Financial Reflections

I try to stay positive.  I really do.  But sometimes optimism about things can be unwarranted.  Like if I were to take out a 6-year loan on a car because I was just sure my increased home equity could pay it off if I lost my job.  That sounds crazy, right?  Well just read the reasons why I’m depressed below and you’ll see why I think many people might be doing just that - and why I’m worried about the economy:

1. Personal savings are at the lowest rate they have been since the depression.  In fact, the savings rate is negative.
2. People are taking cash out of their homes in near record numbers, right when people keep seeing signs of an impending housing crash.
3. Of course, with all that credit, they have money to burn.  Consumer spending is up, way up.
4. They’re buying things like cars on credit, using long term loans and ending up upside down in what they drive.

And I thought my financial situation was bad.  What worries me is that the housing bubble could burst in a big way, leaving the whole economy a mess for years.  Maybe I’m just getting depressed.  I’m not in much of a postion to do anything about it, that is except for myself - and taking out more debt and spending more isn’t on my to-do list.  I plan to pay of debt, save and invest, that way I’ll be in a better position if things do go bad, and in a much better position to take advantage when the economy wakes up again.