Yesterday, DF asked about the negative savings rate. I noted the RM column I wrote last June (Ignore Statistical Oddities at Your Peril) in response. Like all unsustainable things, they will continue until they no longer
can. This is often for far longer than expected, but not forever (an
admittedly large range of time).
Let’s look at the nitty gritty: In 2006, the US savings rate was minus 1%. The previous year in which the US "enjoyed" a negative savings rate was, well, the previous year — 2005. Prior to that loathsome twosome, we have to go wayback to the Great Depression (early 1930s) to find one single negative savings rate year.
As Abelson points out this morning, "the only time ever before that our worthy population had two years in a row of negative savings, as we did in ’05 and ’06, was in those heartbreak years, 1932 and 1933." He adds:
"The dismal disclosure of just how effectively Jane and John Q. are spending more than they earn has been greeted with the usual serious sophistry from the usual Panglossian pundits. Their contemptuous claim is that benighted worrywarts like ourselves who fret over such inconsequentials as a negative savings rate are just plain silly. And, it grieves us to confess, after carefully mulling their arguments, we do feel, well, just plain silly.
For how could we overlook the fact that savings as officially defined don’t include the equity in houses and investment in stocks. And, as we all know, it is decreed that house prices can go only one way — up. Pay no heed to minor variations in that sacrosanct trend; they probably won’t last more than five, six years at the outside."
A fresh take on the subject comes courtesy of MacroMaven’s Stephanie Pomboy (via Alan Abelson). Stephanie notes not just the negative national savings rate, but two other relevant data points: The ratio of cash to debt, and how that cash and debt is distributed in the country:
"THE PARADOX OF A LIQUIDITY-FUELED STOCK MARKET in a land rife with illiquid inhabitants is pointed up by the little chart on the right. The one that depicts cash as a percentage of household debt. Which, as is evident at a glance, is shrinking like the proverbial snowball in hell.That highly graphic graphic comes to us from the excellent Stephanie Pomboy and her irreverent and invariably informative (block those alliterations!) MacroMavens commentary. As she observes, "For all the bragging about the $6 trillion in cash households have sitting on their balance sheets, relative to household debt, this cash cushion is at a record low!"
More disturbing still, Stephanie goes on, is that the households with the cash (and assets) "are not the ones with the debt." Rather, alas, the top 1% of householders hold 30% of the assets and 7% of the debt, while the bottom 50% hold a mere 6% of assets but a burdensome 24% of the debt.
What Stephanie envisions is that just as "the story in 2005-2006 was the cash buildup on corporate balance sheets," the story for 2007-2008 might very conceivably be "a similar increase in saving by households, as they endeavor to repair the damage inflicted by the burst of the housing bubble."
What might this mean? The precise timing is difficult to ascertain — but if the "great mass of consumers finally takes a deep breath and cuts back on their profligate spending," it would not be a particularly positive event for the economy or corporate earnings. And corporate earnings in Q4, we learn this morning, look like they have finally broken their streak of double digits gains.
As to the stock market, it has been driven by liquidity and momentum, and that can continue for quite a while, regardless of the fundamentals. For those who question whether investing contra-to the fundamentals is the way to go, I suggest Ned Davis’ book, Being Right or Making Money.
>
UPDATE February 3, 2006 10:52 am
Lots more charts and graphs here:
We’re Swimming In Liquidity, Aren’t We?
http://www.safehaven.com/showarticle.cfm?id=6819&pv=1
Source:
Spendthrift Nation
Alan Abelson
Barron’s February 5, 2007
UP AND DOWN WALL STREET
http://online.barrons.com/article/SB117046213014796911.html
Looks like the “K” cycle don’t it!
Barry,
On my blog yesterday I noted a short statement concerning the negative savings rate, but additionally posted a website which appears to be offering the consumer yet another way to increase their debt load. Frightening!
Thanks Barry…your site is a daily read for us.
Barry:
Great post. I posted a link to this article and also did a post Thursday about the negative savings rate . The Commerce Department is trying to discount it as “no big deal;” but the only reason we are not having more bankruptcies is because the last Congress and President Bush made it harder to file for bankruptcy relief. Otherwise my business would be going like gangbusters.
Barry,
I seriously question this negative savings statistic, for one it is calculated using after Tax income. It doesn’t take into the account of 401(k) savings. Lot of middle class have their savings in 401(k).
