To put your credit score above having a shelter over your head is unbelievable, but unfortunately so many people fight to maintain that score even if it means losing other, more important stuff. Most of them also have never heard of an emergency fund so in order to use what they have been told to use in case of emergencies—-their credit cards—it makes perfect since to them to pay their credit cards first. BACKWARDS! (Using credit cards for emergencies is BEYOND ridiculous!!)

Erik, great post man! I too, HATE credit cards! I am about to host a blog debate called The Great Credit Card Debate, where I will have two opinions on the subject posted on my blog and another as a form of debate. I would love to have you join in on the fun! I will probably start it in March sometime.

Carly – I understand your confusion, especially since you seem to be one of the people not spending more than you make. Erik is right though in that most people do not have the ability to use credit cards without abusing them. It is because of that, that we choose not to play with snakes. Snakes bite, it’s just a matter of time.

You claim that it makes your life easier but Erik has pointed out something most people fail to realize or they just plain ignore. Debit cards provide some of the same benefits that you spoke of, IF you swipe them as credit instead of debit. I have lived without credit cards since 2008 and I have not had any trouble at all. If or when I do, I am still okay with choosing to rid my life of something that is completely unnecessary for me to win with my money.

I’m glad you don’t have an idea, because I honestly don’t either!! :)

In all seriousness, I would also say that if possible, pay your mortgage. It’s just a tough cookie for many people to swallow right now, and I can see the appeal of “taking the easy way out.” (Again, back to the perception of short-term gain).

I’m more of a long-term perspective kind of guy, so I’m with you on the shelter issue. I also don’t see the value of a home as being relevant to what you’re paying for it (since you’re still paying now what you were willing to pay 3 years ago). That’s a bit of a simplification of the complexities of home ownership, but it holds water most of the time.

We’ll see how my feelings change when WE actually become home owners… :)

Just as the market was artificially inflated a few years ago, it’s artificially deflated now. We must stop thinking of our house in terms of how much it’s “worth”. It’s only worth what someone is willing to pay for it. Palmer, if you couldn’t afford to keep your basic needs in tact by paying this huge mortgage payment, then you did the right thing by stopping payments.

Woj, please don’t take me the wrong way on this, but after reading your article and your comments, I still have no idea where you stand on an issue like this. Maybe that’s your point, that there’s no clear-cut answer to an issue like this and it should be case by case, but I am okay with being absolute on the fact that if at ALL possible, pay your mortgage before your credit cards. Because your shelter should always be a higher priority when you are put in a dire financial situation.

I know three people personally that have walked away from their homes, and know intimately about the reasons they chose for doing it. With that understanding, the original article made a lot of sense to me. But maybe I’m off on this one…

This article caught my eye last week too, but I didn’t get quite this strong of a vibe from it! I didn’t think the “journalist” was advocating for paying off credit cards at all, but simply commenting on a potential shift in consumer thinking.

In all honesty, it makes sense to me–given the same situation, I might choose to think very-short-term too, and keep my credit lines open to feed my family, rather than “sink” money into a mortgage. The fact that it’s unethical, unwise, etc, etc. is irrelevant to many people who are just trying to make ends meet “for now.”

Also, I don’t think the “would you rather be homeless?” argument holds water. The majority of places will rent to you these days, even after a foreclosure on your credit record, and those who are “strategically defaulting” clearly know that they will have to move out sooner or later. They are just buying themselves some time.

Having said that, would I give this advice to anyone else? Probably not. But then again, I’m not in that situation. It’s a tough choice to make. The fact is, people are regarding foreclosure more and more as an “option,” not as something catastrophic. Whether that’s good or not is another discussion, but the perception is there. “Everyone’s doing it” definitely applies in the case, as bad as that sounds.

I just don’t think we can be so one-sided and absolute to say that “never walking away” is the right choice for everyone. I’ve learned that much about personal finance in the last year–nothing is ever the “proper” way of doing anything! :)

Now they’re saying, “You can afford your mortgage, you don’t qualify for any rework programs, start paying again,” but the house is now worth 40% less than when I bought it and I am trying to move, anyway. There are so many homeowners in this same situation — just walking away from their mortgages. Are they really going to sue all of us?

I have paid over $90,000 over 5 years on a house I bought for $250,000, and I still owe $250,000. It’s not fair, and it’s not getting me anywhere to keep giving all the money I make to the banks!

I don’t think the article was giving advice so much as commenting on how different a mindset this is. Not that I’m saying it’s a good approach or a sound strategy.

I don’t have personal experience with having to choose between paying a mortgage or credit cards. I think though that when it comes to that point it’s probably more of a survival mode decision than a reasoned financial decision. And I can’t say it doesn’t make sense to think that if you’re current on the credit cards at least it’s access to a way to buy goods/services, but your house can’t offer the same.

Would the laws force a sale of an underwater house in chapter 13 if you couldn’t pay for the mortgage and your chapter 13 payment?