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I just got an e-mail from Mark Goldman, a mortgage guy I often talk to about the finer points of mortgage news.

He reiterated a bit of a point he made when I talked to him for my wrap-up of the 2007 housing market. I didn’t have room to include it then, but he sets up his point by painting the economic landscape — unemployment’s up, credit card delinquencies are up, gas and groceries and utilities are up, incomes haven’t kept pace and holiday sales were disappointing. The dollar has plummeted compared to world currencies.

Under those conditions, what will convince people to enter the housing market? he asks.

Here’s Goldman’s take on weathering this economy:

Watchword for 2008 – Budget – Families will have to suck in their spending (not good for a consumer economy) since credit is drying up. Major danger sign is when credit card balances creep up each moth to pay for ordinary consumption items like groceries and utilities. Credit becomes more valuable as credit cards, car loans and mortgages are requiring higher credit scores.

Most families cannot get debt discharged in bankruptcy. The “ATM of home equity” is gone. There are almost no stated income home equity lines of credit anymore (formerly a common product from almost any bank). So prevention of financial ruin is the best remedy. The way to stay out of financial trouble is to budget so we spend less than we earn. Or, at least do not spend more than we earn.

Do you have thoughts to add to Goldman’s analysis? Click my name below to send me an e-mail.

KELLY BENNETT

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