ve been looking at a picture of my grandfather quite often. He’s sitting on the couch in his home with an old banjo in his hand and a big grin on his face. He didn’t have much spit and polish to him, but he was surrounded with what really mattered to him – his home, comfortable clothes, friends and family, a fishing net on the wall behind him, a musical instrument in his hands. He was happy and he didn’t need much to get there.

He knew what was important. He knew what made him happy. He also knew how easily it can be lost – something that’s very difficult for us to see most of the time. So, he made choices that might seem outrageous to others. So what?

Grandpa, almost twenty five years after you left this earth, you’re still inspiring your grandson.

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  1. the Dad says:

    So true, Trent. I (we – my family) are so greatful for the current economic situation.

    It led to my getting fired last year, hitting bottom, grabbing some bootstraps and financially growing up. I hope it’s the closest thing to a real meltdown we ever experience.

    Would that I had listened closer to my own grandparents we might not have had to take such a bumpy ride.

    the Dad
    Climbing Out

  2. Johanna says:

    I don’t know the details of your grandparents’ situation, obviously, but there *is* a level of poverty beyond which people really *are* less happy. That doesn’t mean that they’re miserable 100% of the time, though, or that they don’t occasionally smile, or laugh, or sing, or enjoy the company of their loved ones. Just because you see a picture of a person smiling and enjoying himself doesn’t mean that he was as happy with his lot in life as you are with yours.

    And there’s absolutely no reason to try to mimic that level of “frugality” in your own life if you don’t have to.

  3. Scott says:

    Thanks Trent, great perspective, especially in this season of so much materialism!

  4. T'Pol says:

    Good post Trent. Thanks!

  5. Laura in Seattle says:

    My grandmother and grandfather were also Depression-influenced. They had a good-sized house in a nice neighborhood, but they economized every way they could. My grandmother threw a fit if the electric bill was over $18 a month. They had a big spare fridge/freezer in the basement where they stashed extra food they would get on sale. Their house was on a standard size lot with a small backyard, made smaller by the fact that they had a toolshed and a curved driveway leading to the one-car garage space under the house (below ground level). But my grandfather had a row of onions planted along the driveway; a small vegetable garden taking up most of the non-driveway patch of yard; and a shallow cement planter filled with runners of strawberries. After my grandmother passed away, my aunt found little stashes of money all over the house – in drawers, under mattresses and even between stacks of towels in the linen closet! And for all the times we visited them, I can’t recall ever seeing either of them throw something away. I agree with you – there’s a lot to be learned from their generation.

  6. guinness416 says:

    There’s lots to be learned from our grandparents for sure (although mine grew up in a war of independence and civil war torn Ireland rather than the US depression).

    But assuming you live in a fairly diverse area there are a LOT of immigrants around you who’ve experienced some extremely unstable and economic conditions – or just come from a background with far different norms in terms of comfort with debt, expectations about safety nets, etc etc; I’m married to one and have a whole bunch in my social circle. Ramit had a post sort of hinting at it a few days ago too. Even if you never knew your grandparents you can absolutely learn from some of the many supersaving immigrants around you.

  7. Henry says:

    So many family members and neighbors that I knew who grew up in the Great Depression would, when asked what it was like to live through the ‘Great Depression,’ remark that they were always so poor they didn’t know that there was a Depression.
    Being ‘poor’ or having to do without was nothing new to them or their community.

    “Without this kind of life-altering experience, it’s unsurprising that later generations are unable to match the frugality of my grandparents’ generation.”

