But our economy may be finally breaking the binds to free itself from the lingering grasp of the Great Recession.
The unemployment
rate decreased in almost every U.S. state last month from the previous year.
Housing stats rose in October to their highest rate in more than four years.
And consumer confidence increased steadily in the third quarter as U.S.
employers added more jobs.
One key
indicator: Credit card balances have increased. The average debt per borrower
grew almost 5 percent from the same period a year ago to $4,996.00 according to
the credit reporting agency TransUnion.
Consumer
spending drives 70 percent of the U.S. economy. Buying is a sign of strength
and confidence, and the holiday spending season will be the next big metric for
how far along this long, slow recovery has come.
But we always
caution consumers to set a fixed budget for holiday spending and stick to it.
The holiday financial hangover can mean months of paying down debt that was
incurred over just a few days of shopping. And it’s easier than ever to go
overboard on holiday spending with “door buster” specials, 24-hour online
shopping and extended retail hours right up until Christmas Eve.
So here’s a
holiday wish list that doesn’t require adding more household debt. Rather,
it takes commitment and resolve from both government and individuals to make
our financial lives a little easier.
•
Rein
in the cost of higher education and make the process of financing college
easier: American
students are starting to question the value of beginning their careers loaded
down with debt. A recent survey by American Consumer Credit Counseling found
nearly half of all respondents felt their college education wasn’t worth the
cost. College debt is the next housing bubble – and it’s ready to burst all
over American families. For the first time ever college debt now exceeds total
consumer credit card debt. And traditional options that have been more
affordable – like public higher education – are getting more expensive every
year. Many students don’t even realize how much debt they have incurred until
they get their first statement after graduation. One good step: the U.S.
Department of Education’s Financial Aid Shopping Sheet has been adopted by more
than 500 colleges and universities across the U.S. This valuable resource
provides a standardized award letter allowing students to easily compare
financial aid packages as they decide on which school to attend. It takes the
mystery out of the bottom line for college costs – and leads to more informed
decision-making.
•
Make
the most of new tools aimed at protecting consumers from overzealous or abusive
debt collectors and credit rating errors: The Consumer Financial Protection Bureau is flexing its
muscles to the benefit of American households. Large collection agencies, debt
buyers and collection law firms are now subject to enhanced scrutiny and
examination by the CFPB. So too are credit rating agencies, which have
tremendous impact on the financial profiles of all American consumers and their
ability to get the best terms on financing. While the CFPB is doing its part,
consumers must do theirs also. That means being attentive and vigilant in
monitoring their credit reports; maintaining a budget and paying obligations on
time; and reporting abusive debt collection practices to the CFPB, Federal
Trade Commission or appropriate state authorities.
•
Use
the power of smart consumerism to do more than just spend. Shop for savings
too: American consumers
should put the same time and effort into finding the best deals on savings
rates, credit cards, mortgages and investments as they do into buying new
appliances, furniture or a car. The long-term payoff can mean thousands of
dollars a year just by making their hard-earned savings work harder for them.
Bankrate.com offers some of the best comparisons for savings account, CD and
mortgage rates. TreasuryDirect.com is a one-stop marketplace for everything
consumers need to know about buying government securities such as savings
bonds, Treasury bills, notes and bonds. Smart budgeting tools can help keep
your household finances on track. A host of such resources can be accessed at
the Association of Independent Consumer Credit Counseling Agencies web site
(AICCCA.org), at American Consumer Credit Counseling’s ConsumerCredit.com or
through any number of AICCCA’s more than 25 member agencies.
Steve Trumble
is President and CEO of American Consumer Credit Counseling and a member of the
AICCCA Board of Trustees.
