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Paying your credit card bill before the mortgage

TransUnion found that the percentage of consumers in California who are delinquent on their mortgages but current on their credit cards was 10.2 percent in the third quarter of 2009, up from 3.5 percent in 2007. In Florida, it increased to 12.4 percent from 5.1 percent.

The financial news continues to be troubling, signaling that this trend might not turn around soon. For the week ended Jan. 30, the Labor Department said the number of laid-off workers filing initial claims for unemployment benefits was 480,000, up 8,000 from the previous week. Forecasters expected new claims would drop.

A record 2.8 million U.S. properties received foreclosure notices in 2009, up 21 percent from 2008 and 120 percent from 2007, according to a 2009 year-end report from RealtyTrac, which tracks foreclosure activity throughout the country.

"In the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog," said James J. Saccacio, chief executive of RealtyTrac.

Reardon said in an interview that many people are figuring that they may lose their homes, so they reason: Why pump more money into the mortgage? They cling to the notion that the plastic is their savior.

"It used to be people kept cash in the coffee can for an emergency," Reardon said. "But times have changed. People don't have coffee cans. Plastic has become their coffee can."

I hope this trend is only temporary. Relying on your credit card is like having a life jacket with a slow leak. It may keep you afloat for a little while, but the protection is short-term. You'll still sink.

Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

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