Foreclosure Crisis of 2008 Should Serve as a Lesson for Steering Through 2009

January 12th, 2009 | Tags: Foreclosure Crisis

There is no doubt that many will be relieved to bid adieu to 2008 and its record breaking number of house foreclosures, jumbo unemployment figures and pathetic credit markets. However there are lessons to be learnt to steer the country through 2009. Nobody learns to walk without falling down – this must be remembered.

The foreclosure crisis has shown up to many the value of savings for a rainy day. The people overnight learnt how to save, spend less and shop smart. 2008 began with a nil savings rate but towards the close the personal savings rate in America had climbed up to 2.8% as per the findings of Department of Commerce Bureau of Economic Analysis. In fact in May 2008 the savings rate had shot up to 4%. Although these figures are pale compared to 7.5% noted in the first part of the 90’s it is a tilt towards the right course and a solid proof that consumers have taken a lesson from the foreclosure beating and learning to save.

The fall in rate of consumer spending also points to a basic change in the American psyche. In October, spending by consumers fell by 1% and this was followed up by a decrease in November by 0.6%. Perhaps people are at last reining in their reckless consumer habits.

Clarky Davis who deals with debts and is a credit counselor of Raleigh said, “In this new year people will be adopting a more frugal lifestyle. They understand now that bigger isn’t necessarily better. They are thinking that they don’t need a bazillion channels. Instead of having everything, they are re-examining what they really want and those things they truly value.” Davis analyzed that consumerism had been pushed forward by shrewd marketing and advertising.

Shopping 24 hours from websites was a clever move introduced by retailers. But today shoppers are using the information coming in from the Internet for balanced spending. Davis aptly put it and said, “People are realizing that they really don’t own their stuff, their stuff owns them. They want to make a change.” Davis has some tips to make that change possible.

The first thing is to chalk out priorities like giving food and mortgages being given precedence over splashy holidays. The next thing is to stay calm and not to panic like cashing in on 410(K) hastily. Above everything one has to create a sustainable realistic lifestyle to shut out foreclosures forever.