What's the Price of Free?

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Michelle Singletary
Thursday, August 13, 2009; 9:57 AM

Join me today for a live online discussion at Noon ET. I'll take your basic personal finance questions. Submit a question now or during the discussion.

What's the Price of Free?

I'm a self-proclaimed penny pincher. I do what I can to trim my expenses as much as possible. But what I've been wondering lately is what price we all pay for our low, low, low-price culture?

Have we become a nation of freeloaders at the expense of others who are forced to work for less so we can enjoy our cheap goods?

While I am a bargain shopper, I don't mind paying a fair price for what I get, because I know somebody had to make it, sell it or provide a service for it. I'm certainly grateful there are still people willing to "buy" their newspaper. Heck, I have a paid subscription to the Post.

Two books reviewed by Post Technology columnist Rob Pegoraro explore our "culture of free."

Pegoraro looked at "Free: The Future of a Radical Price" by Chris Anderson and "Cheap: The High Cost of Discount Culture" by Ellen Ruppel Shell. Pegoraro says Anderson makes the case in his book that "the Internet era has simply made 'freeconomics' easier."

"Free," Pegoraro says, "outlines how a company can shuffle an item's cost from everyday customers to other parties such as advertisers or pickier users willing to pay for a premium version."

As for Shell's book, Pegoraro writes: "The best insights in 'Cheap' come when it unpacks the psychology of pricing."

For more of Pegoraro's insights about these two books read Low, Lower, Lowest.

Kicking People To The Curb

I've often told homeowners facing foreclosure that their lenders don't want their house. I've tried to comfort them by saying that it is in the lender's best interest to avoid kicking them to the curb.

But this is a new era of financial instability. As I continue to hear from homeowners who can't get their lenders to modify their loans, I've concluded that the old belief that lenders don't want your house isn't true for some borrowers in this economy.

In some cases, researchers and industry experts have found foreclosing can be more profitable, Renae Merle reports in the Post.

"The problem is that modifying mortgages is profitable to banks for only one set of distressed borrowers, while lenders are actually dealing with three very different types," Merle wrote in a piece in late July.

To learn more about the three categories of borrowers and which ones are more likely to get a loan modification, read Foreclosures Are Often In Lenders' Best Interest.

Are We There Yet?

Lately, the question I get asked most often is "When will the recession end?"

Truthfully, I don't know. And while the economic data may be showing some improvements, on ground zero, as someone who is personally helping people who have lost their jobs and their homes, I see a long way to recovery.

This is shaping up to be "a recovery only a statistician can love," Wells Fargo senior economist Mark Vitner told Post reporter Annys Shin.

"A few recent pieces of data offered reasons for both hope and trepidation," Shin writes in A Recovery Only a Statistician Can Love.

Which data? You'll have to read Shin's report.

Also, in today's Post, Neil Irwin reports on the Fed's pullback of intervention programs established to help lift us out of the recession. For more information, read Fed Starts Rollback Of Rescue Efforts.

Color of Money Question of the Week

Annie Gowen authored an interesting piece this week on people who are ashamed to admit they are out of work.

"Even as the ranks of unemployed and underemployed have grown, career counselors, therapists and other experts say a certain segment is determined to suffer in silence, keeping details of job losses and financial pressure secret from all but close family and friends," writes Gowen in Lying Low After a Layoff.

Gowen reports that Cynthia Turner, a licensed clinical social worker who practices in Loudoun and Fairfax counties, said she knows folks who are out of work and yet to keep up the appearance of prosperity still pay their country club memberships.

Clearly, this group is in the minority. But it did make me wonder about how others are dealing with losing what for some is key to their identity. Would you get up and pretend you were still employed after being laid off?

Would you lie to neighbors and friends when they ask you how's work going?

As Gowen reports "suffering in silence is counterproductive. Experts say most people find jobs through informal networks of friends and family rather than Internet job boards or want ads."

So the Color of Money Question of the Week is: Have you lied about your economic status and if so, why? Normally I only post responses with people's names and cities, but in this case you can respond anonymously. But please still include your hometown. Send your comments with the subject line "Lying Low" to colorofmoney@washpost.com.

You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.


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