What's the Difference Between a Short Sale and a Foreclosure?
A recent Forbes article dove deep into the differences between a short sale and foreclosure. Click here to view the article in its entirety.
To sum it up for the sake of time, a short sale will take a little longer but you can purchase another home sooner than if you foreclose on a home.Your credit will be impacted by at least 150 points. If you make the decision to stop making payments on a home, then you'll begin going down the path of foreclosure. The banks will work with you and oftentimes they will suggest you try to short sell the home.
If you're worried about your finances going forward, the best advice I can offer is to start reducing your living expenses little by little so it doesn't feel so drastic. I would then put away a little bit from each of your income sources. Once you start living less than your means you will feel better about yourself because you'll see a way out. Once you start too far down the path of debt where you're heavily reliant on credit cards to keep you going with the lifestyle you're currently on, then it becomes impossible to see a better way except to open new lines of credit to pay other stuff off. It's a tough circle to break, but critical to the future of your family.