Asian Journal- The Filipino-American Community Newspaper

A LOT of people tell me that they never saw it coming. Every day, they lived their lives thinking that they were doing OK financially. They used credit cards to buy things, get cash and even go on vacation. They bought cars, homes and appliances on credit as long as they thought they could afford to make the monthly payments. Then one day, they lost their job or their business and that was the day they realized that they didn’t really own anything! Since everything they had was on a payment plan, the banks actually owned it all!

Credit often creates the illusion of having money that you don’t have. Sure, why not? The banks make it sound so easy. They have "affordable" payment plans, they have "deferred payment plans" and all other kinds of plans that make buying on credit way too easy. This is exactly the kind of thinking that led us to our current mortgage crisis. Several years ago, banks started literally giving money away to everyone who wanted to buy a home. No asset verification; stated income on the credit application was all they needed. And the monthly payments on those ARM’s were just too attractive for people to resist. So people were buying these $700,000 homes with no money down with interest-only payments, oftentimes the same amount that they were already paying for rent. The realtor told them "no problem". In a few years, they could refinance their mortgage to "continue the low payments."

All of this, of course, turned out to be nothing but a lie and an illusion. So here we are, several years later, with millions of people across this country facing foreclosure. What started out as a "dream house" has become a "house of cards" (pardon the pun) and their worst nightmare. A lot of these people are still in denial, refusing to accept what has now become apparent to them. These are the people who are asking their bank to modify their loan so that they can keep the same $700,000 home with the same negative amortization or interest-only payment that they were making when they first purchased the house. They have not woken up to smell the coffee.

Please don’t get me wrong. It is perfectly alright to dream big and have financial goals for yourself and your family. But once in a while, you need a reality check to see things as they really are, not how you wish they had been. You need to see where your money is going every month and to make sure that you are living within your means.

Keep in mind that if you have to buy something on credit, it’s not yours, until it’s fully paid. Your credit cards are not "assets", they are liabilities. Yes, having available credit can be good but don’t abuse it. Before you say, "just charge it", make sure that you can actually pay the bill when it comes. Otherwise, you’re fooling no one but yourself and one of these days, reality will hit you like a ton of bricks and you will discover that you have not become one penny wealthier. Instead, you have become a prisoner of debt and you have no one else to blame but yourself. Don’t let this happen to you. Learn to use credit responsibly.

If you need help in getting out of debt, call my office at Toll-Free 1-866-477-7772 to schedule a free, confidential consultation. In some cases, filing for bankruptcy may be the only solution so that you can start over but let me evaluate your case first to see what options are available.

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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.