Now this downturn really hurts.
The financial pain Americans are experiencing cuts a lot deeper today than it did just a year ago, when the economy was only starting to veer south. Back then, six readers spoke with USA TODAY about small cuts their families were making to help make ends meet. Today, that has required much bigger life changes from almost all of them.
Then:Jason Jepson of Huntington Beach, Calif., stopped buying PowerBars at his health club.
Now:He's moved from a $1,200 apartment to a $700 room in a house.
Then:Angela Harris of Richmond, Va., stopped going to Starbucks for her daily caffeine fix.
Now:Her husband has transferred hundreds of miles away to keep his job.
Then:Deshaun Davis of Lewisville, Texas, cut back on spa treatments at Nordstrom.
Now:She recently took a second job and has downsized from a four-bedroom, three-bath home to a three-bedroom, two-bath one. "I never saved a thing before," Davis says. "But now I think about every dime I spend."
Not spending, even if you have money, has become the new national norm. Consumer confidence dropped to an all-time low in February. This is what happens when a nation loses more jobs in three consecutive months than it had lost in any similar period since 1945.
A nation of optimistic buyers has become a nation of pessimists who are cutting back even on window shopping. Discretionary spending is out; we're sitting on our wallets and waiting.
"You've got a consumer who's hunkered down," says Ken Goldstein, an economist at The Conference Board, a non-partisan research group. "Don't expect them to come out any time soon."
A year ago, saving money was starting to be cool, says Ellie Kay, a financial adviser who wrote Living Rich for Less. "Now, it's not cool: It's mandatory."
Watts Wacker, the noted futurist, says more than a few of his friends have begun keeping cash at home rather than in a bank, despite current federal guarantees on deposits of up to $250,000.
"When you're in a crisis mode, you lock down," Watts says. "We're stashing our acorns like no one could have imagined."
Here's how six USA TODAY readers are coping with the recession now, after making their first "small" cuts in a weakening economy a year ago:
Cutting the rent
When Jason Jepson began to fret about his finances a year ago, his first move was to stop spending $1.79 each for PowerBars.
The 34-year-old public relations specialist started buying budget granola bars for about 55 cents at Trader Joe's.
Since then, Jepson's personal finances have taken a big hit with the economic downturn, and his job has evolved. A year ago, he was a PR consultant for a yacht dealer. Now, he's also been asked to try to drum-up income-producing yacht-team sponsorships for the dealer.
The bite that the downturn has taken on Jepson's finances has forced him to make more drastic personal cuts.
He slashed his housing expenses by moving from a $1,200-a-month apartment near Newport Beach, Calif., to a room in a home in Huntington Beach that costs him about $700 a month.
He junked his gas-guzzling 1985 Jeep for a great loan rate on a new Mini Cooper, which helps pay for itself with a $300-a-month savings on fuel bills.
He even finds himself doing what he once made fun of his father for doing: clipping coupons.
"One year ago, I took all I had for granted," Jepson says. "Now, I don't take anything for granted."
Husband transfers for job
To help make ends meet, Angela Harris stopped going to Starbucks about a year ago.
That seems so simple, now.
More recently, her husband, Ola, was forced to transfer more than 500 miles from his family in Richmond, Va., to Atlanta to keep his job as a network engineer.
He now sees his wife and 4-year-old son, Toyin, every other weekend. To save money, instead of flying home he often makes the nine-hour drive.
"It isn't easy," says Angela, 42, a legal secretary. It also means the family now must pay rent and utilities on two apartments. The changes have scrapped the plans they once had to buy a house in Richmond.
They also put off plans to start a college savings plan for their son. "Our financial adviser said to wait" and focus on their 401(k) accounts, she says.
Angela still sees her family as luckier than most: "We have always been prepared for the worst. We never got big homes or fancy cars. And we only have one credit card, which we always pay off."
But she acknowledges it's still hard to walk by the local Starbucks — which she must pass several times a day — where she used to treat herself daily to a $3.46 Iced Caffè Mocha.
"I've pretty much forgotten what it tastes like," she says.
