Should I try to stay in my house or deed in lieu of foreclosure?

I’m 30 years old, have 6 years of teaching experience and a master’s degree in my field.
My pay –due to a pay cut and loss of benefits two years ago is ,000 a year. My monthly pay was and continues to be 0 twice a month. My monthly mortgage is 8. This leaves me in the red -2 a month. My parents give me 0 a month, so I am only -2 in the red.
I enrolled in graduate school in the Summer of 2009. I took out huge federal student loans both to pay for it and to keep me afloat in my home. I have a master’s degree in education. Today, however, I no longer have any student loans with which to buoy myself up with financially.
I am two months late on my mortgage payments and am currently 23 days away from foreclosure on my home. I closed my credit card accounts months ago. My HOA does not allow me to rent my home. And, I am not in a situation wherein I can have a roommate.
During this, my parents have been very supportive. I haven’t wanted to rely on my parents financially for a very long time and at this point I find it beyond humbling and humiliating and just plain-out shameful.
I was offered a teaching position that would pay me ,000 more a year. The position required I receive a signed document wherein my current employer agrees to allow me to break my current contract. My current employer refused –as is his/her legal right- to let me leave my current position. Basically, this means that I can’t begin a better paying teaching position until August of 2011, and will not be paid for it until September 2011.
Fortunately, this week I did secure a summer job.
I am ready to let the house go. I hate it, and have always hated what it represents: Financial Prison. I have a house but I can’t go anywhere, do anything or spend any money because of it. I am stuck in it all the time. I’ve talked to the bank and I am out of options; I need to pay up or lose the house.
I ran numbers. If I become a public school teacher my salary in the state would range from ,000 to ,000. Even though this is a huge raise for me, it would still not really enable me to save much money, and that is what I want to do. Additionally, there aren’t many jobs available this year as more teacher cuts are expected none of the jobs being listed are driving distance to my home. I need to be able to move for work.
I called up the friend of the family who sold me the house to discuss my options. She recommended that I focus on finding a new job, and do what I can to make the smallest payments possible on my home. The reasoning is that I will preserve a place to live and if I find work far away can lose the house without throwing away more mortgage payments than necessary. And, if I do find work close by, I have still preserved my home. This is, based on all of my exhaustive research on the topic, good advice.

The only issue is that I am at the foreclosure point. My parents have an apartment above their garage and I asked about moving in for 6 mos. I figure I could do a deed in lieu of foreclosure, pay my parents enough to cover utilities, and then save what I would be paying towards a mortgage. It would hit my credit hard, but not as hard as foreclosure.
Since I have been so reliant financially upon my parents they have a great deal of thoughts this matter and they want me to keep the house at all costs. They feel it may not be time to let the house go and don’t want me to take on the stigma of foreclosure. They want me to bring over all of my bill, bank, and mortgage statements for them to review and then –most likely- give me money to help me survive.
I don’t want to take more of their money. I feel I am in a sinking ship financially and don’t want them to throw away any more money on it. I also feel very educated about my options and my situation and don’t wish to be further humiliated by showing all of my financials to my parents (and I think it very unnecessary as I don’t want their money) But, I know they feel very strongly this is inaccurate. I don’t feel that moving into their garage apartment is an option. And, I’m concerned renting elsewhere will just cost more money.
This weekend I am selling off most of my personal belongings I am keeping my couch, my tv, my tv stand, microwave, bed, dresser, my desk, and my tech equipment (usb drives, laptop, computer). I’m hoping this will give me an emergency fund for whatever my next move might be.
To be honest, I don’t have money to pay the 8 in the next 23 days to keep me out of foreclosure, and I feel like it is throwing away money.
I am so stressed out. I have no idea what move to make, and I want to make an educated move.

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