Back in the day, no one questioned the usual response to being short on cash: “Save the house!” was the universal cry, and people paid the mortgage payment first.
But now, reports Mary Umberger in the L.A. Times article, “Paying mortgage isn’t a top priority in tough times, research shows,” the usual order has been overturned. Your average Joe Homeowner starts with the car payment, then moves on to the credit card payment, and then perhaps lets the mortgage slide.
Why? (Take a moment to think about it . . . . )
My first guess was in line with what the experts speculate, namely that if you don’t have your car, you can’t readily transport yourself to the job that might pay the rest of your bills.
What’s more, explains Umberger, “If you stop paying on your credit cards, the credit card account gets closed, and you can’t use it anymore.” I would have also thought that, with credit card interest rates insanely high, the short term consequences of piling on more credit card debt are just too ugly to ignore.
Foreclosures, meanwhile, take nearly a year to bring about. And, they’ve been in the news so much lately, I’ll bet people are more aware of that fact than ever before. Many people may even know someone who’s been in foreclosure, which certainly wasn’t the case ten years ago.
It’s rational consumer behavior — but still doesn’t mean one should let the mortgage slide without trying to do something about it. See Nolo’s article, “When Foreclosure Threatens: Can You Afford to Keep Your Home?” for more information.