Comments on: Recession’s Silver Lining: Consumer Debt On The Decline

By: Jenn

Jenn — Tue, 15 Sep 2009 16:50:32 +0000

The recession this past year hasn’t really changed anything under our roof. We’d already had our wake up call 2yrs ago when my DH was laid off unexpectedly. Luckily I’d been tracking all our expenses on an Excel spreadsheet so we had a good snapshot of our current cashflow. Then we scrambled to assess the true state of the credit cards we’d been casually paying off. While he was in his 60day notification period and still officially employeed, we immediately went to the bank to increase the limit on our line of credit (just in case we needed it). We cut ALL non-necessities out of the budget, cut the food budget in half. No lessons for the kids that fall, no new clothes for anyone – we all had plenty. We had to arrange private life insurance since he’d be losing the coverage he’d had through work. Before losing his health care coverage he quickly got his dental work and eyeglasses up to date. Christmas shopping was almost completely done by cashing in Airmiles for gift cards, magazine subscriptions etc. In the end he found a new job withing 3 months and we carried on. The difference was we never went back to the way we used to do things. Until he was laid off we’d never really assessed how vulnerable we could be if one salary suddenly went away. We now have lazer like focus on being debt-free. We haven’t carried a CC or line of credit balance since then, and we’re pounding our mortgage with all the extra payments we can managed. I don’t want to live in fear that the next layoff could send us over the edge, so we now we live well below our means, and it really gives you peace of mind. As it happens, I will be laid off in the next 3-6 months when my company closes, but this time we’re in a far better position to weather the storm. If I haven’t found a new job before the layoff, we’ll simply stop all the extras (retirement contributions, extra mortgage payment, trips, entertainment) until I do find a new job.

By: marci

marci — Tue, 08 Sep 2009 20:38:27 +0000

@Banditjack – my sentiments EXACTLY – except no car loan…and I think this pickup and the forester will probably out-survive me…. at least that’s my plan But visiting grandkids out of town, I go about 10,000 miles a year all told

By: Banditjack

Banditjack — Tue, 08 Sep 2009 19:53:04 +0000

Paid off unsecured loan, now paying off Credit card. Will have that paid off in less than 20 months. Use credit card only in emergencies these days. When card is paid off, will take that payment and put it against car loan. No new car for me when its paid off. Will keep this gas guzzler, since I only drive about 5,000 miles a year. Being a retired widower, no need to keep up with the Jones family. Hell, no need to keep up with anyone. As long as there is a good library close by, don’t have to spend money on entertainment. A good book and a good imagination is better than any Hollywood movie out there today.

By: cathleen

cathleen — Mon, 07 Sep 2009 03:54:32 +0000

Again, I think we need to emphasize that this is a very large country so prices here in California, and other places like NYC, etc., are going to be eye-popping for others.
Our mortgage is over $500K but the value of the house is $1M. (2bed/1 bath at that!)
A job which might pay $30K in the middle of the country might pay $75K here. So really, percentages might be a better way to look at specific expenses.

By: DDFD at DivorcedDadFrugalDad.com

DDFD at DivorcedDadFrugalDad.com — Tue, 01 Sep 2009 11:47:49 +0000

Glad to hear about the decline– long overdue.

Consumer debt is really the reduction of your future purchasing power . . .

By: joseph

joseph — Sat, 29 Aug 2009 20:25:05 +0000

good gracious, I though I wasn’t doing so well with my debt, but these numbers make my personal situation look positively capital!
As I live in the midwest, I suppose norms may dictate lower acceptable levels of personal debt, which goes hand in hand with the number of goods and services available being somewhat less, and lower priced!

By: Tim

Tim — Fri, 28 Aug 2009 01:15:57 +0000

Debt is down not because people are paying it. It is because too many people lose their jobs and had exhausted their 9 months of umemployment benefits. Which leads to increase bankruptcy filings. The economy still sucks but those damm dumb-head writers, journalists, ecomonic experts, money experts, church leaders, etc… think it is getting better. If you are one of them please prepair yourself for the worst. Our national debt clock stands at 11,000,000,000,000….Please wakeup people. Please learn to speak Chinese because you and your children need a job there someday. I am a salaried employee. My company cut 10% off my annual salary. Work 3 weeks and off 1 week furlough indefinite until my employer says its over. Who knows when? I am sure Chapter 7 BK will be increased as debt decreases respectively.

By: LobotoME

LobotoME — Wed, 26 Aug 2009 17:37:08 +0000

Yes, the “recession” was the kick in the butt we needed to get busy paying off my school loans and one car payment we had – we have paid of $16,000 so far this year (by spending less and generating more revenue and growing a bunch of our own food this summer) and will have the remaining $16,000 paid off by the end of the year. We have an emergency fund (6 months) and we still have our mortgage (which is what we plan to attack next). And out of all of the people we know, our parents included, we started off with the LEAST amt. of consumer debt – we have friends that have balances on 7 or more CC’s, car payments, school loans, mortgages, HELOC’s etc… YIKES.

By: Diane

Diane — Wed, 26 Aug 2009 05:52:14 +0000

Oops – Grrr – I meant “translation”. Sorry.

By: Diane

Diane — Wed, 26 Aug 2009 05:48:53 +0000

Squeaky, you rock! Thanks for doing the homework and for the brilliant tanslation. With everything, it’s always a matter of perspective.
I have enough mortgage debt to land way on the right side of the spectrum. Fortunately, even at current market value, with 50% equity. I live in an expensive area. I could not afford it if I had debt in any other category.

Bill, that’s been a favorite quote since my first (and last) Statistics course in college!