Americans saving less than nothing

iVillage Member
Registered: 07-11-2001
Americans saving less than nothing
3
Fri, 04-21-2006 - 12:43pm

My BF called me this morning to say that he had seen a piece on a morning show (He believes Good Morning America) that discussed that there were more bankruptcies last year than there were during the Depression. He said that he felt we are better off than he thought. He said they highlighted a lady who had maxed out all of her CC with compulsive spending. It sounded like an interesting piece.

I was trying to find out more information, couldn't find anything on GMA's website, but found this interesting article instead.

We all need to give ourselves a big pat on the back for trying to pay down debt and put money in savings. It seems that many of those around us aren't - so big kudos to all of us on this board.

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"Americans saving less than nothing
Spending could outstrip income in 2005, which hasn't happened since the Depression"

When the Commerce Department recently tallied up consumer finances for November, it found that Americans shelled out more money than they took in. It was the seventh such month of red ink during 2005.

Kevin Lansing, an economist with the Federal Reserve Bank in San Francisco, tracks the personal savings rate -- the Commerce Department's measure of how much consumers have left after spending is subtracted from income. In November the savings rate was a negative 0.2 percent.

Given how much red ink households racked up in the first 11 months of last year, Lansing said the nation's personal savings rate could well be negative for all of 2005.

That, he added, would be "the first such occurrence since the Great Depression."

The term "savings rate" may be a misnomer. Keith Leggett, senior economist with the American Bankers Association, described the measure as a tally of all the income that isn't spent.

"Savings is the absence of consumption,'' he said.

Traditionally this unspent income has been used to accumulate capital for future investment. By contrast, the recent spell of low savings -- or high spending -- has provided a short-term stimulus, helping the nation's output of goods and services grow at an enviable 4.3 percent rate in the third quarter of 2005.

But many experts say that in the months ahead, savings-starved, debt-burdened households will slow their spending and, with it, the economy. "You're seeing a situation where the consumers are spending every penny they possibly can and borrowing on top of that,'' said Joel Naroff, a Pennsylvania economic consultant, who expects growth to cool in the near future.

to continue reading this long article:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/01/08/BUG7IGJHEK1.DTL

Happy saving and paying off debt

iVillage Member
Registered: 01-31-2006
Fri, 04-21-2006 - 4:56pm
Thank you for sharing this with us. Unfortunately, many can't or won't save or even stop charging the cards. I do agree that people on this board do more in terms of paying down debt and saving than most people. We should feel proud of ourselves for facing up to the problem instead of sticking our heads in the sand. I remember reading in Dave Ramsey's book a phrase that people like to use as an excuse for not getting out of debt: "I am not THAT out of shape".
iVillage Member
Registered: 01-06-2005
Fri, 04-21-2006 - 5:31pm

Thanks for sharing that with us!!!


I am very proud to have a goal in mind!

 

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iVillage Member
Registered: 11-09-2004
Wed, 05-03-2006 - 12:02am

Hello,


I look forward to the day when I can add "Debt Free" to my signature. It will be so nice to look at these statistics of how much people *aren't* saving, and realize that I'm different. Right now, I'm not different *yet*, but I'm definitely working on the behavior that will eventually make a difference. =)

Sincerely,
Lindsey Schocke


Geeks on Tap: Mission Accomplished

Sincerely,
Lindsey Schocke

Geeks on Tap: Mission Accomplished