Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Consumers cut debt for 5th straight month
Old 08-07-2009, 02:28 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,961
Consumers cut debt for 5th straight month

Good news as far as I'm concerned. Heard someone on CNBC earlier this week say 'this isn't a recession, it's a reset.' Even though it means the recovery will be much slower, hopefully we won't get so far ahead of ourselves again and face another meltdown like the one just past (fingers crossed).

Consumers cut debt for 5th straight month | Comcast.net
__________________

__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-07-2009, 03:06 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
I wonder how this statement can be true:

"The Fed says Americans cut their outstanding consumer debt by $10.3 billion, or 4.9 percent, to $2.5 trillion in June"

$10 billion is close to 0.49% of $2.5 trillion, but nowhere near 4.9%. Simple math error or am I missing something?
__________________

__________________
FUEGO is offline   Reply With Quote
Old 08-07-2009, 03:56 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,961
Quote:
Originally Posted by FUEGO View Post
I wonder how this statement can be true:
"The Fed says Americans cut their outstanding consumer debt by $10.3 billion, or 4.9 percent, to $2.5 trillion in June"
$10 billion is close to 0.49% of $2.5 trillion, but nowhere near 4.9%. Simple math error or am I missing something?
If they cut their debt by $10.3B in June to $2.5T, that would be a monthly drop of 0.41% or an annual rate of about 4.9%...
Quote:
Outstanding U.S. consumer debt fell by $10.3 billion, or 4.9 percent at an annual rate, to $2.5 trillion, the Federal Reserve said. That's a much steeper cut than the $4.7 billion analysts expected, according to Thomson Reuters.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 08-07-2009, 04:16 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by Midpack View Post
If they cut their debt by $10.3B in June to $2.5T, that would be a monthly drop of 0.41% or an annual rate of about 4.9%...
Gotcha. Missed the "at an annual rate" part. That is a steep drop. Only 20 years of that and the nation would be debt free!

Heh, I just figured out why I missed the "at an annual rate" part. It wasn't there when I read the article the first time. They changed the friggin article after I pointed out the error! I copy/pasted the quote in my post above straight from the article. At least they caught their mistake. For a minute I thought I was going crazy...

If debt was reduced by 5% on an annual basis and it also says savings increased 5%, then that means some serious reductions in consumer spending (assuming relatively flat incomes).
__________________
FUEGO is offline   Reply With Quote
Old 08-08-2009, 09:27 PM   #5
Recycles dryer sheets
 
Join Date: Mar 2007
Posts: 176
At the current rate it would be a lot faster than 20 years, because as one's debt load decreases if one continues to throw the same amount of money at the debt then each year they would hit a higher percentage:

Using round numbers, $100K debt and 5% ($5000):

Year 1: $100K - $5K = $95K or 5%
Year 2: $95K - $5K = $90K or 5.26%
Year 3: $90K - $5K = $85K or 5.88%
Year 4: $85K - $5K = $80K or 6.25%
and so on...
missionfinder is offline   Reply With Quote
Old 08-08-2009, 09:36 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,255
Quote:
Originally Posted by Midpack View Post
Good news as far as I'm concerned. Heard someone on CNBC earlier this week say 'this isn't a recession, it's a reset.' Even though it means the recovery will be much slower, hopefully we won't get so far ahead of ourselves again and face another meltdown like the one just past (fingers crossed).
I agree with your comment.

It seems obvious to me, if we don't actually 'reset', we are just jumping back into another bubble. So it will be painful. The bubble was the problem, and the recession is just the result of the problem. But people see the recession as "the problem".

I think a long, gentle sustained 'reset' is the fix.

-ERD50
__________________

__________________
ERD50 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Lock in electric rates or continue month-to-month? soupcxan FIRE and Money 47 08-02-2008 11:25 PM
Consumers face challenges in handling debt cute fuzzy bunny FIRE and Money 6 07-04-2006 06:24 PM
Stupid consumers laurence Other topics 15 04-08-2005 06:02 AM

 

 
All times are GMT -6. The time now is 05:35 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.