There are many strategies that can be considered to lowering your debt levels. One of these is the downsizing of your assets, which many people have done effectively. Where once we considered that we needed the large house, a certain prestige vehicle or an expensive toy like a boat cruiser, circumstances do change and we need to change with them as a way to reduce debt.

If you are still paying off these high priced assets, consider do you really need them. You can downsize by two main methods. One is by selling the asset outright and not immediately replacing it. This will help determine if you really need it. The second method is to trade down to a cheaper and normally smaller version of what you had before.

If you do not really need a house, why not sell it. Sometimes we find that we have more than one home either through an investment, a lottery win or an inheritance. Sure we can rent out the property to tenants and receive a steady income flow of rental payments but your financial circumstances may be better off if you lower your debt in one transaction. This is especially applicable to consider if you are paying higher interest rates that is just profiting a financial organisation.

The same can be said for a car or boat. Do you need an extra car or car at all? Is public transport a viable alternative with an occasional taxi? The hidden cost in car ownership of taxes, insurance and maintenance makes car ownership very expensive. You need to judge this based on your lifestyle and work requirements.

Downsizing your home for a cheaper version has been done by many people. When the kids have all grown up and left home, do you as parents still need such a big home, with all the expenses and time spent maintaining it and the hidden equity that could be realized on selling. Sure it is nice to have a big home for the grandchildren, but usually the grandchildren take many years to materialize and if you are not living locally to them, then their visits can be very rare. Why not sell the home and purchase a smaller property, such as an apartment and use the surplus funds to pay off or lower your debt.

The car can be a similar example as the home, except downsizing a car does not usually give you the same cash return as does the home. This is basically due to the fact that a car is not a good investment as they often devalue as they get older (except for very rare cars), whilst a home appreciates in value as it gets older.