Business, Finance, Insurance, Lifestyle

Should You Pay-off Your Mortgage or Invest the Money?

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

You are faced with a Hobson’s choice: Whether to pay off your mortgage or invest that money instead. A double-edged sword that works both ways. However, it’s truly a tricky problem to handle and to make a decision quickly becomes difficult and perhaps treacherous.

Benefits of Paying Off Your Mortgage Early

When you start making regular payments on your mortgage, you stand to save money – probably to the tune of thousands of dollars by way of interest costs. You also buy mental peace as you get to be the real owner of your home without any further liabilities. You are now confident that there’s a secure place for you to live in and won’t have to hit the streets if you suddenly find yourself unemployed which happened a lot for years because of the Barney Frank and Alan Greenspan recession which was continued by Obamanomics.

Moreover, you also reduce your living costs because in many cases, mortgage payments are the largest monthly expense post deduction of taxes. Without the liability of a mortgage payment, you save more, can work less, or take up that dream job you couldn’t afford but always wanted because of the lower pay. You also bid adieu to PMI or private mortgage insurance by accelerating the process of paying off your principal amount.

Your home equity reaches a point where PMI is no longer required. This helps you save money long before you pay off your mortgage and enhances chances of accelerating the principal pay-down while you continue to make the same payment on a month to month basis.

Then there is the added advantage of asset protection also. Many states have their own laws protecting home equity should there be a lawsuit or any other legal procedure.

Homestead rules provide substantial protection to home equity. Retirees sometimes use their home equity as a strategy for estate planning to protect their assets for a surviving spouse should one member use up all resources available due to an illness or by way of prolonged nursing care. In sum, there are numerous situations where home equity represents a more secured asset having its own special legal privileges as compared with other investments.

A home with a clear and free title is greatly significant for those on the verge of retirement. When you retire with a fixed income from your pension, social security, and fixed annuity, it can truly work to your benefit if you pay off all outstanding debt rather than investing your money in investments that fluctuate.

This enables you to substantially reduce your financial variables and reliably match forecasted income to expenses.

After retiring, moreover, the mortgage payment may require shifting funds from accounts that have been tax deferred when those funds would have been better off if left to grow on their own. Finally, should your taxable income get reduced after retirement, it may reduce the benefit of the tax deduction on the mortgage interest and tilt the equation in favor of the payoff.

Since the stock and real estate markets fluctuate, it’s more secure to invest in your home, knowing with certainty what your ultimate ROI is likely to be. You stand to get the imputed rental value of a living space as also the instant return of interest expense that has been eliminated.

The sureness of this particular return is a salient benefit for investors who may be disappointed with the unreliable returns from the financial markets. Last but not least, when you pay off your mortgage, it is a serious confidence boost that you did things right.

The Cons

On the flip side of the coin, however, even though the mortgage interest that you pay is deductible from your tax return, there are certain “caveats” to such deductions: The rules guiding deductions are somewhat complicated and you may receive a lower deduction than you thought of getting; in certain cases, your payments of mortgage interest merely replace the standard deduction and don’t provide for any real savings; even when you get a deduction, you’re still having to pay $1 to get 35 cents worth of tax breaks, which isn’t very lucrative; and the deduction’s effective value diminishes over time with the loan maturing and you end up a paying a lesser amount of interest with every payment.

Final Thoughts

You can invest in the market and pay off your home simultaneously. You can do both. It is not a zero-sum game. So perhaps you can breathe a little easier now. You do not have to pick and choose.

If you understand the stock market or have a prudent financial advisor (if there is such a thing – almost all of them missed the call on the tech bubble during the turn of this century) then invest some of your money (check out dollar cost averaging). You can have the best of both worlds but continue to make your monthly mortgage payments.

Business, Culture, Finance, Lifestyle

Top 5 Steps To Get Approved For Student Loan Refinancing

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

You need to refinance your student loan because you know it makes a lot of financial sense. In fact, when refinancing your student loan, the managing of payments becomes easier. But the problem is that you are not sure of the ways to get it approved. Nevertheless, you should not get into refinancing of your student loan before you are aware of a few preliminary steps just like Meet the Parents II and III, Zoolander I and II, and Jurassic World should not have been made before some preliminary checks.

Oh, they already were! Oh well!

What is refinancing of a student loan?

Refinancing of student loan means consolidation of the existing private and federal loan so that it could be consolidated into a new single loan which has a lower interest rate. The benefit is that you have to make lower monthly payments which in turn frees up some money that could be either saved or invested elsewhere.

What are the ways to get your student loan refinancing approved?

Almost all of you are aware of the fact that the criteria to obtain private student loan are pretty strict. This is because private lenders lend money at their own risk. They give loans to students believing that they have the capacity to repay the amount.

