Tuesday, August 27, 2013

Continuing on the Right Path with Debt Elimination

During the fourth quarter of 2012, a key measure of U.S. household debt fell to a record low after peaking during third quarter 2007 just before the economic recession. The trend continued during second quarter 2013, when U.S. household debt fell $78 billion. The amount of debt in American households is now at its lowest in seven years. Millions of Americans are finding it easier to repay their credit card bills, mortgages, and other debts.

How have they managed to do this in an economy that has been slow to recover? According to a recent article in The Wall Street Journal, the improving housing market bears much responsibility. As the values of homes have increased, homeowners are profiting by selling their properties. Many Americans are finding themselves more comfortable financially, allowing them to make dents in their mortgages while remaining in their homes.

Despite this good news, we are far from out of the woods. Student loan debt has reached crisis status, with American households owing an average of $31,646. The average amount of credit card debt in U.S. households is $15,263 and Americans in total have $853.6 billion in credit card debt. The total American consumer debt figure is $11.15 trillion, an astounding figure. Mortgage, student loan, and credit card debt are the top three sources of household indebtedness.

Consumers use many methods to get themselves out of debt and achieve financial independence. The Dani Johnson training system War on Debt is a popular tool. People who once owed hundreds of thousands of dollars have used this to become debt-free within a short time. It may seem difficult to achieve financial independence when the economy has not yet righted itself but Dani’s system proves that it can be done.

However, this system is not a permanent financial “fix.” It alone will not prevent someone from making financial mistakes in the future and society makes it easy for anyone to make unwise financial choices. Having money is enough of a reason for some people to buy in excess or purchase items they do not need. Avoiding the distraction that having money creates and making the decision to move forward in the right direction represent the smart approach.

Many people recognize when they make financial mistakes. Unfortunately, a lot of them let their mistakes push them in the wrong direction. They might punish themselves emotionally but do nothing to correct the situation. Even worse, they might give up, determining that there is no point in being financially responsible. Fixing the mistake and moving forward is the best response and surrounding yourself with others who are moving in the same direction makes this easier to do.

People who hold each other accountable for financial goals do not accept excuses such as “I bought it because I had the money.” They encourage each other to repay debts and avoid accruing any more. In the Dani Johnson community alone, there are more than 180,000 thousand people involved in this effort. Join this group or create your own.

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