Is it just me, or does it seem like every other commercial on the TV or radio is for some sort of debt relief or debt consolidation company?
I know things are very tough right now with the economy. Unemployment is at the highest levels since the early 1980s, it’s still very hard for small businesses and consumers to get access to credit, and the housing market – the single largest source of personal wealth in this country – will probably never rebound to its 2005/2006 peak.
But, are things so bad and were we collectively such terrible money managers that we need to be completely inundated with companies offering to help us settle our credit card debt for pennies on the dollar?
Considering much of our (fake) economic prosperity over the past 20 to 25 years has been fueled by debt spending – both by our government and by the general public – it makes sense that we’re in a world of hurt. After all, it’s easy to spend on debt when all you have to do is do a quick cash-out refinance of your always-increasing-in-value home.
But now that the refinance and home-equity loan spigot has been all but turned off thanks to rapidly falling home values – nearly one in four borrowers is underwater – we actually have to pay down our acquired debt with our savings – which, for a while, was either negative or right around zero percent.
Couple this with the fact that the number of Americans who filed for personal bankruptcy surged by almost 33% in 2009, it’s easy to see why there is such a demand for debt consolidation and credit counseling services. After all, we wouldn’t be surrounded by these advertisements if they were falling on deaf ears.
Hopefully The Great Recession has reminded us that frugality is good, make sure we live within our means, and save for a rainy day – or in this case a rainy two years.
What are your thoughts? Please leave your comments below.
