‘I’m currently paying off about $400 a month in “bad” debt’: Should I sell my apartment to pay off debt or keep it and continue paying monthly?

Hi Money Minder,

So, I’m in a bit of a pickle. I’ve got around $400 worth of debt to tackle each month, thanks to credit cards and personal loans. If I keep this up, I’ll be debt-free in roughly two years. On top of that, I fork out $350 for my rented apartment every month. Just to give you a heads up, I’m bringing in about $2,000 monthly.

Here’s the lowdown:

• I used to live in an apartment for 2.5 years.
• I had to move out because the interest rates spiked, and it became too pricey for me.
• Now, I rent it out, but it’s a break-even situation after expenses – no profit, no loss.

I’m torn between selling the apartment to squash my debt quicker or sticking to my current plan of paying $400 per month for another couple of years while keeping the apartment as an investment. Any words of wisdom on which path to take?

Cheers!

Response from THE MONEY MINDER:

Hello There,

Congratulations on being proactive about paying off your debt and seeking advice on your financial situation. It’s clear that you have a solid understanding of your current financial obligations and have a plan in place to become debt-free in two years.

In considering whether to sell your apartment to expedite your debt repayment or continue your current plan, it’s important to weigh the pros and cons of each option. Selling the apartment would provide you with a lump sum of money that could significantly reduce or eliminate your debt, allowing you to achieve financial freedom sooner. However, if you believe that the apartment has the potential to appreciate in value over time and serve as a valuable long-term investment, holding onto it may also be a wise decision.

Given that you are currently breaking even on the rental income from the apartment, you may want to consider factors such as the potential for future rental income, property appreciation, and the overall market conditions in your area. Additionally, if selling the apartment would result in a profit after expenses and taxes, it may be worth exploring this option further.

Ultimately, the decision to sell or keep the apartment should align with your long-term financial goals and priorities. It may be beneficial to consult with a financial advisor who can provide personalized advice based on your specific circumstances and help you make an informed decision. Best of luck with your financial journey, and all the best from THE MONEY MINDER.