Search Results for: life insurance

Making Your Way From Broke to First Time Homebuyer, Here’s How

February 18, 2020 By Susan Paige Leave a Comment

If you’re one of the many Americans counting down the days until you’re no longer “throwing money away” for rent, you’re not alone. Buying a home is the largest purchase the average person will make in their lifetime, which is why it’s essential to prepare for such a significant investment. If you’re ready to make your way from broke to a first-time homebuyer, keep reading.

Determine your budget

Before you begin dreaming of mini-mansions, you need to know how much house you can comfortably afford with your current income. The word “comfortably” is used purposely here because many real estate agents and mortgage lenders will show you homes at the upper end of your budget, which is great if you want to survive on rice and peanut butter each month.

Use one of the many free mortgage calculators online to determine how much house you can afford with your monthly housing budget. Again, try to stay on the low side of that number to make sure you have enough money left over each month to save for unexpected home maintenance and repairs.

How’s your credit?

Quick — what’s your credit score? If you can’t answer right away, it’s time to run a credit report and find out where you stand. If your credit score is on the low side, now is the time to develop a strategy to raise your score to get you into a home by qualifying for a mortgage with a decent interest rate.

If you have overdue bills, begin working with collections agencies to pay off those outstanding balances and get the “dings” removed from your credit report. Specifically, ask the representative for the balance you need to “pay to delete” the debt collection from your credit report and get it in writing.

Many younger buyers struggle with low credit score simply because they haven’t amassed enough credit. Consider asking a parent to add you as a registered user on one of their cards to help you build credit; only do this if your parent has a solid credit score and history of on-time payments, or you could adversely affect your credit rating. You can also open a credit card with a small line of credit and use it each month to amass a history of revolving payments. Most of all, be patient, as building your credit takes time.

Save for your downpayment

If this is the first foray into your first time home buying education, you need to know that you don’t necessarily have to have twenty percent saved for a downpayment. When you use a mortgage calculator, you can also have it show you the amount you’ll need for a downpayment, but this amount will vary depending on your circumstances.

When you’re saving up for your first home, realize that your down payment percentages could be as high as 10 or 20 percent, or as low as 3.5 percent to zero down; it all depends on the type of loan you’re after. If you struggle to save, then a first time homebuyer or FHA loan may be the best option, only requiring 3.5 percent down to purchase. However, if you have no problem saving ten percent, a conventional loan may save you money in the long run. Talk with a mortgage lender to determine the types of loans you’re eligible for, and which one makes the most sense for your financial situation. Remember, this is the largest purchase you’ll make in your lifetime, so be sure to weigh all of your options.

Expect the unexpected

If you think everything’s smooth sailing once you sign the paperwork and move into your new home, you’re mistaken. There are several surprises you’ll encounter as a first time homebuyer, including taxes, homeowners association fees, insurance, and maintenance costs. Again, this is why you don’t want to max out your monthly housing budget with your mortgage payment, as things will invariably pop up.

It’s not uncommon for things to go wrong with your home shortly after purchasing, and you’ll quickly find out that even something as minor as having to have a plumber come out for a repair can be costly. So, just in case your furnace decides to quit, or your central air conditioning stops pushing cold air, you have funds set aside each month as a failsafe.

When you research your options, you’ll find that the road to homeownership is straighter than you’d originally imagined, and perhaps even a little shorter. Planning, patience, and persistence will take you from broke to first-time homebuyer.

Building A Monthly Budget: How to Calculate Your Costs

November 8, 2019 By Susan Paige Leave a Comment

Budgeting is always the hardest when first starting out. The idea of creating a spreadsheet with a breakdown of every monthly cost and expense is so intimidating that many people put it off for a long time.

All a budget is, in essence, is a well laid out plan. When calculating a budget, what you must do is calculate the difference between your anticipated income and your fixed costs so that you can get an idea of how much you have left for desirable expenses. You don’t have to be an accountant to know how to create a budget plan though, here are some easy tips.

· Add Up Monthly Fixed Expenses

The first thing that you need to do when making a budget plan is to calculate your monthly fixed expenses. These include costs like rent, car insurance, payments on any auto or title loans, or insurance.

You can use a spreadsheet or budgeting app to keep things organized, and accurately access what your expenses look like each month.

· Add Up Monthly Variable Expenses

Variable expenses are expenses that change month to month, and they can be a bit of a challenge to add to your budget plan. Calculating these costs is more of a judgment call than anything else, especially if they fluctuate greatly month to month.

Costs like groceries, gasoline, electricity and discretionary spending can vary monthly so setting aside a specific amount can be difficult. However, by averaging and overestimating variable costs like electricity or gasoline, you can write it into the budget without worrying that the actual costs will be more than what you’ve planned for.

