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I’ve Sold Everything And Still Can’t Make Ends Meet. – Linda

“Dear Steve,

I work in the financial industry as an assistant. Over the last 2 years my income has been reduced approx 40%. I have not been sucessful in finding a part time job to make up the difference. In these past months I have used up all savings and am not able to make my house payment. I do have additional credit card debt, altho my vehicle is paid off, but will need to be replaced in the near future. This is the first time I cannot make the mortgage payment. My company refuses to allow me to draw out $ from my 401K until I am at least 3 months behind. I have no other alternative to come up with $$ to make timely mortgage payments going forward. I have sold off furniture, pawned jewelry, etc and there is nothing left to utilize. I feel like I just hit a dead end. I am single, no other income to be found. My home has been on the market for 1 1/2 yrs and have not found a buyer in this market.

Is there any government help with myh situation? I am still employed so that is not the issue, it just doesn’t go as far since my income has dropped 40% over last few years. No part time jobs available for me at my age in this area…I have looked for 8 months now.


Dear Linda,

By the time you find yourself selling assets just to pay the bills this week or next month, you are already in deep trouble. Unfortunately you’ve learned the hard way that the liquidation of savings and stuff does not a resolution make. We need to seek another solution.

It seems that this situation can be directly attributed to the reduction in income. Without that income it is just mathematically impossible for you to get your expenses to fit within your income. Something is going to have to change.

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I remain totally unconvinced that taking money out of the 401(k) is a smart idea at all. The only thing that will do is drain the retirement fund, much like every other easy to reach asset has been drained. Instead we need to look at more basic solutions.

Money problems are resolved by either increasing income, reducing expenses or a combination of the both. If it is not possible to find a different higher paying job then your options are limited to reducing expenses.

In your situation it might just be that the home on your current income is simply not affordable. If you are going to keep your current level of income you will need to reduce your expenses to not only fit within your income but also to allow you to save money on a regular basis. You’ve drained any emergency cash you had laying around and right now if an unexpected financial emergency arose, you’d be in dangerous and deep trouble.

You could talk to a HUD Housing Counselor about your mortgage situation but I’m not hopeful that’s going to solve the problem since your income has dropped so significantly since you originally qualified for the mortgage. But it does not hurt to ask.

Ultimately this situation is probably going to come down to you handing the house back to the bank and then filing bankruptcy to discharge your remaining mortgage liability and unsecured debt. That’s the best way to reduce expenses when faced with no other alternative.

You can click here to talk to a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

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.

About the author

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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