    I’m sure that the grandparents’ grandparents and ancestors would marvel at the dependence of those in the ’30s on cash and material goods. Those on this continent 200 years ago and earlier were almost exclusively dependent on what they could cultivate, gather and hunt. Future generations slowly became more dependent upon manufactured goods and other things that they could buy with cash. Bartering and a reliance upon cash began to take hold as transportation became more sophisticated. Those living through the ‘Depression’ were just another step between ancestors that produced everything they needed themselves, to us, becoming an almost exlusively throwaway society that is not self-sufficient. Just another step in the evolution of our economy. You cannot say your grandparents were happy to be frugal and go without, they had a standard of living that matched nearly everyone else in the country. So they were content in the context of their times. Would they have been content if removed to a time two hundred years earlier where they were expected to take a plot of land, build their own house from materials they manufactured, with none bought; cultivate the land with a plow and horse, tend their own livestock or do without beef if they had no cow, eggs if they had no chickens; have no close neighbors or social life, not venture much further than the next farm except for once or twice a year, endure Indian attacks, and otherwise endure a life of hardship and likely failure? Such comparisons are fruitless. Those of us here in the present day are also just as happy as anyone else, in our context. It has nothing to do with our attitudes or frugality or lack thereof, it is what we have become accustomed to, as Industry and Government has made us.

    And I wouldn’t call buying the most inexpensive wine and then rinsing and drinking the rinse water frugal, I would call it an exhibition of alcoholic tendencies. If they were truly frugal, they would have made their own wine from their own grapes, or gone without.

    Even if some who survived the Great Depression were ‘frugal’ because of it, what about all of the servicemen returning from WWII? What an orgy of spending and consumption! New cars, new houses, large families, travel, a love affair with advertising and slavery to brand name products, fads that consumed money but delivered little, etc. What frugality did they exhibit by living through the Depression? Some people that were products of the Depression were frugal, some weren’t. Not much different from today. But were they frugal because of the Depression? Maybe not. Maybe they were just miserly obsessive-compulsive hoarders.

  8. chacha1 says:

    My grandmothers were born in 1915 and 1917 respectively, and believe me they were WELL aware of the difference between the relatively-prosperous 1920s and the seriously-deprived 1930s!

    One was a pastor’s daughter and one was a farmer’s daughter, but both lost out on better health (poor nutrition for a lot of years) and better education (not a dime to spare, although the pastor’s daughter at least got to go to a two-year teacher’s college).

    Pastor’s daughter made up for it later in life by traveling the world, with her husband and alone after he died. Farmer’s daughter made up for it in her own way by hardly ever leaving her home state and collecting, collecting, collecting. Neither was “poor” but both had their worldview permanently set during the Depression. For both it was a bit Scarlett O’Hara: “I’ll never be hungry again!”

    And – in yet another example, not that any are needed, that everyone is different – neither became “frugal” in the pejorative sense. They both took care of business, but didn’t deny themselves what they wanted.

  9. Gretchen says:

    What about the people who do have to choose between housing and food?

  10. Noadi says:

    My grandparents were born in 1915 and 1924 (my dad’s parents) so they were both kids during the depression. They loved to tell us grandkids stories about growing up, most were funny like chasing escaped pigs. Some however really drove home how bad the depression was, about being hungry, not having money for new shoes so going barefoot around the farm to keep their shoes nice enough for going into town. In a way they were lucky, both being from farm families they were able to raise food and cut firewood from the nearby woods instead of buying it.

    While some people kept those frugal by necessity habits (my grandparents did but then farmers have always had to be frugal) a lot of the post-WWII explosion in consumerism I’m convinced was a reaction to all those people in their 20s and 30s who grew up in the depression making up for lost time.

  11. Bill says:

    I loved talking to my father and grandma about the depression. I saw in them what I would call depression era scares. I noticed it more related to food behavior. My grandma had 2 years of food in her house. She told me she would never go to bed hungry again. My dad ate the chicken necks and the giblets and soaked up bacon grease on to toast. They where both members of large families.

    I think we are having a much easier time of it than they did, I think the poverty found in Africa and Asia are far beyond even what they felt.

  12. Kate says:

    I remember going to my grandmother’s house as a young adult and coming back inspired to reuse and conserve–she died with a small fortune in the bank and she and my grandfather were not wealthy by any means. I also remember, as a child, pulling back the rug in the parlor and finding money underneath it–it was their bank. Along with the jar of money in the backyard.

