Saving is so in style right now
American consumers cut debt by a (whopping) record $21.6 billion in July.
It seems it’s not just us ‘Grow Your Green’ savers–many Americans are paying down their debt right now. The amount we owe on credit cards and other consumer loans plunged a record $21.6 billion in July!
According to the L.A. Times:
The drop in consumer debt for the month was the largest since the Federal Reserve began tracking the data in 1943 and the sixth straight monthly decline in outstanding consumer debt, the longest streak since 1991.
It’s apparently five times more than analysts had predicted. These experts speculate that a lot of folks are still worried about the economy, and so they’re reducing their debt in case they lose their jobs (if they haven’t already).
It’s mixed news. On the one hand, it’s great that we’re learning to save again and we’re not living above our means anymore. On the other hand, since we’re not spending, are we keeping the economy from recovering more quickly?
Some call this the Paradox of Thrift:
The paradox states that if everyone tries to save more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. The paradox is, narrowly speaking, that total savings may fall even when individual savings attempt to rise, and, broadly speaking, that increases in savings may be harmful to an economy.
Whatever it is, if you still have a revolving line of credit or you’re looking for a new card, here are some tips on finding the best credit card deal. We also have help for you if you want to improve your credit score to get those great rates.
What are your thoughts? Do you think this shift in the “saving psyche” is a good thing?
The “saving psyche” is not just a good thing, it is a great thing! Everyone should have a 6 to 9 month emergency fund, and maybe even more in today’s tough times. So, save your money! If you have loans, try to get the lowest interest rates you can. Try to avoid fees for banking. Get higher rates for savings. Credit unions are good ways to do all of these!
If you don’t “need” the item, strongly consider putting off buying. If you really need to buy something, find the best price, search for internet coupons, and see about cash back offers or other rebates through various online sites.