Hard economic times can be extremely stressful, whether it be the result of losing a loved one, losing one's job, or being the victim of someone else's malintent.
The average family may have four kinds of credit:
- Home loan
- Car loan
- School loan
- Credit card
When payments are looking as though they are going to go into default, there are many hard decisions to make, and credit card companies want to help people make the decision to appease them by at least making the minimum monthly payments.
When this is done at the expense of paying one's rent or mortgage, it is a sure sign that logic may have slipped out the back door.
Why do Credit Card Companies Call so Often?
A lender offering a credit card is taking a larger risk than a lender offering a home loan.
The home loan company can take action to seize a person's home, just as a landlord can evict tenants who do not pay, and so, when a person goes into default on their home, the bank may not want to reclaim the property, but they do not want to subject themselves to any further risk by having a person in a home they are holding the note for if the bills cannot be paid.
Credit card companies, on the other hand, are not going to reclaim anything. After all, it's going to be hard for them to get the gourmet bon-bons back, and impossible to reclaim a credit-funded day trip to Austin, Texas.
In fact, they know that all they have is the power to intimidate a person by constantly calling them, their neighbors, or their relatives, hoping to get a payment if not all of the money owed.
Vehicles are somewhere in between. While the vehicle can be reclaimed, it is unlikely that it will hold its value unless the loan period is 42 months or less, which is unlikely for most who purchase a car.
How to Pay Bills When Times Get Tough, and Why
The program for paying bills is very simple. The most important things comes first, which include paying the rent or mortgage, keeping food on the table, and having lights and water. After that, a vehicle is more important than a credit card, which may end up in the same place as student loans regarding importance during hard times.
The mortgage company will not hound its clients nearly as much as a credit card issuer because they have valuable collateral. While knowing this, borrowers must be sure to put first things first, and let the secondary and tertiary things fall where they may, because a current credit card account is not going to offer heat, light, or water beyond its purchasing ability, but a home and car can grant stability that no credit card can offer.
Join the Conversation