Four Ways to Find Mortgage Money

When Plato said, "Necessity is the mother of invention," he probably wasn't thinking about homeowners who are having trouble making ends meet. However, rising interest rates have enlarged monthly mortgage payments, and people need to find creative ways to boost cash flow.

A certain redheaded little orphan crooned, "The sun'll come out…tomorrow." In the musical Annie, it's an 11-year old's undaunted optimism that buoys the spirits of Franklin Delano Roosevelt, Daddy Warbucks, and an entire nation mired in the Great Depression.

Today's economy is not as dire, unless you're struggling with rising interest rates on your home equity line of credit (HELOC) or your adjustable-rate mortgage (ARM). Some homeowners, already leveraged to the hilt on their home equity, have succumbed to foreclosure due to the meteoric rise in their monthly payment.

If you find yourself caught between a rock and a rising interest rate, consider the following methods to increase your cash flow.

1. Hold off on withholding

An immediate and often overlooked way to generate more cash flow is to lower the amount you withhold for payroll tax. Because your monthly mortgage amount has increased, you'll have more interest to deduct on your taxes, which may lower your tax bite. Consult with your accountant, or someone in your company's human resources department, to gauge the adjustment. If you receive an annual refund on your taxes because you overpay your withholding, you may have additional cash flow waiting to be tapped.

2. Downsize your car(s)

No greater temptation exists than a brand new shiny car. But there's almost no greater draw on your monthly finances than an enormous auto payment. Consider selling your car and purchasing an older model. Many reliable cars run well even after 100,000 miles. You may see a slight uptick in maintenance costs, but it pales in comparison to what you'd pay on a car loan.

3. Downgrade your technology

Unless you're using high-speed Internet access, additional cell phone lines, and expanded cable channels for work, consider downgrading these services. That's a much better option than foreclosure. You need to tighten the reins, but by tweaking these areas, you can easily add $100 or more to your monthly cash flow.

4. Scrutinize your insurance deductible

How high is your insurance deductible? You can save a nice chunk of change by boosting your deductible to $1,000 or more. This dovetails nicely with your decision to downgrade your automobile- you may even choose to drop your collision insurance if you're driving a beater.

The little redhead was right. The sun will come out tomorrow, especially if you follow these tips for boosting your cash flow. They should get you on the right path to making those mortgage payments. Just be sure to take a careful look at your overall spending, as well. Cut back on entertainment, and limit the frequency of eating out. It helps to be as optimistic as Annie, but to get yourself back on track, you'll need to be as clever with your finances as Daddy Warbucks.