Dream Economics

It would be difficult for anyone NOT to be aware of the current economic situation in the United States. The collapse actually hit Wall Street even harder than Main Street initially. When the banking industry quivered and went into cold chills, America noticed. The real impact struck home when formerly middle and upper class families started losing their homes. It was unfathomable to most that there was even a possibility of foreclosure. Bottom line in far too many cases was that homes were purchased with the mistaken belief that real estate would continue to skyrocket in price. Reality is that what goes up at some point may very likely come down. Come down it did. In fact it came crashing down.

The problem was more than just purchasing too expensive a home on the wing and prayer that it would continue to rise in price, but people were using their home like an ATM. People were pulling money out of their home at alarming rates. When values could no longer support the high price, many found themselves owing more on the mortgage than the potential sales price. Sales price – that is if they could find a buyer at all.

Mortgage companies tightened their rules and raised their standards. Few found themselves able to qualify for a loan. The sales market dried up like a prune.

We need to go back to the basics of realistic purchasing rather than spending based on dream economics. It is time to return to our entrepreneurial roots and make sound decisions for our future.

As Paul Zane Pilzer, economic advisor to two presidents wrote in his article in the September 2009 Success magazine, the wisest decision anyone can make right now is to own their own business and take charge of their future. He spoke about the dangers of a job in this economy. Either your company is looking to streamline and eliminate your job or another company is looking to purchase your company and eliminate your job.

We need to stop believing in dream economics where everything is rosy and someone else will always take care of us. We now know through tough experience that prices do not continue to rise forever. It is time to take responsibility for our past decisions and take charge of our future.

Having a job right now and relying on that “guaranteed pay check” is foolish. Counting on your house to continue to escalate in price far beyond value is wishful thinking. Stop relying on dream economics and step up to take charge of your future.