Americans Are Cutting Debt - But Why?
While I was hanging around on Yahoo Finance watching my stock portfolio bottom out, I did notice an article that looked encouraging at first glance. It said that US consumer debt has dropped a bit for the first time on record. i.e. for the first time, since they started tracking consumer debt, it has dropped. Now this should be good news that Americans are finally realizing that the future pain that debt gives them is not worth the quick satisfaction of a 50 inch TV set or something.
Is Declining US Debt Always Good News?
However, are Americans cutting debt by choice. It is hard to believe right now, especially in the holiday season. Actually, credit card companies are putting the squeeze on consumers, and falling debt levels may not be the consumer’s choice, but the fact that their credit limits have been sharply dropped.
And even though consumer debt has gone down by less than 1 percentage point, Americans net worth has declined by over 4 percent. Mortgage debt has also decreased, but it may be because many Americans have given up on their mortgages, and others cannot get a loan in this tight credit market.
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Got an extra dollar to spare … For your Credit Cards?
So can you spare a buck a day?
If so, maybe you can apply an extra $30 a month to your credit card bill. If so, you will be paying to finance $360 a year less, which with interest rates approaching 27% on some cards can be substantial! This is especially true if you have only been paying the minimum balance and found that you are not getting anywhere trying to pay off your balances.
This same approach can also work on car loans and some mortgages. Look at the monthly payment as a minimum and try to kick in a bit extra when you can. I am here to tell you, but nothing is so satisfying as watching those balances decline so you can think about the day when you do not have monthly loan balances to make payments on!
In addition to saving money in the long run, you will also reduce the length of time it takes to pay the bill off. So go ahead and buy the cheap coffee instead of the grande latte, and get that debt paid off!
If you haven’t been here already, why not visit our online debt payoff calculator and see how fast you can lower that debt?
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Prepare for a Recession
Well, now there is no doubt about the fact that the US, and the world, is enduring an economic downturn. We have been watching financial leaders and politicians deny if long enough, but even they are admitting it now. However, as much as we are all struggling to watch our expenses and keep our savings, we do find that some people do ok during a recession, and some people even prosper! What is the difference between those that can barely survive the crisis, and those that make out ok? I think the difference is being, just like a Boy Scout, prepared!
Look for some practical tips here: Surviving a Recession. It is mostly downhome advice like saving money, reducing debt and preparing yourself for a job loss. But it also contains some unique tips on making some income during unemployment with freelance jobs that you may not have thought of.
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US Foreclosure Rates Are Still Climbing
American Are Still Losing Their Homes
This is a pretty painful subject for me because I do know people who had to leave their homes. They did manage to land on their feet, and seem to be thriving in a more modest dwelling then they used to own. They did go through a crisis, but probably ended off better then most. But people, wake up, this crisis is not over. For some more gloom and doom see: US FORECLOSURE RATES ARE RISING.
Now some people were victims of predatory lending, and were mislead into some pretty awful mortgage deals. Some others lost jobs unexpectedly, or perhaps savings were depleted by falling interest rates or stock prices. Frankly though, many more people were victims of their own consumerism.
I guess, when faced with the prospect of having no house at all, a more modest home seems pretty attractive. There is something purifying about living modestly, and about knowing that you are living a bit below your means. And if you are saddled with a mortgage you cannot manage any longer, why not free yourself from the stress?
If you have a way to get out of your loan, even if you have to sell the home for far less then you think it is worth, why not take the ticket out? In the long run, you will probably prosper more, and have a happier life. I know this advice seems a little bit heretical here in the land of consumerism, but it is what my friends did. They are doing alright now.
If you are still financially stable, but worry about losing your home in case of a death, disability, accident, or unemployment, consider an affordable mortgage protection insurance policy.
foreclosures, mortgage crisis
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