Is it wrong to walk away from your mortgage ... just because you can’t afford the payments?

Let’s say you have a mortgage that you can’t afford any longer. You’ve got an adjustable rate mortgage. And when the rate keeps “adjusting” up over and over again, your payments get to be too big. You contact your mortgage company and they offer no help. After all, you should have known your rate could go up, causing your payments to go up with it. Would you simply walk away, losing the house - but sparing yourself the misery every month of struggling to pay your mortgage?

Seems like some people do walk away:
Homeowners Who Just Walk Away

In an ideal world, none of this would happen. But life’s not always fair. And it’s certainly not always easy.

But is it right for these people to just walk away? And abandon their house along with their mortgage? What else are they supposed to do?

More importantly, what would YOU do if it happened to you?

Post your thoughts below:

I know, I know, when money’s tight you have to do some strange things to survive financially. But there’s a BIG difference between eating mac & cheese every night … and buying a new big screen hi-def TV to watch while you eat your mac & cheese!

So you owe it to yourself to correct as many of these mistakes as possible – as quickly as possible – in order to get yourself back on track:

1 - Playing by the creditors rules
Ever wonder why you are paying 19.99% interest on your credit cards? Because it’s a lot easier to pay than to call them up and ask for a break. And because it’s a lot easier than shopping around for a new credit card with a lower rate (if you do this, make sure to cut up the old card – you don’t need to cancel the old account, for credit score purposes, but you don’t want to add to your debt, just lower your interest).

2 - Not paying yourself first
These days setting up a savings account is very easy. Just go online, search for “online savings account”, find the highest interest rate, and set up an automatic withdrawal every month. Even if it’s just $25 or $50 a month, at least it’s a start. And before long you’ll have your own emergency fund (see below).

3 - No rainy day emergency fund
Without an emergency fund, it seems like every expense is an emergency – and then finds it way onto your credit card. You need to find a way to put aside 1-2 months worth of expenses into a bank account that you only use for emergencies (and getting that big screen hi-def TV is NOT an emergency!)

4 - Keep spending what you don’t have
Sure, when you need to spend more than you make just to buy groceries, life is tough. But then you need to look really deep (deep inside your heart AND deep inside your checkbook) for ways to cut your expenses. Do you really need cable TV more than you need food? Rather than driving to the mall, how about driving to the consignment store to shop for clothes? See, you get the idea - if you just try hard, you can find ways to save money.

     

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Even though I've been using the Bank On Yourself program for over a year, it still didn't make complete sense to me.

Most articles I've read that bash BOY say things like "use insurance to insure yourself not for saving" and "use investments like mutual funds" for investing and saving.

So even though I pay my premium every month, and I know it works, it still didn't quite sink in.

Then last week I got an email from Jeffrey Reeves, the author of "Money for Life...In Good Times And Bad". He sent me a copy of his book, I read through it in a few hours - and then it all made perfect sense!

When you borrow money from a traditional bank (or finance company, credit card, auto dealer, retailer - you get the idea) you pay them the principal AND the interest. And at the end, assuming you every pay off the debt completely, you have the product ... and that's it.

But when you create your own bank, at the end you have paid yourself the purchase price - and the interest (and NOT the bank or lender) so you end up WAY ahead!

Of course, it takes a while (and the right set-up) to get your bank to the point of having enough money to make this work. So it's no "miracle cure" for all your money problems.

But each time you "bank on yourself" you're making yourself richer and NOT the banks! So you should definitely check out this book.

It costs $29.95 - but if you're thinking about banking on yourself, it's worth every penny! Jeffrey's been giving financial advice for over 30 years, and makes a great case for being your own bank - and tells you exactly why and how to do it (which was the best part for me!)

Here is the book: Money For Life...In Good Times And Bad

What do you think about this idea of "banking on yourself"?

A couple of weeks back someone asked me "What's the secret to getting out of debt?"

Wow, tough question, I thought.

Because so many people find it easy to get into debt. But getting out of debt, that's a whole different story. For many of us it's like going to the dentist - it's easier to pretend there's not a problem until the pain gets REAL bad, and you can't avoid it any further ... or else!

So, what is this secret to getting out of debt?

Is it debt settlement? Credit counseling? Getting lucky and winning the lottery? Investing in the stock market, or real estate?

Nope. Nope. Nope. And nope.

If there's one thing I've learned over the last few years, the secret to getting out of debt is ... well, it's the same as the secret to succeeding at anything in life:

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