Michael’s Two Cents

Have you seen the latest news on the home mortgage crisis? Check out this disturbing article. Here are a couple quotes that pretty much sum it up.

“That marks the first time homeowners debt on their houses exceeds their equity since the Fed started tracking the data in 1945.”

And…

“Moody’s Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be “upside down” if prices fall 20 percent from their peak. “

It seems that as the walls come down it may be even smarter to start building new walls, literally. Maybe adding a bedroom to my house to save my equity isn’t such a crazy idea afterall. I’ve been drawing up sketches for my own house; but my real concern goes much further than regaining some of the equity foothold I’ve lost. I’ve begun to wonder if the whole delicate economic fabric that has been built on top of consumerism has now started to come a bit thread worn and even begin to unravel.

I’m not saying we’re looking at the end of the world (haha) just that this current recession might be more than just a down cycle; but don’t take my word for it, I’m no expert on the economy. But I’m observant enough to be able to but a couple simple ideas together… for example…

• A need to rebuild the American economy after WWII lead to…
• Consumerism (thanks in part to Victor Lebow), which lead to…
• Bankes and other lenders finding better ways to lend money, which lead to…
• Inflation, like in home values, which lead to…
• Increasing personal, corporate and government debt, which lead to…
• People feeling like they are running on tread mills, which is leading to…
• Big Trouble.

I’m a simple guy but I think this oversimplification paints what many say is an accurate picture of what is actually going on. (The Story of Stuff is a good example example.)

You could also think of it like this. Over the past 60 years we’ve seen an incredible increase in… well just about everything… more people, more money, more pollution, more stuff. In other words if growth continues the way it has been we’re going to be neck deep in more than our mortgages.

So what to do? I don’t know about you but there are a few things I can do for myself to improve the rest of my life and my daughter’s life.

1. I’m immediately slowing my consumption of everything.
2. I’m trying to reduce and reuse before I recycle.
3. I’m eating better to get healthier and feel better.
4. I’m driving less and working from home.
5. I’m planning to add a bedroom to recapture some of the equity I’ve lost.
6. I’m looking into building a house on the cheap. Nice, green and cheap.
7. I’m working to eliminate all debt.
8. I’m finding alternative way of earning money.

There’s more but those are the things top on my list for myself. All of these things have immediate and long term benefits. They also help me reduce the risk becoming increasingly overextended. Maybe I’m crazy but I think that if I can lighten my load I’ll have more time for my family, me, and all the things I like to do most. My house, my belly, my car payment, my debt, are all a drag on my personal freedom and happiness. Could it be the road to the real American dream is actually paved with less not more?

What are you doing? Just curious, not a judgment.