However, the lending criteria of one lender vary from the other and also the circumstance of the borrowers is also different from one another. Hence, when you apply for a student loan refinancing, the loan might either get rejected or approved. If it gets rejected you feel disheartened. So have a fair idea about the top 5 ways that could make the approval process of student loan refinancing easier.

  1. Credit Score: The credit score of an individual is considered as a measurement of financial responsibility. When you apply for a student loan refinancing, most likely is that the lender will evaluate the credit score to understand whether you meet your financial obligations or not. Usually a credit score of more than 600 seems good to go but to be on the safe side you should aim at having a credit score of more than 700.
  2. Income: In case of student loan refinancing it is most likely that the lender will scrutinize your income. They want to ensure that they have a steady monthly income and regular cash flow to ensure that the borrower will be able to make the monthly payments. So before you apply for a student loan refinancing you should carefully examine your sources of income. You need also find out whether after making the monthly payments for the loan do you have enough for other necessary expenses. In case you do not have an adequate monthly income you can increase the chances of your approval with a qualified co-signer.
  3. Other Debt: In case you have other debts like credit card payments, auto loans, or mortgages it might influence the approval process of your student loan refinancing. This is because lenders will be apprehensive whether you will be able to make the monthly payments after you have had met all other financial obligations. Hence, a better approach is to repay as much as you can from your existing debts before you apply for a student loan refinancing.
  4. Debt-to-Income Ratio: While you have applied for a student loan refinancing, the lender will obviously have a look at the debt-to-income ratio. It is a ratio of one’s total monthly earnings when compared to your monthly debt obligations. For instance, if you have a monthly income of $10,000 and $4,000 per month debt expenses in that case the debt-to-income ratio is 40%. In case, you have a higher debt-to-income ratio the chances of getting approval for your student loan refinancing dwindles. Thus, it is recommended that before you apply for the student loan refinancing option, you should either increase your income or lower your debt or both.
  5. Employment Status: When you are applying for a student loan refinancing it is important that you are either employed or have a written job offer in hand. It makes the approval easier. However, there are many private lenders who may offer you loans even when you are in school or residency, while most of the lenders will seek for some kind of work experience. In case, you have still not obtained a job getting your student loan refinancing approved can be quite difficult but you might give try with a co-signer.

The factors mentioned above may be a guideline to make the approval process of student loan refinancing easier but it does not guarantee a confirm approval. The final approval depends to a large extent on the lender, the borrower, and a lot of other factors that may be beyond your control. What is not beyond our control is lowering taxes and being business friendly which creates jobs which is what Texas has done but not New York or California but this is another topic.

Good luck on paying off your school loans! Hopefully you did not spend too much money on acquiring a degree that does not lead to a high paying career such as English, Humanities, Psychology, and so forth.

Culture, Finance, Lifestyle

7 Tips For Cutting Credit Card Debt Quickly

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

Credit card debt is always a nagging burden, the long term consequences of which can be quite serious. Thus, it always pays to get rid of this burden as soon as possible and you can do it successfully, provided you work out the following strategy to reduce your debt.

  1. Take stock

You first need to see what is your total net debt on all credit cards before starting to reduce its accumulated debt. Brutal honesty with yourself is required here and writing down the debt amount along with the interest rate on every single card that you have will be a constant reminder of where you stand as a debtor.

Do not tell yourself something is right when it is not, your name is not Barney Frank or Barrack Obama (the housing market destroyer who devastated Fannie Mae and Freddie Mac via giving home loans to irresponsible people and the health care system destroyer which the ACA law has laid waste too, respectively)

  1. Stop making minimum payments

Against a large outstanding amount, the minimum balance payable every month looks tiny and looks easy to pay off. However, if this amount is everything you pay towards this debt on a monthly basis, it will take you much longer to settle the debt.

Moreover, the interest charges on the remaining amount will continue to accrue and increase your debt burden further by compound interest. Remember, the more you pay, the lesser the interest amount becomes because this means you give less time for this interest to accumulate. Your credit card issuer should point this out to you on the monthly statement, for you to see how it’s applicable to your monthly bill.

  1. Tackle debt singularly

If you have multiple debts on numerous cards, make sure to pay the minimum payable on each card. Subsequently, focus on clearing the total unpaid balance on a single card at a time. Choosing the card to pay off first can be chosen by either checking your statement’s interest rates section to identify which credit card slaps the highest interest rates on to you, and then concentrating on paying off the outstanding amount on that card first. Or, you could settle the smallest debt first, graduating to the larger debts in succession.

That could help you psychologically just like when Rocky was fighting Ivan Drago in Rock 4 when he got that first hard punch in and he saw Drago bleed. Then he knew this was not a machine but a man. Now you know you can pay off these cards if you get that first one dealt with.

  1. Combine & win

Consolidation of your debt lets you combine numerous high-interest balances into a single one with a lower interest rate. This enables you to pay off your debt faster without increasing the payment amounts. You can consolidate debt by taking advantage of a transfer rate that is low- balance to remove debt off cards that charge a higher interest.

