Homeownership has long been considered the embodiment of the American dream. But these days, many homeowners feel like they’re part of an American nightmare as mortgage bills pile up and values continue to plummet. Nearly one-third of homeowners who bought in the last five years now owe more than their properties are worth, according to Zillow.com.

So on Tuesday’s Money Action Plan segment, Carmen took calls from two homeowners who are fighting hard to make ends meet. Below is what she mapped out for them.

Jennifer, NC
Like many Americans, Jennifer was enticed by an interest-only mortgage that seemed easy and affordable. But she ended up getting too much house and now she’s trying – desperately – to sell. Aside from her ticking time bomb mortgage, which is getting ready to reset in two years, Jennifer has thousands in credit card debt and a monthly car payment to keep up with.

The monthly housing costs are manageable, Carmen said, but they won’t be for long. Jennifer’s best bet is to sell her house before the interest rate resets, even if she has to come down on the asking price by 5 or 10%. That way she can save a couple hundred dollars by renting, shave a little off utilities and focus on paying down the $40,000 in credit card debt, which is the immediate problem.
Jim & Mary, MI
They might look like a normal couple on the outside, but on the inside Jim and Mary are exhausted. Both were laid off and Jim has spent the last two years searching for a new full-time job to no avail. His contract work is about to end along with Mary’s unemployment, and they can already see how things will deteriorate from there. The retirement savings has already been wiped out, the credit card debt is slowly mounting and any remaining investments are drying up.

Jim and Mary’s housing costs, at 41% of their monthly income, are too high, Carmen said. They’re also paying a lot for healthcare, but that’s a cost they can’t afford to cut. The couple has some other assets in collectibles that could be worth $10,000. If they don’t want to sell their home with its substantial equity over $100,000, they should think about selling the collectibles to pay down credit card debt and then think creatively about other ways to bring in more income, Carmen said. Once the debt is paid off, the next thing to focus on is retirement savings.

Watch the video to see the detailed Money Action Plans, and if you need a plan of your own, Carmen wants to give you one. Email her below.

Hello Carmen and team, I saw your show for the very 1st time today and I love it. I really enjoyed your segment on the housing problems. Keep up the great job and I am going to read your "Generation Debt" book too. THANK YOU! --John, CA

Posted on: 13 Aug 2008 11:57 A.M.