Less Credit = Less Debt

Is this such a bad thing?  Don't get me wrong, the banks need to release some ridiculous restrictions and free up more money for the economy, or society will find another way.  Like SAVING MONEY. 

Recent reports are saying that Americans are shedding debt at remarkable paces.  Just 5 years ago, Americans were noted as being one of the worst nations for savers.  We spend more than we make.  I'm pretty sure we haven't shed that label just yet, but we are making remarkable strides. 

Here are some of the latest stats:

1. Homeowners have trimmed interest payments alone by 11% — or $67 billion a year — from the peak in 2008, according to the Bureau of Economic Analysis (BEA).
2. The nation has slashed total mortgage debt from nearly $11 trillion at the mid-2008 peak to $10.3 trillion in the first three months of 2011, the BEA reports.
3. For the first time since 1998, households are saving more than they're spending on mortgage interest.
4. Mortgage interest consumes 5.27% of the nation's after-tax income, the lowest since 2004 and comparable to the 1980s and '90s
5. The average interest rate on all mortgages — not just new ones — has fallen for 16 consecutive quarters to 5.96%, the lowest since the government started keeping track in 1977.

Paying down the house payment seems to be what people are saving toward.  Funny, because so many people say to me, "Should I stop paying my mortgage, because I am tired of throwing good money toward a bad investment?"  In reality, is it the house, or the mortgage that you have a bad investment?  This study is about people that are able to qualify for better mortgages, lower rates.  They have equity and provable income with good credit.  And therefore they can make the decision to put good money towards good investments, like their home AND their mortgage.

These figures come from the Bureau of Economics Analysis as reported in USA Today, May 5th 2011, and comments made by Mortgage Bankers Association and CoreLogic.