5 Ways the Recession Made us Save Money
Housing: Staying Put Because of the depressed real estate market, properties aren't selling as fast, and many owners are faced with the likelihood that they'll have to remain in their homes for longer than originally planned, Every says.But this isn't necessarily a bad thing. "In the past, homeowners signed up for risky mortgages and credit lines in order to 'move up' and buy a house that was larger than they could afford," she says. Now that those types of mortgage loans are no longer available, owners will be less likely to have large mortgages that they can't pay, she says.Another cost-cutting move for consumers is to wait longer to schedule major work, such as remodeling a kitchen, says Every. Homeowners want to save money and pay for the jobs with cash on hand instead of taking out home equity loans, she says.People are also saving more by handling minor home-related tasks such as landscaping themselves instead of paying someone to do it, Every says.
Credit Cards: Trimming Back
As a result of the credit squeeze, consumers are learning to live with lower balances and fewer credit cards, says Ted Jenkin, a Certified Financial Planner and co-CEO of oXYGen Financial Inc., a financial services company based in Alpharetta, Ga.
People also are racking up less credit card debt, and they're paying down balances and trying to save money for emergencies, he says.
"I'm seeing a lot of people get rid of their multiple store-brand cards and instead, they're choosing to have just one or two major brand credit cards (such as Visa, MasterCard or American Express)" says Jenkin.
He adds that many store-brand cards tend to have higher interest rates, with some charging an annual percentage rate, or APR, of more than 20 percent. Frugal cardholders who have lower APRs and carry less debt will pay less in interest and save money in the long run, says Jenkin.
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