Free & Clear or Week to Week?

The real estate and mortgage businesses have been on a heck of a ride the past few years. Hopefully, many lessons have been learned during this time. I have heard and read a lot this past week about the coming changes in the FHA guidelines. My friend, Ricky Khamis, tells me that we can expect to see a lot more of the FHA loans in the very near future. (more "favorable" guidelines than many current loans)
While it is sad to hear that so many people are facing foreclosure, I tend to wonder how much of the "mess" was "self inflicted." Most of the loans were bought by huge companies with huge profits. A large percentage were given to "speculators" and people "keeping up with mr. and mrs. Jones."
On the other end of the spectrum, you have people like Robert Kiyosaki writing that "bad" markets can be beneficial in the current environment for prudent investors.
Some people strive to have their home "Free and Clear," while others choose to spend their money on other things while living "week to week." A good choice might just be somewhere in the middle. Getting caught up in market trends can be dangerous. I believe that real estate is a great, long term investment. Using your homes equity to pay bills, buy the fancy car that you can't really afford etc. might prove to be what really hurt many of the current people that face foreclosure.. Someone has to pay for all of the fun!
I hope that the vast majority of people that need help can get it through a new mortgage with better terms. I also believe that the market will correct itself and get back to "normal" before we know it. (not tomorrow)
People will always need a place to live and many studies have shown that home ownership can be more beneficial for many people. It will be interesting to see how this one plays out..