Tips to Keep in Mind when Creating a Monthly Budget

Now that you’ve added up all your monthly costs, you know how much money you need to make ends meet. In a monthly budget, you want to compare these expenses to a monthly income. You don’t want to take into account a holiday bonus that you’re expecting in 6 months, because that isn’t affecting your expenses or income this month. For a monthly budget, use your monthly income to calculate any leftover funds after your expenses.

If you have a fixed income, such as a salary, or you are paid hourly with a set schedule, then this is easy. If your income is varied due to a fluctuating workload, then the best you can do is average your earnings.

Once you’ve calculated your excess income, you can figure out what to do with it. Ideally, you added discretionary spending as a line item in the budget, so your excess money shouldn’t just become spending cash. Any excess funds should go towards debt or savings. If you have more excess income than normal one month, feel free to spend it on entertainment or desirable expenses. Now that you’ve created a budget, you can spend money and still feel financially responsible.

Stick to Your Newly Created Monthly Budget

Now that you’ve gone through the work of crafting a monthly budget that works for you, know that you have a financial plan set. Having a monthly budget makes life easier and making a physical one can better help you visualize the numbers and make adjustments without guesswork.

Making a monthly budget is not the hard part though. The difficult aspect is sticking to the budget, tracking expenses, and not making a habit of exceeding your budget. Going out to eat is fun and enjoyable, but if you do it more than you should, your available income for the month will start to eat into any excess funds you have–and possibly exceed them! If you’ve calculated for the entire month though, splurging every now and then shouldn’t throw you off track. And if you do slip up, relax because you can always get right back on track next month! So enjoy your financially responsibility!

Image source: Pexels.com.

Living on a Tight Budget: Should Groceries Be the First Place You Cut?

January 8, 2019 By MelissaB Leave a Comment

If you’re like me, the last few years, you may have felt that you’re simply treading water when it comes to income and expenses. It seems every time our income goes up, our expenses go up, and I’m not talking about lifestyle inflation but rather insurance premiums and deductibles, etc.

Like many people, I try to cut corners to make our money stretch as far as I can. I’ve certainly had times a few years ago when I bought the cheapest groceries that I could find by using coupons and sales, even though the food was processed and not that good for my body.

I rationalized that I was being frugal, and, I’ll admit it, I was proud of myself. Never mind that we were eating casseroles that we didn’t really like made with processed foods or that the leftovers often went to waste because we didn’t want to eat the meal again. Never mind that both my husband and I had cholesterol well over 200 even though we were in our thirties.

Change in Eating Habits

However, over the last few years, my opinions on grocery shopping, the foods we eat, and how to save money have changed. I still like to save money (and I still need to in order to make our budget stretch), but now I do it differently, and I feed my family differently. A few years ago, I went Paleo. I dropped a lot of weight, and my cholesterol level settled around 155, even though I was a few years older. True, our grocery budget went up, but not by as much as I expected. I learned ways to buy healthy food at a reasonable price.

Where Else Can You Cut Besides Groceries?

Should you Cut groceries first? — Where would you cut first?

Sometimes, especially when money is tight, groceries seem like an easy place to cut. Convenience foods bought with coupons can be had for a steal. Take a look around Pinterest, and you’ll find many posts of bloggers touting how little they spend for groceries.

But is this a good thing? I know groceries are typically one of the largest monthly expenses for a family, but should this automatically be the place we look first to reduce our budget? After all, there is great truth in the adage, “Pay your farmer now, or pay the doctor later. In fact, “Americans spend nearly 20% of their income on healthcare costs, while on average spending 10% of their income on food. . .Considering the age-old adage, ‘an ounce of prevention is worth a pound of cure’ may be the first step to attempt to reduce healthcare spending—and the key place to start is food consumption. If you start to consider your diet a form of preventative health care, you might start rethinking your daily meals” (University of New Hampshire).

Take a look at your budget. If you don’t automatically slash your grocery budget, where else can you cut expenses?

If you don’t short change your body healthy foods, you’ll save thousands on health care later on. Meanwhile, why not consider dropping your smartphone and getting a “dumb” phone? (Yes, I still have a flip phone for emergencies that we bought 10 years ago.) Can you drive your current vehicle a little longer so you don’t need to have a new car loan? Can you drop cable? Do you have subscriptions you’re paying for but you don’t use? Likely, there are several lifestyle choices you can make to cut your expenses without compromising the quality of food you can buy and eat.

Do you cut other expenses so you can continue to buy quality foods, or do you prefer to slash your grocery budget?