Imagine you are severely behind on your mortgage and your house is about to be foreclosed. Making matters worse, you are underwater because you kept refinancing your home in order to take out the equity and purchase things you can’t afford. A week before your house is about to be repossessed by the bank, you decide to take out a payday loan at exorbitant rates to catch up to your past-due amount. Do you go to sleep that night thinking that you are in the clear?
Of course not, borrowing money in order to service debt is like eating Big Macs and chasing it with milkshakes to lose weight. Not only is your house still at risk of being foreclosed, by overleveraging yourself, you drastically worsened your financial outlook into the future. Sure, you saved your house for a few months, but now you have two bills you have to pay that you can’t afford. Most Americans know this to be true, it is utter folly to mortgage your future in order to pay today’s rent...continued…
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