The sooner you clean and dress the financial wound the sooner the recovery
Afraid to Lose Your House or Car?
by Gary Foreman
Get Out of Debt in 3 Steps
Do You Have a Relationship with Debt?
Every Penny Counts when Paying Down Debt
The other night I watched a movie called "Flags of Our Fathers." It was the story of the men who raised the flag on Iwo Jima in World War II. The main theme of the film (heroism) isn't relevant to us here, but something did strike me while watching it. As soon as someone was wounded and went down they called for a corpsman or medic. If the wounded was injured too badly, a buddy called out for them. The many battle scenes were filled with cries for corpsmen.
With a little research, I found out the corpsman was a Navy enlisted medical specialist and a medic was from the Army. (Thanks to http://en.wikipedia.org/wiki/Hospital_Corpsman) I still know only a little about the subject, but it seemed clear that it was important to get help to the wounded as soon as possible. That's why the brave medic or corpsman was willing to risk his own life to help save a friend.
It occurred to me that there are similarities in the world of personal finance. At some point or another, we'll probably all get wounded in the money wars. And we'll likely fall bleeding to the ground. How quickly we stop the bleeding and dress the wound will make a big difference in our survival rate. Let's learn the lesson of the corpsman. It's important for borrowers to call for help as soon as they're wounded.
Some people are having trouble with their home loans. If you think you're about to fall behind in your mortgage, talk to your bank. Don't wait until you have missed a payment. Most lenders are glad when a borrower faces trouble squarely and comes to them seeking a solution. It's much harder for the lender if you run and hide.
The bank doesn't want to foreclose on you. They'll probably lose money selling your house. The best situation for them is for you to continue to make payments on your home. Even if those payments are less than the original mortgage called for.
Find a way to help the lender "win" if you stay in your home. Contact your mortgage company and tell them that you're having a problem and want to work with them to find a solution. They're in business to make money by loaning it out. Reducing your payments and lengthening your mortgage is better for everyone than foreclosure and resale.
The same thing is true if you're struggling with your auto loan. The lender would rather work with you. That's easier than repossessing the car, selling it and then chasing you for the difference between what you owed on the car and what it sold for.
Now, that doesn't mean you should call the lender anytime that your payments are a little uncomfortable. It's up to you to eliminate the extras in your budget before you approach your lender. If you haven't done that, don't expect help.
And, don't call your lender and tell them you want reduced payments so you can buy something else. They won't be receptive. Not because they don't like you, but because their job is to protect their loan and make money on their investment. Helping you to borrow more money isn't good business.
Could your debt leave you homeless?
Back in the movie, one advantage that the corpsman had was that they could pretty easily tell when someone was wounded. But, financial wounds aren't like war wounds. There's no blood. They're not that visible to others and we can easily conceal them if we wish.
Often that's exactly what we do. We try to hide our problems. We won't address them while the wound is still fresh and can be healed.
Why don't we ask for help? Sometimes we're afraid to face the problem. We hope that it will go away on it's own. Or maybe we don't want our friends, neighbors, and co-workers to think we're not doing as well as we think they are. Usually pride is involved.
The funny thing is that your co-workers or neighbors don't need to know that you have a problem or that you're looking for a solution. You don't need to publicize that you're asking for help. Only you and your lender need to know.
Can we guarantee that you'll save your home or car? No, but the sooner you clean and dress the financial wound the better your chances of a recovery.
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.
Take the Next Step
- If you're struggling with your mortgage or auto loan, stop trying to hide your problem. Contact your lender and ask for help. Together you just may find a solution you both can live with.
- Find out if you might be able to refinance to a lower auto loan rate.
- Am I a good candidate for bankruptcy?
- Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!
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