For most of us our house has been and quite possibly can continue to be our bank. I have suggested in the past that one should pull out reserves from their house because when they need them they probably can't get them. I have also said many times that HELOCS, Home Equity Lines of Credit, are not reserves. Many people unfortunately didn't get the message and have found their Helocs frozen by their lender because of a declining real estate market linked directly to the credit crisis. It really didn't matter whether your house's value was declining the lender wasn't taking any chances.
There aren't any simple answers to being fit and strong financially but unless you are, I wouldn't become complacent. Not only are we in the middle of a real estate and credit crisis but we are seeing real signs of inflation creeping into the economy. Usually the way to stop inflation is to slow the economy down to the point of recession and the pressure is relieved. We are most likely in a recession currently and inflation isn't slowing because of energy, dollar and employment problems. Slowing the economy doesn't look like it will be the answer this time.
Rather than worry about things we have so little control over let's look at some ways to add the strength we need. If you own a house and have sufficient equity pull some of it out and stick it into the bank for reserves. The rewards will far exceed the risks at this point.
If you own a house without sufficient equity you might consider refinancing to a shorter amortization loan to begin to build equity. (You of course would only think about this
if the new interest rate is significantly lower than your current one. If it isn't start paying more toward the principal with your current monthly payment.
Are you a renter? Now is the perfect time to look to buy something you can live in and try to do this with a sorter amortizing loan, as a 15 or 20 year fixed. This will put you on your way to build some equity, protect yourself from inflation and set up some reserves in the future.
Fit and strong are terrific goals as long as you define them for yourself. What works for me probably wouldn't work for you and why should it. We aren't the same age, don't live in the same community, don't have the same ideas, desires or philosophy so we shouldn't have the same goals. We both however, need to be fit and strong financially and at least fit
physically or we might have a real battle on our hands. I certainly hope not! Life works better when the pressures are reduced and now is the time to get started.