Don't Let This Happen to You

Today, more workers are withdrawing money from their retirement accounts in the form of 401(k) hardship withdrawals and loans than ever before. Merrill Lynch sampled applications filed in January, 2008 and found the primary reason was to prevent foreclosure or eviction.

While there are many reasons for families to come up short when it comes to their mortgage payments, we must keep a few things in perspective.

First of all, the mortgage must remain one of the most important payments that are made each month. While usually the biggest payment, the mortgage payment is far more important than any credit card or unsecured personal loan. Do not make the mistake of being foreclosed on but current on your Visa card.

If you cannot make your mortgage payment one month, chances are you cannot truly afford your home. Your mortgage payment should be no more than 25% of your family's monthly take-home pay. The loan should also be no more than a 15 or 20-year fixed-rate.

I often hear, "But I cannot make the payments at that rate." If this is the case, then simply stated, you cannot afford your home! When it comes down to it in the end, we are all responsible for the choices we make.

It is time we opened our eyes to our own problems. We seem to always want bigger, better and more, but our incomes normally do not rise as fast as our wants.

For everything but a home, if you cannot pay with cash, then you probably cannot afford to buy. Children do what feels good; adults devise a plan and follow it.