Two key measures of our financial health lost ground in late 2007.

For many families, the equity they have in their home is their biggest source of wealth and savings. It's the difference between what the home is worth and how much is owed on it.

But for the first time since the Federal Reserve began keeping records in 1945, Americans now hold less than half the equity in their homes. Why? Because of falling home prices and all of the money borrowed against the homes.

During the final three months of 2007, borrowers held 47.9% of the equity in their homes and lenders owned the rest.

With home equity down, it's not surprising that our net worth is falling as well -- that's the difference between all of our assets and all of our debts.

Total net worth fell by almost 1% in the final quarter of the year. Although it's still 39% higher than in late 2000, the decline is further proof that the economy is slowing and a recession is increasingly possible.

It's important to know what's happening with your net worth. Our net worth calculator can help you figure that out.

You also need to be ready for any layoffs, pay cuts or other financial problems a recession might bring. So here are 6 smart moves to prepare for a recession.