Skip the mortgage, pay the credit card

[moostraks]

http://money.cnn.com/2010/04/15/news/companies/consumer_debt_payments/index.htm?source=cnn_bin&hpt=Sbin

Okay what kind of sick, twisted logic would cause someone to pay a credit card before their house note? If you are going into foreclosure why would you bother to pay the vultures extorting 25% and up for an unsecure loan? Are people that addicted to keeping access to that available limit? Do they not know that when lenders get wind of what they are doing the will decrease the available balance so they are merely postponing the inevitable at a very high cost to themselves???

[torchbearer]

credit card penalties are worse that the penalties people incur for not paying their house note.
its an easy decision actually.

[moostraks]

credit card penalties are worse that the penalties people incur for not paying their house note.
its an easy decision actually.

Until they foreclose. Seems to me one would get in the hole pretty quick with the mortgage and be in a never never land of possibility of repayment. Since the mortgage companies aren't really interested in reassessing the loans, at some point one will find themselves out on the street. (At this point somewhere further down the line than it used to be but it does work its way around to happening...)

Not to mention the credit card companies don't need a foreclosure to shrink the line of credit so the consumer just seems to be shooting themselves in the foot. My two cents fwiw...

[torchbearer]

Until they foreclose. Seems to me one would get in the hole pretty quick with the mortgage and be in a never never land of possibility of repayment. Since the mortgage companies aren't really interested in reassessing the loans, at some point one will find themselves out on the street. (At this point somewhere further down the line than it used to be but it does work its way around to happening...)

Not to mention the credit card companies don't need a foreclosure to shrink the line of credit so the consumer just seems to be shooting themselves in the foot. My two cents fwiw...

actually, that is what has happened. the presidential promise to bail-out the homeowners gave people a sense that they could let their notes slide. i do believe they did this because of good reasons. Loss of job of one or both spouses is a big reason people's budgets shrank.

now read the articles being put out about bank of america warning that all these people (around 11 million) are about to be foreclosed.
which would be the correct purge, but the only problem is- the bank doing the purging got government bailouts being repaid by those people they are kicking out. The bank system didn't get its purge, it got a bail-out. now the lil' peons are getting crushed like roaches.
That is tea party anger.

[moostraks]

actually, that is what has happened. the presidential promise to bail-out the homeowners gave people a sense that they could let their notes slide. i do believe they did this because of good reasons. Loss of job of one or both spouses is a big reason people's budgets shrank.

now read the articles being put out about bank of america warning that all these people (around 11 million) are about to be foreclosed.
which would be the correct purge, but the only problem is- the bank doing the purging got government bailouts being repaid by those people they are kicking out. The bank system didn't get its purge, it got a bail-out. now the lil' peons are getting crushed like roaches.
That is tea party anger.

I guess people really are that gullible.:(

This is going to get real ugly. Heard last night unemployment is postponed to what...June? Without another extension (and how long are they going to extend it indefinately?) and the foreclosures heating up...ugh!

[HOLLYWOOD]

I guess people really are that gullible.:(

This is going to get real ugly. Heard last night unemployment is postponed to what...June? Without another extension (and how long are they going to extend it indefinately?) and the foreclosures heating up...ugh!


Capital Hill passed another extension supplemental for Unemployment Insurance.

Cost of the UI extension Bill: $18 Billion

Length it supports: It's frigin Retroactive to unemployed people who lost their UI this year 2010 and carries the unemployed through May.

Why fuck around anymore CONgress... just pass a bill for a 99 month Extensionf UI and get it over with!

Oh, dummy me, I forgot, you need Talking Points for reelections and campaign donations.

[Cowlesy]

Capital Hill passed another extension supplemental for Unemployment Insurance.

Cost of the UI extension Bill: $18 Billion

Length it supports: It's frigin Retroactive to unemployed people who lost their UI this year 2010 and carries the unemployed through May.

Why fuck around anymore CONgress... just pass a bill for a 99 month Extensionf UI and get it over with!

Oh, dummy me, I forgot, you need Talking Points for reelections and campaign donations.

As you well know, those billions they're essentially injecting directly into the economy (if you're unemployed, you are more than likely spending those checks and not saving) are pretty much the only thing keeping the economy afloat. And like you point out, talking points for November.

[peacepotpaul]

Until they foreclose. Seems to me one would get in the hole pretty quick with the mortgage and be in a never never land of possibility of repayment. Since the mortgage companies aren't really interested in reassessing the loans, at some point one will find themselves out on the street. (At this point somewhere further down the line than it used to be but it does work its way around to happening...)

