1990 1991 : CONSUMER TIPS : Play It Close to the Vest

Some cockeyed wisdom says that if consumers would only spend more, businesses could sell more and the economy would improve. You won’t read it here: The consumer could go down the drain selflessly offering that kind of help to his country.

Confronted by the possibilities of war and recession, layoffs and hiring freezes, consumers should start 1991 in a depression mode. Save money, then pay cash.

Anyone uncertain about the future should get rid of unnecessary debt, starting with credit card balances. Even their low interest rates are high (and starting in 1991, not tax deductible), and given the way the finance charges are applied, it’s hard to keep track of the amount accruing interest. The number of cards used should be pared to one, and that one used for convenience alone, paid in full monthly.

Businesses, also feeling pinched, are pushing consumers to greater commitment. One should refuse even buy-now-pay-in-March offers: Who knows what March will bring? Nor should anyone rush to take loans just because they can still get credit: They should be paying everything off while they can.

Big purchases need even more care, particularly homes, reputedly a “buyer’s market,” given slow sales, cut prices and lower interest rates. A $500,000 house reduced to $275,000 is not a bargain to everyone. The old rules still apply: One should save up for a down payment and spend no more on housing (mortgage or rent) than a quarter of one month’s salary.

Furthermore, no one should buy, trade up or remodel primarily for resale, whether we’re talking houses, cars, or art. Why go for expensive features one can live without just to please future buyers, when it could be even harder to sell later?

The old New England credo still makes sense: Use it up, wear it out, make do or do without. No need to feel economically depressed. Think of it as being environmentally aware.