Positive Effects Of The Recession

Being in a recession is never something you hope to be in, but let’s take a positive look at the current situation this country is in. There are actually several benefits to the current recession that will hopefully have some positive long term effects. Let me go through a few of them.

Savings

For years Americans knew not the meaning of saving money. If they needed money they would turn to credit before going to their non-existent savings account. If they wanted to take a vacation they would simply refinance their house and take a huge chunk out. After all they had all that built up equity to use. Well, the equity was just a number on a piece of paper and was never real.

Now in this recession we are seeing the savings rate increase year after year. Many Americans, even though they have less money than they did a few years ago, are saving more money. While saving money is not necessarily good for the overall economy, it’s a good habit that the average American household should have.

Loans

During this recession people are borrowing less than they used to. A big part of this is because the banks are simply not loaning money out like they used to. Now, the banks want you to have a down payment, good income and a great credit score. Frankly, that’s how it should have been in the first place. But just because the banks let anyone and their mother borrow money didn’t mean we should have taken advantage of that.

There’s only a few things that you should borrow for, such as student loans, car loans and home loans. While the credit crunch is affecting Americans wanting to qualify for home loans, it’s also stopping Americans from foolishly borrowing more money than they can afford to pay back.

Debt

It was recently reported that overall credit card debt has dropped again. This points to Americans being serious about getting rid of their debt. The recession has caused many Americans to be more financially aware of their situation. Constant news stories keep a constant reminder to all of us of the dire situation we are in. These news flashes are both scary and full of knowledge at the same time. This is causing many to heed the advice of the pundits on television and pay down their debt.