Sometimes life has a way of kicking you when you’re down. It is almost expected by the time you retire, but you may feel that things have turned out well and are prepared for the worst.
Unfortunately, you will most likely feel pinched at least once.
Whether it’s a health problem due to an unforeseen accident or a new roof you need in your home, you will need money. And while selling your blood to the local blood bank may seem like a feasible idea, it won’t get you out of the water.
Then what do you do?
A reverse mortgage
One of the most common ways to raise funds quickly could be to take out a reverse mortgage. While this may not seem like an optimal solution, in the event of something near-catastrophic it could be your only source of quick money.
Basically, with a reverse mortgage, you take money against your house. If you own the home, you basically take a lump sum or payments from a financial institution in exchange for some kind of bond.
That has multiple benefits, of course.
• You will receive funds quickly and usually in sufficient amounts to meet any sudden expenses that may arise without prior notice.
• You can stay at home and enjoy it. It is not about selling your home, but about taking a form of payment against you.
• Mortgage companies that specialize in this are easy to find. In reality, you only have to watch television for a limited period of time before a celebrity is seen displaying their sponsor’s product, with a spectacular toll-free number, right before your eyes.
However, there are some drawbacks. Not only are they inconvenient, but they are quite significant in terms of potential impact.
• It is a loan and must be repaid. There have been horror stories about the loss of people’s homes to companies after their death, leaving their heirs with nothing. This could be inconvenient if the home is a family home, one with generations of history and memories.
• Like any loan, there will be an interest rate. By coincidence, no one has ever mistaken a loan shark for a dolphin. You should know in advance that this is not free money and that it needs to be repaid one way or another. If you take out this loan or mortgage, know that you will have to budget for payment or a lump sum payment if you want to avoid a potentially larger negative outcome.
If you can deal with a mortgage and feel that your financial situation is short-term, this type of reverse plan could be more than beneficial for you. In fact, it could save your shirt. But if you see a long-term problem, be aware that you are putting your home at risk.
Sell your vacation home
Many people, once they have reached retirement age, have managed to accumulate assets. Some of them can be large, like a vacation or rental property. If you are facing an unexpected financial hurdle, downloading something could help relieve stress.
There are multiple bonuses for doing something like this; several of them could last longer and be more important than previously thought.
• Selling a vacation home would give you a surplus of funds. It would allow you to refill your bank account for a long time or at least compensate for a sudden and painful financial problem.
• You would no longer be responsible for the upkeep of the property. Saving on homeowner association fees, if applicable, as well as on utilities and taxes can help even more. Even a few thousand dollars left over at the end of the year could help you with every aspect of your life, whether it’s paying for insurance or medications you may need.
• It will also eliminate some of the worries you have with having an additional property. You won’t have to worry about maintenance, you can cancel home insurance and stop worrying about the safety of a vacant home. On top of that, many prime vacation spots are on the beaches or in bad weather areas. No longer will you have to watch hurricane reports and worry that your roof will somehow end up floating through the center of downtown.
However, like all things, it has its drawbacks.
• If your second home is used for rental income, you should consider that you will no longer have that additional income per month. If your budget depends on the influx of cash at regular intervals, you need to make sure that you can dispense with the stipend or else your financial windfall will be wasted.
• You are losing an important asset. If you sell your second property, you will get rid of the stressful side of it, but you will also lose the good things. You will no longer have that fancy beachside condo to lounge around. Your children will not inherit it and it cannot be used as collateral later in case of something else.
Giving up a second property is not a decision to be made lightly. You may regret giving up on that oasis, especially if you really enjoy using it. You should consider that if you sell it, the financial results will justify giving up the joy and flexibility that the property allowed.
Download your unused assets
Most likely, you have accumulated more than real estate. A lot of people hang on to cars well past their prime and that’s a good thing. Antiques are in! That boat from a sedan you bought new 25 years ago may actually be worth more now than it was before, something that could potentially surprise and amaze your spouse. Even baseball cards or collectibles could earn you a few dollars. Luckily, at your age, chances are you’ve saved something at some point that you thought might be worth something someday. That day, my friend, has come.
Nostalgia is a growing market. Shows like Pawn Stars and anything on the History Channel will show that people like to reminisce about days gone by. How many times have you walked through a shiny 1957 Bel Air and thought of poodle skirts or hot rods? Even if you weren’t alive or old enough to enjoy the 50s and 60s, antiques resonate with the public. As a result, things have value. Like a drug or a drink, people want to feel good, have fun. If you are sitting in or in a classic car, you can also charge it if you are not using it. Your pockets could get extremely high if you do, and that’s something that could help you get through that midlife financial crisis.
However, before you sell that signed Rolling Stones poster, ask yourself if you can part with it. Did she really part ways with him? By obtaining property, collecting things, people accumulate memories. Selling a baseball card is not like selling a newspaper. If you sell a baseball card that your father gave you for your birthday, will you agree to that later? Are you going to miss it? If so, you most likely cannot replace it. You may find another Mickey Mantle, but it won’t be that Mickey Mantle. Like all things, you have to decide if you can live without it. If you can’t, there are other options.
Acceptance of Lump Sum Payments
There are businesses that exist just to give you money, with a trap, of course. If you have a deal, or even a long-term retirement account, some companies may offer you cash up front in exchange for your payments.
Before laughing all the way to the phone, then the bank, you should stop and consider that for a moment. Sure, you will have the money in hand, but at what real cost?
• Nobody gives away free money and these companies are no exception. It may be your money, and you may need it now, but they are not going to give you everything. Many companies will give you a fraction of the real value, almost taking advantage of your need for assistance. They are not necessarily in the same category as loan sharks, but they will definitely get their share of the block.
• You can’t just undo it. If your $ 500k annuity just turned into $ 300k or less, there is no going back. If you accept the payment, that’s what you have. It has gone without more resources, without payments, without anything. You have to stop and think about it for both the future and the present.
• Again, these companies are in it to make money. With hired spokespersons and a lot of airtime, you know they have to take their pound of meat and do it very generously. Always read the fine print and go with a company only after researching it and making sure they are improving. And remember, just because it’s on the internet doesn’t mean it’s necessarily true.
Like all ways to get cash fast, you need to think about it carefully. Don’t rush, take your time and really make a checklist of what you need, why you need it, and what you are willing to give up in terms of long-term financial freedom to get a quick fix for your situation.
If you just need a little help
There are times when it is not so terrible that you are willing to sell your property to stay afloat. There are times when you just need a little help with bills or expenses you may have.
• Consider downsizing your home if you are not really attached to where you live. Reducing the extra square footage could not only save you in terms of property and utility taxes, but the reduction could generate a profit that could help finance the rest of your retirement.
• Eliminate unnecessary spending by strategizing. It is becoming much more common for people to get their entertainment over the internet rather than cable or satellite. Sometimes those bills alone cost $ 100 or more per month. While it doesn’t seem like much, it might help on a tight budget.
• If you are really desperate, don’t hesitate to ask for help. Programs were created to help, and if needed, food assistance, even assistance with utilities, can help you stay afloat.
The main point is that, if there is a will, there is a way. If you don’t need or want it, you should sell it. If it’s too big, downsize and get something more manageable. You should focus on enjoying your retirement more than anything else, and financial problems should be the least of your worries. Strategize what is really necessary for you to be happy, and work from there. As long as you pay attention to companies that prey on desperation and think three steps ahead, you should be fine.