A reader has only enough to pay the mortgage, car lease, or credit card. But not all three.

2 minute read

Question: My mortgage is almost $1,800 a month, my car lease is just under $1,000 a month, and just to keep my credit card balances from growing means another $700 a month. I got laid off last month but luckily found a new job right away.

What stinks is, the new job doesn’t pay as much, and I have zero savings. It’ll take me a couple months for my income to catch up to my expenses, so which bills do I NOT pay for a few months? If I can blow off the mortgage or car loan, I can really get back on my feet.

— Alfred in California

Howard Dvorkin CPA answers…

Questions like these upset and depress me. I’ll explain why as soon as I give you a definitive answer:

Pay your mortgage. Even though it takes awhile, depending on your state, to foreclose, you don’t want to mess with your largest investment — not to mention the only roof over your head.

Pay your car lease. First, call the finance company and politely explain your situation. Sometimes, you can get an extension, but that usually happens only if you’ve already made a half-dozen payments already. Cars can be repossessed very quickly, and I’ve heard horror stories from clients who have had their vehicles towed away after missing a single payment.

Run up your credit cards even more by making the minimum payments. This pains me to say, because I’ve written books urging Americans to pay off — then cut up — their credit cards. However, after a follow-up conversation with you, Alfred, I learned you had none of the usual options.

You have no retirement account to borrow against, you have no equity in your home because you took that out and spent it on a European vacation, and you never even had a savings account.

Your family won’t lend you any money because you already owe them for the down payment on the house, and you didn’t even mention the $20,000 in student loans you’ve deferred but will come back in a big way very soon.

Most people reading this will empathize with being in debt but may doubt some of your choices. Their sympathy might disappear when they learn your previous job paid you more than six figures, yet you not only managed to spend it all, you actually had to borrow to get your house — which is much bigger than you need.

As for the car, you leased an expensive BMW because, and I’m quoting you here, “The women are impressed by it.”

Here’s the bottom line, Alfred: You need help more than you need cash.

In more than two decades counseling people about their debt, I’ve seen your case many times: Otherwise smart individuals who have a blind spot when it comes to managing their money. If you were to win the lottery tomorrow, Alfred, you’d be broke in a few years — because the problem is all in your head, not in your wallet.

So I urge you — and anyone who recognizes themselves in this description — to call a Debt.com counselor today at 1-800-810-0989 for a free consultation. The best way out of this mess is a holistic approach, encompassing not only your credit card debt but also your student loans. At the very least, please read the Debt.com Money Management section to get some idea of where you stand.

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC