Let's say a family has 50Ks of disposable income per year, after taxes. Let's say this family buys a 400K house and puts down 100K as a down payment (this is money they had in the bank, so no debt here) and pays a fixed 30-year mortgage, let's say 20Ks per year. If this family had only this debt, what would the percentages be? I'm just a little unclear as to how they are calculated. Would it be 40% (100* 20/50) ? Also, obviously, this debt is not the same as having bought some gadgets that lose value quickly and cannot be sold.

make a case that much of the growth came from housing. Your pet theory has been tested just by looking at residential construction as a percentage of GDP. Back out the unusual housing growth and GDP is anemic.

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sense and so I think you are right. They make half as much as I do but live at twice the expense while I barely manage to break even. I have no debt. I think they run credit cards up 12 at a time; refinance the debt into their mortgage and then proceed to run the credit cards up again. Now, the their homes equity, which had been increasing, is shrinking so the current cycle of credit card debt will not be refinanced and will eat them alive.

Managing money well is a gift Joaquin that not everyone has. I believe that wise money management should be taught in school and instilled at a young age.

You are of course right but the failure of so many will affect all of us. Its so easy to say that people are being irresponsible but what would we say if financial institutions start to fail? There is something wrong when institutions drive themselves to failure because they are maximizing profit even though it drives them into a wall.

aaaaa

included, I was just astounded that the figure was so high for an average family.

Book values versus selling price...value on books $100, but sells for $75. That translates into a 25% reduction in net worth.

Houses often don't get what sellers would like for them and as there are more houses on the market, housing prices decrease. There is nothing more subject to supply and demand than housing. What I 'think' something is worth may have no relationship to what a buyer is willing to pay. If someone has pinned their hopes at getting x number of dollars, they may wake up to not having nearly enough funds from the sale of the principal residence for retirement. Another factor to take into consideration when calculating one's net worth is the timing of purchases and sales.

and it is on the same funds flow statement as this article mentioned. Just figure they rounded some edges off.

http://mauberly.blogspot.com/