The US economy is in much better shape right now than it was a year ago. But that doesn’t mean that every individual is in better shape.
These days, many Americans are struggling with exorbitant living costs due to rampant inflation. This puts many people in a difficult position and forces many to loot their savings or rack up big credit card tabs just to make ends meet.
The Ukrainian conflict does not help matters. Gas prices have jumped exponentially since the crisis began overseas, so Americans are paying even more at the pumps.
If you’re worried about your financial situation in light of all of this, you’re in good company. Here are three moves worth making if money has gotten dangerously tight.
1. Consider tapping into your home equity
Home values are rising nationally, so many people are sitting on large amounts of home equity. If you are one of them, you might consider borrowing against your home to raise money to cover your expenses. You can do this through a home equity loan or line of credit (HELOC). Both options offer fairly competitive interest rates – and they’re cheaper than charging expenses to a credit card and paying off the balance over time.
2. Consider cash refinancing
When you refinance a mortgage, you exchange your existing home loan for a new one with more favorable borrowing conditions. Regular refinancing involves borrowing the exact amount you owe on your current mortgage. But with a cash refinance, you can borrow more than the remaining balance of your mortgage and use the excess funds as you see fit. If you’re struggling to pay your bills, you can use your extra money to make sure they’re covered.
Although mortgage rates increased over the past few months, they are still quite competitive on a historical basis. And they’re still more competitive than the rates you’ll typically see for a home equity loan or HELOC.
3. Get a second job
The US economy is full of job opportunities, some of which could be very flexible. If you are ready to take on a side hustle in addition to your main job, you can give your salary the boost it needs to make sure your bills are covered.
It makes particular sense to consider a side gig if you don’t own a home and therefore can’t fall back on a home equity loan or HELOC, or if you can’t get money out of your home through refinancing. While a Personal loan could be a viable borrowing option if you are not a homeowner, before taking on that debt it could be beneficial to see if increasing your income with a side job does the trick.
Right now the cost of living is skyrocketing and we could live for many more months of high gas prices and intense inflation. If you’re worried about staying afloat financially, consider using the equity in your home to provide breathing room or supplementing your income with a second job to avoid having to borrow completely.
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