Similar statistic, Credit card loans as % of household income, I don’t trust this either because you can get a loan from credit cards at a much cheaper rate(1.99 to 3.99 for life) using balence tranfers. These loans are much cheaper than credit union/banks for Autos and mortagage loans. Heck, I can even do a carry trade, taking loan from credit card and put it in Fedility Money market.
What I would like to see is % of credit card loans where rate is grater than (Prime + few points).
1) Where can I get a 1.99% to 3.99% credit card rate for life? Sign me up — I’ll transfer my secured 6% mortgage over
2) As we have noted before, the average family has a small portion of money in their 401ks/IRAs;
lOn average, their homes — and in a few cases their cars — are worth much more . . .
“but if the “great mass of consumers finally takes a deep breath and cuts back on their profligate spending”
I’ve been hearing this “but if” from the first moment I started to follow the business news. The more interesting question is, why do Americans never stop spending?
Yo Barr,
On point as always…Just a source note….The update info was grabbed(stolen) from the Friday wrap up on Financial Sense Online and was done by Brian Pretti…
http://www.financialsense.com/Market/wrapup.htm…
Holla
Barry,
If you want here is atleat one card where you can get 2.99% for the life for Balance transfer, max $50,0000.
http://www.advanta.com
I just checked the http://www.advanta.com site and the posted rate was 7.5%
Most CC co’s have “life of loan” low interest transfers Barry.
A few are pretty low, .99% and up. Credit limit may vary.
The latest ones I’ve seen are from Discover, Washington Mutual and Citibank.
I like the idea of moving secured debt to unsecured…..very good indeed.
Sailorman,
Call Advanta and ask them for balence transfer card. They have different cards. Right now they are advertising different plan on the website. If you call them, they will take your application.
I think we’re all waiting for the sum of our personal debts to be bundled in one big universal non-recourse loan, just like the original mortgage loans offered in California and the loans our CEO’s basically get from their companies. And btw, did Bernanke tell Japan, China, et al that our foreign debts are all non-recourse? That’s the only way it makes any sense.
As I look around at my co leading edge Boomer cohort I see a lot of spending that is not discretionary. Medical expenses lead.
The Boomers I know are facing personal medical expenses and family medical expenses. Babies that would have died as infants are now surviving and requiring care into their adult years. The infirm parents of Boomers are living longer and dieing longer. These aren’t bad things but, all of that care is expensive and can’t be turned off. That is draining many Boomers.
SN — what is the source of your claim that savings does not include 401s?
I keep running into this comment and it is completely wrong.
Moreover, it is not calculated using after tax income. I suggest you go to BEA and find out what you are talking about.
http://www.opinionjournal.com/weekend/hottopic/?id=110009619
Would like your opinion in light of this article, Barry
~~~
BR: I no longer pay attention to the WSJ Op-Eds. On way far far too many occasions, I have caught them playing fast and loose with facts, engaging in rhetorical sleights of hand, and generally being “weasly.” They seem to have little regard for “The Truth.”
Additionally, it is a waste of time debating the intellectually dishonest.
I know many WSJ reporters personally — the paper is widely thought of as one of the best in the World — and many (but not all) are embarrassed to be associated with the Op-Ed page.
Nova Law:
I read it. The writer wants to count illiquid assets as “income.” The equity that is being built to your retirement or house is not “income.” You cannot spend your house, and if you take the money out of your 401K, you will probably pay a penalty. If you take out a loan on your house, you are incurring more debt, which is reducing the value of your assets.
I get the distinct impression that the writer wants to confuse “income” with “wealth.” As many financial planners will tell you, there are many people in the country who are high-income earners, but who are not wealthy.
Another problem with the writer’s analysis is that those house values may very well be overinflated due to a manic market or even fraud (or a combination of the two).
The value of your 401K may very well be getting eaten away by the effects of inflation.
Does this help?
As debt goes parabolic vs. income,i.e., as the ratio moves towards infinity, that’s either bankruptcy or non-recourse loans. As prices of assets, food, shelter, services, etc explode up vs. minimal productivity gains, that’s either inflation or inflation excluding inflation.
the comment i would make about the low interest credit card “for life” is that it is probably bs. i know cc companies can change the rate on you for whatever reason they find necessary. read the fine print. they,the credit card company, don’t have to let you keep that low balance transfer rate. they can change it whenever they want. i know one of the stipulations is if your credit score dips a couple of points one month. which happens all the time for most people. if you try to play that game you will lose, guaranteed. the words “good deal” and credit card should never be used in the same sentence. “2.99% for the life of the balance transer”. only until they decide to change the rules to life of the balance transfer meant 1 year.