  13. Rosa Rugosa says:

    I’m not interested in starring in the reality show “How well would you weather the Great Depression?” I’m just trying to keep my financial house in order – and doing a decent job of it so far, but could always do better. But no bad wine for me – you’ve got to have some standards!

  14. Henry says:

    Yes, #10, traditional farmers have always had to be frugal. But now, in every community I’ve lived in, the farmers act like they have as much money as the lawyers and doctors, and they probably do. The kids have everything from new cars to the latest technology, big houses with brand new vehicles in the drive, satellite T.V., and on and on. They are treated very well by the Government with subsidies and tax breaks, many of their homes qualify for homestead exemptions. Most of their real debt is in farm equipment, which would probably not even come back on them if they had to default on the loans, due to the nature of their business structuring. Farmers, the ones who make a real living at it, are certainly no one to pity today.

    @#11, I love giblets. My friend’s grandmother ate lard sandwiches, but that was because she had syphillis. Anyhow, I don’t know many people from large families that weren’t scrappers for food their whole lives, no matter the economic ‘times’ they lived through or the money and small households they had later in life. Liver and chicken offal may be economy meats, but that doesn’t mean they aren’t tasty.

  15. kristine says:

    I was fortunate enough to know, until the age of 10, 3 of my great-grandparents.

    Tea bags were used al day long, for 2-10 cups- it was one tea bag a day. Soap shards were fused and reused. Fried potatoes with sliced hot dogs was a staple. The basement was full of musty stuff- for a rainy day. Nothing was wasted. not a thread, not a red and white string from the bakery box, not a button, no a scrap of food, not a slip of paper, not a box. Prepared food- what’s that? Presents were wrapped in the funny papers, or fabric with a bow that would be sewn into something later. All the trees they planted bore fruit. Clothes were let out and taken in as the wearer needed, with the sewing machine I still use- it has a foot pedal. Shoes were re-soled, special occasion clothes were re-worn again and again for decades, things were repaired, not replaced.

    I grew up relatively “poor” in NY. We survived on surplus cheese, and had meat once a week. My dad had meat more often as he worked at hard physical labor literally digging ditches. We ran out of things, and I remember entire days waiting at the free clinic for my shot. My clothes all arrived in a green hefty- supposedly from a distant cousin- no one I had ever met. I think now they may have been from charity.

    It is the frugality deeply instilled through the generations that helped us survive. We did, and I still, use every little thing till there is nothing left of it. Gifts, decorations, curtains, bedding, were all made, not bought.

    The real challenge for me as an adult was not to hoard useful items I had no planned use for. The ability to let go, and give things away, trusting more will come to you if needed, comes long after the actual security arrives. My grandma had a hoarding tendency too. Luckily, the neat freak gene keeps it all in order.

    It has a happy ending though- my parents each started their own business from our garage, and they are now retired, living on the entire side of a mountain they own in the Catskills, and winter in FLA. I wish I could say they are still frugal- they are not. Instead, they try to “fill the hole” caused by hardship. It affects different people quite differently.

  16. Henry says:

    Kristine, ‘surplus’ cheese is what us down here call ‘government’ cheese, right? Back in the eighties I remember that the wives of the richest members of the community would be in line for that cheese, it was so good. They weren’t misers, it was just that good!

