Money Matters

I've been called all kinds of cheap because I had, until recently, 2 20 year old cars. I now have one 20 year old car and one 11 year old car. I live well below my means and insist on paying credit card balances at the end of the month. I religiously save my spare change and all singles accrued at the end of the week.

I take my money very seriously. Which probably explains my current singlehood. But that's another story all together.

In any event the NY Times has a shocking article on just how badly some people are managing their money. Shocking to me at least because I cannot imagine even having $200,000 in debt or having a personal savings rate of -7% or -14%.

For the 34 million households who took money out of their homes over the last four years by refinancing or borrowing against their equity — roughly one-third of the nation — the savings rate was running at a negative 13 percent in the middle of 2006, according to Moody’s Economy.com. That means they were borrowing heavily against their assets to finance their day-to-day lives.

By late last year, the savings rate for this group had improved, but just to negative 7 percent and mostly because tightened standards made loans harder to get.

“For them, that game is over,” said Mark Zandi, chief economist at Economy.com. “They have been spending well beyond their incomes, and now they are seeing the limits of credit.”