My good friend Chris Catanese's blog got me thinking today.  Chris is not only a great friend, mortgage wizzard, and pretty darn good realtor, but has become quite the social economist.  (Chris, you know where to send the check).  His blogs deal with the economy and it's effect on the real estate / mortgage market, and today he wrote about that nasty word inflation. 

As the price of everything but the real estate market goes up, and people don't feel that little jingle in their pocket anymore, FEAR starts to set in.  The peaks and valleys in the economy, are, always have been, and always will be based on FEELINGS.  When the economy is stable to growing, people feel good, spend more money and invest (maybe) hastily, it helps to fuel more prosperity, momentarily.  Remember the tech stock run-up and subsequent bursting of the bubble.  When there is decline, everybody tightens up. further worsening the situation.  Personally, The only way I've found to take these hi's and low's in stride is to have a financial plan and stick to it regardless of what the economy is doing.  This, for most of us, is so much harder to do than to  say, but if we're not emotionally driven in our decision making, like the turtle who was slow and steady, we win in the end.

Case in point - My Fiance` and I were going to put a deposit on a townhouse last weekend.  The unit was the last Model Home" in this one section of the community and it was a great deal.  It was listed at $584,900, but since it was the last one, they would give it to us for $462,900 - and it came fully furnished.  I did a little research and their is an interior unit that is about 15% smaller, didn't have nearly the amount of builder upgrades as the one we were going to purchase, listed at $449,900.  So we were getting a great deal.  Well, when we arrived, the builder's agent had just taken a deposit on "OUR" house.  On the way home we happened on another new development and decided to take a look .  We fell in love.  This townhouse was bigger, in a better area and yada, yada, yada ... to make a long story short.  I was on my way to take them a check with a signed agreement when it hit me.  Although we love the house, love the area and all, this townhouse was going to cost us, even discounted almost $80k, $592,900. 

When we started looking, we had set a budget of $500,000, even though we could afford more, and wanted to be in close proximity to my Fiance`s new job.  Driving to the development office, I realized that neither of our two most important criteria were being met, because we "LOVED" the house.  We were about to make this decision based solely on emotions. 

I came to my senses, called the agent and told her that we had reconsidered.  Needless to say she was disappointed, as were we, but we have a plan, and if we stick to it we can weather any storm that life or the economy can throw at us.