SALT LAKE CITY — Neven Lee Gibbs, a 59-year-old retired staff sergeant, grew up a self-described "grape of wrath" in California. His parents and grandparents were survivors of the Dust Bowl and the Great Depression, and for them, thrift was more than a quaint idea — it was a way of life.

"Dad wouldn't invest in the stock market for any reason," Gibbs said, "no matter how good the prospects were. In the early '60s the stock market dropped to a point where stocks could be bought for five cents. We didn't buy."

Gibbs and his uncles and cousins all own their homes and vehicles outright. For four generations, the family has sworn by the phrase "pay as you go."

With Americans collectively hitting a peak of $13.8 trillion in household debt four years ago, and now living through the Great Recession, the question arises: Will this economic disaster produce not just a temporary tightening of belts, but a real renaissance of thrift?

A 'Category 5'

Charles Stokes is the Roy Bergengren Fellow at the John Templeton Center for Thrift and Generosity. He studies, among other things, the savings habits of Americans of modest means. When describing the Great Recession, his metaphor of choice is a Category 5 hurricane.

"It was a major economic storm, a Category 5," Stokes said, "and those things happen sometimes. They're hard to predict and when they come, the question is, 'What's the infrastructure? Will the levies hold?' What we've seen is that the infrastructure wasn't very good. The institutional changes that happened since the time of the Great Depression really left Americans of modest means in a very vulnerable place when the Great Recession hit."

Prior to the Great Recession, Americans experienced 20 years of gains in net worth. For the bottom 50 percent of households, all of those gains are now gone — and the wealthiest 10 percent are 80 percent richer. The losses are largely due to the collapse of home values, a mountain of consumer debt and the decline of median incomes to 1993 levels.

Head above water

Keith Harper, a graphic designer, and his wife, Jen Harper, were among those caught in the storm. They bought a home in Seattle for $400,000 right before the housing bubble. "Exactly the wrong moment to buy," Harper said. "Our real estate agent told us if we'd waited a few weeks, we wouldn't have been able to get a loan."

Unfortunately, the loan went through and the value of the home soon dropped to $330,000. About a year later, Harper, who'd been working for a start-up, was laid off and the couple decided to move to New York. They rented their house but still fell $1,000 short of their mortgage payment each month.

"It was draining us," Harper said. They tried to refinance the loan, but the original lender had sold the mortgage. In fact, it had already changed hands three times, and the third lender, a subsidiary of IBM, was only a loan servicer and couldn't originate a new loan. Eventually, the couple defaulted on the mortgage.

Like millions of other Americans, they're trying to pull themselves back up. "We're bootstrappers," Harper said. Now renting and without a car, the couple keeps busy with freelance projects and entrepreneurial ventures. Currently he's rolling out Well Crafted — a digital portfolio application that enables visual designers to show their work across various operating systems on smartphones, tablets, e-readers and other digital devices.

The shift to thrift

Whether the financial vulnerability experienced by Harper and others is triggering a long-lasting culture of thrift, Charles Stokes isn't sure. Household debt has decreased by $1.3 trillion — more than nine percent — since its peak four years ago, but that's not the only metric that matters.

"A lot of Americans are realizing that with the Great Recession they need to get their houses in order, so that's definitely a positive sign," Stokes said. "However, it's not surprising that when things get tough, people kind of batten down the hatches. The key will be, when things improve, are we going to see a return to those debt habits? What I'd like to see is the rebuilding of thrifty institutions, especially for the middle class and Americans of modest means. I don't know that we're necessarily seeing that."

When asked what kinds of institutions he's referring to, Stokes ticks off a list: schools, houses of worship, banks and credit unions. "Across a number of different kinds of institutions, there are opportunities to encourage thrifty habits such as sharing, saving and having an entrepreneurial mind-set so that when work's not there you know how to create work for yourself."

Wrestling a bear

If the idea of thrift sounds basic, it is. But for many Americans, if not most, practicing it is like wrestling a bear.

According to a survey by CreditDonkey, a credit card comparison website, four out of 10 Americans have less than $500 in readily accessible savings. Six out of 10 are not saving for retirement.

What is needed, according to Stokes, is a fundamental push back against a culture of consumer debt that has come to dominate American society. "I know some people disagree with that," he said. "They say we need the consumer culture to drive the economy. But that's debatable. That's definitely not my opinion. I think you can have both a strong economy and households that are thrifty."

Stokes says that parents have a major role to play in tilting the tide toward thrift. For the past 30 years, advertisers have been selling the consumer culture to children, persuading them to identify themselves as consumers.

"I think the most important thing for parents to do is to model thrifty behaviors," Stokes said. "Reuse, recycle. Show kids that, hey, we have credit cards but we pay them off each month."

Survival mode

Cheryl Carson of Pleasant Grove is the author of the book "Enough is Enough: Making the Decision to Live Debt Free." She also speaks to groups about the dangers of debt. Despite her efforts, however, she's skeptical that thrift is making a comeback.

"People have a hard time with the message of thrift," Carson, 61, says. "They don't want to change their lifestyle. Advertising tells them that they work hard and deserve nice things. However, debt is not just a financial issue. It can contribute to depression and is a major factor in 89 percent of divorces."

Carson's parents grew up during the Great Depression. Her mother was the 13th of 15 children in a family where thrift was the only option. Her father abhorred debt and kept a tiny bankbook to help Carson and her siblings track their 5-cent deposits. She once went to the store with him and asked if she could get a little tin mailbox that had caught her eye. To her surprise, he said yes. However, upon returning home he subtracted the amount of the mailbox from her account in the bankbook. That simple experience taught Carson a long-lasting lesson that nothing is free.

Twenty years ago, after her husband incurred a $61,000 debt following a business setback, Carson told her children that the family would have to go into survival mode. Her son later told her that he knew they were poor when "they went into survival mode and nothing changed." Despite her husband's modest income, the couple paid off the business debt in three years and then set about paying off their mortgage, which was also about $60,000. Carson made a paper chain with each link representing a mortgage payment. The children were too young to understand amortization schedules, but they saw the chain getting shorter each month. Three years later, it was gone.

Today, Carson and her husband maintain a $5,000 rainy-day fund and are close to paying off two rental properties, which they plan to use to fund their retirement.

Thrift: a big idea

"Be frugal and free," Benjamin Franklin wrote in "The Way to Wealth." He was writing about freedom from the chains of debt, but the saying also applies to the relationship between thrift and generosity.

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"(It's the notion of) helping yourself so you're in position to help another," Gibbs said.

Stokes agrees. "Thrift has always included some element of stewardship and generosity. … The idea that what we have is not ours but something that we're holding in trust not only for ourselves, but for future generations.

"What I share with someone else today who's in need might come back to help me or future generations. There's a connectedness there that you don't see with a flatter idea of financial literacy. The thrift idea is a big idea," Stokes said.

email: dward@deseretnews.com

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