Well, Geoff Colvin, senior editor of Fortune magazine, seems to think that there is one way in which major financial institutions have been leading the way: deleveraging.
Writing in the publication, he describes deleveraging as – in very basic terms – paying down debt. Across Wall Street, banks have been doing this as fast as they reasonably can in order to get themselves on stable ground. Why shouldn’t consumers follow?
Companies often sell equity to pay debt. However, the average person can really only choose to make changes to how they manage their money, Colvin says.
What types of changes? Why not start by reevaluating how you spend your monthly earnings, then see if there is any area in which you can cut back.
For example, do you really need to buy your lunch every day? Could you walk instead of driving to nearby appointments? Are you really using your gym membership?
In times of abundance, these types of questions can easily fall by the wayside. But for people who are trying to ride out the credit crunch without getting burned by their credit card debt, they can make all the difference.
There are signs that Americans are starting to do a bit more deleveraging in regard to their personal debt. According to the most recent report by the Federal Reserve, August figures show that consumers cut the amount they owed for the first time in 10 years.
Some may see that as a good sign. But with hundreds of billions of dollars of consumer debt still on the books, there is clearly more to be done.
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