Housing trickle down worries

When I read this article by, Leva M Augstums, AP Business Writer on Yahoo, and how this huge home furnishing convention she went to was basically empty, I got that clenching in my stomach.  “Hold on,” it said.  “It’s starting.” I’m not going to reprint the whole article, just a paragraph where she’s wrapping up towards the end, to give you the general gist. 

“After three years of growing losses and declining sales, Bombay Co. filed for Chapter 11 bankruptcy protection last month. Virginia-based Stanley Furniture Co. has laid off 200 workers and reported a loss in its most recent quarter.

Second-quarter profits at Furniture Brands International Inc., the maker of Broyhill, Thomasville and Lane brands, were off 66 percent. The St. Louis-based company said in April it was closing three North Carolina plants and cutting 330 jobs as it continues to move production to lower-cost factories offshore. It recently said its third-quarter loss will be larger than previously expected due to the soft business environment and weak orders.”

Why I got scared is because I worry that this is just the beginning, the tip of the enormous iceberg that our ship in grinding into.  I think the housing slowdown is going to have a much bigger effect than expected.  And not just in construction, house sales, and home furnishings and the financial sector, the mortgage companies (like American Home Mortgage who was cut off by Fannie Mae, had to file Chapter 11, and who I read recently, has apparently been bouncing checks all over the place.) Many banks as well have made ridiculous loans and what-not.  I am concerned.  Ever since the Variable Mortgage rates have began to come due, there has been an epidemic of foreclosures. 

Now, if people are having a hard time coming up with the money for their mortgage, they aren’t going to run out and buy a new car or new furniture.  Those are not purchases that are necessities.  Then the next tier to cut back on is fancy vacations, visits to the spa, fancy meals out, private schools for the children and the list goes on and on and on.

Now if you’re somebody who already is not able to indulge in the above list you might think, “Well, that won’t effect me...” But the thing is, it will.  Because these businesses employ a lot of people, teachers, waiters, financial advisors, bank tellers, factory workers, truck drivers who transport the goods.

Anyway, I could go on all day with my worries.  And I don’t want to worry all of you.  It’s just I feel that if you see a whole crowd of people sitting down to have a picnic on the train tracks and you can see that there is an enormous train bearing down on them at full speed.  You have an obligation to say something.  So please, be careful everyone.  Try to cut back on your spending.  Save for a rainy day.  Feeling safe, having a safety net is way more important than buying that gorgeous pair of shoes, or going on that vacation that your high interest credit cards are financing.  And I know that sometimes when people get scared about not having enough, scared about bills and money, what do they do?  Run out and buy something, to try and fill that hole.  And it helps short term.  But long term, it is a killer!

Try build up a minimum of six months living expenses, while making sure to put away for retirement.  I hope that I am wrong, but if I’m not, and this financial storm hits at least this way you won’t be caught unawares.

Posted by Meg Tilly on Tuesday, October 09, 2007 in Chewing the Fat

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