Shoe Leather: Behind the seams of Shoestring Magazine

Shoestring Father's Day: The Granddaddy of Cheap

As a little shout out to all fathers out there who instill frugality in their children, we honor the granddaddy of all things cheap: Sam Walton. Regardless of your personal opinions on Wal-Mart, there's no denying that they've built an empire on affordability. In the age of Bernie Madoff and Enron, Sam Walton is probably rolling in his grave. Although he was a billionaire several times over, he never publicly displayed his wealth. His 1979 red and white Ford pickup truck was proudly described as a clunker, and he chastised executives for driving Mercedes and BMW's. Most of his clothes were bought from Wal-Mart, and he and his wife lived in the same modest house for most of their marriage.

Makes you think, doesn't it?

~Meghan

Shoestring Business: The Rebranding of AIG

I, like many of my peers, watch The Daily Show with Jon Stewart. The Pew Research Center even claims that many young adults consider The Daily Show their primary news source. While the Daily Show claims no journalist responsibility, their hard-hitting satire encourages many (including myself) to take a second look at more traditional news sources -- plus, I love the fact that I can watch The Daily Show on hulu.com.

I was watching last Thursday's episode when Jon brought up the name change of AIG. For the low, low cost of 170 billion dollars, AIG is now AIU. While it's easy for Jon Stewart to crack jokes about buying a vowel, I think from a marketing perspective, it's also really fascinating. Clearly, AIG had lost the confidence of the American people and a name change signifies a fresh start, but are people really going to accept a slight name change and jump back into business with the insurance giant?

It reminds me of something Dick Cheney once said:

"Deficits don't matter."

Now, ordinarily, I would never agree with any thing that Dick Cheney says. I even belong to a Facebook group called "Telling Dick Cheney to Shut The Hell Up," but I have to concede that he has a valid point.

The Federal Reserve estimates today that the entire worldwide supply of US money is currently about 10 trillion dollars, but that only 7% of that exists as paper money. That leaves a lot of money in existence as an electronic abstraction. Studies have shown that people tend to spend 15% more when they use a credit or debit card than when they pay cash. Sure, it's a broad generalization, but if you think about it, it makes sense. When money becomes an abstraction, it's easy to lose track of its actual value. I think nothing about throwing down my credit card to buy a latte, but when I only have $5 in my wallet, I switch to a regular drip coffee instead. That extra $2 to $3 seems all that more precious when I actually have to hand it over.

I equate the US government with a person holding an American Express black card. Nobody is going to turn that card down, regardless of the purchase price. Besides, it's not like the US can just pick up and move so creditors can't find them. Now, I'm not arguing for unchecked federal spending -- huge deficits can lead to inflation and a rise in interest rates. I believe that most of our economy runs on trust, confidence, and possibly fuzzy rainbows. If you believe that the economy is stable then the economy is stable.

The Great Depression wasn't caused entirely by the stock market crash, but rather by fear and by a run on banks. The stock market had returned to moderate levels by the mid 1930s, but the Depression persisted over the next decade. Which brings me back to my original point about AIG/AIU : Can a simple name change be enough to earn people's trust again?

If I had been in charge of rebranding AIG, I would have gone a different route and done a complete departure from the existing brand. Remove all bad memories and start fresh with a new name and a new brand identity. (But, hey, nobody asked me.)

When someone buys a new business, it comes as a package deal; the employees, the location, and the reputation -- for better or for worse. You can fire employees and you can move locations, but you're stuck with the reputation. If AIG had been rebranded as something totally different, the bad reputation would sooner fade in people's memories.

~ Meghan

Small Is The New Black: Tiny, Thrifty Car Options

The blogosphere was abuzz with the news that IKEA would be releasing an eco car named LEKO. After the initial jokes of assembling it yourself with miniscule wordless instructions subsided, it was revealed that LEKO was not a real car, but more of an imaginary car; an imaginary car that picked up hitchhikers. LEKO allows people to log on, and find available rides to your nearest IKEA.

Flat packaging cars designed to be easily assembled is not as far fetched an idea as it first seems. The company Gordon Murray is launching the T.25: a smaller car that is shipped flat, allowing 12 times the number of cars to fit on a cargo ship. Selected companies will create small iStream factories to assemble the T.25, at only a fraction of the size of a typical car factory, iStreams could open in previously unavailable locations, and conceivably have less of an environmental impact. The T.25 is still in pre-production so I was unable to get specs on mpgs or base costs.

Detroit has already catered to our demands for bigger and bigger. With the skyrocketing cost of gas over the past three years, however, Americans are beginning to look for more fuel-efficient, and subsequently smaller, cars. One of the most talked about options is the smart car, one of the few cars currently available for sale in the US. The smart car is tiny, cheap, and gets fairly decent gas mileage, but in my opinion it’s not cheap enough, or has good enough mpg’s. In order for a small car to become immensely popular in the land of Hummers and McMansions, it needs to be cheap. I mean dirt cheap. The smart car comes in at around $12,000. I give it credit for being accessible, but the car looks a little like a car for weeble-wobbles. Plus, the gas mileage comes in at only 33mpg. For a car that only seats 2 adults, I want this car to be priced in the $8,000 range, and get a mpg of at least 50. I know that I have high standards, but I feel that we’ve been given the "band-aid" solution for years. Car manufacturers slap a hybrid sticker on a gas-guzzling SUV that gains only an extra 2 miles per gallon. People walk away feeling smug and proud of themselves for doing their part to save the environment, but in truth the improvements are negligible and often come with a hefty price tag. Some hybrids don’t even beat the mpg’s of comparable regular cars. You could buy a Honda Civic 4-door sedan for $15,000 that boasts an impressive 40 mpg, beating both the popular Lexus hybrid and the hybrid Chevy Tahoe.

The standard Mini Cooper (one half of Shoestring's fleet--Melissa's owned one for over five years) boasts an impressive 40mpg, but Mini has also made strides in the electric car market. The Mini all-electric car is available for a one-year lease in select markets (currently LA and NY). The one-year lease brings back some bad memories of the General Motors EV1, but Mini assures critics that this is one-year product testing, with real consumer feedback, so they can release the car to more locations. Now I love the idea of an electric car, but the practicalities of it leave me scratching my head. Electric cars would be perfect in urban areas. Most people don’t need to travel considerable distances, and smaller cars make parking easier, but where are people going to be able to charge them? Could electric chargers become the Laundromat dryers of the automobile industry, with cars being unplugged under the cover of darkness, and the proverbial laundry piled on the sidewalk? What I would rather see is an increase in public transportation.

The recession has made “small and more affordable" the new black. Tata Motors announced the launch of its Nano car in India last month. At just 10 feet long, sans airbags or anti-lock brakes, the Nano costs just $2,000. Tata aims to make car ownership affordable to the frugal car owner and the millions of motorbike owners. While the thriftiness appeals to me and Shoestring, the announcement left a bad taste in my mouth. Is making car ownership affordable to millions more people going to help the environment?  Couldn’t Tata have invested in increasing alternative fuel sources, or expanding mass transit in India, instead? At $2,000 dollars a pop, aren't we just creating the disposable car?

Would love to hear your thoughts!

~ Meghan