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.
Your house
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.
Your car
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.
Your possessions
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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We downsized after our children graduated from college. We went from a large 5 bedroom house to a townhouse. It was one of the best decisions to lower the cost and put some of that equity to work.
I can relate to your experience KC, albeit on a smaller scale. Just this afternoon I sold my Felt road bicycle. I’ve been unable to ride it here in Louisiana so I placed an ad on Craigslist and 3 hours later I had $500 dollars in my pocket. I plan on purchasing Moneytree financial planning software to help launch my own practice. For me, it was easier saying goodbye to my bike knowing that the proceeds served as seed money for a money making venture.
@Krant, I am still shocked that my parents haven’t done the same. I’ve been out of college for 8+ years now, and they’re still living in the same 4 bedroom house on an acre lot that I grew up in. It’s too much house (and work!) for them! That said, they do own it outright, and I know that’s a big factor for many.
I wouldn’t sell your house to one of those sell quick places because I am sure they buy for WELL below market value so they can turn a profit at your expense… just my two cents.
The market is wherever a buyer and seller agree to exchange. In almost every transaction and market there is a price to be paid for liquidity. These businesses have a place in the market and I’m sure they have many satisfied customers. Even in conventional real estate transactions there is a line of people waiting to take money from both buyer and seller.