My article posted on savingadvice on 7/28/08:It was recently announced in the news that Starbucks will be closing over 600 stores due to a phenomenon nicknamed “The Latte Effect.” This basically describes the actions people often take when economic times are tough and money is tight, which includes cutting back on extra expenses like coffee, manicures and hair treatments. While some people may be able to relate to this new trend, I personally don’t relate to it at this point in time. This is because I’ve been cutting back on these things for years and tough economic times have really not had an effect on me in this area.
A few years ago when the economy was strong and people seemed to be spending money like crazy, my husband and I got serious about paying off our debt. While doing so, we decided that extra expenses (like coffee and beauty treatments) would be a once in a while treat rather than a regular occasion. Once we paid off all our debt, we decided to continue our way of spending, as in spend less than we make so we could save and invest. With an extra $1000 a month of income that exceeded our bills, we decided to save that money rather than spend it.
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