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Hoping for a financially brighter 2013, still thinking about the recent past

Kelly Dilworth

Over the holidays, I turned down an invitation to visit a family member who lives in a rural area a few hours from town because I was afraid my aging Toyota would break down along the way.

That — along with my semi-monthly trips to the auto mechanic this fall — should have been my cue to stop the procrastination and finally buy a more reliable car. But, like many recession-scarred Americans, I probably won’t — at least, not any time soon. Hoping for a financially brighter 2013

Instead, I’m more likely to spend the next 12 months the same way I spent 2012: I will continue sweating over the small nugget of savings that I built up over the year, after I finally managed to whittle down my credit card debt to zero. And, rather than shop around at auto dealers, I will strategize fresh ways to aggressively tackle my husband’s decade-old student loans.

As for taking on more consumer debt when the economic recovery still remains uncertain? No thanks.

Research shows I’m not alone.

For the past year, I’ve covered the Federal Reserve’s regular reports on household debt and credit and have talked to economists around the country who all tell me the same thing: Despite historically low interest rates that make borrowing more affordable than ever, many people in the U.S. — enough to slow down the fragile economic recovery — just aren’t ready yet to take the bait.

Some are still paying down the loans they accumulated before the recession, experts say, and are unlikely to borrow more until they regain their financial footing. Others remain gripped by financial pessimism and aren’t yet convinced that the U.S. is poised for a robust recovery — particularly since the unemployment rate remains at 7.8 percent and Congress, which just barely averted at least one financial crisis this week, is still stuck in a partisan rut.

For the past few years, the U.S. recovery has started out strong early in the year, only to falter by the spring. Who’s to say 2013 will be any different?

2012 ended with a string of modestly positive economic news. Consumer spending, for example, picked up in November. So did disposable personal income and orders for manufactured durable goods — which could indicate that businesses are planning to grow this year. The economy added 155,000 jobs in December, according to a report released today (though that still wasn’t enough to dent the unemployment rate).

Already, many economists are relatively bullish about 2013’s prospects for slow but steady growth. If they’re right, that’s welcome news. But when you’ve gone through several years of the same thing, it’s hard to shed that cautious voice in the back of your head that says: Sure, things may gradually get better in 2013, but you still better save enough for a rainy year — rather than just a rainy day — just in case they don’t.

That, for me, has been the most enduring lesson of the past four years. For the fifth New Year’s Eve in a row, I resolved to save more, despite the fact that I’m earning next to nothing in interest on my savings. In theory, I know it makes more financial sense to borrow now to get that new car when interest rates are at historic lows — but it’s tough to shake old fears.

Before the recession, my financial planning consisted of making sure that I was bringing in enough income to get by from one month to the next. As long as I worked hard and didn’t make any financially stupid decisions, I had all the financial security I needed, I thought.

I know better now. Eventually, I’ll take the plunge and borrow more — but not before I’ve saved enough to cushion the blow in case the unexpected happens … again.

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