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We Have Enough Cash to Make it Four More Months. – Laura

By on March 24, 2010
We Have Enough Cash to Make it Four More Months. – Laura

“Dear Steve,

My husband was downsized from his company and due to previous bouts of unemployment we had to make house payments w/credit cards and amassed major debt and did not get that paid off prior to him losing this position.

We have enough cash to make it for another 4 months and then we will be tapped out.

I’m just sick with worry

What options do we have?

Do we stop paying the credit cards and only pay the house and car?

Laura”

Dear Laura,

I know this is a VERY stressful time. And now, in your moments of fear, I need for you and your husband to sit down and talk through some issues so we can get a game plan going here.

The primary goal now has to be to replace the lost income. Unemployment is better than nothing but that will run out at some point.

You can also no longer use the credit cards to pay for things you can’t afford. That’s not a solution here.

What we have to do is get real about what the plan is for you to live on just the unemployment till a new job is found. And in doing that everything must be on the table.

That means you should consider moving if no jobs are available in your area. There are areas in the country that are doing well and have jobs waiting to be filled. You need to seriously consider if you would rather move than be homeless. Sometimes you have to do what you have to do rather than what you want to do.

You’ve got to make your life fit within your unemployment income. Your first paid and priority debts are going to be the car payment and utilities. The home may just not be affordable for you now and you might have to stop paying the mortgage. Certainly you should not be paying the credit cards. They would be a bottom priority debt.

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If you stop paying the mortgage you can’t afford you will wind up eventually in foreclosure. It will take the bank months and months to take your home. Until then you can live there. If a new local job is found you could then enter a Chapter 13 bankruptcy and work out a repayment arrangement to bring the mortgage current again and stay there.

If you have to move or you can’t find local income to stay the home will eventually get foreclosed on and it will become another debt to include in a Chapter 7 bankruptcy to discharge all of your debt.

Stopping payments on debts is hard to do emotionally. You know collectors will call and that will be stressful but you’ll have to learn to deal with them in a friendly way and just tell them you don’t have the money to pay right now. Don’t be rude or dodge them. Just be nice and let your accounts flow through the normal collection process. That buys you more time.

The remainder of your cash on hand is gold. Every penny you spend has to be carefully considered. Once spent it can’t be replaced. If you decide to relocate use that money to move with and rent a place in your new area.

Right now, today, your energy is best spent in making a job out of getting a job. Register with every temporary agency in your area. Take any assignment they might sent you on. Be eager to work.

The key right now is to transform your worry energy into specific actions that will lead you from this situation in one way or another. Can you do that for me?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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