Henry Blodget on The Business Insider points to economic data and mentions that the worse of this recession may be over for the American economy. Specifically, he suggests that contraction of real GDP at annualized rates of 6.3 and 6.1% in the fourth quarter of 2008 and the first quarter of 2009 mark troughs in the crisis. Should those with debt breathe easier? A reduction in household net worth and a plunge of the worth relative to debt are reasons to be extremely cautious. These factors can dampen prospects for economic growth moving forward, thus exacerbating even personal debt problems that may appear temporary at the moment. Even the notion of housing as a “sure bet” for one’s long-term investments is being called into question these days, and rightly so. So what is a sure way to get back on track?
Reducing expenses will be key. Reduced costs in turn decrease the debt pain experienced from costly, unexpected emergencies; they minimize the negative consequences from job/income insecurity; and they free up cash for debt reduction. To efficiently reduce expenses, consider setting up a budget, separating discretionary from non-discretionary costs. Also, track debt using a simple form, making sure to check levels and progress periodically.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
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