Managing Debt In Times Of Economic Crisis
Sharon L. Secor
October 04, 2007
While there has been a significant amount of news coverage of the housing bubble and the mortgage crisis, that isn’t the whole economic story. Other factors at play in the current economic climate include the effects of the housing correction on related industries and consumer spending, the falling value of the dollar, crushing consumer debt, and high fuel costs. Financial experts have been watching the economic storm clouds gather for years.
Some, including Robert Kuttner, co-founder and co-editor of The American Prospect, Jeremy Rifkin, who is president of the Foundation on Economic Trends, in Washington DC, and Dr. Kent Gilbraith, who, in addition to serving as a forensic economist in courtrooms, is a professor of economics at the Hankamer School of Business at Baylor University, have written of what they call “the perfect storm,” in which the gathering economic storm clouds come together, resulting in a serious economic down turn. Americans carry huge amounts of debt, while the rate of savings has fallen to Depression Era levels. Staggering beneath the burdens of mortgage, credit card, and other types of debt, the average American is ill prepared for the economic crisis pending in “the perfect storm.” The time to give serious thought and planning to managing debt is now.
For many people, significant strides in managing debt can be achieved merely by making a spending plan that -- in addition to controlling spending and not creating new debt – works towards paying down old debt. With a little curbing of unnecessary spending, enough can often be drawn from the budget to ensure that more than the minimum payment is made on credit card debt.
Reducing spending by just ten dollars a day can free up approximately three hundred dollars per month, and it’s easier than it may seem. Taking lunch to work, driving just a little less, using the grocery store sales pages to plan meals and grocery purchases – these are just a few of the many small things than can be done to achieve that ten dollar per day reduction goal.
For those facing debt situations that are a bit more complex, sooner rather than later may be the best time to take action. If facing a reset of an adjustable rate mortgage in the future, it’s best to start working to reduce debt and improve credit scores as far in advance of applying for refinancing or other types of loans as possible.
Credit counseling can be of real assistance to those who are feeling overwhelmed by the amount of debt they are carrying and are unsure of where to start in order to bring the situation under control. In some cases, the interest rate of a debt consolidation loan can be a better fiscal choice then paying double-digit credit card interest.
There are numerous means of managing debt. The important thing is to choose the best way for your individual circumstances and start moving in the right financial direction.
We live in uncertain economic times, and have not yet seen all of the effects that this coming together of the perfect economic storm will have not only on the world of big business and finance, but also on our day-to-day lives. It is essential to work on gaining the best financial position possible to deal with the economic difficulties that are still to come. Taking steps right now to bring spending under control and to manage accumulated debt is an important part of those efforts.
Some, including Robert Kuttner, co-founder and co-editor of The American Prospect, Jeremy Rifkin, who is president of the Foundation on Economic Trends, in Washington DC, and Dr. Kent Gilbraith, who, in addition to serving as a forensic economist in courtrooms, is a professor of economics at the Hankamer School of Business at Baylor University, have written of what they call “the perfect storm,” in which the gathering economic storm clouds come together, resulting in a serious economic down turn. Americans carry huge amounts of debt, while the rate of savings has fallen to Depression Era levels. Staggering beneath the burdens of mortgage, credit card, and other types of debt, the average American is ill prepared for the economic crisis pending in “the perfect storm.” The time to give serious thought and planning to managing debt is now.
For many people, significant strides in managing debt can be achieved merely by making a spending plan that -- in addition to controlling spending and not creating new debt – works towards paying down old debt. With a little curbing of unnecessary spending, enough can often be drawn from the budget to ensure that more than the minimum payment is made on credit card debt.
Reducing spending by just ten dollars a day can free up approximately three hundred dollars per month, and it’s easier than it may seem. Taking lunch to work, driving just a little less, using the grocery store sales pages to plan meals and grocery purchases – these are just a few of the many small things than can be done to achieve that ten dollar per day reduction goal.
For those facing debt situations that are a bit more complex, sooner rather than later may be the best time to take action. If facing a reset of an adjustable rate mortgage in the future, it’s best to start working to reduce debt and improve credit scores as far in advance of applying for refinancing or other types of loans as possible.
Credit counseling can be of real assistance to those who are feeling overwhelmed by the amount of debt they are carrying and are unsure of where to start in order to bring the situation under control. In some cases, the interest rate of a debt consolidation loan can be a better fiscal choice then paying double-digit credit card interest.
There are numerous means of managing debt. The important thing is to choose the best way for your individual circumstances and start moving in the right financial direction.
We live in uncertain economic times, and have not yet seen all of the effects that this coming together of the perfect economic storm will have not only on the world of big business and finance, but also on our day-to-day lives. It is essential to work on gaining the best financial position possible to deal with the economic difficulties that are still to come. Taking steps right now to bring spending under control and to manage accumulated debt is an important part of those efforts.
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