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Maybe there's something to the old ideas after all.

Save your money to buy what you want.

Avoid overextending yourself when buying a house, and pay 10% or more as a down payment.

Be careful with credit cards, and watch the interest rates closely.

Watch out for 'easy credit' promotions when buying a car or furniture.

Seems each generation needs to relearn the old economic fundmentals - that you can't spend more than you bring in (at least, not for long!) and you should put some money away as a buffer for the future.

I've seen some analysis that a lot of the major bank failures are a result of real estate loans gone bad. Not just sub-prime loans, but the 'no-proof-of-income' loans, and other loans where much more was approved than would be justifed by the income of the homeowners. There was a loan to fit virtually everyone, of every income range.

And when the loans couldn't be paid? Well - what did they think would happen from that?
Or did they even look that far ahead?

Billions in loan defaults - and the loan companies tottering... yeah, who could see THAT coming?

So now, we'll see credit tighten like crazy. If you've got a mortgage, hold onto it or refinance to a lower rate if you can get it. If you're trying to get one...?

Start saving your down payment, get your credit in good shape. The days of $0 down are past.

J.

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This page contains a single entry from the blog posted on September 19, 2008 11:41 AM.

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