One of the worst things that can happen to anyone is to lose their home to their creditors. If you used your home as security for a loan and were to miss a couple of monthly payments on your loan, you could be on the road to big time trouble. Most people who signed a mortgage agreement with their creditors never read the fine print. Most mortgage agreements will give the creditors the right to foreclose on your property in the event that you have failed to repay your debts. Literally, you could end up on the streets if you fail to settle your debts. Talk about one stressful situation for you and your family.
How Best to Avoid foreclosure?
The best ways to avoid foreclosure is to make sure that you pay your amortizations religiously. One of the keys to avoid foreclosure is to live well within your means and to save as much money as possible. Even if you are earning a limited amount of money each month, you still need to learn to budget your income. Each month, as you receive your paycheck, divide it immediately according to your needs for that month. One good idea is to incorporate an "envelope system." What you would do in this case is to mark on each envelope the different types of expenses you have and then put money into each of those marked envelopes. Note that each envelope contains money for different purposes, thus you should never get confused. For example, never touch the envelope marked for mortgage payments and use it as grocery money. This type of system will eliminate any confusion with regards to money; however, it does take a lot of discipline though. If you do not have the discipline required, perhaps you can ask a family member to help you. Just to whatever it takes! If you are one of those that earn cash on a daily basis, you should always set aside a portion of your cash to pay for your home amortization so that you can avoid foreclosure. For example, let’s say your monthly amortization payment is around $500 dollars per month. Now divide that amount according to the numbers of days you work. If you work 20 days a month, this means you will need to put aside $25 per day.
If you’re married, you and your spouse can split up the daily saving quota, thus making it even easier.
In the event that you have an emergency, try not to use the money that you have set aside for the house amortization. Do your best to find other means of generating money to help you out of your emergency situation. This will take an extreme amount of discipline. But this is the only way that you can avoid foreclosure. The bottom line is, avoiding foreclosure requires a tremendous amount of discipline. The discipline to live below one’s means it is a good starting point. Without discipline, one can find them on the street in very short order.
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