Dropping vacation plans
A year ago, to save a few nickels, Sharon Honeywell gave up her Crystal Light tea. More recently, her family in Flourtown, Pa., outside Philadelphia, gave up something she cherishes a lot more: a family vacation.
"We've always taken summer vacation," says Honeywell, a bookkeeper whose husband, Steven, works in health care.
With the economy weakening and their 19-year-old son, Steven, starting in the fall at Penn State University, Honeywell says, "We had no choice."
The family had taken a summer trip every year — including to the Grand Canyon and to Myrtle Beach, S.C. Last summer, they took a few weekend trips to the shore.
"It saved us several thousand dollars," says Honeywell, who also has a 15-year-old son, Michael, in the 10th grade. "They both understand this is a unique situation for us."
Honeywell and her husband also cut back on their IRA contributions over the past year, for the first time funding only half the maximum.
"When we saw how much we lost," she says, "we figured our money was better off in a money market at the bank than in the stock market."
A mother looks for work
About a year ago, Sara Winters made herself the official family lunch packer. Not only did she stop buying lunch every day, so did her husband, David. And ditto for their 16-year-old son, Jack.
Now, the Columbus, Ohio, family is making far more substantial cost cuts. Winters, 46, a graphic designer, recently quit her job because, she says, the daily pressure of a potential layoff became too great. The family-owned direct-mail marketing company she worked for had mostly real estate clients. As that client base dried up, layoffs began and the staff shrank from 30 to about 10.
"You can imagine how stressful my job became," Winters says. "You didn't know if the doors would be locked the next day."
She's taken on part-time work, including unloading trucks and stocking shelves at a local Target store over the holiday season.
While her husband's printing business is doing OK, the family isn't saving money like it used to. She's stopped contributing to her retirement plan, and the couple are not contributing to their son's college savings. "The best way we can help out our son," Winters says, "is to stay out of debt."
Moving to a smaller home
Last summer, when many other families were packing up to head for the beach, Deshaun Davis and her family were packing to head somewhere they never thought they'd have to go: to a smaller home.
Davis, her husband, Mert, and her 9-year-old daughter, Kyla, moved from a four-bedroom, three-bath house in Fort Worth that they sold for $365,000, to a three-bedroom, two-bath home in less-costly Lewisville, Texas, that they bought for $299,000.
"We wanted to save money," says Davis, 38. "The simplest way to save was by downsizing."
A year ago, when Davis' family was first feeling the effects of the economic slowdown, the college professor saved money by eliminating trips to the spa at her local Nordstrom for facials and lip waxes.
Now, the family has to do more.
Besides her full-time teaching job at Texas Woman's University, Davis took on a part-time teaching job, as well.
"Friends I know have lost homes and jobs," Davis says. "Then, I had an 'ah-ha' moment: It could be me."
So the couple sat down and looked at what they're spending. They had what Davis calls the "biggest conversation" about finances they'd ever had and scrapped spending plans that included a family trip to Walt Disney World.
Not cut: church donations. "That's the only thing we didn't change," Davis says. "It just wouldn't be right."
A scaled-back Christmas
It didn't feel lavish two years ago when William Muckelroy II and his wife, Lore, bought a $2,000 plasma TV for Christmas.
Things were different last Christmas for the couple from Eagle, Idaho. Their only gifts to each other: new tires for their cars.
That means Lore's 1999 Toyota Corolla, with 130,000 miles on it, will have to keep rolling for five more years, William says.
Next Christmas? "Maybe I'll get a pair of jeans," he says.
That's a long way from last February, when the couple's biggest move toward cutting costs was William carrying tap water to work instead of $1.29 bottles of Evian.
Now they're also paring back vacation costs. They typically take summer trips out of the country, but last summer they took a $600 trip to Las Vegas. And this summer they may visit Lore's folks in Pennsylvania, "but only if airfares are cheap enough," William says.
William also has stopped sending out dry cleaning — which used to cost him at least $100 a month. And after contributing $5,000 last year to his Roth IRA, he's not adding a cent this year.
"I haven't even thought about it," he says.