Do you notice that the red line is way below the other two lines? It simply indicates that there are fewer delinquencies for auto loans than those for credit cards or mortgages. So Americans are putting their car payments ahead of other debt. Does it make sense? Absolutely no. The bill that should always be paid first is the mortgage. Why? Because you always want to have a roof over your head. On the other hand without a car, you can still use public transportation. Yes, it is inconvenient for those of us who live in the suburbs (the town where I live has really nothing that will take me to the nearest train station 15 miles away -- but my plan is to ask a friend to give me a ride), but we can survive without a car. Without a place to live (especially if you have a family with small kids, being homeless is no fun) you are in a lot of trouble.
So how to pay your bills?
- Always pay your mortgage on time. It is better to call the lender and ask them allow you to miss one or two payments so that will give you some cash flow as you organize your finances.
- Make only the minimum payment on credit cards. If that is difficult, call them to ask for more time. During the meantime they may stop you from using your card, but that is much better than defaulting.
- Try to renegotiate your car payment by asking for some grace period or consider surrendering your vehicle.
- Cancel services like cable, newspaper subscriptions, gym memberships, (or in my case, karate school, etc., basically anything that you can cut.