Former Federal Reserve chairman, Alan Greenspan, thinks that the current economic downturn is temporary, according to a report in the Toronto Star. The housing market in particular may not have bottomed out yet but he does not think it will get much worse.

“I think that while we are past most of it there are a lot of negatives … but it is no longer subtracting from the (gross domestic product) growth,” the former Fed chairman said.

For the broader economy, Greenspan offered tempered optimism, citing strong profit margins and capital goods data that are “showing some potency.”

“It’s hard to envisage those two key factors coming at the beginning of a recession,” he said.

He warned that some home buyers might have interest costs increase in the short term, however.

The housing market is looking a little lopsided these days. While the selling prices of homes have gone down by 2.5% over the last year, the price tags on celebrity mansions has doubled, tripled, quadrupled and beyond.

Your average homeowner isn’t going to realize the same kind of profit when selling his home as in previous years, and housing prices are expected to fall further. Buyers are waiting cautiously, hoping to get a better deal a little further down the road.

But celebrity homes are wearing high-blown price tags. The asking price for the 10 most expensive homes rose by 23% in the last year and the average price is $71.5 million.

The gap between “us” and “them” ever widens.

In a statement released today that can be accessed at the Federal Reserve Board Website it was announced that the Feds are going to keep interest rates at 5.25%.

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market. Going forward, the economy seems likely to expand at a moderate pace.

The FOMC monetary policy faced only one dissenting vote. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.

“Annual income twenty pounds, annual expenditure nineteen pounds, nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds, nought, and six, result misery.”

The Micawber Principle teaches what we all think we already know, that we should live within our means and failing to do so is the beginning of financial difficulty. It seems fairly obvious but until you do the numbers, you might not realize in what areas you are, in fact, living beyond your means - something that will eventually snowball into real debt struggles.

Start by making a budget. List all expenses that are unavoidable and necessary such as rent or mortgage payments, utilities, car payments, fuel, food and other household expenses regularly incurred. Compare your monthly expenses to your income, if you still think you look like you are in pretty good shape, then make the list that really counts.

Track all your expenditures daily, not the big items from your budget but the little expenditures you don’t think about. Cups of coffee, eating lunch out, birthday gifts, movies, impulse buying… you’d be surprised how these little items add up. Now look at how many times you pulled out a credit card to pay for one of these expenses, probably because you didn’t have the cash available and count in the interest.

Chances are, you will find that without realizing it, your expenditures regularly exceed your income. By putting this purchase on one card and the next on another, you spread the debt around and so it doesn’t appear to be growing very much. But over time you are keeping yourself in debt, even if you manage to juggle the money around to meet all the minimum payments.