BR asked Where can I get a 1.99% to 3.99% credit card rate for life? Sign me up — I’ll transfer my secured 6% mortgage over.
I had received a few of these around the same time ARM’s were at their 3 3/4% lows around 2003-2004 or so.
But, I doubt also that any bank is giving away these offers now. In fact, I still have a 4% citibank card for life, and they have tried to buy me out – offering 10% bonus for paying off my balance and reducing my credit line by any amount paid. I guess they don’t like my balance of 4% for life anymore!
I wish my balance transfer line was as large as my mortgage at that time!
Just checked in on Advanta: 2.99% on balance transfers up to $49,750 for the life of the balance.
New charges are 9.99% (Prime plus 1.74%)
If you have a large balance, thats a good deal.
Their other plan is 0% for 15 months, then 7.99% fixed, with 5% cash back on certain purchases (the rest were 1%)
800-780-3945
advanta.com
The “ones with the debt” will eventually default after a long period of making minimum payments, and then start over from zero without an intervening period of retrenchment….i.e. consumers will not change and become savers.
When the defaults roll in, the losses will pop up in the MBS
and financials (i.e. Mutual Funds, 401k captive or otherwise) of those who “are not the ones holding debt”. If the losses can be spread out enough and simply reduce the other gains, it’ll just keep on going like this for decades. The debtors will keep consuming, while those who “are not the ones with debt” will continue under-consuming and eating the losses as part
of the cost of their gains.
This is why one should never wait around for consumers to halt consumption…it simply won’t happen.
The changes are always instigated by the savers, who may
pull up stakes if they perceive more risk of losses than of gains. Whenever they stop providing the savings to those with the consumptive habits, the music stops. Sometimes abruptly.
Everytime the negative savings rate is mentioned the perma-bulls come out full force with “they don’t include 401K savings”
Well, they didn’t include 401k savings 2 years ago, nor did they 5 years ago and probably not 10 years ago! Maybe the -1% does not represent the true savings rate but in my book, the hige drop in savings rate over a decade means a lot.
Especially when one considers that 50% of employees cash out their 401k when they leave their jobs… Isn’t it in America that the workforce is the most mobile?
So what’s next to stimulate the economy? Thousands quickly spending their retirement savings with the coming layoffs
“I get the distinct impression that the writer wants to confuse “income” with “wealth.” As many financial planners will tell you, there are many people in the country who are high-income earners, but who are not wealthy.”
OkieLawyer, sign me as PghLawyer, and yeah, that’s exactly what this writer has attempted.
I suppose it’s an attempt to define a new economic reality, but the common law definition, now codified in most states under the “Uniform Principal and Income Act”, continues to differentiate capital gains (principal) from income, and wisely so. The common law has always recognized the fleeting nature of capital gains that can turn to losses, putting imprudent trustees on the hook for personal liability.
So, sure America, go ahead and spend a “gain” that may or may not be there tomorrow. Fiduciary trustees have been sued over this approach for centuries.
The personal savings rate is negative – not the national savings rate. This obscures the strength of corporate savings and investment.
JKH, the current account deficit is the truest measure of national savings, and it is accelerating at a 25% rate NEGATIVELY AND HAS BEEN FOR YEARS.
Great article.
It is virtually certain me that liquidity would run in the streets (or via helicopter) if there was a slowdown. What better way to devalue all that debt and get people spending again?
Teddy, the current account deficit is not a measure of national savings. It is the difference between investment and national savings. Such notables as Kudlow and Bernanke and the late Milton Friedman argue(d) that the deficit is an indicator of investment strength (debatable perhaps). What is not debatable is that the current account deficit is not a measure of national savings.
JKH, you are correct. However, the current account deficit or surplus is the sum of the nation’s positive or negative trade deficit plus the nation’s net earnings from its investments abroad. If the trade deficit is negative that means that the nation has a deficit in savings for that amount for that year. Currently the trade deficit is around 800 billion or about 6% of GDP, which means that the national savings rate is negative. But if you don’t have positive savings,you better have an income from your investment’s abroad to counterbalance it. Unfortunately, the income from abroad is insignificant compared to the trade deficit. In fact, I think I read it might have even tipped negative when compared to other countries stream of income from their investments in this country. And the current account deficit is causing the net external debt of the US to accelerate at a 25% negative rate. I think you would agree that we are not growing our way out of debt.
