Credit card versus Mortgage - Which should come first?

Sometimes, consumers do not think clearly about finances, and more specifically what to pay when money is lean (at times, not enough).

The Sheila Newton Team wrote about 'Which Would You Pay First? Your Mortgage or Your Credit Cards?'

According to her, "Some folks are making the decision to "let their home go", intentionally, in favor of paying their credit cards. They reportedly feel that their home is not worth what they owe on it, and their logic is, “why bother paying at all if I am paying into a never ending debt?” Many of those same people are using their credit cards for monthly needs like food and living expenses, so they must keep them current."

Borrowing from credit cards for survival is like digging yourself further into the hole, rather than helping you curb your bleeding. I can see why some people choose to use keep their credit cards current because they feel that that's the EMERGENCY FUND. No, no. Citibank, Bank of America and Capital One are not your friends.

The people should be aware of the FOUR WALLS.

They are basic food, utilities, transportation and shelter.

Everything else is secondary when life comes to this place.

FOOD - While we talk about food, and basic food we need, we're not talking about buying soda, ice cream or snacks. We are literally on EMERGENCY MODE that you will not include "luxury items" in your grocery bill. Medication is included in the FOOD items of course. We don't want you to be sick.

UTILITIES - Did you know if you raise your home temperature by 1 or 2 degrees, you save pretty significantly on your summer bill? And likewise in the winter?

TRANSPORTATION - Basic transportation taking you to and from work so you can earn the income in order to protect your FOUR WALLS. Not referring to over and beyond your means for a car you cannot afford. If you can't afford to pay cash for the car, you most likely cannot afford it. There is also a guide on the total value of your vehicles (cars, trucks, RV, jetskis, boats, etc. ie. anything that has a motor in it) should be valued at no more than half your total household income.

Of course this also depends on your income (if you earn $1000/month, versus if you earn over $1 Million per year). The 1/2 value of your household income works for most "general" American household.

From the book by Stanley (Millionaire Next Door), most people are not what they drive.

SHELTER - Shelter as in mortgage or rent. Most of the time, a 25% take-home income can/ should be allocated to shelter. What I have seen some families do successfully too also include up to 30% take-home pay assuming they do not have any other consumer debt except for the mortgage.

It starts getting financially difficult if the numbers are closer to 40-50% of the take-home pay. After all, we want to continue to have a life besides just "working for the house".....

Credit card versus Mortgage - Which should come first. Protect your 4 walls when life comes to this point.