Thursday, March 02, 2006

-0.5% Savings Rate But Where is the Recession?

A recent article in USA today, questions the validity of the negative US savings rate suggesting that the calculations are off base considering that during The Great Depression of 1933 the savings rate of the day was -0.7%.

While the article questions the way the Government calculates the savings rate, the fact remains, consumer debt is growing and people are inflating their networth with inflated home prices then adding on more debt by taking equity out of the inflated price of their home.

If you're trying to save money, and build equity, relying on the inflated value of your principle residence is not the way to go about it because it is not a liquid asset and in most cases does not produce a revenue stream.

Consider focusing on eliminating your mortgage debt as soon as possible as it will free up cash flow that can go into a cash generating asset rather than being tied to capital appreciation .


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