This article is strictly on ways to use your equity.
Some of the most common ways are:
- Pay off debt.
- Pay for a vacation
- Pay off or buy a new vehicle
- Invest in retirement assets (such as IRAs, 401Ks, stocks, bonds, etc.)
- Invest in education (yours or kids)
- Invest in real estate
- Peace of mind
There are probably as many ways as there are people to use equity for a property.
The key point is to look at using the equity in a way that will gives you progress or enhances your peace of mind. Every item above should give you as a minimum, peace of mind.
- Pay off debt. Eliminate the pressure of monthly payments and eliminate a payment based on 15% or higher interest rate.
- Pay for a vacation. Many don’t believe they can afford a vacation or that they should use the money for that purpose. I am not advocating that you should use all the equity for that but I am advocating that if it will make you better you should consider it.
- Pay off or buy a new vehicle. No surprise that having a vehicle is a necessity and not a luxury. As well as it needs to be dependable. Ask yourself if you are spending more on maintenance and inconvenience (it breaks down) that using the equity would be a good solution.
- Sometimes a good retirement investment shows up and using the equity would be perfect.
- Invest in education. Sometimes the best investment is a seminar that will prepare or enhance your current knowledge and skills. Definitely consider this one.
- Invest in real estate. Although there is a learning curve to this option. This could be a good way to build even more equity that would be available.
- Peace of mind.
Honestly, items 1 through 6 should all be leading to item 7. Your mental health is just as important if not more so than any of the others.
I am not recommending doing any of these things without considering the whole financial picture. Just remember that equity is sleeping money and it needs to be active to give you a return and make your financial life better.