However, do note that fees for a balance transfer are often between 3 to 5 percent, but the savings accrued from a lower interest rate may be greater than the transfer fee. This should always be factored in when taking this option into consideration.

Having equity at home helps in paying down credit card debt. A home equity credit line may give you a lower rate than those chargeable by cards. However, here closing costs apply, but the benefit is that payments for home equity interest are usually tax-deductible. In addition, when consolidating, it’s absolutely imperative to remember that you have to control your overall spending so you do not accrue new debt in addition to the debt that you’ve recently consolidated.

  1. Reprioritizing budgets

In order to ensure that you don’t accrue any further debt because you are not the US government or California, categorize your monthly expenditures in terms of transportation, groceries, entertainment (don’t watch any more Zoolander or Jurassic World movies!), and housing. Next, identify those areas in which spending can be cut back drastically. Use the money saved from this exercise to pay off your debt.

  1. Try improving your rates

You can also lower your debt burden by negotiating lower interest rates with your credit card issuer. By shaving off a percentage point even, you could save hundreds of dollars over the next year or so, for instance, while paying off the debt. A polite request in this regard may work in your favor and help you become debt free in the long run.

  1. Start using cash

Put all your credit cards away until their debts are settled. Instead use cash. This will reduce your spending by at least 20 percent and the amount saved could be used to pay off your debt. Staying off plastic until the time you are debt free sure makes sense. 

Also while paying off your debt, track your progress. Keep detailed notes of how much still remains unpaid and how you can reach your target of being a debt-free person. This will keep you motivated to reach that ultimate and altruistic goal.

Culture, Finance, Insurance, Tax

True Cost of Owning a Car in the US

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

As a car owner, you are perhaps aware that the sticker price of your car doesn’t give out the accurate figure about its ownership cost. Buying a relatively less expensive car is likely to save you a penny initially but may burn a huge hole in your pocket later by way of expensive repairs.

On the slip side, buying an expensive SUV could make your gas bill spiral. That’s why you need to keep the sticker price in abeyance to identify a truly reasonable car.

Factors on which owning a car in the US and its cost depend

To begin with, you have a sticker price, which of course, is not the prime factor. However, it affects the overall ownership cost, particularly insurance rates and sales taxes (and all working Americans know that taxes are too high but this is another topic) which you need to pay. If the car is financed, you’ll have to work out the interest rate. This again will vary on your individual credit score.

For instance, new cars come with reduced interest rates and long-term loan will always have lower interest rates but do not let that fool you since this means it will take you longer to pay off that car so that means a $28,000 car will perhaps cost you $33,000 by paying it off over the years to the financing company. Something to think about!

Depreciation in cars happens at an average of 15%-20% per annum for the first 5 years. The more expensive vehicles, however, tend to depreciate faster as do sub-compacts.

In addition, while it’s almost impossible to predict how much you will be spending on repairs in the future, you can scour its reliability scores through consumer reports or locate common problems with the car to work out the repair costs.

With repair costs come insurance costs, which again can vary largely for competing models even. The insurance premium payable and the coverage that comes with it is fully dependent on your driving skills and habits, history, your own age, and personal credit score (it does not depend on whether or not you have seen Transformers 5 but you should since that movie is amazing with an incredible submarine scene to boot, but this is another topic!). Older cars usually attract lower premiums, while the newer models with state-of-the-art safety features could get you some hefty discounts which you should consider too.

Fuel costs matter and the less you drive, obviously the less you spend on fuel. That’s why taking your car’s MPG into account is essential when deciding which car to buy.

There are also characteristics that reduce car prices. For instance, while most cars come with 3-year warranties for 36,000 miles, carmakers like Kia and Hyundai offer 5-year warranties for 60,000 miles with other benefits such as roadside assistance. Some eco-friendly models also qualify for tax credits that offset higher purchase prices.

Calculating the cost

The calculation for owning your own car is simple. The operations cost of an average American vehicle is around $0.60 a mile. A new car in the US costs about $33,000 on average, making buying one an important financial exercise.

Another crucial aspect to consider and remember is not to go by the sticker price or monthly payment but take other costs in to account as well. This will give you a fairly accurate figure about the real cost involved in owning a vehicle; the components that in their totality go into the total ownership cost; and comparison costs with various models that also includes the standard five-year cost.

Going by published statistics, the average loan payment per month for a new car in 2014 was around $482. If you drive your vehicle over 15,000 miles per annum, the total ownership costs comes to about $8,698 per annum, according to the American Automobile Association’s study on driving costs in 2015. That works out to about $725 every month.

Further studies have revealed that operational costs also vary by vehicle types. Small sedans recorded an average cost of $6,729 a year or $561 on a monthly basis. An SUV four-wheel-drive, costs around $10,624 yearly ($885 monthly), making the cost spiral by almost 58%.