Teddy, total domestic investment probably approaches $ 2 trillion or thereabouts in the national accounts (This is very, very rough, but a ballpark number makes the point.) The current account deficit funds the shortfall in domestic national saving that would otherwise be required to finance this level of investment. You’re correct in the composition of the deficit, you’re correct in the relatively low level of investment income, you’re correct about the recent inflection point, and you’re correct about the acceleration in net external debt and the difficulty of turning it around.
But the national savings is the difference between the $ 2 trillion and the $ 800 billion. This means the national savings rate is still substantially positive. Because the government sector is in deficit as well as the household sector, the corporate sector makes up the difference with a savings surplus that is keeping overall national savings afloat. The strength of the corporate sector is evident in corporate earnings, dividends, and stock buybacks, all of which are reflected directly or indirectly in the corporate savings rate, as measured on a national accounts basis. Of course the stock market is an indicator as well, although stock market revaluations are not reflected in the national savings rate (for the same reason that home price appreciation is not reflected – this is a separate issue, about which many commentators opine).
Finally, the issue of international investment income has been a critical one for the sustainability of the U.S. current account deficit to date. As you point out, the investment income inflows have been declining. These are net income flows. The bigger story underlying the current account deficit is the enormity of the gross capital flows underlying the net capital inflows required to fund the cumulative current account deficit (i.e. the net external debt).
The gross flows are very roughly (again super-ballpark) $ 10 trillion in both directions.
The U.S. has been operating as a giant international hedge fund for years. It takes in cheap capital by offering Treasuries and domestic bank deposits to foreign holders of US dollars (including central and commercial banks). It recycles the money back out to foreign investment opportunities. The return on these foreign investments has far exceeded the cost of funding these cheap liabilities for many years.
This is the genius of US capitalism operating globally. In addition, this giant hedge fund has an ancillary operation called the current account deficit, which, partly because of the success of the main hedge fund operations, allows Americans to shop at Wall mart on a foreign credit card.
The net investment income from the entire operation (gross matching flows plus current account deficit), as you have rightly noted, has been declining and has probably turned negative at this point.
This may be a tipping point in the sustainability of the whole thing. There is a limit to the volume of American assets that can be swapped for foreign products. But don’t underestimate the power of American capitalism to keep this credit card active for a while yet. After all, debt is a permanent phenomenon of capitalism. Why not net U.S. debt? Also, the synchronized global recovery bodes well for at least some export led favorable adjustment in the current account deficit.
JKH, I think it’s a difference in semantics. If total national investment(which is presently investment from US and foreign sources) is 2 trillion, then 800 billion of that is foreign savings, ie, a deficit in savings for investment of 800 billion. We’ve always needed and depended on investment for productivity growth, and we use to fund it with just our own savings, but now we have a yearly 800 billion deficit in savings for investment that must come from foreign sources since this countries savings rate for investment is insufficient.If a lot of it is used to fund shopping centers and homes with subprime and negative equity mortgages which has been the case for a long time, then it’s not a zero sum game, but a negative sum game. And I think you will find that next year’s trade deficit will be larger than this years with an even greater increase in negative savings for investment because banks seem to prefer the loans for houses, shopping centers, and consumer goods presently. We are not growing our way out of debt, but into bankruptcy.We now have a net external debt of 3 to 5 trillion, depending on who you talk to. Paul Volcker thought we were headed for a banana boat republic 2 years ago if we did not change our ways. Enough said.
American coups the past 50 years (all to fight communism) raised other countries’ cost of capital. If we want to maintain the strength of the dollar without increasing interest rates on our bonds, we need only topple some more foreign governments. Investors around the world will continue accepting a lower rate of return from us. And we, the citizens of the Empire, will continue enjoying our plasma TV’s, granite countertops, and fine Romulan ale.
-The evil Dr. Spock
I am 31 years old.
Based primarily on my peer group and perception of “the world,” 60-70% of us who are able and smart enough to save properly will end up inheriting enough to retire comfortably at a reasonable age that the saving was just a drill.
I may or may not be in the 60-70% but I do like to think I am part of the vast minority who is saving enough.
