When the economy takes a turn for the worse, panic can quickly set in for the public. News reports of the falling value of the dollar, houses sitting on the market for too long or going in to foreclosure, and a high unemployment rate tend to make people tighten their purse strings and ride out the storm. In a poor economy, many people find themselves without work and may have to resort to living off of credit. This can cause your overall debt load to dramatically increase, and unless steps are taken to service that debt, it is not long before it can spiral out of control. But a downturned economy does not have to mean the end of your financial world.
Three ways a sluggish economy can help you with your debt include the following circumstances:
- The amount consumers spend have an impact on the economy far beyond just where the purchase is made. Financial experts say the number of people who are impacted by even a relatively small purchase is great. When consumers spend, the money infusion reaches all levels of workers from the store clerk to the manufacturer. When more people are spending, more people are needed for work, and this creates jobs. The creation of necessary employment positions means the unemployment rate goes down and more people are able to go to work and provide for their families. The key is to make purchases within your budget rather than to accumulate an overwhelming amount of debt.
- When the need to take out credit arises, even in a sluggish economy, there are lenders who are willing to make loans. While the rates may be higher than you’d like, paying off the debt on time will help boost your credit score. This means that even though loans are required to help make ends meet, you are working towards a better credit report, and this can help you to get more favorable loan terms in the future.
- When the debt taken out is for a home, the consumer ultimately benefits from the increased value in the property. In a sluggish economy home prices tend to be lower. The smart investor uses this information to take this chance to make a purchase, and hold on to the property until the values rebound. And, values always have a way of rising. The important thing to remember here is to only make the purchase if you are able to hold on to the property for several years.
It may seem like there is no end in sight when you are burdened with more debt than you can handle, but when creative ways to service that debt are formulated, even debt during a bad economy can be handled. Call our office to learn more, and to find out what type of debt management solutions meet your needs.
For more information about finances, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.