Not to mention the credit card companies don't need a foreclosure to shrink the line of credit so the consumer just seems to be shooting themselves in the foot. My two cents fwiw...

exactly!!

credit card debt can keep piling, your credit can be destroyed, but would you rather be in a house or not?

[Zippyjuan]

From a purely numbers standpoint, it makes the most sense to pay off your highest interest debt first since that is costing you the most to keep. A 25% credit card debt will cost you more than a five percent mortgage. The credit card debt will accumilate at a much faster rate if ignored or put off too.

If you are concerned about potential future financial problems, paying down the credit card first also makes more sense. If you encounter a situation where you need more money and your cards are already maxed out- where can you get more money? You probably can't borrow more against you home at this point. If you are getting your credit balances lower, then you have more "headroom" on those should an emergency arise.

Of course the most desirable situation would be to have no credit card debt and be current on your mortgage but not everybody is in that situation for a variety of reasons- some of their own making, some not.

[devil21]

In short, letting a credit card default is much, much more damaging to your credit history and your life in general than a foreclosure.

[moostraks]

From a purely numbers standpoint, it makes the most sense to pay off your highest interest debt first since that is costing you the most to keep. A 25% credit card debt will cost you more than a five percent mortgage. The credit card debt will accumilate at a much faster rate if ignored or put off too.

If you are concerned about potential future financial problems, paying down the credit card first also makes more sense. If you encounter a situation where you need more money and your cards are already maxed out- where can you get more money? You probably can't borrow more against you home at this point. If you are getting your credit balances lower, then you have more "headroom" on those should an emergency arise.

Of course the most desirable situation would be to have no credit card debt and be current on your mortgage but not everybody is in that situation for a variety of reasons- some of their own making, some not.

That isn't how it works though. Once the credit companys catch wind of the fact you are in financial trouble they do the one, two punch. They decrease your available balance and then raise your interest rate. You become a credit pariah. You are lucky if they don't play the game of decreasing the available balance so that you have actually overextended and they can charge you overage charges.Yes they do play this game, Bank of America does anyways.

[moostraks]

As you well know, those billions they're essentially injecting directly into the economy (if you're unemployed, you are more than likely spending those checks and not saving) are pretty much the only thing keeping the economy afloat. And like you point out, talking points for November.

The area I am in would be destitute without unemployment.

[moostraks]

In short, letting a credit card default is much, much more damaging to your credit history and your life in general than a foreclosure.

seriously? Seems to me if you are that screwed you are losing the ranch you might want to gamble on bankruptcy to finish off the nightmare...

[torchbearer]

That isn't how it works though. Once the credit companys catch wind of the fact you are in financial trouble they do the one, two punch. They decrease your available balance and then raise your interest rate. You become a credit pariah. You are lucky if they don't play the game of decreasing the available balance so that you have actually overextended and they can charge you overage charges.Yes they do play this game, Bank of America does anyways.

they did this to me. they dropped my limit below my current balance and began pounding me in the ass with fees, and since i went over the limit, they jacked my interest rate up to 29.99%

[Lovecraftian4Paul]

Stupid. I thought it was a generally understood rule of personal finances that you are supposed to take care of your necessities first, then pay debts down starting with the loan with the highest interest rate.

[moostraks]

they did this to me. they dropped my limit below my current balance and began pounding me in the ass with fees, and since i went over the limit, they jacked my interest rate up to 29.99%

You aren't alone. I about had a canary when they did it to us. We were up to 38%interest at one point. Talking to Bank of America was likely to cause a heart attack the people were so obtuse.

All the credit was in dh's name so he went bankrupt and we lost everything except the family car.

[peacepotpaul]

In short, letting a credit card default is much, much more damaging to your credit history and your life in general than a foreclosure.

I can understand, that if you're so short on cash you'll eventually lose your house anyway, it makes little sense to throw money in a black hole.

But, what good is protecting your credit if you're going to be homeless?
And what harm is not having credit when you own your house?

[devil21]

seriously? Seems to me if you are that screwed you are losing the ranch you might want to gamble on bankruptcy to finish off the nightmare...

The difference is that 30 days late on a credit card absolutely trashes your credit score! Miss one payment by 30 days and your score will drop into the 500s (subprime) temporarily. Miss a payment on your mortgage and it'll just stop updating because of "extend and pretend" going on now, plus mortgages are collateralized installment loans. CCs are unsecured debt. If you want more details I can provide but trust and believe that a single CC default is (and will be) much more damaging to your credit profile. Heck, you can walk away from your house and still rent a new pad before your credit scores are dinged enough for the renter to know you're a "deadbeat". Filing bankruptcy trashes everything and quickly. Btw, a foreclosure may not be too "negative" in future credit scoring models considering the rate of defaults these days. The models will be tweaked accordingly.