Thursday, December 22, 2011

Pay the Mortgage Before you Shop!

There’s often a balloon in bankruptcy and foreclosures soon after Christmas in part because people “skip a payment” to buy presents. This is never a good idea and now it is even worse. First, if you want to keep your home, the mortgage comes before virtually everything. I tell my clients it comes before they eat!!  I know try explaining that to the spouse not handling the budget or the kids.

It may be satisfying to pay several smaller bills first — feels like solving  problems, right? — but if the biggest bill you didn’t pay was your mortgage then your problems are getting worse, not better.

It is easy to think “well, I’ll make this up next month, I don’t want to disappoint the kids.” The problem is that you won’t be making more money next month . Your expenses will be the same or maybe higher, given the prices of food, gas and electricity. So where will the “make-up” payment come from? If you are not already in the “Robbing Peter to Pay Paul” cycle, this could start it. Remember the old adage can I  pay my Visa with my mastercard?

It is easy for me to sit back and suggest disappointing the kids during the holidays. They’re not my kids. My son would not understand, he's six though and is satisfied with jacks.

Perhaps keeping a roof over their heads is a worthy goal as well. Also  teaching the lesson of taking care of “needs” before “wants” could be the best present you can give them this year.

If you do plan on filing bankruptcy in the new year wait three month from your last Holiday shopping and do not use those cards in the mean time.