PUT YOUR HOME TO USE AS A CONTROL MEASURE OF YOUR DEBT
In order to meet up with the needs and demands of your life, it is quite natural you may need to take out a loan. Given the fact that maintaining an average standard of living costs high and also the fact that access to different financial products is easier than ever before, lots of people have such unsecured as well as secured debts in their name. There are quite a number of people who have multiple unsecured debts as well.
If you are one such person then your top priority should be taking control of it so that it stays within your manageable limits. You must also ensure that you keep on making the monthly payments on time and that too on all of your loan accounts. This will reduce the debt load as much as possible giving you enough time and scope to make your future financial plans.
Ignoring your monthly payments is not only unwise but it can be rightfully termed as a ‘crime’. This is because it is you and your behaviour that will make yours as well as your family member’s life difficult in ways more than one such as:
- You will start getting those annoying collection calls
- You will feel stressed and even lose your sleep over the matter
- You will be desperately looking for ways to meet up your monthly bills
- You will experience behavioural changes in you
- You will also face health issues and if this situation is not mend
- You will also face legal hassles as well.
In short, you will not be happy in your home. Ah! Your home!
Home is a sweet place to be in. However, both buying a house and decorating it is not cheap and can put you into debt by it if you are not careful about your finance, debt and your needs.
Have a proper plan
Going out of your way to decorating your home will surely put you into further debt adding pressure on you since you already have a home loan and credit card loan, and maybe a student loan, car loan and others. In order to ensure that you do not fall into the black hole of debt and look for relief sifting through different debt settlement reviews you must have a proper plan designed well in advance.
- Staying within your budget and affordability and planning your home decorating project will help you from incurring more debt.
- You will need to make sacrifices and reluctant changes in your plan and have to settle for a standard settee rather than the posh L-pattern sofa you saw in your friend’s home.
In addition to that, consider your affordability and stick to your needs rather than fulfilling your wants. Yes, both may seem similar and may be used interchangeably, but there is a lot of difference between ‘need’ and ‘wants.’
- Need – Something you cannot do without
- Want – Something that can be foregone or postponed as of now.
For a more detailed insight it will be a chapter in economics but here staying out or managing your debt is your primary concern. Therefore, stick to it!
A debt measure
Surprising as it may seem to you, your home itself can be a very useful tool that you can put to use it as a control measure for your debt or debts. If you know how to do it then you will never feel stressed out while managing your debt. Typically, debt stress creeps in when you:
- Delay or do not pay high-interest debts such as credit card balance
- Continue to make only the minimum amount in each loan and
- Fall behind your schedule.
These acts will not only jeopardize your financial health but will also affect your own health as well. This is because:
- The more you delay in making the payments the more interest you will have to pay in the end.
- Your debt will seem to forever exist and when you pay such unnecessary payment of extra interest it will limit your repayment capacity.
This will prevent you from focusing on the other debts that you may currently have.
The best and most prudent way to manage your debt and go ahead with your home decorating project is to find finance. You can use your home itself for the repayment. You can do this in different ways as under but make sure you choose the most suitable option according to your current and projected financial status. You may talk to an expert debt counselor for that matter.
The best way to use your home or its equity is to refinance your mortgage because:
- This way you will not only get a reduced rate of interest to pay as compared with the current one that you are paying, but you will also have enough cash in hand to start with your home decorating endeavour.
- The low rate of interest of refinancing will reduce the monthly bills and help you to pay off your other debts as well.
- Since the money you will receive will be more than the amount that you owe currently you can also save some money to create an emergency fund.
- Most importantly, the extended tenure for repayment of this refinanced debt will be a welcome relief for you.
You may also try out cash out refinancing if you want to take out a larger mortgage. This will help you to make bigger plans regarding your home decor without having to worry about the loan repayment. You can pay off your current mortgage dues as well as other debts that you have. However, you will need to have adequate equity in your home to get cash out refinance.
Lastly, you can take out home equity loans which are referred to as Second Mortgage in the finance industry. Once again, the equity in your home will act as collateral security for the debts.
The bottom line: to use your home to stay out of debt you must maintain it to retain high market value.