    I can tell you all about my great-grandmother. Her and her second husband took everything they could get for free, if they thought it had any monetary value. They visited my grandparents one day, and were offered a roast from a cow that was just butchered. They took the largest one, one that was earmarked to feed 20 or so field hands during tobacco season. My grandparents later paid them a a visit, and they were invited by my great-grandmother to stay for dinner. This upset my great-grandfather, who insisted they had nothing to prepare. So my grandfather gave the old man a $20 to pick up something for the women to cook. The old man went to the store, came back with a loaf of bread that was so thin holes wore through, a pack of bologna that came with a rind and stained the bread and fingers red, and a stale bag of potato chips. He also kept the change.
    The great-grandfather died. My great-grandmother developed Alzheimer’s. My grandmother was offered a deal by her brother, where she could have the entire inheritance if she would care for her until death. She took the money. Then she went to a nursing home, paying for g-gma’s care until her death, which came quickly. She was left with an extremely large sum of money, as there were large cash reserves from the stinginess, and liquidating the estate added to it.
    The great-grandparents hoarded and spent as little as they could, their stinginess did not encourage visits from relatives, no one received cards nor gifts from them, no one sent any to them either. My grandmother died soon after getting the money, she had her own anyhow and spent it freely in her later years. She didn’t touch the inheritance. Then she died. The money wound up in her son’s hand’s, my uncle. He spent the next three years not working, buying cars and wrecking them while drunk, and snorting the rest of the cash up his nose.

    The money that was hoarded didn’t bring my great-grandmother any pleasure, my grandmother didn’t live long enough to need any of it, and her son was brought nothing but endless misery by it.

    I believe the money should never have been hoarded, it should have been tossed around freely to provide a higher standard of living for all in the family. Then everyone involved would have had a little experience in spending. Just like a college kid that never drank at home suddenly winds up with alcohol poisioning their freshman year, this kid that never had free money to be a little wild with couldn’t handle it when it came all at once.

    Those of you out there that are hoarding and hoarding money, just remember, you can cross the line between having an emergency fund and being a miser pretty quick. You’ll die sooner or later, and that money will go somewhere. It’d be nice to be idealistic and donate enough to charity so as to not overwhelm your children, who will probably resent your frugality and buck right against it, but will you be among the very few that make their last act one that snubs their children? Can you do that to them? You better spend it while you’re still here to hold people accountable.

  17. Roscoe Casita says:

    Trent: I think your grandpa had it correct, the banks are NOT to be trusted.

    The FDIC that back stops the banks has gone into a negative balance now, and will need its own bailout.

    Diversification is the correct answer i know you’ve preached, and i’ve followed: CD’s, Bond, Gold, Silver, Cash on hand, index funs (0 allocated right now.)

    Still, of everything my grand parents knew, “Do NOT trust the bank.”

  18. Louise says:

    My husband is one of those frugal immigrants guinness416 mentions in #6. He is EXTREMELY frugal, and I was quite a spendthrift early in our marriage. This led to a lot of stress and horror for the poor dear, and to lots of eye-rolling on my part. When I unplugged the iron, he’d run in, shouting “free heat!” and quickly iron something with the residual heat. When I finished using the hose, he would drain the excess water into a bucket for later use. I remember lifting the top of the pot to stir some stew I was making, and staring unbelievingly at 6 eggs and a variety of other foods he was cooking in it. Mind you, these were not added as part of the stew; they were to be scooped out later! I’m just lucky he didn’t wash his socks in there!

  19. Kara says:

    While I think that message of Trent’s post is admirable, I think that we may be all missing the point. Trent’s gran-dad was frugal because he came of age during a time when frugality was the difference between having and not having. People still grow up this way. My husband and I both did. By the way, this is where I disagree with you, Johanna. People can grow up very poor monetarily and be happy. It’s possible. I was. There are a few left over issues, though. Neither my husband nor I ever want to go hungry again. We certainly don’t want our child to ever go hungry. This desire has led to an abundance of food in our pantry. I am good about rotating it, but we can go overboard if we’re not careful. Another unwanted side-effect of growing up poor is the impulse to “spend our money while we have it.” This one is really hard to overcome. All in all, though, this is a good post, and one that reminds me that one doesn’t need a lot of “stuff” to be truly happy.

  20. The post brings up several great points. First, how thing scome full circle with respect to banks. Personally, I don’t trust them as far as I can throw them now.

    What with riciulous fees at every turn, and their inability to govern themselves, there is rampant distrust these days.