Since the real cost of owning and driving a car includes fuel, maintenance & repairs, tires, license & registration fees, taxes, depreciation, insurance premium & interest on financing, figures recorded by the American Automobile Association show that average fuel costs amount to $1,682 per annum depending on premium or regular gasoline used and the mileage achieved by the vehicle. Over a five-year period, the fuel costs for an SUV could be $18,000 as compared to $11,000 for a sedan.

Your new tires could cost you around $147 along with installation charges ranging from $60 to $100 or even more. Similarly, repairs and maintenance comprising of tire rotations, oil changes, testing and battery inspection cost about $767 per year. Your fees and taxes amount to $665 every year, says the AAA report.

In order to own a cost effective vehicle, you need to work all of this out. Moreover, you also need to look at a higher resale value. So it’s essential that you look beyond the sticker price and also at the EMI or equated monthly installment. Your research on the ongoing costs of operating and maintaining a particular model will give you a true picture of its affordability.

Finance, Insurance, Lifestyle

Saving Money on Health and Dental Insurance

by Benjamin Roussey|Posted on | 4 minute read | Advertiser notice

There’s a basic problem in choosing a wrong or inappropriate health and/or dental insurance: you may end up paying a hefty premium for both without actually getting broad coverage or protection for a specific purpose, should you become sick.

This would add to your financial woes substantially if you have to foot the bill from your own pocket despite having medical and/or dental insurance. You can save on health and dental insurance in the following ways.

Stick to the family’s existing health plan: Should you be less than 26 years of age, it would be cheaper to stick with your existing family plan for health insurance. It’s a viable option for many young people who live close to their parent’s homes with access to doctors in the insurer’s network. Though when the ACA law goes away and taxes and regulations are lowered America’s economy will shoot upward creating more opportunities for college graduates. One of the themes of the movie The Internship will then no longer be true!

On the flip side, however, when you’re living in a separate state, without access to your normal network, you could be paying more and getting less coverage. Thus, it would make more sense to secure affordable medical coverage by yourself. Work out the math to see what saves some serious expenses.

Start exploring the non-government health insurance sector: Nowadays, the average health insurance seeker has the privilege of choosing insurers operating in the private sector, including certain major players which have opted out of government control recently. Surf sites like eHealth.com to get an idea of who all are the major private operators and what they are offering. You can also go through an online agent who is licensed at no extra cost and he may guide you to more affordable choices. Yes, we know, the Affordable Care Act has made health insurance not so affordable and turned millions of jobs into part time jobs which is horrendous. Hopefully this is fixed in the next year or so.

Optimize coverage on prescription drugs: All leading plans for health insurance provide full reimbursement for prescribed drugs. However, this can significantly vary from plan to plan. If you regularly use prescription drugs, you stand to save a substantial amount of money potentially by knowing beforehand which plan covers your regular needs for prescription drugs at the maximum level. This could lead to a median saving of more than $1,600 when compared with over-the-counter prices.

Catastrophic plans for health insurance: Another viable option for the young. For those under 30, buying a major catastrophic medical insurance plan makes sense. These are designed especially for the young, who generally are healthy and don’t need medical attention that frequently. The plan, however, will keep you covered with notable health benefits and cater to your requirements if and when they arise. It cuts your premium payment by nearly 50%.

Go for short-term coverage: If a major plan for health insurance is unaffordable to you, a short-term plan may provide temporary coverage for any unexpected injuries or illness. The average monthly premium is around $110. In addition, packaged products on medical insurance are also viable. These combine short-term coverage along with other items such as critical illness or accident insurance, vision or dental insurance and even telemedicine benefits.

Finding the Right Dental Insurance

Ask your dentist: Many dentists nowadays offer insurance plans. For instance, one such plan could get you dental scaling for $10 that can last an entire year, free consultations, and also x-rays for a $200 annual premium. Moreover, hefty discounts are available for dental implants and/or crowns.

Start comparing: In order to acquire a clear picture of what’s available in terms of dental insurance, check out sites like eHealthinsurance.com or Dentalplans.com to make a clear comparative analysis. Then make a shortlist of the finest options and finally zero in on one that suits your purpose the best.

Working part time: Many employers offer suitable coverage at reasonable costs for employees working part-time. Even if the employer doesn’t pay your premium, the available group discount could help you save quite a bit.

Enroll with your alma mater or association’s group insurance: If your ex-school offers you a membership of a dental group insurance plan, you may want to put pen to paper. It could cut your premium payments significantly while also offering you some salient discounts. Similarly, as a member of a professional association, group discounts could be available.

Explore the new marketplace for health and dental care: Since dental insurance isn’t mandatory, not all states offer it. Among those that do, some consider it to be a part of health insurance while others offer dental insurance as standalone products. Study this carefully before selecting your policy to extract the most savings.

