You may associate debt worries with those in the lowest income bracket, struggling to make their income stretch and resorting to borrowing on loans and credit cards in order to make ends meet. However, debt problems can develop in households with seemingly comfortable levels of income, due to a relatively small change in personal circumstances. Recent research from online lender CashNetUSA.com finds that a quarter of US citizens now consider themselves to be ‘poor’.
Money borrowed when times are good can quickly become a burden when circumstances change, perhaps through a reduction in income, such as loss of employment or demotion, or an increase in outgoing, perhaps through added medical expenses or having to care for a dependent.
In the current economic climate, this situation is occurring more often. Those with money tied up in property, cars and possessions may consider themselves reasonably well-off, but when debt worries build up they may find they are asset rich, but cash poor. Selling off some of these assets may be the only option to avoid descending into a crippling debt spiral.
For most homeowners, their property is the biggest asset they own. While no one wants to feel they are forced to move out of a home in which they have built a family life, if your kids have grown up and moved out on their own, or if you have inherited a larger property from relatives, you may wish to consider whether you really need that much house. Downsizing can turn some of that asset into cash, so look at market values and gauge how much equity you could release. The housing market is relatively stagnant at the moment, however, so if your debt concerns require immediate action, you could sell your house fast through a property-buying firm such as Tom Craven.
Again, no one is suggesting that you should get rid of your wheels altogether, but downsizing can save you money which can be used to tackle your debt worries. You can make a small lump sum from trading in your vehicle, but the biggest savings will be made on your monthly outgoings. By plumping for a lighter, less-powerful vehicle, you will use less fuel, and pay lower insurance premiums every month. Swinton car insurance quotes can show you just how much you can save by opting for a more eco car.
If you have high-value luxury items with little sentimental value, such as artwork or jewellery, cashing these in could help you out of a short-term fix. However, make sure you use specialists who appreciate the value of the items in order to get the most for them. Selling possessions for a pittance is very dispiriting and won’t get you out of debt trouble!
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