[upsidedownCal]

OK so I bought my house for $240k in 2002. In Los Angeles
Refinance several times.
Put some of the money back into the house.
Build a 6-car garage and use it for a studio where we run our business.
But, mostly paid for college for my daughter.
Owe 474k on a first with PNC. Fix at 6% Interest only until January 2013 then adj. with a cup of 18%. Scares me like nothing else.
70 k on Heloc with E-trade on my name only.0.25 over the prime.
Total 545k
House worth less than 300k
House next door sold for 240K and is a bit bigger.
Owe 95 to Credit card.
Meanwhile, business suffered some losses of contracts and 2008 was horrible.
We basically lost money and that’s where the CC debt came from.
2009 was also pretty bad. We changed direction a bit started working on our own no employees, and started being profitable again.
We cut our expenses to the bone, No gardener, no pool man, no cleaning lady, no eating out, no shopping just groceries and necessities. etc.
So, we are able to pull ourselves and pay more than the min. on the CC.
We are finishing paying one car very soon I pay every week to finish it ASAP so I will have $450 to put towards something else.
My question is what to pay first?
I pay a bit more on the first just rounded numbers for the last few months.
I pay the heloc several times a month.
Not sure I am doing the right thing.
Since my 2008 tax return show loss, I am afraid to try and negotiate a new loan, might get a higher payment.
I am able to hold on, no late, no delinquencies, just the normal hassle of reduced credit line when ever I pay off something.
Any help would be appreciated.

[NE Settlement]

If you're faced with the decision to pay either the 1st or the 2nd mortgage. Always go with paying the 1st. In fact, in the situation you face, you would be best suited to get the 1st current or modified so that's squared away as soon as possible. Even if you can't get it modified into a fixed rate loan right away, interest rates are fairly stable at the moment and you still have a few years.

If you have to fall behind on something, the 2nd mortgage is a better choice. The 1st can and will take your home if you fall too far behind. The 2nd, it's completely unprotected right now with the value of your home being what it is. There would be absolutely no gain in foreclosing on you for a 70k loan.

The credit card debt is your lowest priority debt and steps should be taken to address how you pay that back, to try and eliminate as much in fees and interest as you can. You should look into all options available to address the amount of debt you have, including Bankruptcy. (just make sure your 1st mortgage is current before starting a BK)

Good luck and keep plugging away, I'm sure you will find the path to financial freedom.