Whether you are able to already make payments toward debt or are working away at finding new income to pay more toward debt; you may be ready to downsize. When you chose to make the step to downsize, it may be as simple as selling your old car to a neighborhood teen looking for their first car. It could be as large as selling your home and putting the equity into a smaller home with lower payments. There are multiple ways to downsize, and I hope to give you some ideas on how to make that happen.
3 Ideas to Make the Step to Downsize:
Sell extra vehicles. Most families have more than one vehicle. While it can be a necessity in some situations, the second car is often just a waste of garage space. Carpooling, scheduling errands and using public transportation are all options for most people. If these things are not possible, then selling the vehicle won’t work for you.
However, before you make that ultimate decision – take a good look at your true need versus your wants. Being left with only one vehicle in your household may free up not only extra money from a sale that will pay off debt, but the insurance, maintenance and gas costs that you also have in your budget.
You can also choose to downsize to a cheaper vehicle. Do you really need that new car? Could you trade-in your current vehicle and get a pre-owned vehicle for half the monthly cost?
Move to a smaller home. If you are renting, this may be a fairly easy transition for your family. If you own your home, it is more difficult. Depending on the equity in your home, it may be a money making move that would provide you with flexible income to pay off debt. It is definitely something to consider and to look at closely. Make sure to crunch the numbers from multiple levels before making a heavy move like this one.
Give up luxury items. This could be a lengthy list of things. It can be everything from your annual family vacation to simply selling a few of your more valuable possessions like guns, game systems, art work, etc to make extra cash to pay toward bills. There are numerous items that would be considered luxuries by different people. Evaluate your home and possessions to see if anything is there to downsize to help pay off your immediate debt needs.
When you are in a bad place with debt, you have to get serious about it. That often means you must make the step to downsize. Downsize everything from your home itself to the clothing in your closet if necessary. For some this is easy, for others it is not. You must look at your overall debt and financial goals to determine if this is a good choice for you and your family at this time.
Week 7 Challenge:
Look around you. Is there anything you can downsize to help get rid of your debt? Talk it over with your spouse and come up with a plan. Make sure to write down what you are willing to downsize, the possible consequences of downsizing and how this step could help your financial situation.
For example: If you are downsizing your current vehicle, how could this negatively impact your life? Could it cost you more in gas or repairs over the next few years? How much net income will trading in your newer car for a used car yield? Is the amount worth it? Also decide which debt to allocate the money to now, so you don’t find something else to spend it on later.
Disclosure: I am not a financial adviser nor do I have formal financial training. All articles are for informational purposes only and should not be interpreted as financial advice or consultation. Please consult your account and/or financial adviser before making changes to your finances. All situations are different, so please consult a professional to determine your individual needs.