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ECN202 paper - Home 1 RUNNING HEAD HOME Home Finances Todd...

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Home 1 RUNNING HEAD: HOME Home Finances Todd Morrow ECN 202- James Cadena May 2, 2010
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Home 2 In recent years, households in the United States have exhibited very poor fiscal policy in running their homes. With one in every 136 homes in foreclosure (Realtytrac ,2010) there is no time like the present for American families to reassess their financial standings and get back on track with their savings programs. Many American families are depending on government programs like social security to get them by in their golden years. I hate to say it, but that is not something that I would bet my happiness on. Social security, even by the most conservative outlooks will be bankrupt in the coming years. By some accounts, social security will only yield $.02 for every dollar invested (Social Security, 2010). These staggering figures should be a wakeup call to anyone that wishes to retire in their life time. Start saving now. In the past, real-estate has been a major investment in the United States, with no one ever seeing any losses. That was until 2006. The real-estate market in 2006 was at an unsustainable level. With the majority of mortgages being of the subprime variety, the bottom finally fell out. Many families, as well as investors, lost thousands and thousands of dollars in a matter of days, as house values plummeted. As a result, many banks stopped loaning to everyone, including small businesses. Without cash, small business closed, taking many jobs with them. This caused many to lose their jobs, and their houses. As a result of this, property values continued to fall, further complicating the problem. All of this could have been avoided by following these simple steps: set up an emergency savings, pay off debt, save for retirement and college, and finally build wealth (Ramsey, 2003). Let’s go through these steps in further detail.
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