    Second, how we are just beginning to get out of this financial crisis we just went thru. How about our grandparents who some probably spent the better part of their LIVES in one.

    Now that would take preserverance and frugality and prudence and a whole host of other qualities that for some of us its hard to get into our lives for a few weeks, much less several years.

    Great post.

  21. Amateur says:

    When you see that type of behavior stemming from years of being poor and hungry, it can be a bit overwhelming. Folks do stuff like stuff themselves silly during dinners where there may be excess food to make sure nothing is wasted. If the children did not finish their plates, parents would take on seconds or thirds. It wasn’t even eating anymore, it was some strange act of desperation that not eating it meant a missed opportunity to eat – which would have unimaginable during the days when folks did starve.

    I agree with #19-Kara, I have seen folks who also grew up in the same way come into a bit more money than their folks and grandfolks as adults and spent it quickly and very much out of control to the point where they didn’t have much saved for the future, nor have real plans for the future other than plans for future purchases. That mentality is really hard to kick, the feeling of getting what one deserves because the rest of the world seems to have one (think smartphone(s), flat screen tv, new cars versus preowned, etc).

    It’s hard to balance and remove some of those thoughts two generations later and not behave in a strange obsessively hoarding way when it was all we knew growing up. Trent’s grandpa had the right idea about some things, kicking back with his banjo and family, it can’t always be about being poor, hard work, and hoarding food scraps all the time.

  22. Lenore says:

    What a beautiful remembrance of your grandfather, and thanks for bringing to mind many of my ancestors who survived the Great Depression and other hard times. I do have to question your comment about “they had food on the table” and “a roof over their heads” though. Perhaps your relatives never missed a meal or lost a home, but many people did or lived in fear that they would.

    When we think about the “good old days” we need to remember people often gloss over grisly details when reminiscing or smile for photos no matter how they feel. For every time my family has laughed about my grandmother burying jars of money in her yard, she no doubt suffered sleepless nights and distrustful days.

    The phrase, “Poverty is violence,” has come to resonate very deeply with me. Our Depression-era ancestors might have thought Unemployment Insurance or Social Security as superfluous as some believe Universal Healthcare would be today. Just as we can’t imagine life without a few financial safety nets, future generations may be amazed we allowed citizens to suffer and die for lack of health insurance. Nobody is openly advocating extermination of the poor, but it’s amazing how many Americans would deny medical care to their fellow human beings.

  23. stella says:

    Growing up “poor” or with severe financial restraints, whether you are of our grandparents (1920s) or parents (1950s) generation does leave a legacy, one which cannot always be overcome, even with the most grateful attitude and upbeat spirit.

    For our grandparents, and their brothers and sisters, they did without high school educations in many cases — college was fantasy land back then, which severely hampered them (and their earning power) as it also did for some of our parents, who could not attend and/or complete college (not everyone can get a scholarship or financial aid–as families today are now finding out as kids either cannot enter or are dropping out of college due to costs.)

    Aside from daily hardships and economic worry, which does take a toll, no matter how hardy and upbeat people are, they did not lead the fullest lives they could on so many levels. There was very little social mobility (and social interaction) for the poor during our parents and grandparents’ lives, and they missed out on a lot of opportunities (Yes, a few managed to escape poverty by hard work and incredible luck. Luck IS a factor because they all worked hard.)

    With no social interaction (beyond church) they did not have access to meeting people who could help them with work and lots of other things we take for granted today in a very networked world. (Poor people don’t tend to have a lot of friends who are “better off.” for lots of reasons.)

    Emotionally, being poor affected them in a lot of ways –obvious and not so subtle. And did imprint on their children and their children’s children. It’s a bit more complicated than how they saved or how they approached frugality. Far more complex in how they viewed the world and how they felt about themselves based on how the world viewed them (and this was long before designer clothes, etc.)

