By Mary Larsh, Columnist
In the current economic recession, I have learned to be very careful spending and saving money.
My grandmother always told my father “to save for a rainy day.” My father has in turn taught me to save my money and never buy anything I cannot afford. This is a good lesson for all of us in avoiding financial ruin during a run of bad luck or difficult economic times.
Avoiding debt is a priority. It is important to save to accumulate a nest egg.
This “save more than you earn” monetary philosophy is especially important in times of economic recession. Bad times and bad luck are inevitable. It is important to be financially prepared for the future.
One of the reasons the housing market took a dive was because homeowners were unable to pay their mortgage payments.
“Sub-prime mortgages are home loans given to people who are high-risk and can’t reasonably afford them,” according to The Casual Truth.
The inability of homeowners to pay their mortgage payments forced the banks to foreclose on their homes. Many foreclosed homes were put on the market and housing prices depreciated.
People purchased the short sale home my parents are interested in during the height of the housing market in 2005 for $376,000.
“A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy,” according to Foreclosure University.
The current owners listed this house over a year ago for $359,000. Currently the house is listed for only $294,000.
These homeowners obviously have fallen into unforeseen hardship. Their home has depreciated in value because of the increased amount of houses on the market. They will most likely incur almost a $100,000 loss on their home.
This kind of loss would be detrimental to any family. However, if they had saved for a “rainy day”, they might have survived their financial crisis.
Life and the economy are unpredictable. In this day and age, we have to be financially responsible or else we might fall into the same bad luck of these sellers.