Every month, American homeowners and consumers are setting new records for being financially unstable. To avoid becoming a participant in those dismal numbers, you must be vigilant. Learn to recognize the symptoms, and take proactive protective measures before it's too late.

In March, the percentage of home equity held by homeowners in the U.S. fell below 50 percent for the first time since 1945. For all practical purposes, one of our most dependable and trustworthy sources of value-the real estate nest egg-is following in the footsteps of Humpty Dumpty. Here are some suggestions so that you won't be among those who are falling down.

Protecting your home equity
About nine million homeowners have no equity in their homes whatsoever. But that's the good news. A large percentage of those folks have negative equity-which means that they owe more mortgage debt than their houses are worth. Those who hope to accumulate money rather than burn through it are advised to be on the lookout for warning signs, and take practical steps to preserve and protect their precious-and precarious-home equity.

Red flags and hazardous habits include:

Dependence upon home equity loans to pay for ordinary household expenses.
Sacrificing routine home maintenance in order to pay off consumer debt.
Borrowing equity to pay off credit cards, or other obligations unrelated to real estate.

Home equity funds for value
If you're thinking of using a home equity loan, it may still be a good idea despite the doom and gloom of today's headlines. But even in good times, it's always prudent to reserve home equity funds for those projects that add actual value to the property. Taking out a second loan to pay for a vacation, a new wardrobe, or an automobile, may be a bad idea because they take value out of the home without replacing it. On the other hand, using the same loan to add a new room to your house, or update the bathroom, could boost your home's value and improve your overall financial situation.

Stick to that principle and play it safe. To ensure success, consult an appraiser before doing home equity funded projects. Appraisers know which kinds of home improvements add the most value in today's market, and in your particular part of the country or neighborhood. They may tell you that when your neighbors added a swimming pool, it actually lowered their value instead of raising it. Or that your plan to add a bathroom makes less financial sense than it does to replace the aging roof or to build an outside deck. You may pay a couple of hundred dollars for that kind of insightful advice, but it might save you thousands of dollars worth of home equity, plus peace of mind, which is priceless.