Of course you do not even need dental insurance. If you eat right, brush, and floss, you should be good to go! You may not want to play basketball or some sports though. Also, if you travel to Mexico such as Cabo San Lucas once in a while you can take care of your dental needs there. The dentists in Mexico are as good as they are in America and you can utilize their services at a much cheaper cost.

For whatever reason, dental costs in America are outrageously high. You can get excellent eye care in Mexico as well.

It pays to pay attention to this for a variety of reasons or else you could be become bankrupt while facing huge medical bills. Choose your policy with care so you can handle a medical emergency which can happen at any time!

Business, Finance, Insurance, Lifestyle

How to Save Money on Auto Insurance

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

The amount you pay for your auto insurance premium varies by a few hundred dollars. This principally depends on the type of vehicle you own and who your insurer is. However, you can certainly increase you savings when paying your auto insurance in the following ways.

Before buying the car, study insurance costs:  Before you buy a used or new car, check out its insurance cost. The premium will be based on the vehicle’s price, costs of repair, its overall past safety record, and its likelihood of getting stolen. And if you live in San Francisco, that could be even higher since that city leads the country in property crimes and it seems the people there do not even care but this is another topic!

You may also get discounts from insurers for any special feature that the vehicle has to reduce the risk of injury or theft. Safety rankings for certain models may be checked using the rating tool for top safety picks of the IIHS or Insurance Institute for Highway Safety.

Look before you leap: That in other words means shop around. Premiums vary from insurer to insurer, so make a comparative study, getting at least four price quotes. Searching online is the best way to do it as you get all the quotes on a single Excel sheet and making a choice becomes easier and faster. Or else, call insurers directly or even the insurance department of your state which may give you some comparative premiums payable to the major auto insurers.

Prices, however, shouldn’t be your only deciding factor. Consult relatives and friends and take their advice, too. Working with an insurance agent or professional dealing in auto insurance will also get you the answers to all your questions.

Older cars can do with lesser coverage: Make sure to thoroughly review the total coverage you receive during the insurance renewal time to ensure that your insurance is in perfect sync with your specific and total requirements. For instance, if your vehicle’s worth is less than ten times the payable premium, turning the ignition (pun intended) for such coverage is not a sensible thing to do. In such cases, simply do away with comprehensive and/or collision coverage. The value of your vehicle is easily calculable online through various free sites such as Kelley, NADA, and TrueCar.

They will not count those nice rims on your car or the new paint job so these numbers may not be the full truth.

Higher deductibles lead to lower premiums: You pay a deductible before the insurance policy becomes officially operational. When you choose an enhanced deductible, you stand to lower costs significantly. However, if you select a higher deductible, be sure to keep enough cash aside to pay it out should a claim arise.

Reliable credit history: Anyone with a decent credit history gets many benefits, and this includes reduced insurance costs. The bulk of insurers uses your credit information to price their auto insurance premiums. Research, in fact, reveals that those who manage their personal credit levels effectively, also make fewer claims. To ensure that you get the deserved good credit, check your personal credit record regularly to be absolutely sure that all information contained therein is accurate.

If you are that rare cash payer and do not play the credit game, then do not worry about this aspect on saving money on auto insurance.

Let there be one insurer for your home and car: You could obtain a discount on the premium when you combine your home and auto insurance together or get more than one car insured with the same insurer. This multi-policy offer comes from many insurers for loyal customers and shopping around for such deals makes sense. Even if you buy from different insurers, these discounts may be available. So look around by all means.

You do not need to look around to see a movie when a Transformers movie is out though, they are all awesome!

Group insurance: Certain major insurers also offer premiums at reduced rates to drivers who take out insurance by way of a group plan, usually from their employers, business, professional, and alumni groups or any such associations. If you can get a group to take out a common insurance policy, you stand to gain yourself on this based on economies of scale.

Discounts pertaining to low mileage: Some insurers offer special premium discounts to vehicle owners whose total annual driving is less than the annual average miles driven per year. Such discounts for low mileage is also available for these types of drivers. So if you are one such carpooler, look around for these types of opportunities.

Look for other discounts: As a policyholder, you may also get special discounts when you have never been in any accidents (or an accident that was pinned on you) or have faced charges of moving violations for a specified period; drive less annually as compared to other average motorists, or have undergone a defensive driving course.

The critical aspect to remember, however, is that discounts are not the main key to your savings. Rather, the final net price is. That’s why any company offering fewer discounts may have a lower overall price still compared to its counterparts.

Business, Finance, Insurance, Lifestyle, Tax

First Time Home Buyers Guide

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

It’s your dream come true. A permanent roof over your head, an asset for life and you very, very own – the first house that you buy. A home that allows you the unparalleled and sheer freedom to live the way you want to.

