Funding The 4 Walls

Rene has some credit card debt and collectors are after him. Dave tells him how to keep a cool head and maintain the 4 walls.

QUESTION: Rene was in the remodeling business, but the market is now slow. He is now upside down on his condo and has credit card debt. He makes $3,500 a month. Credit card companies are screaming at him and he’s not sure where to start. Dave explains to him about what it means to maintain “the 4 walls”.

ANSWER: Credit cards can scream. If it dings your credit, then so be it. Get current on your first mortgage because it’s the most important thing to keep current. Your second mortgage is the second most important thing.

Here’s the order of attack. Pay food, utilities, then your first and second mortgages. There’s no point in being current on the second mortgage and not current on the first because the second won’t foreclose. When you pay those, along with clothing and transportation, that’s taking care of the basics and providing for your household first. That’s called funding the 4 walls. Pay your necessities first. Once you’ve done all that, then you can attack the credit cards.