Let me play on your scenario with a real life one. :laughing:It is very simple. I will do one more analogy so you understand. If you have your houshold budget and you buy a house and a boat and a car and some other things , and you can afford them, then you simply make the payments and you live happily. If you suddenly lose your overtime and cannot make the payments you have to sell some things or borrow money to make up the difference between your bills and your income. If you cannot sell anything fast enough you have to get some kind of loan to make up the difference. If you choose not to take on this debt and not make the payments, then you will default on your loans. the interest on all your credit cards will instantly shoot up to the maximum rate, of about 33%, and you will start loosing your stuff. Your credit will become **** and any loan you hope to get will cost you much more. Your insurance will also go way up.
Does this sound like the fiscaly responsible choice to make???
If your overextended to the point that losing part of your income puts you in a position to default, or make another loan, odds are you don't qualify for a loan. Your items are probably not worth the fiat currency owed on them (50% of the homeowners in the country now) so you have a choice, make those payments and try to save your credit, or eat and feed your kids.
The US is already maxed out, like most of it's people are, adding new debt to pay old debt isn't a sane choice, sure it's the moral choice, but you still gotta eat and feed your kids. It's the 40 years of fiscal irresponsibility that got us here.. adding more fiscal irresponsibility is by definition, insane, doing the same thing over and over again, expecting different results.