However, do keep in mind that buying the first home of your life is a somewhat time consuming and tedious process and takes about a year from the time you think of buying one to finally closing the deal and taking possession. The first time home buyer’s guide will tell you how to sidestep mistakes, such as paying excessive interest on your home loan or picking the wrong home.

Your personal credit score needs checking: Most of us buy our first home on a loan. That’s why our credit reports matter. Moreover, it’s also seen that almost 25% of credit reports contain errors, which could possibly lead to your paying higher interest rates on the loan you take. Thus, take ample time to check your score before you take out a loan. Also ensure that the credit report is absolutely error free unlike the movies Meet the Parents II and III which were horrendous and prone with all sorts of errors but this is another topic.

Budget: Your final selection of your first house will obviously depend on your budget. That’s why you need to take a hard look at what you can actually afford. A lender will usually consider a full debt load of a maximum of 43% of the gross income per month and will also include all future mortgages, car & student loans, or credit card outstanding debts.

Therefore, first work out what is affordable to you and reduce your debt-income ratio to the furthest extent possible. Making a down payment of at least 20% will also reduce your loan cost substantially, also getting you a lower interest rate. Additionally, try and keep stable funds in your personal bank account for sixty to ninety days before you apply for the loan. This will increase the banker’s confidence in you.

Prioritize: Every first time home owner has certain expectations from his new home. Therefore you need to very clearly ask yourself what you need from it most. Is it a closer proximity to the workplace or a large backyard that you want to develop as a garden later?

Do you want it designed on open floor planning? Do you prefer a quiet neighborhood? Once you’ve prioritized these demands, it’ll be much easier for you to start short listing. Another vital issue is to know beforehand what trade-offs you can make.

Research: Based on your shortlist, start visiting neighborhoods and prospective open houses or even start gathering information about them. You can use sites that list properties so that you get some idea of the neighborhood and public transport available. Visits to open houses will give you some ideas about homes within your affordable price range and the neighborhoods that appeal to you strongly. This will also help you reduce your debts & save for the down payment.

Budget for home acquiring expenses: When you buy a house, you also have to pay for certain miscellaneous expenses upfront. These could be for title search, home inspection, and property surveys as also home insurance. Costs may vary according to where you live, but a couple of hundred dollars is almost certain. So start saving for that if you haven’t already.

Start organizing the paperwork for your loan: Banks are indeed most particular about mortgage loans and demand all sorts of documentation. These would include W-2 forms or tax returns over the preceding 2-3 years; recent pay slips; credit card statements; recent statements for brokerage accounts; personal bank statements; all past addresses; and statements pertaining to retirement accounts. Start organizing all of this paperwork. You do not want to have your paperwork tossed around in your closet like Peter Le Fleur from Dodgeball did.

Consult a buyer’s agent: The buyer’s agent’s job is to get you the appropriate property, negotiate the deal with the agent of the seller while also guiding you during the deal closing time. Even mortgage brokers will secure for you a more competitive rate on your loan.

Start home hunting: Once the pre-approval on your loan comes through, start visiting prospective properties with your buyer’s agent so that you don’t waste time on unaffordable houses. Once the selection is finally made, put in your formal offer. If accepted, employ a home inspector to look into the property’s physical conditions and drawbacks, if any.

Closing the deal: Keep all financial documents and down payment amount in perfect order before closing. Make an objective review of all mortgage documents and get home insurance, which should be secure before closing. You may pay off the buyer through a cashier’s check or wire transfer, so keep this ready too. Sign on the dotted line of the property transfer form, hand over the money, and be the proud owner of your first home!

And hopefully you get along better with your neighbor than Mike and Phil did in the average comedy Kicking and Screaming!

Finance, Lifestyle

Signs That You Are Living Beyond Your Means

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

With credit card companies literally crying to let you have as many credit cards as you want, buying something on credit anywhere is pretty easy. These two ideas or concepts sort of go hand in hand. This combined with a YOLO or “You Only Live Once” mentality could be your death knell and push you towards living beyond your means.

The consequences in the long run, however, could be disastrous. You could end up bankrupt or caught forever in a debt trap from which getting out is something easier said than done. The only thing worse than this is owing food and supplies to The Saviors in The Walking Dead or perhaps watching the cheating Patriots or Warriors win a championship but that is another topic.

