August 9, 2017
5 Ways to Simplify Your Financial Life
No matter who you are or what you do for a living, it can seem like your bank statements, credit card receipts, and other financial documents are burying you alive. If you are struggling under the weight of all that paperwork and looking for a way out, there are things you can do to simplify your financial life without sacrificing your long-term goals. Here are five great ways to simplify your financial life.
Use a single credit card. Using a single credit card is one of the most effective ways to simplify your financial life, and doing so will make your finances must simpler. Another twist on this strategy is to use one card for offline purchases and other for online transactions. This is nearly as simple, and a good way to track your online and offline expenditures.
Put your bank accounts under one roof. Having multiple bank accounts all over town creates unnecessary paperwork and makes your financial life more complicated. So shop around, look for the best interest rates and consolidate your funds where they will get the best return.
Go paperless. Reducing the amount of paper that lands in your mailbox will definitely simplify your life, so opt for paperless statements wherever and whenever you can.
Automate your emergency fund with direct deposit. Building an emergency fund is hard, but it does not have to be. Just split your direct deposit between your checking and savings accounts, sending a set dollar amount or fixed percentage to your emergency fund.
Use software to make tax season simpler. Personal and small business accounting software can make tax time easier, so take advantage of their capabilities. Instead of ending up with a shoebox full of receipts next April, you can enter your expenditures and track your expenses as you go. When tax time rolls around, you can simply import the information into your favorite tax preparation software package.
You do not have to let your finances take over your life or worry that you will not have time to get it all done. With a few simple changes to your everyday life, and the power of technology, you can simplify your financial life, lower your expenses, and focus on the future.
July 26, 2017
5 Things First Time Home Buyers Should Do Before They Go Shopping
Shopping for your first home is exciting, and it is only natural to want to get right to it. The idea of trading in that monthly rent check for a mortgage payment that builds equity and wealth for the future is certainly compelling, but there are some key things first time home buyers should do before they start driving around and looking at properties.
Buying your first home is a major commitment, and a big life change. Owning a home and renting are two very different things, and you need to make sure that you are well prepared before you call a real estate agent. Here are five things every first time home buyer should do before they start shopping for the property of their dreams.
1. Assess the Financial Situation
Before you start shopping, you need to set your price range, and that means taking a hard look at your finances. Pull out all your financial documentation - from your bank statements and brokerage records to retirement savings and your emergency fund information. Knowing where you stand financially will make it easier to set a realistic price point, one with an affordable monthly mortgage that will not leave you feeling stretched.
2. Pay Down Debt
If your financial analysis reveals high levels of debt, now is the time to pay it down. High levels of credit card debt and other high interest payments can lower your credit score and make getting a home loan that much harder.
Paying down your debt now will raise your credit score and make you a more attractive borrower, but it will also make your mortgage payment more affordable. If you cannot afford to pay off the entire debt, pay it down as much as possible.
3. Think About Job Stability
As a first time home buyer, your ability to make the monthly mortgage payments is tied directly to the steadiness of your income. In most cases that means the stability of your job, and your employer.
Before you go house shopping, you need to take a realistic look at your job situation. Is the company you work for profitable, with positive cash flow and accelerating earnings? Is the industry you work in growing or shrinking? Is your own job stable, and do you have a positive relationship with your boss? The answers to these questions will tell you a lot about whether you are ready to make the leap from renter to homeowner (and mortgage holder).
4. Budget for Ancillary Expenses
Many first time home buyers are surprised at just how much it costs to own their own home. They budgeted for the monthly mortgage payment but not for the cost of repairing a leaky toilet or replacing a failed refrigerator or washing machine. The ancillary costs of owning a home are nothing to sneeze at, and it is important to factor them into the home buying equation.
From the cost of furnishing your new home to ongoing repairs and maintenance, there are a lot of expenses that go with owning a home. Budgeting for those ancillary expenses may lower your price point somewhat, but knowing you can afford all the costs of homeownership will give you extra peace of mind.
5. Check Credit Scores
Your credit score will play a big role in everything from your interest rate to whether you qualify for a mortgage at all. If you have not already done so, now is the time to check your credit score.
If your credit score is in the upper echelon of the numerical range, you can rest assured that the mortgage qualification process will be a breeze. If your credit score could use some help, finding out early will give you time to raise it. From paying down debt to making every payment on time, the actions you take today could give you a better credit score tomorrow.
Buying a home is a major commitment, one that demands the right preparation. Taking the time to carefully prepare and go through the steps listed above can make everything that follows, from qualifying for a mortgage to making an offer, a lot less stressful.
