Many people are prone to believe that there is no way to live debt free. This is mainly because people have come to believe that they can’t live life without a credit card.

For many individuals, a world without credit cards is one that they can’t imagine.  Having said that, more and more people are coming to realize that credit cards, if not used savvily, tend to do much more damage then good when it comes to an individuals overall credit if it’s usage is not tightly controlled and managed properly.
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Consumer borrowing fell slightly in the third quarter as Americans continued to shed their debt burdens in the face of a struggling economy.

Household debt totaled $11.66 trillion in the three months ending in September, down $60 billion from the previous quarter, according to a report released Monday by the Federal Reserve Bank of New York.

"The decline in outstanding consumer debt reveals that households continue to try and deleverage in the wake of a challenging economic environment and large declines in home values," said Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed, in a statement.

But while overall debt is declining, the number of people who are failing to keep up with their payments rose in the third quarter. The delinquency rate stood at 10% in the end of September, up from 9.8% in June. About $1.2 trillion of consumer debt is currently delinquent, according to the report.

Credit cards: Credit card debt fell slightly to $693 billion, a marginal change from last quarter. And the number of open credit accounts fell by 6 million, 23% down from its peak in 2008.

That could mean banks are closing down delinquent accounts, according to Bill Hampel, chief economist at Credit Union National Association.

"I suspect that accounts closed are mostly the behavior of lenders as opposed to the borrowers, because they could not collect anymore," said Hampel.

At the same time, the number of credit inquiries increased, reflecting a strong demand for credit.

Real estate: Mortgage borrowing fell by $114 billion, 9.6 % below its peak, as people continued to shun home buying in favor of renting.

The number of people signing up for new mortgages fell 17%, the lowest level since mid-2000.

Meanwhile, existing homeowners are borrowing more. Home equity lines of credit increased by $14 billion during the quarter.

Student loans: Student debt rose to $865 billion, up from $845 billion from the previous quarter.

Between 2010 and 2011, undergraduate students, received an average of $4,907 in federal loans according to a College Board survey. Graduate students, the Board said, received $16,423 on average.

"About a third of students graduating this year have so much debt that they still could be repaying it when their children enter college," said Mark Kantrowitz, publisher of FinAid.org.

The uptick in college borrowing is typical in a down economy, said Lauren Asher president of the Institute for College Access and Success. People tend to seek more education and training in hopes of landing a better paying job.

But the additional education is no guarantee to higher paying employment, Asher said.

"A college degree is still is very good investment, but like any investment, you are not sure of your returns," she said.

IT’S one of the toughest lessons an investor has to learn: while the value of assets can plummet posthaste, it takes forever to shrink the debt that was used to buy them.

Last week, this harsh truth was made clear yet again, in a report on consumers’ financial well-being by the Federal Reserve Bank of New York. The first of a Fed series to be published quarterly on household debt and credit, the 38-page report shows just how tapped out the consumer remains three years after the borrowing bubble burst.
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A debt consolidation loan calculator can help to organise you debt. Every one who has run into problems with debt has at one time or another considered debt consolidation.

Debt consolidation is when you take out a loan to pay off your debt. This is best seen in an example: If you have 10 major debts that you are attempting to pay off, you will be working to pay them off on a monthly basis.  This is 10 different companies that you are working with on a monthly basis.  You will also be paying any fees or rates that they charge along the way.
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There is no better feeling than getting out of debt! The stress and hassles that come with fighting debt can take a terrible toll on an individual or family. So when you are finally free of debt you should do every thing in your power to make sure you never end up in the “bad debt” situation again.
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