(Agencies)
Updated: 2008-03-24 11:07

She is nickel-and-diming expenses at home, too. She eats in every night, has stopped going on road trips to visit her family, dropped her satellite dish and canceled her monthly Blockbuster movie rental.

"I want to make sure I have enough money to feed my family," Rae says.

Signs of the pinch are showing up everywhere:

By the end of 2007, 36 percent of consumers' disposable income went to food, energy and medical care, a bigger chunk of income than at any time since records were first kept in 1960, according to Merrill Lynch.

People are treating themselves less often. The National Restaurant Association says 54 percent of restaurants reported declining traffic in January, and the government says eating at home increased last year for the first time since 2001.

Financial planners say that more than ever, parents are calling for advice on how to deal with grown children who have moved back in with Mom and Dad after losing a job or just to save money.

Less trash is being set on the curbs of Mesa, Ariz., where surging home foreclosures are leaving more houses empty. That means fewer homeowners paying the city $22.60 a month for pickup. And William Black, the city's solid-waste management director, says people aren't throwing out as many appliances and bulk items, like furniture. They're sticking with what they have.

On top of an economy that was already groaning under the weight of a downturn, Bear Stearns came down like an anvil.

It tied together so much of what's wrong with today's economy - the housing crash, the credit crunch and a loss of confidence among investors and consumers alike.

Understanding how things got so bad means rewinding to the start of the housing boom. Wall Street and the banks made it far easier for people with shaky credit to get a mortgage - known as a subprime loan.

Investors wanted a piece of the fast-growing mortgage pie, so there was plenty of money sloshing around the market to pay for the loans.

Financial firms sliced up the mortgages and sold them as complex investments, finding eager buyers among pension funds, hedge funds and more who were chasing higher returns and willing to overlook risks.

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