Debt Snowballers Rejoice: Consumers Bust Debt by record $21.6B in July

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This just in from the Associated Press consumers have busted their debt snowballs and according to July’s numbers have paid down $21.6 Billion dollars in debt! All of this while the government is trying to induce you to take on more debt by buying a new car with the cash for clunkers program. We’ll see how that changes in the coming months but for me this is happy news to know that there legions of hard working people getting rid of debt. Analysts predicted that the the drop would be about 4 billion. Don’t count the American consumer out, moreover I’d prefer to be known as an American producer do we really need to be labelled consumers?

Working your own way out of debt or changing your consumer ways? Give a shout out. If you are interested in starting your own journey you may want to check out The Debt Snowball Saved My Marriage: a Spreadsheet Tell-all. It documents my own families start to debt freedom and hopefully can help you as well.

More from the Associated Press:

Demand for non-revolving credit used to finance cars, vacations, education and other things fell by $15.4 billion, also a record decline. That 11.7 percent pace was on top of an 8 percent annualized decline in June.

Consumers’ appetite for revolving credit, primarily credit cards, declined by $6.1 billion in July, an annualized rate of 8 percent that followed a 6.4 percent drop in June.

Economists predict that consumers will be spending less, saving more and trimming debt to get their household finances — which have been decimated by the recession — into better shape.

July’s retreat translated into an annualized decline of 10.4 percent. That followed a cut of $15.5 billion in June, or a 7.4 percent annualized drop, and the most since a 16.3 percent decline in June 1975.

The latest cut left total consumer credit at $2.47 trillion.

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{ 4 comments… read them below or add one }

MoneyEnergy 2009/09/08 at 2:46 pm

It’s a really good improvement, that’s for sure…. they say 70-75% of the American economy is led by consumers, i.e., the spending of US citizens, but as you point out, citizens are producers too. Both sides of the balance sheet count. Eliminating debt might shrink nominal GDP numbers in the short term but will provide a more accurate and robust representation of growth, too. No matter which way you slice it, it is necessary and a good sign of improvement.
.-= MoneyEnergy´s last blog ..5 Stocks I Wish I Hadn’t Bought =-.

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Rick Vaughn 2009/09/08 at 8:16 pm

How can you not be excited?

Hopefully, people are starting to wise up but you never know. That’s great that Americans are doing this but we need to government to follow suit. Thanks for the good news!
.-= Rick Vaughn´s last blog ..More Money, More Problems? =-.

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Craig 2009/09/09 at 8:29 am

What’s the reasoning behind this? Has to be more than just people paid off more debt? I’m curious whats behind the scenes with this number.

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paul 2009/09/09 at 10:06 am

Some of the analysts feel it’s that consumers aren’t taking on any new car loans gearing up for the Cash for Clunkers program, but I think that might only be a small part of it, I honestly believe the nation has made a shift, we’ll just see how long it lasts. LA Times has a good article about it, and they included an interview with me about my debt reduction story.

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