    You can have a strong internal core, but you know that the world does indeed divide between the “haves” and the have nots, on many levels and this did take its toll on them. As it is taking a toll on people today who suddenly find themselves without jobs, a sense of identity (from their work) and without cash for the basics. Not all of these folks were spendthrifts, who purchased big-buck items and spent money foolishly. Not by a longshot.

    Losing things in your 50s and 60s now, if you came from a family history of poverty, is devastating in ways others who grew up more secure cannot even imagine.

    Lenore, your comments were a good reminder Poverty is indeed violence.

    The fact, as you point out, that so many fellow “citizens” would indeed deny healthcare to other citizens is truly frightening.

    I was raised to believe that each of us “arrived” with certain skills and abilities and that it was our responsibility to develop them and USE them to help our fellow man. That if one succeeded well in life, that one had an absolute obligation to give back (and not just easily) to help others.

    Because the reality is, those of us who have a business, for example, succeed because of others who buy a product or service. Without those customers, we’re nothing. So when we profit, that profit was meant to be put back into the world to help those who did not arrive with the same set of skill and abilities–and opportunities.

    What truly frightens me today is the selfishness of so many people. Ironically, it’s the well-off who are often unwilling to part with their money. The average Jane or Joe who struggles, will be the first to lend a hand. And those with old money will often quietly give. It’s those “nouveau riche” in the middle who have trouble parting with their cash.

    By the way, frugality is important. Always. IT’s about conserving resources as well as dollars. However, there is nothing glamourous to being poor or in poverty.

    Let’s keep that in mind.

  24. Todd says:

    Thank you, Trent, for the reminder that chosen simplicity can lead to happiness, and thanks to Lenore and Stella for the reminder that poverty is NOT chosen simplicity, it is violence, propagated by the selfish on those with less power. It doesn’t feel good and no one who has lived through it is nostalgic for it.

    We should all strive to help ourselves and others enjoy “the things that matter,” as Trent’s grandfather did. He sounds like a wonderful man to remember during the holiday season.

  25. AnnJo says:

    I have been slammed across the face and across the room, and I have also lived in a household where no one knew when the next dollar bill would arrive. THose who say that poverty is violence have most likely never experienced either, or maybe would rather remember them as a political talking point than what they really were. Poverty sucks, but it is NOT violence.

  26. Kevin says:

    “We inherently rely on these institutions and they allow us to live less frugally and carefully than we otherwise would have.”

    Isn’t that a GOOD thing? Aren’t we better off for having a stronger social safety net? Isn’t society’s net happiness INCREASED by not having to skimp and save every penny, knowing we’re required to survive any bout of unemployment entirely on our own?

    Those social safety nets allow us to relax a little and truly enjoy life, instead of frantically fretting over every little break in employment.

    You said it yourself – three generations have passed. And thanks to those safety nets, they’ve been protected from the perils of an economic meltdown. However, there hasn’t been another Great Depression. If those 3 generations had foregone the rich life experiences that their money afforded them, and had instead hoarded it in fear of another Depression (and lacking the social safety net), they’d have missed out on a lot of quality living.

    I think we’re better off for not having to be pathologically frugal.

  27. Kolleen says:

    Poverty, Poor and frugal, how they ‘actualy’ work.
    Being frugal is a choice how you deal with household/personal budget and money matters.
    Poor is when income and “outcome” are unbalanced, often due to high housing costs and low paying jobs. The term poverty is often, misused, you can live poor and make a good life being frugal. Poverty can kill you.

  28. beth says:

    the banks in the depression didn’t take the money and run as you said, they expereinced a run, when all depositers took their money out and the bank could pay their creditors.

  29. Callie says:

    @#18Loise, What a riot! Lol! I’m planning on using that egg boiling trick, if just to have boiled eggs with our soup.

    @Johanna, there’s nothing wrong with living within your means, even if a little austerity is in order.

    Personally I buy very expensive coffee, because I wont drink it otherwise. If it’s not “Fair Trade” or Colombian forgedaboutit it. *BUT* we recite the phrase “use it up wear it out make it do or do without” when it comes to anything material.

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