I wrote on this blog earlier last year about all the money we've been taking out of our homes and where it's been going.

Here's a great story on just that phenomenon illustrated by very interesting charts. It's based on a report issued by the Fed which has just been updated.

The bottom line is still that too many of us are taking too much equity out of our home (an appreciating asset) to spend on consumer goods (depreciating assets) and in the end it is making us all poorer!

It's also clearly had an effect on the housing market. If you've tapped out your equity to buy the car, pay off credit cards or take that vacation to Maui, you've got no down payment to move up to the bigger house when it's time. I hear it from sellers all the time! They can't afford to take any less and pay off all their existing mortgage debt.

Unfortunately, buyers aren't willing to pay you more than your house is worth to help you out of a tough spot! And when you move up, you won't want to help either!

I'm not saying everyone who takes cash out of the equity in their home is an idiot! There is a time and a place where it makes sense. I'm saying for most people, most of the time, they've made a bad decision.

What do you think?