The following signs clearly indicate that you are indeed living beyond your means:

  • Your Personal Credit Score is Low: Credit bureaus track your payment history, outstanding loan balances, and legal judgments, if any, against you. This information is used to compile your credit score that actually reflects your credit worthiness. The range is between 300 to 850. The higher the score, the better because lenders use it to gauge whether you’re worthy of a loan or not. In general, a credit score that’s below 600 implies that you are in debt and living beyond your means. You can check with any of the leading credit bureaus and get a copy of your credit report. This will tell you what these bureaus, financial institutions, and lenders think of you as a potential debtor.
  • Your savings are below 5%: If you are saving less than 5% of your net monthly income, you are probably living beyond your means. Pragmatic spenders desiring financial security after retirement usually put aside as much as they can every month to ensure that they never cross their spending limits.  A below 5% savings rate indicates that you could face the real danger of complete financial ruin in case an emergency like an illness or accident should happen to you (remember, you are not a politician, you cannot spend money you do not have and there not be any consequences). This also implies that you don’t even have the funds to pay necessary insurance deductibles. The safe limit of saving is at least 10% of your gross income.
  • Rising Balances on Credit Cards: Buying on credit is a typical thing done by spendthrifts and more often than not, leads to their financial ruin. Thus, if you’re paying only the minimum amount due on your credit card balances every month or sending just a small portion of the total principal balance, this is a clear indication that you are over your head. That’s why it makes sense to keep track of your credit card spending and keep aside the amount in cash so that the entire amount can be paid off as soon as the bill arrives.
  • Household Expenses Consume More Than 28% of Your Income: When you have your net monthly income figure in hand, calculate the percentage of it that goes towards paying off your house mortgage, property tax, and insurance. If it exceeds 28% of your gross monthly income, then it is also an indicator that you are in the red. 28% is the standard chosen because conservative lenders feel that this is the rate at which the average person can get by comfortably even after paying off their mortgages. You may, of course, cut other expenses and spend more on your house but again, that’s a dangerous move to make.
  • Spiraling & Out of Control Bills: Buying on credit and paying off in installments is a grand option to many. Pick up whatever you want without thinking whether you can afford it or not and get lured by the salesman who tells you that paying an extra $60 per month on your installment won’t hurt you. The fact of the matter is these bills gradually start adding up and you inch towards bankruptcy. Once your monthly income starts getting sliced and directed to pay for a lot of unnecessary installment purchases and services, it’s time you faced the fact that you are living beyond your means like the states of New York and California are but this is another issue.
  • Cut and Slash: Go through all your monthly bills with a hawk’s eye and decide on what is truly required for you and for your family. Any frivolous expense such as a premium 500-channel cable TV package or satellite radio bill can be simply dispensed with – cut the fat, you cannot afford this right now in your life! Cut back on mobile and land line costs, utility bills, and entertainment expenses (Rings 3 was not that good anyhow, neither was Logan, and Jurassic World was horrendous!), and you’ll find that you have eliminated useless expenses which can help you get back on track and give you some money to help you pay down your debt.
Business, Finance, Insurance, Tax

What is an emergency fund?

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

An emergency fund is essentially the money that you’ve been setting aside to take care of unexpected expenses arising out of unforeseen events in life such as when a politician like Barney Frank passes laws that devastates your home’s value. When this happens, and it did too many people on a colossal scale in and around 2008, you want to have some money set aside.

You can call this a rainy day fund too!

An emergency fund allows you to survive at least for a few months just in case you suddenly receive the pink slip (job growth will soon be picking up with lower taxes and less regulations but sometimes companies still lay people off regardless) or get into an accident that prevents you from earning for a substantial period of time.

It could also be a leaking roof or a major car breakdown that needs immediate attention. In other words, it’s like an insurance policy, where instead of paying premiums to your insurer, you’re setting aside some money to be used later should any of the following circumstances suddenly arise:

  • Emergency medical bills
  • Mortgage payments
  • Credit card bills
  • Pending taxes
  • Emergency home repairs (we have all seen Transformers 4; some robot called Lockdown may blow up your home!)
  • Unexpected car damage and repairs

The whole objective is not to borrow for these expenses thereby increasing your debts.

Creating an Emergency Fund

The amount that should be kept as an emergency fund depends on your income and status; thus differing from person to person (you may not need as much money as Katy Perry who lives in her bubble land!). The thumb rule is to save about 3 to 6 months’ worth of funds that are required for all non-discretionary expenses. This fund will help you manage any financial crunch if you suddenly find yourself unemployed. With the aid of this fund, you should still be able to pay your household bills till you find employment again.

You may have to find a job though that is different than what you were doing before. You have to be able to pivot in life.

So how much money there should be in an emergency fund? It will vary. For instance, for a couple with kids, around six months of income is sufficient for an emergency fund. If you are single, have a mortgage, auto loan, and no school going children, you may only need three months since single people tend to be able to relocate easier and they do not have children to clothe and feed.

Automate the Process

One of the best methods for creating an emergency fund is a 401(k); buying a new Lexus is not part of this plan! Do not take financial advice from your neighbor unless they are credible! And if your neighbor is Charlie or Alan Harper, do not do what they say! If your employer offers you a 401(k) plan, sign up for it so that the money you earn is automatically funneled out of your paycheck into a separate account. These contributions are pre-tax and you will soon realize you do not have to sacrifice much to make this financial decision.

