3 Ways to Gage How Bad the Sub-prime Debacle Will Get

Question is how far will the sub-prime problems spread into the rest of our economy?

How will it affect other borrowers? (Those are the people who seemingly have it all together with good credit scores. They’re living the good life with the nice houses, enviable cars and fashionable clothes).

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The [tag-tec]sub-prime[/tag-tec] fall-out  is happening.  We’ve written about it and it’s a fact.

 

Question is how far will the [tag-ice]sub-prime[/tag-ice] problems spread into the rest of  our economy?

 

How will it affect other borrowers?  (Those are the people who seemingly have it all together with good credit scores.   They’re living the good life with the nice houses, enviable cars and fashionable clothes).      

 

 

Here are three simple ways you can keep your ear to the ground and  be one of the first to get the  powerful knowledge.

1. Talk to  CPAs and Financial Planners

 

Naturally they won’t be mentioning names, but they can tell you about  the folks you’d  probably least suspect who are now already  in big  trouble.

 

These are the people who over-borrowed during the past exciting market, mistakenly thinking  it would go on forever.    

 

They went into their equity and spent it on such foolishness as vacations, remodeling, and fanciful toys. 

 

Now they’re struggling to  pay their finance charges on their maxed out credit cards.

 

2. Ask Insurance Professionals

 

This is another group that is  already seeing  a downpour of economic trouble. 

 

Worried PiggybankPay particular attention to those clients who had to  provide proof of insurance while they [tag-self]refinanced[/tag-self] during the boom. 

 

This is an interesting group because instead of taking their extra cash and reinvesting in real estate  they immediately turned around and bought  more auto insurance.

 

Huh?

 

Why should we analyze that?

 

Because they traded in perfectly good economical cars such as Hondas and  Chevrolets and replaced them with sleek new greed machines.

 

Does Peter have to pay Paul at some point here? 

Can you take money earning good equity and put it in something that depreciates and still expect to reap good results?

 

Now they’re finding out it was the wrong crop.

 

 

3. Listen to Divorce Attorneys

 

Last but not least we have  the group who deals with people after they have  reached the end of the Street of Broken Dreams.

 

Are divorces up because of  the real estate boom has waned?Old Person with Bible

 

Yes.

 

Is this unusual?

 

No.

 

Whenever an industry is going through hard times, the divorce rate increases  for that group.  Tomorrow it could be stock market investors, who knows?

 

But it means hard times for  some mortgages brokers, builders, and homeowners who bit off more than they could chew thinking the market would always be riding on the high wave.

 

Conclusion

 

Some people went crazy during the last market.  They didn’t want to face the fact that the music might stop.  They thought it would go on forever, or at least that’s what they wanted to believe.

 

Our philosophy is the same in all markets. 

 

Know thy market.  Then adjust your game plan to the times. 

 

Fortunes can be made in good markets and bad.  In fact, as more homeowners get into trouble over the next few months, there will be  multiple  opportunities for savvy investors.      

 

 

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