I wrote earlier in the week about how this housing problem is harming those who work in the home industry, such as contractors and furniture store owners, as well as those who purchased a home and now can’t make the steep monthly payment.
We are seeing a lot of this in Southern California. Foreclosures abound. Makes sense, when the median price of a home is somewhere close to half a million dollars. What couple just starting out or working in jobs that pay minimum wage can afford such a ridiculous price tag? And that is for a fixer. Want something with granite, a newer roof and a yard for your kids to play in and you could be looking at swalling an eight hundred thousand dollar price tag!
I have one friend who has fallen into tough financial times. She’s several months behind on her mortgage payment as well as her cell phone and other bills. She will tell you that she is bad with money. But what will happen if, in several more months, she falls even further behind? Her sister and brother in law bought over their head, and now their home is falling into foreclosure.
These aren’t people that you don’t know, they are people that live right next door.
This is a scary truth that many Americans are now facing. According to the latest numbers, more than 76,000 people filed bankruptcy in January and experts predict that almost one million Americans will have to do the same sometime this year.
Businesses are following suit, landing at a four month high with bankruptcy claims last month coming in over 4,000.
This always scares me, particularly when we talk about the mom and pop companies across America. The people that have sunk their money into this dream, only to find that the economy will not be supporting that company.
What can you do to protect yourself? While the answer seems obvious-don’t spend more than you make-sometimes we just don’t listen. Or we don’t understand.
The thing that I’m finding quite interesting, now that I’m hitting middle age, is that many people don’t understand a thing about personal finances. They don’t know about retirement funds. They have no idea what will happen if they decide to pay off a huge bill with a credit card that will, in a few months, charge them a large amount of interest.
If you know that you are bad with money, now is the time to take action. Get involved. Take a finance class, read some books, find a great accountant that you trust. Become educated about money, because you need to understand what will happen if you spend more than you can pay.
If you are a follower of economics, as my husband is, you’ll find that we generally follow an ebb and flow in the economy. We see good times, we see bad times. Are we heading for bad times? The numbers don’t sound good, but I guess we will have to watch and see just how bad it will get. In the meantime, take charge of your own personal finances and make sure you understand what it will take to keep yourself out of the red and in your home.
Have a great weekend, working parents!