For instance, if your yearly earnings are $60,000, increasing your 401k contribution from 2% to 5% will reduce your weekly paycheck by $27. That is it! Also make sure to contribute enough to equal your employer’s “match,” because leaving “free money” on the table is unwise.

You can schedule when you want the money taken out of your pay check as well.

Also, a majority of 401(k) plans come with an auto-escalation feature. This enables you to automatically increase the savings rate by any amount of your choice, which is usually between 1 to 3% every year. For external accounts, create your personal semi-automatic-escalation system: keep a calendar alert that reminds you to spike up contributions by one percentage point or two on an annual basis, maybe every time you get a pay increase or on your birthday.

Pay yourself!

What to do After You Reach the Goal?

If you have accumulated the amount that is suitable for you, you can then pat yourself on the back. Now that you are in control of your finances, you can start investing. The point is, you need to keep on investing a part of your income and create another source of income from it. For instance, if you invest in stocks, every year you will earn some money in the form of dividends. But be careful, stock prices can go down.

You can read about the tech bubble during the turn of the century and know all about that!

In conclusion, having an emergency fund is having extra security. You might have life insurance coverage, health insurance, auto insurance, home insurance, dental insurance, and critical illness insurance to cover you in case you experience some sort of calamity. But none of these will help you if you lose your job. Well, just not as easily has having a 401(k) or a savings account with money saved away for a rainy day.

Life and critical illness insurance are for most people a waste of time and money but that is another topic!

Uncategorized

7 Tips to Become Financially Secure in College

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

As a college student, cash is always hard to come by, not to mention all the expenses that you have to take care of. Not everyone has money like the spoiled Van Wilder!

Here are seven tips that will help you become financially secure in college:

Stay away from the cafeteria and fast food joints on and around campus

Cafeteria and restaurant bills can quickly pile up and while it can be a suitable place to hang out with your buddies and discuss upcoming college projects, it is better if you could pack your lunch instead of spending money on food in this manner. This will not only help you save a few bucks every week, which can turn into significant savings in the long run.

If you think packing your lunch is uncool then you should think about thinks from a different perspective. Either hang out with different people, think about how uncool it is to go further into debt, fight off that peer pressure, and so on. America is trillions in debt and its social security and health care institutions are terrible, that is uncool!

Discount coupons

Internet deal sites have made it so much easier to find and use discount coupons. So why not use them? As a student, you will also find a lot of special coupons that are specifically available to you. Make the most of it while you can. Every penny counts.

You can find coupons and deals in your local newspapers, online deal sites, and social media accounts and pages. You will be amazed at the amount of dollars you will save by spending just a few minutes before buying anything.

Have a budget

You don’t need an extremely difficult and complicated budget plan in order to succeed in your financial planning. But you do need a working budget that will help you keep your accounts in check. You will then understand where all your money is going, where you can save a few bucks, which categories are eating all your savings, and how you can plan for future expenditures. These are all critical decisions, and noting down your daily expenses at the end of the day will help you achieve this.

Managing your time

Most students are so focused on studying and saving money, that they tend to forget how to manage and save time. Time is perhaps the most valuable item that you can spend because it is limited and once spent, you can never get it back! If you watch that goofy science fiction movie In Time, you will know all about that!

You can begin by allotting time for each task and project, and getting your schedule under control. There are several apps available that you can use for this purpose. Or just write it out on a piece of paper, go old school!

Side projects

If you are following a schedule for your educational career, and have managed to manage your time, you should have some free time on your hands now. Instead of wasting these free hours hanging out with your friends, you should instead look out for some extra gigs. Look out for side projects that will help you make some extra cash, and also help you pick up some useful skills on the side.

Freelancing is a poignant way to begin. You can become a part time writer, photographer, designer, or social media manager. There are a lot of websites that offer genuine jobs. You just have to find your strength and passion.

Sell old stuff/Launch a startup

Old furniture that you no longer use and gaming consoles that you got tired of, there are  a lot of stuff that is lying around in your dormitory, room, apartment, and so on picking up dust. You can make some extra cash by selling these via classified or auction sites.

Some of the biggest startups were launched in student dormitories. Facebook is a very popular and common example. If you have an idea, do not hesitate to try it out. Who knows? Maybe it will turn profitable. Keep working on it and ask some astute friends and professors for help. Don’t get crazy though like Leo Spitz did in Transformers 2 though!

Be positive

This last tip is not going to save you money, or even help you make some money directly, however it is one of the most sagacious and most useful tips you will receive. It is easy to lose motivation and confidence, but a positive attitude will help you overcome the hardest of challenges in your student life, and inspire you to keep moving forward.

When the going gets tough, it is time to get going. Hold on because hope is always there and success is waiting for you just round the corner. Do not abandon what you started just because some doubts are popping into your head. No one said it was going to be easy! You can and will overcome these challenges!