Wednesday, January 27, 2010

The Recessions' "Silver Lining"

Our nation’s current economic state has been like a dark cloud over both consumers and businesses for well over a year. While words like ‘foreclosure’, ‘bankruptcy’, and ‘bailout’ have been added to our day-to-day vocabulary, it is hard to imagine a silver lining to this dark cloud of recession.

However, behavioral economists – the people that study the way human beings make money decisions – are noticing a positive and promising trend in one way Americans have responded to the recession. In the last year, when unemployment rates skyrocketed, along with rising foreclosures, bankruptcies, and bank failures, a surprising thing occurred – Americans, on average, saved more money.

The savings rate of Americans grew in 2009 for the first time in decades. Recent data released by the US Department of Commerce’s Bureau of Economic Analysis shows the savings rate rose to nearly 7% in the last quarter of 2009. This is the highest rate since the early 1990s and is predicted to grow to nearly 10% in the next one to two years.

So, what is behind this seemingly counter-intuitive phenomenon? Conventional wisdom would tell us that during these dire times of job loss and loan defaults, our rates of personal savings would decline as we struggle to make ends meet. While nearly all households have felt some type of fiscal crunch, stashing cash in savings still became a priority.

When we feel financially secure and the economic climate seems healthy, we tend to put our money into ‘better’ uses like home renovations or family vacations. But, when the economic turmoil began to make news and the unemployment rate started to leap, so did our savings rates.
Suddenly-insecure Americans decided saving money in emergency reserves is a better use of our hard-earned and increasingly scarce funds, since the future seemed a bit more uncertain.

Unfortunately, for the many individuals and families that scrambled to build emergency savings accounts over the past several months, saving money may be an all-too-easily-forgotten practice once the fear of the recession subsides.

We will all be much better off if this crash-course lesson in saving money isn’t abandoned at the next sign of economic recovery. The silver lining of this economic cloud will shine brightly if some of these belt-tightening techniques become long-term behaviors.

We’ve learned now that we can trim our budgets and delay some purchases when our future is uncertain and increased security is needed. Let’s continue the trend of making personal savings a priority, so the next time a dark economic cloud appears on the horizon, we’re prepared.

Monday, January 25, 2010

How The Web is Transforming Personal Finance

I just read the article "How The Web is Transforming Personal Finance" and found it very interesting. I'm not sure how thorough the authors have been in reviewing the various online money management services. It is quite possible the authors are developing their recommendations based upon who is willing to "sponsor" the article series. That being the case, the article should at least get you started in your research of which online money management service might be right for you. I know I am going to look into a few that were mentioned in the article and do a search to see what else is available that wasn't mentioned.


Wednesday, January 13, 2010

"I Can Cope": Too Many Bills, Not Enough Money?

On Thursday, Jan. 21, 6:30 to 8:30 p.m., Kathleen Peterson from the Cheyenne office of Consumer Credit Counseling Service of Northern Colorado and Southeast Wyoming will discuss available resources and strategies for dealing with overwhelming debt, including what creditors can and cannot do and when to consider bankruptcy.

There'll be a Q&A session follwing this free lecture that is open to the public.

The talk takes place in the Cottonwood Room of the Laramie County Library, 2200 Pioneer Ave.

Call Greta Morrow at 635-3943 or Janice Triplett at 638-8949 for more information.