Solving the Foreclosure Crisis Essay

1141 Words 5 Pages
This year, the rate of foreclosure has increased from a problem into a crisis, and it is of increasing importance that the problem be solved. More and more Americans are loosing their homes as unemployment rates rise and it gets harder to pay the bills. High foreclosure rates cause homelessness to rise and banks to struggle. Since home loans are secure in the fact that if payments are not made, the bank can take the house, also called foreclosing it, the bank is less at risk. The problem with this system is that when the housing market is down, the banks cannot sell the house, and lose money in the deal. When banks lose too much money, they are either bought out, bailed out, forced to fire employees, or close down completely. As a result …show more content…
The decision to use payday loans often results in a downward spiral of debt and dependency on these loans, which end up taking hundreds to thousands of dollars before either bankruptcy is reached or they are able to break free from the vicious cycle. Since getting caught in this snare is like throwing money out the window on a windy day, it should be avoided. To avoid payday and other unnecessary loans, people should be saving money when they can. There are several ways to do this, such as getting a second job or cutting down on spending towards entertainment. For those already in debt, they should use the debt snowball method to get out. This technique begins by figuring out how much money you can budget out a month to pay down your loans. To do this, cut down on extravagances and other unnecessary spending. This is not to say that you cut it out completely. Next, list out all your debts from lowest balance to highest balance, including minimum payments and interest on the list. Always pay the minimum payments and use your 'paying down the loans' money you budgeted out to work on eliminating the loan with the smallest balance. Once that loan is gone, repeat the process until you are debt free. Tons of people try to work themselves out of debt each year, but often get discouraged and quit, as the bills do not

Related Documents