July 12th, 2011 
Vijaianand The financial and Subprime crisis surely bought lot of grief to our economy dragging us to an historical recession and trying to get back up but not able to find the light at the end of the tunnel. It surely caused lot of mess starting from millions of unemployment to state government to companies disappearing to state government shut downs and list goes on and on.
Obviously we have gone through many issues and lot of bad things happened over the past few years. But the crisis surely done some good things as well. As they say, look at the brighter side of the bad thing happened. The brighter side is many americans have come out of debt inthe past few years and improved their credit. It has brought back the saving habit among Americans. The financial mess does create panic among American public and helped American them to get of their financial mess by paying off of their debt and start to think about future in a better way.
As per the Business week article published this week(07/07/2011), the average U.S. credit score—a predictor of the likelihood lenders will be paid back—rose to 696 in May, the highest in at least four years, according to credit reporting bureau Equifax. Delinquencies on consumer loans have dropped 30 percent in two years, according to Federal Reserve data.
Improving credit quality gives households the ability to spend more. A rebound in spending would help the economy to bounce back. U.S. consumers have reduced debt by more than $1 trillion in the 10 quarters ended in March, according to the Federal Reserve Bank of New York. Households spent 16.4 percent of their earnings on debt payments in the first quarter, including lease and rental payments, homeowners’ insurance, and property taxes. That’s down from 18.9 percent in the third quarter of 2007, before the recession started.
While household obligations are at a 17-year low because of increased savings and lower interest rates, household debt still comes to 115 percent of income, compared with a 75 percent average from 1970 to 2000 as per Morgan Stanley executive.
Our current saving rate is still well below the saving rate of 1960’s and 70’s and way below than other countries like Japan, India where the bank system supports itself through the consumers saving deposit. But atleast now consumers are realizing the fact that debt is not going to help them and help the economy and consumers should spend less and save more.
How can they Pay off and improve their credit ?
Obviously it is not easy, gets even tough during this bad economic condition but there are always ways you can implement by tightening your belt and not stretching beyond the limit. Few simple steps you can follow to help you and your credit and the economy as well,
1. Try to be on time with your Auto, Mortgage or Credit card payments
2. Pay off every dollar you owe to any organization and aviod collection
3. Pay off high interest credit cards first and work your way down.
4. Get help from government credit counselors to consolidate debt
5. Clean up the credit report by checking them regularing
6. Don’t spend more than your Income
7. Try to save atleast 10% of your Income, Pay yourself first
8. Plan for future expenses and save for them
9. Avoid frequent visit to Restaurants and fast foods
These simple steps always will help you to be on track with your financial obligations and also make you to save money for your future.
Just Payoff debt and Save up!!
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