Pardon us while we let out a giant "Whooopeeee!" A recent story in The Wall Street Journal contains the following golden sentence: "After running up giant credit-card balances and going deeper into hock for the past decade, there are signs that American consumers are starting to curtail their credit-card borrowing and pay down some debts."
We are particularly happy to hear that, because such actions are a cornerstone of our Foolish investing philosophy. It's right there, in Step 2 of The 13 Steps to Investing Foolishly: "Your personal finances need to be in squeaky clean order before you ever think of placing that exciting first stock trade."
Getting your financial house in order involves three things:
- Erasing credit card debt
- Setting up (and sticking to) a regular savings plan
- Accumulating an emergency cash stash
According to the Journal story, outstanding credit card debt fell a sharp $8.4 billion in December, the largest monthly decline since record keeping began in 1968. Meanwhile, the savings rate has risen significantly -- consumers stashed away 4.3% of their income in the fourth quarter of last year. The prior-year savings rate was less than 1%.
One final, important, optimistic note. Americans are being smarter with cash they've received from refinancing their homes. Loan giant Freddie Mac
Good job, America... keep it up! If you need more help, be sure to visit our Credit Center, where you'll discover some long-hidden secrets of the lending industry and learn how to get out of debt and manage a credit card properly.