”Keeping up with the Joneses” is a phrase that everybody has heard up to keep up a social status. This is the thing that most often causes spurts of getting with iPhones, flat screen TVs, riding lawnmowers and many other things. Well, as outlined by the Federal Reserve, the Joneses are getting debt settlement relief these days rather than putting more stuff their credit cards.
Lots of debt going down in the home, according to the Fed
The Federal Reserve recently released new data about the levels of household debt in America. It seems that once the recession came, individuals decided to tighten their belts and pay things off. (A little debt consolidation never hurt any person.). Seven quarters in a row had debt levels showed going down. This was reported by the Wall Street Journal. Second quarter of 2010 showed a 1.5 percent reduction from the past quarter and a 6.5 percent reduction from the previous peak, in 3rd quarter of 2008. In just 3 months, $ 178 billion of debt was paid off. That’s a lot of individuals basically giving themselves a cash until payday each month.
A few caveats
Falling household debt and an increased savings rate isn’t the entire picture. Not only did consumer debt go down, the delinquency rate went down as well. This quarter was also the first instance of delinquent debt being reduced, which fell by 0.5 percent. Sadly there’s one more thing to consider. Bankruptcy went up 34 percent. It seems fewer individuals are using pay day loans to keep up with paying for credit cards, as 272 million accounts were closed and only 161 million opened. Credit card companies aren’t doing all that well. They might need their own emergency loan.
Cutting debt out of your life
Debt is something Americans are avoiding. They’re also trying to get rid of what they have. Many aren’t getting new credit cards. Paying off old ones is the priority. There are more people going bankrupt though. More individuals are interested in getting cash for themselves. This means getting out of debt is a number one priority.
Additional reading
Wall Street Journal
blogs.wsj.com/economics/2010/08/17/ny-fed-households-continue-to-reduce-debt/