July 12, 2017
Savvy Spender: Simple, Smart Ways to Make the Most of Your Credit Cards
Savvy Spender: Simple, Smart Ways to Make the Most of Your Credit Cards
With their vast array of special perks and member benefits, credit cards are an appealing financing option for modern consumers. Unfortunately, when left unchecked, credit card debt can easily spiral out of control, leaving cardholders with crushing financial obligations and a mountain of stress. When used correctly, credit cards provide a fantastic tool for managing personal finances and building strong credit, but it is essential to develop an effective strategy for using your cards. Before you whip out the plastic on your next stop at the supermarket or shopping mall, consider the following simple keys.
Research Your Options
Credit card rewards programs offer an enticing assortment of benefits for using your card. Many card issuers provide cash back, frequent flier miles, and special discounts for using your credit card on a daily basis. Before opening a new account, take the time to research the various credit cards available. Be wary of low introductory rates that skyrocket after a few months, and carefully weigh the pros and cons of credit cards that carry steep annual fees. If you are diligent with your research, you should easily find a card that rewards you handsomely for your expenditures.
Pay Your Balance In Full
It is an incredibly simple step, but many consumers overlook the importance of paying a card's balance in full each month. Unless you receive a special financing offer and benefit from a 0% APR for a period of time, there is no valid reason for carrying a card balance. Not only does carrying a balance result in financing charges, but it can also hurt your credit score. Plan to charge only what you can realistically pay off when you receive your bill each month.
Track Your Purchases
While it may feel tempting to throw caution to the wind on your next shopping spree, it is vital to pay close attention to your purchasing habits and monitor your spending. Some consumers use spreadsheet software to easily track their purchases while others rely on handwritten records and printed credit card statements. Regardless of what method works for you, it is important to keep a running tally of your purchases in order to protect yourself against billing discrepancies and keep your spending in check.
If you are looking for an easy way to monitor spending, ask your bank about their mobile banking options. Many credit card companies now offer apps for your smartphone or tablet. These apps notify you as soon as a purchase is made with your card, and many allow you to make payments, transfer balances, and track your reward progress.
Of all the benefits credit cards offer, the consumer protection they extend is perhaps the most underrated perk. Your credit card protects you against fraudulent purchases and even ensures service guarantees in some instances. For example, if you purchase a service or product that is not delivered according to your expectations, many credit card companies serve as an intermediary to resolve the conflict with the retailer. Additionally, some cards provide complimentary insurance for travel purchases and car rentals. Read the fine print of your card contract to ensure you understand the terms and conditions governing your card usage.
From savvy businesspeople to everyday moms and dads, credit cards are powerful finance tools that simplify the spending process. When used correctly, you can even reap great rewards from your cards. By taking the time to learn more about your cardholder policies and making smart decisions at the cash register, you can protect your finances and ensure you are making smart decisions for the future.
June 28, 2017
4 Things You Need To Know When Buying A Vacation Home
Everyone looks forward to a vacation, and many people return to their favorite spot each year. If you really enjoy your annual destination, you might be ready to invest in a vacation home. There are many practical reasons to consider purchasing a second home in a popular tourist area, in addition to the fact that it is your favorite places to visit.
Reduces Vacation Costs
The biggest expenses related to a vacation are the daily hotel rate and dining out three meals a day. While some hotels offer a breakfast buffet, you are responsible for your own lunch and dinner. A family of four can easily spend $75 a day on food and $125 for a hotel. Some highly popular tourist areas can cost twice as much. When you have your own property, you can limit your eating out to only the times you prefer. Your monthly mortgage payment eliminates the need for a daily room expense. You are left with more money for traditional vacation activities and shopping.
Rent Your Vacation Home For Extra Income
The months that you are not enjoying your vacation home provide opportunities for extra income that can be applied to paying the mortgage off quickly. It is unlikely that you can rent your property every week you are not there, but you can rent it enough weeks of the year to make a sizable reduction in your loan. The National Association of Realtors says the most desirable rental locations are "near oceans, lakes or rivers, or at mountain recreation areas."
Choose An Easily Accessible Location
When your vacation home is only three or four hours from a major city, more vacationers will be interested in renting your property. Accessibility is key for vacation rentals, and having well-marked roads in good repair is essential. While you may be able to rent the cabin that requires an all-terrain vehicle to reach it, there will not be as many people interested in staying there. Renters want to be less than 30 minutes from shopping, food, and entertainment while vacationing.
If you choose to rent your home out, be prepared to submit any rental income on your yearly income tax form. There will be a number of deductions you can take so be sure to keep all receipts.
Having a vacation home is a great way for families to spend less on daily expenses. Generating extra income from renting the property helps pay the mortgage, taxes, and insurance. Someday your vacation home may become your retirement home, and it can be mortgage-free.
