Uprooting your life and moving to a different state might seem like a drastic move. However, it can be your saving grace, especially when you’re struggling under the weight of an increasing debt burden.
If you’re struggling under massive debt, you need to improve your finances. With the help of a cross-country moving and storage service, you can downsize your house or move to a state with a cheaper cost of living. While such a move might seem drastic, it will leave you in better financial shape.
Get out of debt
Debt remains a big concern in the USA, with the average American owing at least $5,331 in credit card debt. To make matters worse, more than 55 percent of these people can’t afford to pay their credit card balance in full every month. With the average interest rate hovering over the 16 percent market, these debts pile up fast.
The high-debt burden often causes many people to live from hand to mouth, with little money left at the end of the month. Moving to a cheaper neighborhood or downsizing to a smaller house can help you tackle your growing debt. Doing so lets you lower your rent and use the money saved to pay your debt quickly.
There are many advantages to reducing your debt, including improving your credit score. It also helps to enhance your finances while letting you make long-term plans. You’re in a better position to plan for retirement.
Save for a house
Buying a home ranks as a top priority for most people, but only a few get to realize this dream. Given that the average asking price hovers around the $300,000 mark, most people can’t afford to buy a house. To qualify for one, you have to meet stringent measures set by the mortgage lenders.
Some of the requirements include having a high credit score and a steady income. That means you are likely to get your mortgage application rejected if your finances are in poor shape. Ticking all these boxes takes a considerable amount of time and effort.
Moving to a cheaper region allows you to take the necessary corrective measures to improve your financial standing. After paying off most of your debt, you can start saving for a home deposit. Lenders will look at your loan application favorably when you raise at least 20 percent of the total mortgage.
Build an emergency fund
Recent research found that a $400 emergency fund would floor most Americans. The study found that most people don’t have an emergency fund to tide them through the lean times. The lack of such funds leaves you quite vulnerable and sets the stage for financial troubles.
Experts recommend that you should have an emergency fund to last you at least three months. For a single-income household, you should kick that up to six months. An emergency kitty cushions you from hard times in the unfortunate event that you lose your job.
Moving to a cheaper neighborhood or downsizing your house is an incredible way to save money. It not only reduces your cost of living but also lets you use the money saved to pay your debt. Eventually, you get to improve and plan your finances.