Cash is tight. The bills are piling up.
What's more important: keeping current with the mortgage or making those monthly credit card payments?
Increasingly, based on a new study from credit tracker TransUnion, credit cards are trumping the mortgage.
"Conventional wisdom has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages," said Sean Reardon, author of the study and a TransUnion consultant. "However … increasingly, more consumers are paying their credit cards before making mortgage payments."
It's a stark example of how the longest and deepest economic downturn since World War II has reshaped financial priorities for American consumers. The radical change in priorities — what TransUnion calls a "payment hierarchy shift" — is particularly pronounced in Florida.
The percentage of Floridians in the study who were delinquent on their mortgages but current on their credit cards rose from 5.1 percent in the fall of 2007 to 12.4 percent in the fall of 2009, a 143 percent increase. By comparison, the U.S. ratio rose from 4 percent to 6.6 percent, a 68 percent increase.
Reardon said no other state has as high of a "pay the credit card first" rate as Florida. (California is second at 10.2 percent).
Property owners who have lost the equity in their homes because of the housing slump are more willing to walk away or risk foreclosure. At the same time, more consumers have turned to credit cards as a lifeline to make everyday purchases — putting gas in the car to get to work, buying groceries, even paying utility bills.
That's especially true in states like Florida, where unemployment hovers near 12 percent.
"It used to be: 'Pay the mortgage first to build equity. This is my largest investment.' And the credit card was more of a supplement, a luxury," Reardon said.
Now, some of the stigma on foreclosures has diminished, and lenders are being pressed to help people keep their homes and work through their debt. It can take 18 months or longer for foreclosures to work through the Florida system, buying some homeowners many payment-free months before losing their home.
Conversely, credit card companies have been reducing card limits, raising rates and being stingier on floating new offers.
"It's become much more important to keep those (credit card) company relationships healthy because credit is harder and harder to come by," Reardon added.
The flip in financial patterns first occurred in the beginning of 2008. Just barely. TransUnion researchers at the time envisioned it as short-term phenomenon triggered by the subprime housing bust. They didn't envision the gap would not only widen, but widen dramatically.
TransUnion based its study on consumers who had at least one credit card and one mortgage and examined 30-day delinquency data. As one of the country's chief sources of credit ratings, the company could draw from its historical database of 27 million consumer records to analyze debt patterns.
Bill Hardekopf, CEO of LowCards.com and co-author of The Credit Card Guidebook, was surprised at the study's results.
"It seems so counterintuitive," he said. "Most financial advisers would tell people to pay (your mortgage) to keep a roof over your head. Not unsecured debt (like credit cards)."
Yet, he has no doubt more people are relying on credit for basic necessities.
"What's scary to card issuers is that the default rates and delinquency rates are still going up," Hardekopf said.
And as more consumers fall delinquent on credit cards they are already using as a last resort, they will be even harder pressed to pay everyday bills when credit lifelines are cut off.
Jeff Harrington can be reached at firstname.lastname@example.org or (727) 893-8242. Follow him on Twitter at twitter.com/jeffmharrington.