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Research: Consumers Seeing the Light at the End of the Debt Tunnel -

After five years of borrowing and spending, and holding their heads above the tumultuous waters of the Debt Sea - millions of American consumers are finally seeing some relief. Since 2008, the overall household debt, including mortgages, car loans, student loans, and credit cards decreased by over $1 trillion, according to the Federal Reserve Bank NY.

Instead of just putting a fiscal Band-Aid on the issues, American consumers are changing their habits and are becoming more responsible for their finances and their credit health. These changes in consumer behavior are proving beneficial for American consumers fighting debt in the form of student loans, car loans, mortgages, or other large personal or business expense.

The Great Recession and the threat of a possible recession impending are enough to put some sense in the heads of consumers looking to eliminate their debt. Here are some ways consumers have changed their habits:

  • Homeowners are getting shorter mortgages. In the first quarter, 34% of refinancers paid off their 30-year loan and changed to a 15- or 20- year mortgage. "Consumers want to pay of their home down faster than ever before," a Credit-Land rep said. "Shorter-term loans are becoming more and more popular."
  • Credit Seekers Denied. Debt reduction stems from tighter credit card standards that make it difficult for consumers with bad credit history to borrow. The falling household debt went from $12.5 trillion in the third quarter of 2008 to $11.4 trillion in the second quarter of this year, according to the Federal Reserve.
  • Consumers are saving more. The American disposable income rate which measures how much Americans save was 5% in July of this month, which is quadruple what it was in 2005.

Overall, there seems to be an increase in the consumers who has altered their spending habits in order to live within their means. It may seem that Americans are taking more responsibility for their money, but it could just be a temporary fix. Previous economic downturns have not had a resonating effect of America`s spending habits. "Research has shown that once consumers get out of economic turmoil they may shopping binges," a Credit-Land representative said. "The longer that people practice these fiscally responsible tactics, the more engrained these practices will be."