March 10, 2002
The Washington Post
by Albert B. Crenshaw

After the Sept. 11 terrorist attacks, there were reports that Americans had decided to throw caution to the wind and live in no-tomorrow style.

Some abandoned their diets. Others splurged on vacations and luxury goods. Pundits quickly drew conclusions about what it all meant for our society. Now it turns out that what it meant was -- nothing. It wasn't happening.

While a few people in New York may have felt for a while that the future wasn't worth bothering about, the attacks, followed by the collapse of energy giant Enron Corp., seem to have made most people vastly more conscious of tomorrow, according to a survey.

Rather than throwing money away, most Americans have become more cautious with it. Paying down debt is much more in vogue than luxurious vacations, the survey found.

The survey was conducted by Opinion Research Corp. International of Princeton, N.J., and sponsored by the Consumer Federation of America and Bank of America.

Since Sept. 11, the survey found, one-third of Americans are more interested in personal savings, and a quarter are more interested in paying down their debts.

Thirty-six percent were less interested in luxury purchases, and 29 percent were less interested in lottery tickets.

Those who thought the attacks would leave Americans "more present-minded and less future-oriented" were wrong, said Stephen Brobeck, executive director of the consumer group. "A very large number of Americans have not reacted to terrorism in this way," he said.

Another hopeful sign was that those new attitudes are taking hold among young people.

The poll also showed that around two-thirds of Americans feel reasonably confident about the security and adequacy of their income and comfortable with their levels of saving and debt.

The findings suggest that Americans are rediscovering the virtues of saving money and cutting debt. If the sentiments are followed up by actions -- and Brobeck said there is some evidence of that happening, at least with debt -- the outlook for millions of families will be much brighter.

The tide isn't lifting all boats, however. While two-thirds are doing better financially, the other third continues to struggle, and many of them are slipping into bankruptcy.

The split has interesting implications for credit card issuers, many of which aim to find customers who manage to limp along indefinitely, never managing to pay off their debts but never defaulting either. As growing numbers do pay off their debt or default, card issuers are seeing increased pressure on their profit margins.

But weep not for the card issuers. The benefits to the U.S. economy and to the country generally will be immense if Americans really get control of their finances.

If there is one thing the Enron case demonstrated, it is that workers must look out for themselves because no one else will. As much as Congress and the Labor Department fulminate, no one is going to get the Enron workers' money back. And no one can remove the market risks from a retirement system that leaves workers to do their own investing. Education and diversification, desirable though they may be, don't guarantee investor success.

Beyond that, only about half of American workers have an employer-sponsored pension or retirement plan. The rest have only Social Security and their savings.

Under those circumstances, workers and their families need very much to do what the new survey says they are doing: Pay down debt and save.

Getting rid of debt is a key. A debt-free family is much better positioned to ride out an economic setback. If income declines -- for example if a wage earner is laid off -- the family can tighten its belt for a while. But that's a lot tougher if there's a big "nut" of debt service to pay every month.

Consumer debt allows you to have something now, when you don't have the cash, but it also makes that item cost more, often a lot more. Saving for expensive items is hard at first, but those who do it find it gets easier. That isn't just psychology. Save and your money works for you, earning interest. Buy on credit and the reverse happens as more and more of your income is consumed by debt payments.

A number of groups offer information and other assistance to would-be savers.

The Consumer Federation and Bank of America are pushing their "America Saves" program through local organizations around the country. It promotes saving for a variety of goals. The Employee Benefit Research Institute and the American Savings Education Council run the "Choose to Save" campaign, focused on retirement saving.

Both programs have Web sites (www.americasaves.org and www.choosetosave.org). You can get their brochures by sending a self-addressed, stamped envelope. For America Saves the address is Box 12099, Washington, D.C. 20005-0999; for Choose to Save, it's EBRI/ASEC, Suite 600, 2121 K St. NW, Washington, D.C. 20037-1896 (include 99 cents' postage on the self-addressed envelope).