Now, as for the other 94% of the population…
All of these macro statistics obscure one huge (and increasing) factor: Relative Deprivation.
Rich (top 2-10% of us by income/education)…richer…everyone else…el screwo.
if you try to play that game you will lose, guaranteed.
Don’t tell that to the guys on FatWallet. Credit card “balance transfer arbitrage” can be lucrative and successful if it’s done properly. Get greedy and you’ll fail, of course. It’s best to stay at the short-end of the yield curve with this, for obvious reasons.
Some of those clowns are floating $100k+ at 2% or less. Mine aren’t brassy enough for that.
Golly, didn’t mean to put a burr under anyone’s saddle by quoting the WSJ editorial about the savings rate.
I found it interesting because of the large point it makes – irrespective of the political leanings of the editors – that the calculation of the “savings rate” is fundamentally flawed because it excludes two of the largest categories of wealth, namely 401(k)/403(b)/other tax deferred accounts and the equity buildup in homes.
If I look at myself, as an example, I would be a “net negative saver” that, using the “savings rate” metric, has no wealth at all. Yet I have well into seven figures in tax-sheltered accounts and home equity, and would count myself as reasonably wealthy. As I look around at my peers, I see that my situation is more common than not – since the government makes it attractive to save in tax sheltered accounts and makes it unattractive to hold a passbook account, I and my neighbors react in the way any economist might expect.
Might the historical calculation of “savings rate” be as useful in measuing economic health today as a calculation of buggy whip production would be to a measurement of economic growth? I would think so.
The “value” of an “asset” is the net present value of the stream of income derived from that asset over time plus the terminal capital gain or loss realized upon sale at some future time discounted to the present by the cost of capital. When the cost of capital is low, the NPV of the asset increases. When the cost of capital increases the NPV (price)declines.
The NPV of a “liability” (debt) decreases with the declining cost of capital and increases with an increase in the cost of capital.
The cost of capital for the world has been extraordinarily low, inducing an explosion in asset prices, consumption, and debt.
The defining moment will come if and when the cost of capital increases. Asset values will fall and liability prices will increase. Cash will become king once again.
The national and personal savings will be stretched paying off the debt that has been incurred during the current leverage boom (bubble?). Leverage is called leverage because of the similiarity to the mechanical advantage gained using a lever to multiply force for lifting (torgue). It works just as effectively in reverse. Thanks, Maestro !
Asset values are a more comprehensive and meaningful measure of wealth than saving. Saving is only a subset of the full measure of wealth. It’s all fine to focus on the asset value wealth measure. But it’s somewhat counterproductive to attack the correct definition of saving, simply because it doesn’t cover the full scope of wealth. Better to understand the purpose of the distinction. Savings is not intended to measure wealth. It has a different purpose.
Saving is an annual GDP component – globally, nationally, or by sector. Global saving matches global investment on a GDP basis – this is a tautology (ex statistical error). National imbalances of saving and investment result in international current account surpluses and deficits.
Wealth includes the annual addition of global saving, plus the market’s revaluation of all such additions from prior years. U.S. household wealth, a capitalized market value number, (which includes claims on the corporate and government sectors), exceeds $ 50 trillion. U.S. national saving, an annual book value number, is probably less than $ 2 trillion (all of which is attributable currently to the corporate sector, since the household and government sectors are currently negative savers). (Interesting to view a corresponding conceptual P/E on this basis – i.e. $ 50 trillion/$ 2 trillion = wealth/saving P/E of 25.)
The reason to be interested in saving per se is the linkage to annual GDP investment. Low levels of savings or aberrant distributions of savings can reflect low levels or aberrant distributions of real investment over time and geography. The amount and distribution of real investment is critical to the future of the economy. This is the primary point being made by Bernanke and Greenspan before him.
Greenspan once commented in testimony to Congress, regarding the future of Social Security, that “capital gains can’t fund investment” (at the level of national accounts). That’s an important aspect of the distinction. The saving distinction is necessary at some point to track annual additions to real investment – i.e. capital expenditure. Looking at the difference in the trajectories of wealth and saving can offer insight as well to the issue of bubble market valuations.
Wouldn’t it be great fun to see both the household cash and debt broken down by quintiles?
Talk about some sobering statistics.
Oh, and Go Bears! This qualifies as tangential doesn’t it?
