STOP!!!

You are paying extra toward your low interest first, while borrowing from a second, credit cards, and 401K????? This is madness!

STOP!!! NOW!!!

You are getting deeper every month and need someone to help you if you cannot control it yourself. There are companies who will take over and pay your bills for you if you need that much outside control. Yes, there is a fee.

1- Cut up the Cards to stop the bleeding. You need to be living on a cash basis. If you have money in your pocket, you can spend it, otherwise, you are done spending. You say it is hard to give up the cards, but you will lose them soon if you don't take control. This will also stop the overdraft fees which can amount to hundreds of dollars monthly of wasted money. You might as well go burn the money, it would be more fun.

2- Post a picture of a homeless person living in a box on your bathroom mirror so you will be acquainted with your new neighbor if you don't change your path now.

3- Have your paycheck set up with direct deposit if you can. From your checking account you will set up automatic payments for everything you pay monthly. Send the required mortgage payment only- this is your lowest cost interest and longest term amortization. I'm very concerned that the reason you were told to pay extra on the mortgage was that they knew you were in a loan that may bury you when the interest rate moves up. If your credit is a mess, and you are deep in debt, you will be stuck with a loan you can no longer afford and you will not qualify to refinance. The mortgage rules are changing almost daily as sub-prime loans are being eliminated and down payments are going up. After the checks are cut for the bills, write a check to your emergency savings account, and another to yourself. This last check is what you have for food, clothing, gas, and entertainment.

4- Stop putting money into a 401 that you have to borrow from. This is extremely costly. Right now your priority needs to be to handle the debt so you don't lose your home when payments go up. You can restart the 401 when you are back on tract.

5- Go back to working that second job. Keeping yourself occupied will keep you away from spending because you are busy working. SPEND ONLY CASH. Look at the picture on the mirror to remember why you are fighting for your life. Pay off the cards and the HELOC so when your 7 year loan is up, you are ready to react and have the good credit (and equity) to do it. Remember, in many areas house prices are falling. You can't count on a higher appraisal to bail you out.

6- A score of 670 is not terrible, but it won't get you a good rate. With rules changing, you could have problems with future mortgage needs unless you start to fix it now. You don't need to do a BK, you need to change your habits and pay off your debt. Work through it and you will remember how hard it was to do, and you can hold your head up high knowing you didn't stiff anyone.

7- Stay away from Consumer Credit Counseling. These agencies are set up by the credit card companies and are not your friend. You need to do it yourself, or hire an independent agency. If you cannot find one, drop me a note and I'll refer you to someone.

Will Power...