Economy in freefall - worst is yet to come

The news just keeps getting worse. The economy is losing ground in all areas of concern and this does not appear to be the bottom. The decline of 3.8% is the worst decline in 25 years. All indications lead us to expect this number to actually be around 5% once all data is taken into account.

As bad as that seems it is only going to get worse. The media coverage has helped to put Americans into a financial panic as consumers pull back on everything from durables (cars, appliances, furniture…etc) to non durables (food, clothing etc). In fact, the consumer cutbacks are the worst since 1987 on durables, and 1958 on non durables (which dropped a whopping 27.8% in 2008)!

This is causing major job losses all across the board. The unemployment rate as of December was 7.2% which is the highest in 16 years. Yet the news gets worse. Unemployment could hit over 10% by the end of 2009 experts predict. Retail chains such as Circuit City, Ford Motor Co., Eastman Kodak and many more are slashing jobs by the tens of thousands this month alone!

All this leads to a question that homeowners need to ask themselves. Where should we put our disposable income? Certainly, the stock market is out for all but the risk tolerant. Interest rates are so low that savings accounts do little more than provide a guarantee of not losing your money.

In my opinion, it is time for Americans to get out of debt. We have historically spent more than we earn and have not focused on paying down our largest debt….our home. Most homeowners have no idea when their home will be paid off. Yes, they know when the 30 year term ends but will they stay in the home or need to refinance before that? Each time they do they start the clock again from the beginning paying all the front end loaded interest that a 30 year amortization schedule imposes.

It’s time to take this more seriously and realize that there are better options. Homeowners that have 25% or more equity in their home and good credit can qualify for accelerated programs that will combine your mortgage, checking, and savings into 1 account which offsets interest and results in paying off the home quicker on the same income. It’s time to take financial control of our lives from the banks which hold us hostage. Reduce the interest you will pay on your debts dramatically by switching to an accelerated loan.

For more information check out http://loanstomper.com

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