Times are tough. Many people are out of work. Necessities such as food, clothing and gasoline are expensive. Sometimes the endless stress of keeping up with it all becomes too much for folks to handle. The thought to let it go starts buzzing around your head. Maybe the way out of this is to let the house go- after all the mortgage payments are higher than any other monthly expense – it would certainly provide some relief to eliminate the stress of having to make a huge payment every month!
If this is your thought process, there are some things to consider. First of all, if you decide to go the foreclosure route, be aware that you will not be able to purchase anything of any consequence on credit for at least seven years, realistically more like ten years. You will have to pay for any major purchases in cash. Occasionally, people will file for bankruptcy instead thinking that is the only way to save their home from foreclosure and thus give themselves a breather to catch up on payments.
The downside to this thinking is that because your credit will be ruined, if you choose to apply for employment with a corporation, many companies today will also do a background check that will most likely turn up that you filed for either bankruptcy or allowed the bank to take your home by foreclosure. Either way, your chances to actively compete in the marketplace for the juicy jobs may be diminished if you choose bankruptcy or foreclosure.
So what can you do to stop the threat of foreclosure and possibly turn this situation around? As soon as you think you may face foreclosure make some difficult decisions right away.
Slash your spending on everything but the absolute necessities; that means no Starbucks, cigarettes, eating out, etc. I know it sounds harsh, the truth of the matter is these are luxury items and you cannot afford them. If losing your home is important to you, you cannot afford to pay for anything that is not necessary to live on.
Apply immediately for a second job (if you don’t have one already). It may mean working at McDonald’s or part-time at a store. Any income on a weekly basis will add to the bottom line and can be applied directly to your mortgage payment.
Another way to bring in additional income is to rent a room in your home. A friend of mine took his 3-bedroom home and rented two of the bedrooms out to roommates. That change brought in enough money to help cut his mortgage payment in half!
More than one car in the family? Sell one of the vehicles and share the remaining vehicle with the family. Put the money you received from the sale into the bank for future mortgage payments or apply the money directly to the bank if you are behind on your mortgage. Another tip is to trade in your gas-guzzler (big car) for a more sensible, gas-friendly model (preferably one with a lower monthly payment).
Lots of stuff in your life? Look around you for items that could possibly be liquidated through doing a yard sale. One of my girlfriends sold almost all her big items (bicycles, furniture, baby items) at a month-long yard sale, netting thousands of dollars! Another person I know “recycled” beer caps to make funky earrings in order to raise money.
Last but not least ask for immediate repayment from anyone who owes you money- you need it now! And if this is still not enough to keep foreclosure at bay, borrow money from your family (I know you hate the idea, but this is an emergency) until you can afford to pay it back.
These lifestyle changes may be difficult at first but should yield results. If nothing else, they will clean up your home and your life!