I was reading a message board the other day. The person posting was lamenting the fact that he just lost his job. Since he had no idea that he was about to be fired, he rented a new apartment and also racked up some credit card charges.
At the time, it certainly didn't seem to be a problem; he had the income to cover his expenses and payments.
Then came the pink slip. Ouch!
He did succeed in getting another job, but his rent and credit card expenses exceed his income. He managed to
relocate to a cheaper apartment but making the credit card payment left him with very little money for everything else.
It seems that many people, from Wayne County PA to Seattle Washington and everywhere in between, can claim this story as their own.
He will likely end up falling behind on his payments - and it should also be noted that if he had a low introductory interest rate, when the introduction period expires, his interest rate could go to 19% or higher (I have heard that some are paying as much as 32%?). The nasty thing here is that with the interest rate going higher, so will his monthly payment. So the fellow who can barely scrape together enough for his payment now may end up with a new payment that is double or more what the original one was.
This creates an even uglier situation, because as he falls behind and becomes "delinquent", his credit score will eventually take the hit and drop as well...which will certainly make getting a mortgage difficult when he's ready to purchase a home.
There is a ray of hope if you find yourself in this man's situation: talk to your credit card company. Just call them and tell them what is going on - maybe they can set you up with a new payment plan. It may require closing the account, but your credit score will be protected, and you may get a much lower interest rate and a lower monthly payment.
HOWEVER: beware of the sharks circling in the water, masquerading as "Credit Repair Companies" who promise to eliminate your debt and improve your score, and tuck you in at night to boot...you might do well to visit the U.S. Trustee Program / Department of Justice Debtor Education web page and do some research.
The man I wrote about above had a relatively simple fix, as he only had one credit card, and resolving the issue with the card was relatively easy. In situations involving multiple cards, it may require some more work.
If you find yourself in a "financial situation", please, contact your credit card company or an approved credit counseling agency and ask them to help you. Not only will it help your immediate situation, but your future home buying and other real estate goals as well.
Copyright ©2007 by Karen E. Rice. All Rights Reserved. Shark photo courtesy of Cerolene / Flickr Creative Commons licnese.
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Karen E. Rice is a real estate agent working in Pike & Wayne County of Northeastern PA in the Poconos. Lake Wallenpaupack is one of Pennsylvania's most popular destinations for vacations, retirement, and purchasing a home.
Pike & Wayne County PA Real Estate - Home Sales ©Copyright by Karen E. Rice. All rights reserved.
area. If they were edible, Cookie Monster would have a ball. 
an "out of the ordinary house" and for that reason, they were eager to see it.