Will Americans Keep Frugal Habits or Fall Back in Debt When Economy Rebounds?
Some things are easier said than done - and it looks like that might be the case when it comes to retaining the smart saving and spending behavior so many Americans adopted in response to the recession.
Last year, 63% of consumers said they had modified their money habits because of the economy, according to a poll by Citigroup. Just one year later, that number has dropped to 52%. Incomes are on the rise once again, and apparently so is consumer debt - one of the problems that led to our economic troubles in the first place. Could budgeting and avoiding debt end up like the majority of New Year's resolutions - out of sight, out of mind? That depends, say Chicago bankruptcy attorneys.
It's unrealistic to think that we're all going to continue saint-like behavior when we have more money to work with - it's just not human nature. But by maintaining at least some of our new habits even when the economy improves, we can help insure against financial ruin next time the market takes a dip - which it inevitably will.
It's probably OK to allow yourself a little more freedom when things pick up - doing so can help prevent a spending binge. But consider doing so on the condition that you have to pay for your purchases without going into debt. Since you're limited to the money in your bank account, you'll have to think long and hard about whether or not you really need - or can afford - the expenditures you have in mind.
And if you're going to loosen up your budget, make sure to hold on to at least some of the new habits that have served many of us so well these last few years. Sure, the coupon clipping may fall by the wayside. But if you've been saving money by diligently cooking dinner at home, why give up all that hard work? If you've been cutting back luxury costs by eliminating TV channels and magazine subscriptions, why revert back to paying for them when you can continue to view movies and shows and read magazines on the Internet, often for free? If you've been doing a better job of contributing to your 401k and making other savings strides, don't quit now! Spending all that money at the first signs of recovery is like taking two steps back for every one step forward.
And if you're still dealing with debts that arose during - or before - the recession, why give up the opportunity to finally pay them off? Spending some of your extra money to lower your credit card balance, for instance, can save you thousands on interest in the long run. Can't do it alone? Bankruptcy may be the boost you need. Find out how bankruptcy has helped thousands of Americans find freedom from debt in the last few years - and whether it could help you, too - when you sign up for a free personal debt analysis with a Chicago bankruptcy attorney.