Avoiding Foreclosure
To those who are currently facing, or have faced it in the past, foreclosure may seem to be a foul if not a dirty word. They may even perceive it to have an ugly stigma attached to it. But the truth of it is, “bad things can happen to good people.” It is the reaction to the situation that is key.
There is a natural reaction that people have to adversity which, in the psychiatric world, is referred to as your “fight or flight” mechanism. When faced with adversity we will react in one of two ways; either meet the adversity head on or we will avoid the issue altogether. There is no middle ground here. Talking about it with friends or professionals, but taking no action, is still “flight.”
So, “What are you saying Len?”
Simply, the first step to avoiding foreclosure is confronting the situation! Let’s take a look at where you are financially, how you got here, and what you can do to better your situation.
Why Am I In This Situation?
The first thing we need to do is a Budget Inventory. My pastor has a saying that is simple and is chocked full of truth and wisdom. “If your outgo is more than your income, then your upkeep will be your downfall.”
The simple math is that if it cost more to maintain than you have coming in, you can’t maintain very long without change. So grab a pen and paper and let’s get started. Draw a line down the center of the page making two columns. At the top of the left column write “Income.” And at the top of the right column write “Expenses.” Now list all of your income and expenses in the appropriate column. When avoiding foreclosure, it is crucial that you are honest with yourself and thorough to include everything for each column. For example, if you normally spend $140 a week for groceries, don’t make that number greater or less to make this look better on paper. For now, you are the only one who will see this. If you eat out for lunch everyday and spend an average of $12 including tip, don’t put $5 a day. And don’t forget about the interest or dividends you get on investments or savings. They must go to income. Try to account for where every nickel comes from, and where it goes!
Now, tally up the columns. If you have more Expenses than Income, you are what accountants refer to as “Upside Down.” If that be the case skip on down to the next section. But, if you have more on the Income side than on the Expense side, your problem is not having enough money! You may have had a temporary set back of some sort; sickness, car repairs, etc… Or it may be that you just need a class in managing your finances. There is no shame in not knowing how o manage your finances. The shame comes when you don’t ask for help! There are many wealthy people in this world who have no clue how to manage money. Without the help of paid accountants and advisors many would be broke in a few years. We have all heard the stories of lottery winners having been independently wealthy this year, and poverty stricken in just a few short years. Ask someone at your bank, your job, check with non-profits, or if all else fails, contact me and I will help find someone near you who has the knowledge to help you!
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