The “F” Bomb

It’s no longer a dirty word and it can save you money.

When home values, investments, lifestyles were flying high it was the economic “f” bomb everyone avoided.

Frugal is no longer the f word, now it’s a way of life.

People have turned to frugal ways of behaving and found it’s actually not so bad.

Yahoo Finance Columnist Laura Rowley, author of Money and Happiness, says one way people are becoming frugal is by “trading down.”

“Trading up was very fashionable a few years ago so from brewed coffee to gourmet coffee from fast food to casual dining now its the opposite. The main reason is people know they can trade down without greatly affecting their lifestyle. Maybe have that coffee once a week instead of three times a week. Maybe use that affordable shampoo like Pantene instead of a luxury salon brand, said Rowley.

Another way is to use pricing power now you have it.

“Consumers can actually walk into an established retailer and negotiate prices. That we hadn’t seen for a really long time a lot of retailers will now match a price you bring in from somebody else. Or you can ask them to throw in something else. I’m going to buy the iPod I want the charger that goes on the wall. Established retailers never did that before but now they are in survival mode,” Rowley said.

Rowley says she negotiated the price of her vacation condo on Key Biscayne

She also sees a more seismic trend.  A “downshift in social spending “… People changing who they hang out with because they can’t keep up with the Jones’.”

I think people are realizing that if they have a reference group that makes a lot more money than they do they have to change their reference group because they just cant afford to keep up with that group. Maybe they kept up with them in the past using easy credit. They can’t do that anymore. You see people starting to look for reference groups of the same income level,” said Rowley.

Rowley says cost-saving basics like coupons, cheaper cell phone plans, programmable thermostats, are good ways to start dealing with the “f” word.

Also do more “free” things that make you happy — like spending time with friends and family.

Those “f” words may not be so scary after all.

“The silver lining is that the economic crisis is gonna help people to face their finances. When you do get control of your money, when you do know where you’re spending is going, when you do know what you’re invested in, you feel more confident you feel more at peace,” Rowley said.