Good Financial Choices
I’ve been a member of the “These low interest rates don’t look very good” club since about 2004, when the real estate market was spinning out of control. Bubble talk and everything. In 2006, my husband and I streamlined our 1/1 ARM loan into a 30 year fixed, collectively breathing a sigh of reliefe. He got a better paying job and we started to save. I decided to take my yearly bonus and pack it away tightly into a CD as a part of our 6 months worth of home expenses. I was weary about “investing” it in a volatile stock market. Let it sit there until the fever broke.
We have no CC debt. We save into a slush fund. My 401K is mainly invested in international funds. I am making what most call an ultra conservative choice with our cash on hand. I said yes. I forsee a financial nightmare.
Credit Standards have been tightened after the collapse of the subprime market. Investors who were banking on flipping a home for an inflated price with a “No Doc” is now in a position for default. Families sold “McMansions” that were vastly overpriced are starting to feel the crunch of their ARMs as they adjust. People relying on the HELOCs to fund their daughters lavish weddings, make needless upgrades on homes in the hopes to flip them for profit and those wishing to consolidate debt are now in a position that will crunch their wallets. Since personal savings is at a negative rate in this country, I only see retail sales slowing to a near crawl. people are overexteended. Welcome to 1929…..er, I mean 2007.
Are the financial markets in a panic? Well, if pumping 35 billion to offset the lack of liquidity for the Mortgage market, I’d say something is amiss. This is happening all over the world as investment funds backed by defaulting subprime mortgages are failing one by one—like dominoes falling.
I don’t give advice. But I will say that I myself have decided that putting away cash and living a bit more frugal has it’s advantages. Storing cash away and staying away from the stock market sounds like a damn good idea until we weed out all the damn Greenspan worshippers.

