For the first time in two years, American household net worth has increased. This is an interesting — and encouraging — sign of the current times. According to the Federal Reserve, U.S. households saw an increase of $2 trillion from the first quarter of 2009 to the second quarter of 2009. Some of the items that contributed to this increase in net worth include:
- Rise in home prices.
- Upward trend in the stock market.
- Paying down debt.
- Debt write-offs.
Most of this is good news. Indeed, the fact that Americans have been reducing their debt and relying less on credit is quite encouraging. The fact that we are likely to have a long recovery from this recession is also a good thing, in my opinion.
Americans are just now re-evaluating the spending practices of the last couple of decades and are working to get their personal finances in better shape. Some of the habits being developed are good for individual financial situations. A gradual economic recovery will help Americans cement some of their frugal practices into true lifestyle adjustments. A fast recovery would not give us time to make a true shift in mindset.
Hopefully, many Americans will see their increase in household wealth and net worth and realize that this is a good way to take steps toward financial freedom.
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