Some people have little choice but to sell assets to make ends meet. For big-ticket items, including vehicles or your home, it’s important to carefully consider the trade-offs to see if there are any alternative options available.
Selling Your Car
For example, the resale value of a vehicle is generally a lot less than what it would cost you to replace it. If you have a fancy sports car, and you can get by with a used economy car, you’ll likely realize a profit on the trade.
However, if you are already driving a used economy car, you need to identify what you can replace it with that is reliable and will meet your needs. If you truly don’t need the car, then sell it. But if you do the math and realize you can’t cost-effectively replace it or that public transportation is not a practical option, reconsider.
Selling Your Home or Pulling Equity From It
If you own your home, your options include selling it or pulling some equity from the home by refinancing. However, in the current economy, neither of these are very good options. You still need a place to live and selling the home may be a long-term process given the housing market in many communities. The market value of your home may have decreased significantly.
Meanwhile home equity lines are increasingly difficult to come by and, even when available, can quickly saddle an individual with more debt than they should take on.
See our Managing Your Credit and Debt
section for a greater discussion of debt issues, including refinancing your mortgage. This may be another way to free up cash while keeping you in your home.