My Budget 360

With so much talk about the credit crisis you would think that many people would realize that not all credit is good for you. So what is the reaction of our central bank leaders? They decide to extend more liquidity to banks but the only problem is the majority of the population is already maxed out. No longer can they support back breaking monthly payments. The credit card offers in the mail are now subsiding. There was a point in time where I was receiving an incredible 3 to 5 offers per day. It was simply unbelievable and unsupportable. As we have discussed in a previous article, residential real estate is predicted to decline by 20 to 30 percent and $20 trillion in wealth is stored here. You can imagine what is going to occur when prices start declining even further. We are only in the first rounds of the credit retrenchment and already our economy is on the verge of a recession. Read More

Having a wealthy mindset does not mean that you have to be living in Pollyanna. If you selectively choose to only read positive information and shelve the negative, you will fail to miss the point of a holistic and diverse investing mindset. Wise investors realize that money can be made in up and down markets. I am shocked by the mindset of some “experts” claiming that all is fine in the current marketplace. It is not. Yet they play a zero sum game that if you do not accept positive thinking, then you are simply doomed to a life of mediocrity. This is not the case. You must confront the brutal facts of the current situation. That is, we are in a recession and certain sectors will have a much harder time in the upcoming years. Let me list a few sectors that will continue to have problems well into the year: Read More

Current estimates put American residential wealth at $20.66 billion. This is an incredibly large number and that is why even the relatively small percentage decline in prices last year has put the entire economy at risk. According to the Case-Shiller Index which tracks 20 metropolitan areas in the United States, the index is now down 7.8% on a year over year basis. The benefit of the Case-Shiller Index is that it tracks the sale of individual homes over time to get a more accurate representation of the current market than say comparable sales which is the typical appraiser standard of measuring homes. For example, an appraiser will normally look at 3 homes that have recently sold in your immediate area and divide the sales price to the square footage of the home. Of course this is similar to driving forward looking backwards.There have been recent estimates that real estate nationwide is expected to fall another 20 to 30 percent. This is a major contributing factor to the downturn because this is how much wealth will be wiped out: Read More