2020 was a shock for many people. The economy was hit hard, and folks' lives have been affected in ways we could never have predicted. Financial security seemed to have gone out of the window, but no matter what, we had to remain positive and move forward. Debt can hold you back when you need to get moving and people around America took stock of their situation and made decisions accordingly. Paying down or getting rid of your debt may seem impossible — but with some smart planning, it really isn’t.
Once the coronavirus pandemic hit, both outstanding credit card debt and credit limits from issuers dropped for the first time in ages. Before 2020 it had been going up and up.
Consumer debt in America grew 19 percent since 2009 to a record high of $14.1 trillion in 2019. The totals in nearly every debt category grew over the decade. Student loans more than doubled in that period and consumer credit card debt saw a record high of $829 billion! Mortgage debt was at an all-time high of $9.6 trillion. Auto loan debt also had a record high of $1.3 trillion.
What a difference a year makes. Covid created an environment where people and their families were hit by financial uncertainty. However, for many, the reality was that they were spending less during quarantine periods. Economic impact payments and supplemental unemployment money also boosted confidence in their ability to pay down debt for folks all over the nation, in every state. Extra cash seemed to be available as all of the things that would normally be charged to a card like meals out or gas or even daily coffee runs were no longer part of the daily routine. No entertainment was available and no trips away could be taken. The average debt for individual consumers dropped from $6,194 in 2019 to $5,315 in 2020.
This is a significant change in spending and saving. As things start to open again all over the nation and the vaccines start to assist re-opening of spaces, businesses and events, remember the saving that happened when the lockdowns began. It is a good lesson to take into the future, especially when you are budgeting for yourself and your loved ones.
Keeping your debt low while building up a good credit score is the key to having a good relationship with your debt. Do not let it get away from you and keep constant tabs on your money.
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