Realising When Something is a Liability Instead of an Asset
Sometimes it’s easy to see when something is a pure burden financially and not necessary, no matter how much one wants to have it. Perhaps it’s those seasons tickets that you really crave or the extras in the cable package that can be let go in order to give a little financial relief. But sometimes it’s not so easy.
If you are in a house where you are barely making it and upon examining the costs you realise that the mortgage you are paying is higher than you can manage in the long term, it’s very difficult to let go. Most people view their home as an asset and a great investment. Sometimes people even view vehicles this way. But if an asset is costing too much and it is not serving any present return, then there is a chance that it may be better to let it go. Even the stress relief may be enough of a reason to do so.
Think about how much it would cost to rent what is adequate. Not what is really desired and ideal; just what is necessary only. How much is the difference? If you lived in that, would you be willing to take the difference and put it into an investment? Could you do so comfortably? How much could you? This is the same as that home that is too costly. If it really is costing too much in money and stress, then it is time to let it go. The money that is saved really can be put to better use. Whether that use is simply living stress free, because now the money doesn’t need to be found and struggled for each month or invested or living a more acceptable standard of living doesn’t matter. Sometimes the stress alone just isn’t worth it.
My personal experience: Last month I lost my house due to the mortgage being too high and me not being able to qualify for a standard, lower rate mortgage. I sold it in order to pre-empt foreclosure and not have that on my credit report. Part of why I lost the house is because of my marriage failing and the poor refinancing decision I made around that, and part is because of a poor investment decision that I made a couple of years ago which really hurt my credit rating. I was forced to sell the house, just closing the deal one month ago and moved into a smaller (rented) townhouse. The stress surrounding this issue in the last couple of months was giving me palpitations, causing lost sleep, and other health problems, some of which I am only now recovering from. In reflection I realise the mistakes I made for the sake of being strong and helping others instead of putting my own interests first, which I probably should have done. But I have also learned how to manage money in ways that few people ever have to do or would even be able to do. Those are valuable lessons that will serve me and my children for decades. I also learned that there were lessons in finance that my grandparents and mom could have taught me, but never did, simply because finances are somewhat taboo in our society. Why is that? I may never know, but I will also try my best to teach my kids and others the hard lessons that I have learned. And I’m always willing to answer questions directly now, just so that others can learn from my experiences!
