A Leap in the Right Direction
People are making finances, and paying off debts, a priority again and that’s a great shift. Writing off uncollectible debts is also on the rise, and that’s contributing to these lower numbers. When considering the 25 areas surveyed, only four reported a debt increase, and none were in Arizona. Phoenix folks have something to be proud of, and this is a great trend that will hopefully continue to grow.
Overall, Phoenix residents aren’t leaping on opportunities to take on more debt. They’re doing better at managing their credit cards, they’re not financing vehicles they don’t need and the mortgages that are getting approved are manageable for most. Basically, people in Phoenix are treating their credit seriously, just like they should. Gone are the free-for-all years when McMansions were standard and everyone drove a luxury car.
Avoiding a Fallback
Even though Phoenix residents are spending more carefully, there’s always the risk of slipping back into bad habits. Just one faux pas or an emergency can reverse these efforts. For example, a medical emergency or layoff can quickly undo a year or more worth of work. It’s crucial to pay off debts, but every budget should allow for an emergency fund. Ideally, a person or family should have a year’s worth of emergency funds in place, but any amount is better than none.
It’s also crucial to save for retirement and/or contribute to a 401(k) as well as actually designing and sticking to a budget that works. This means there are options for entertainment and no surprise bills down the road. Paying off debts is just one aspect of financial savviness, but it seems like these Arizona residents have that part down. It’s a tough climb out of debt, but with the right tools in place, it can be done-and the Valley residents are proof of that.