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Posted: 6:00 a.m. Tuesday, April 30, 2013

Recession teaches lasting life lessons



By Clark Howard


People with elderly relatives who lived through the Great Depression found it affected them their entire lives. I have a relative who lived through it and reused paper towels, plastic bags, plastic forks, spoons, and knives.

Those people had a life altering event. Any possession they had was precious. Even when things got better after World War II, they clung to their mindset in what we'd probably today call post-traumatic stress disorder.

Well, the Great Recession we all just lived through has done the same to us today. It's led to a new level of frugality long missing from our country.

Loan delinquencies are well below historical averages and are in fact at the lowest level in a generation. Americans overwhelmingly can service their debts.

On the housing front, we've seen a lot of people doing cash-in refis. My HLN producer Dave and his wife were doing a refinance and expected to take out a small amount of equity for some home improvements.

But the joke was on them; they had to do cash-in refinance by bringing money to the closing table, but they got an awesome interest rate in exchange for that. Their housing costs are now incredibly affordable because of that cash-in refi and the lower interest rate.

You look across sectors of economy and you see the same thing. Credit card debt is way down. People learned lessons they won't soon forget.

If you only had a slight brush with the financial desperation of the last 6 years, follow the lesson: Reduce debt in your life and reduce the anxiety of bill collectors contacting you by phone and mail.