According to an article in the Dallas Morning News, the Commerce Department reported Monday that consumer spending, which accounts for 70 percent of the nation’s economic activity, dropped by 1 percent in December and savings increased 1.7 percent for 2008. But that’s from a low of 0.4 percent in 2005 which was only slightly better than the savings rates during the Great Depression another era when foreclosures and bankruptcies were choking the nation.
The article made a very interesting statement:
The hard times are being made more severe as consumers cut back sharply on their spending…
Is it really? Or, is it that the “hard times are being made more severe” because Americans have failed to save more than 1 percent in years? Many Americans are facing foreclosures, job losses and have no savings to cushion the downturn. This is simply dangerous financially and has forced many Americans into bankruptcy. But it’s not just individuals who have failed to save and prepare themselves for shrinking cash flow, businesses also have been caught unprepared and thousands are facing bankruptcy because of it.
The best course of action now for many Americans is to consider how they can save their assets as the current crisis intensifies. Because many don’t have savings, discharging or reducing debts through bankruptcy is often the best option. Filing for bankruptcy, especially Chapter 7 bankruptcy can give Americans the fresh financial start they need to increase their savings rate and prepare for the future.