7 Difficult Personal Finance Decisions That You May Have to Make

7 Difficult Personal Finance Decisions That You May Have to Make

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Finances can be one of the most difficult areas to work through when life seriously challenges you. You might have to make some tough choices that are uncomfortable but will be of the most benefit to you in your individual circumstances. Here are six hard decisions you may face.

Taking Out A Second Mortgage

Homeowners may need to takeout an additional mortgage on their home to cover expenses such as repairs or upgrades. Although these loans will typically have higher interest rates, they are usually for a shorter period of time. A second mortgage could provide the breathing room needed to get a financial life back in balance. With the right goals in mind, a second mortgage can be a good investment in the end.

Selling Your House

On the other hand, if expenses are too high, you may have to consider selling your house, and either renting or downgrading to something more affordable. Downgrading can be difficult emotionally as it requires letting go of some things that are really nice to have, but must be cut to provide financial wiggle room. You can have an appraisal done to discover the market value of your home. For those with a drastic drop in income this is a viable option.

Bankruptcy

Personal bankruptcy is one of the most difficult financial decisions that can be made, but sometimes financial storms do come and it is the only option. House disasters happen, health issues do arise, and other mistakes can be very costly. Bankruptcy doesn’t permanently destroy credit, as the effects of bankruptcy are temporary, and credit scores can start being rebuilt within a couple of years with diligence. When debt is overwhelming, and the majority is dischargeable, this can be the best choice. A bankruptcy specialist will provide the most comprehensive information about this decision.

Withdrawing From Your Retirement Plan

This is a tough call, and should be implemented only if absolutely necessary, due to taxes and penalties for early withdrawal. Speak with your account owner to get all the facts before making this decision, and only make it if there are no other options left to you.

Not Saving For College

Many people have a college fund set up. This can be invaluable, but it does not take into account that there are many grants and scholarships that will provide funding, as well as student loans. Although loans have to be repaid, they will free up finances for those who just can’t afford the luxury of saving ahead.

Applying for a Second, or Third Job

The day only has so many hours and people only have so much energy. For some the idea of more work feels overwhelming because how taxing their schedule already is. But sometimes the income from one job does not cover one’s load of bills. Another job in the evening hours will provide an extra boost in income, though it may come at the cost of important family time. Much respect is due to the mothers and fathers who make the sacrifice of their own comfort to work longer hours for the benefit of their family.

Withdrawing From Savings

Savings accounts are often used later in life or for emergencies. However, if you’re reasonably sure you will have a workable income in the near future, they can be a great asset to utilize. It’s simple to work out a payment arrangement with yourself to replace the money, and you’re less likely to face penalties for withdrawal.

Although these types of money decisions can be difficult to face, sometimes they are the best choice to help you get ahead and out of an overwhelming financial burden.

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Categories: Financial Planning

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