Two questions:
1. We own 6 single family homes: 5 of them rentals. All on 15ish year fixed mortgages. We paid down the principle on those loans by $60K last year (rates of 6.25%-9%). We also put $30K in our 401Ks. Our various IRA’s/401Ks increased in value by $60K (over and above the contribution). Did we save anything? I thought the $30K into the 401K counted as saving. I would classify our current position as high income, low current asset, high long term asset.
2. Given the amount of money everybody is printing, don’t we need to take a few $trillion out every few years and burn it? NASDAQ lost $3 trillion. $1.7 trillion in sub-prime debt.
Obviously, I’m not an economist.
1. Congrats on your savvy — those 5 rental properties sound liek a nice business you are running. Of course, building a business or investing is not the same as Savings. (due to Risk, business failures, etc.)
2. Unfortunately, 99% of the country isn’t as savvy or have access to capital like you do. Their savings rate is much worse.
Thanks. After spending an obsessive weekend reading about the housing bubble anhd sub-prime mortgages and how they are packaged into MBS and the explosion in money supply around the world, we are going to start dollar cost averaging into gold.
Robert – 60K principal repayment and 30K 401K contribution, if funded from personal income (rather than asset sales), reflect savings on a national accounts and household basis, for a total of 90 K. The 60K gain in your funds probably reflects a combination of national accounts savings items (e.g. interest, dividends) together with capital gains. Equity capital gains are not part of national accounts savings, but retained earnings on underlying companies are included.
National accounts savings include accumulation of investment income in 401Ks over the savings years, but not future retirement flows from 401Ks. Retirement flows from 401Ks are considered to be a distribution of prior years’ accumulated capital, not current year’s national accounts income.
“And I think you will find that next year’s trade deficit will be larger than this years with an even greater increase in negative savings for investment because banks seem to prefer the loans for houses, shopping centers, and consumer goods presently”
I couldnt agree with this statement more. In order for the current global monetary system to continue to the trade and ca deficit has to keep expanding because we are not financing any capital investment. Instead everything goes to towards capital gains in bonds, stocks, or real estate. Real Estate as an asset class is only good when the capital gains are greater than the interest paid on the debt taken on. That process is now in reverse and its going to take a while to unwind it.
Distinguish between savings and investments/assets. Too many people who weigh in on this subject fail to recognize that distinction.
Savings are safe. They are there for emergencies, special purchases, whatever, and they can be relied upon — regardless of any externalities.
Investments fluctuate. They are risk assets. Stocks, Real Estate, and other investment asset classes generate higher returns BECAUSE the risk of capital loss exists. The higher returns compensate the investors for this risk.
Consider the person who retired in 2002, after diligently saving and investing for many many years. The crash in 2000 put a big hit on their investment vehicles (IRA/401ks, etc.) — but not their savings.
The risk distinction is a reasonable one, but is not the definition used in the national accounts system. The negative personal saving rate cited is part of the national accounts measure.
The national accounts system links income to real economic output. It has nothing to do with specifying the required nature of the financial instruments involved in the flow from income to output.
Savings in the national accounts are basically income not allocated to consumption or taxes. Savings can flow directly into real assets (e.g. retained earnings invested by corporations) or indirectly using financial assets as the channel (e.g. household savings allocated to bank deposits, stocks, bonds). There is no distinction in asset class or risk when the savings stats are quoted. National accounts savings can easily end up flowing through the highest risk hedge fund.
Investment in the national accounts is the creation of real assets (e.g. capital expenditures or construction, including residential real estate.) Investment in this framework, like savings, has nothing directly to do with financial assets.
Financial assets are a link where required from the flow of savings to real investment.
This is all consistent with the economic definition of investment, which specifies real assets, not financial assets.
This may be contrary to thinking targeted mostly at financial markets, but in fact it’s the definitional basis for the statistics being debated here. It is also the basis of any commentary coming from the Fed or other economists on U.S. savings adequacy or the related issue of the current account deficit.
I find it very difficult sometimes to repair my debts.Like many other people I suppose.But this is my only way because I have a little kid.
Is debt a bad thing? Its been debatable issue. To me, if you manage debt properly its a great trick for money management. Debt Consolidataion is most effective in doing that. Out of many available, the most effective debt consolidation service I have found is: http://www.debtmediators.com.au/debt-consolidation.php . We have been dealing with them for the last 5 months, and they helped us to consolidate all our loans and reduce the debt