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More homeowners paying down mortgage debt

By itself, debt isn't necessarily a bad thing. Many Massachusetts residents probably don't have the cash on hand to purchase something like a house or car, so they take out a loan and follow a budget in order to make monthly payments. These transactions help the economy grow and individuals build assets.

However, certain life events can even disrupt well-formed monthly budgets. When this happens, individuals may fall behind on their credit card and loan. New reports from the Federal Reserve indicate that more and more consumers may finally be finally catching up on their debt. According the to officials from the Fed, between the first and second quarters of 2013, American consumers shed a total of $78 billion worth of debt.

By digging into the data a little deeper, observers note that falling mortgage debt is primarily responsible for the overall reduction in debt. At the same time, however, other types of consumer debt grew between the first and second quarter of this year. This may be indicative of a change in the way consumers are spending money.

It's worth noting that completed foreclosures and low interests rates are factors to consider in the declining mortgage debt. As interest rates remain low, consumers are more likely to see monthly payments as manageable and are finding a sense of debt relief that way.

Knowing that certain forms of consumer debt are on the rise, financial trouble may still come to affect people. Distressed consumers should also know that options to reduce debt, such as personal bankruptcy, are still on the table and can provide help.

Source: Deseret News, "Consumer debt shifting around," Michael DeGroote, Sep. 3, 2013

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