Whether the economy is in a recession is debatable. Whether we're in the midst of an all-out economic crisis is considerably less so. The encouraging news is we're still going about our daily lives and still spending; stories of rampant destitution aren't sweeping the nation.
In fact, personal income was up 0.5% in August, according to the U.S. Department of Commerce. Real disposable personal income, however, which takes into consideration inflation, taxes and purchasing power, fell 0.9%.
In order to combat the effects of inflation and taxes, most U.S. consumers seem to be tightening the wallet just a bit, rather than tossing it aside altogether. This explains why consumer spending in August was unchanged compared with July: We haven't stopped spending, but we aren't exactly shopping 'til we drop, either.
In Pictures: How To Live The Good Life On Less
"Consumers are continuing to spend, just at more moderate levels," says Milton Pedraza, chief executive of the Luxury Institute, a New York-based market research firm.
For those looking to maintain a certain kind of lifestyle without dipping so deep into the safe, there are some relatively painless ways to cut back.
As the fat bonuses and never-ending expense accounts begin to dissipate, bottle service--the nightclub ritual in which guests must fork out a specific amount of cash, usually $500 or more, to gain entrance to a club--is seeing a decline, which means a night out might cost you a little less than before. Unfortunately, pricey cocktails are not falling out of favor: At the Eldridge, New York's latest hot spot, the signature drink--which includes Armand de Brignac Rose champagne, p.i.n.k. vodka, lychee juice, simple syrup, passion fruit seeds and gold flakes--rings in at $32.
In order to minimize damage to your wallet while out on the town, Syl Tang, chief executive of HipGuide, a group of fashion and travel trend-trackers, says to plan ahead.
"For those who want to rein it in a bit, it's all about the 'advance work,'" says Tang.
First, get on the guest list to avoid a cover charge. Not best buddies with the owner? Tang suggests calling ahead, finding out who is running the list on the night you'd like to stop in, then simply e-mailing that person and asking--nicely--to be placed on the list. Second, don't charge anything, use cash. "It's running up a tab that gets us into trouble," says Tang. "[When using cash only], you'll find yourself going to the same hot spots, but spending less."
Looking for an escape far beyond the confines of a club? Maybe it's time for a holiday. Instead of staying home, book a vacation for a few days during the week rather than the weekend. "I know it doesn't sound as sexy," says Juliet Kinsman, editor and chief of Mr. and Mrs. Smith travel guides, "but you get some great deals at places that aren't geared toward the business traveler."
Another option? Apartment swapping, says Guggenheim managing director Karen Meyerhoff. There are hundreds of Web sites that allow travelers in different cities to trade homes for a week or two, albeit with a few regulations. Of course, choose a company you feel comfortable with that can be contacted easily if there is a problem.
How do you maintain a sense of luxury in lackluster times? Weigh in. Add your thoughts in the Reader Comments section below.
If a one-off vacation just isn't enough, consider fractional ownership, which consists of several people co-owning and dividing up use of a holiday home, as a result cutting down on upfront costs. Fractional ownership also is cheaper than renting in the long run. Options include a private-residence club like the Fairmont Heritage Place in Dubai, set to open in 2010, where 50 properties each will be divided into 10 fractions. While the initial cost of buying may be higher than renting for the summer--these fraction ownerships can cost upward of $100,000--once your mortgage is paid off, the place is yours. What's more, you can sell your fraction--possibly for a profit--in the coming years.
For those in search of a little instant gratification, it's no surprise that shopping--particularly bargain shopping--can fill the gap. In tough economic times, there's a cachet to wearing a vintage Ossie Clark dress or scoring a pair of Proenza Schouler pumps for 90% off the original price, according to Pedraza. Embrace your inner spendthrift this fall and buy one or two high-end pieces at low-end prices.
Along with vintage and second-hand shops in ritzy neighborhoods, look for deals online. Web discounters like Yoox.com offer a robust inventory of in-demand designers, such as Costume National, Marni and Prada, and online sample-sale sites, such as Gilt Groupe, hold 24-hour sales of one brand's leftovers from the previous season. Some recent sales have included Peter Som and Thakoon at up to 70% off.
And for quick decompression, a trip to the spa often does the trick. If a $150 facial is out of the question, why not consider a $50 treatment at the local Aveda Institute? All spa employees--from the masseuse to the manicurist--must receive training and pass a state board exam. That means there are dozens of schools educating these students, and offering top-notch services for a fraction of the price. Don't be nervous about a novice using you as a guinea pig: These schools only allow the most advanced students to perform treatments on clients--and even those students are closely monitored.
However you choose to cut back, one thing's certain: You can spend less and still enjoy the good life.
"This is a good time to expand one's horizons," says Tang.