Savings? What Savings?

It’s hard to make ends meet. But is it Great-Depression-like hard?

Personal savings fell to its lowest level in 74 years in 2006 — negative 1 percent, according to a Commerce Department report. That means Americans spend 101 percent of their income, up from 100.4 percent in 2005 and the most since 101.5 percent in 1933.

Only four years in American history have seen a negative savings rate for the entire year: 1932, 1933, 2005 and 2006.

There are numerous reasons for the 21-consecutive-month slide into the red, economists say. But the most widely acknowledged is lifestyle. That is, we’re living beyond our means.

The rich want to live like the super rich; the super rich want to live like the Sultan of Brunei, and everyone else watches them on TV. Common folk like you and me want just a little more than we can afford, too. Wages have not kept pace with inflation, but the middle class has refused to scale back on lifestyle.

Another mistake, according to financial consultants, is trying to live without a budget. You wouldn’t run a golf course without a budget, so how can you run a successful household without one?

Superintendents always have a contingency plan for golf course cuts if push comes to shove. The real question is: What’s your personal contingency plan? What would you cut if you need to shrink total expenses — by oh, say, 10 percent — tomorrow?

— David Frabotta, Senior Editor