June 14, 2017
Gathering the Money for a Down Payment in Two Years or Less
Whether you are looking to purchase a home in the next two years or you intend to wait another five, you must find a way to save up enough money to use for a down payment. Without the money to make a deposit on a house, it isn't likely that anyone will accept your offer to purchase their home. It’s likely you won't be able to qualify for a mortgage either unless you have a tidy sum of money for a down payment. Here is a look at several strategies you can use to help you amass a sizeable down payment for your home purchase.
Sell Your Car and Take Public Transportation
If you don't need your car because you can walk or take public transportation to work, you might want to sell it. Having a larger down payment can keep your mortgage payment affordable enough to allow you to take on a car loan once you've purchased your home.
Your monthly rent is probably the biggest expense that you have. If your lease is up, move back in with your parents or crash at a friend's place for the next year or two. Negotiate so that you don't have to pay any rent while you are staying there. For example, you can volunteer to mow the lawn, clean the house, and run errands. Take the money you save and place it into a savings account that you can use for a down payment.
Discontinue Cable TV, Premium Services, and Shopping Subscriptions
Discontinue all non-essential services and subscriptions, no matter how small the cost might seem. If you have to pay a membership fee, then you should unsubscribe. You probably do not need the service for the next couple of years. Plus, if you miss the service, you can always sign up again once you purchase your home.
Save Monetary Gifts, Bonuses, and Tax Refunds
While the extra cash might provide you with the pleasure of buying something you want but don't actually need, you should set it aside for the day you plan to buy your home. You can always make the purchase another time.
Become a Minimalist
Stop buying items that you do not actually need. For example, you can get creative and use shopping bags to wrap gifts and junk mail for scrap paper. Basically, if you don't absolutely need the item, simply do not purchase it.
Sell Off Collections
If you've been an avid collector of comic books, antiques, or some other valuable commodity, now might be an advantageous time to sell your collection. The money can increase the size of your down payment considerably, allowing you to purchase your home in a more timely fashion.
Avoid Expensive Dates, Vacations, and Meals
While it might be enjoyable to go on an expensive vacation or to dine out every weekend, the cost is going to make it that much harder to save up the money you need to buy a home. Whenever possible, avoid expensive recreational activities so that you can put the money to better use.
Use Coupons and Discounts
While it can be annoying to look for discounts and coupons, show them on your phone, or print them out, doing so can save you lots of money. You can take the savings and set it aside for your down payment. Don't fool yourself into thinking that an extra five dollars here and there isn't going to matter. Every cent that you save is one that you won't need to find later.
The size of your down payment is going to influence your ability to obtain a mortgage - as well as the size of your monthly obligation. Making a conscious effort to save money to use as a down payment is going to allow you to amass a larger sum than if you simply put away fifty dollars from each paycheck. Try to save money using as many ideas as possible so that you optimize your ability to achieve your goal of saving up for a large down payment on a home.
May 24, 2017
3 Simple Updates to Help Sell Your Home Fast
If you're getting ready to sell your home, you may be wondering what you can do to help it sell quickly. How can you make your home more appealing without investing a lot of time or money? The answer could lie in updating some of your home's fixtures.
Update Your Lighting to Impress Homebuyers
Few things can make a room look more drab and dated than old, dingy light fixtures. You might be surprised at the affordability of stylish new fixtures. Most require only the most basic do-it-yourself knowledge to install. Buyers are always impressed by energy efficiency, so consider choosing LED or other low energy usage options.
To maximize curb appeal, begin with your porch light. Inside, new lighting in your kitchen and main living space will give you the greatest return on your investment. A well-lit room looks larger and more impressive than a poorly lit one does. Therefore, be sure to use the brightest lamp or bulb (measured in lumens) your fixture is rated for.
Quick Kitchen Upgrade: New Faucet
Arguably, the kitchen is the most important room in any home. However, a kitchen remodel is notoriously expensive, and few sellers will see a return on such an investment. Installing a new faucet in the sink is an easy, economical way to make your kitchen more appealing to potential homebuyers.
You don't necessarily need to spend several hundred dollars, but skip the builder's grade faucets and opt for something impressive. Lift-outs are especially popular. Another tip: if your sink currently has a separate sprayer and you upgrade to a lift-out faucet, pick up a matching soap dispenser to install in the hole left by your old sprayer. These features can give your whole kitchen a bit of modern appeal.
Bathroom Facelift: Updated Fixtures
You can give a bathroom a whole new look by updating a few fixtures. Decide if you need new lighting, as above. Then, update your faucets. Matching the sink, tub and shower fixtures will give your bathroom a cohesive, professionally designed look. You may want to replace the toilet handle as well; it's usually best to match either the color of the tank or the other fixtures in the room.
Even if your bathroom and kitchen have served you for many years, these new fixtures can give your place a stylish, modern feel - and help you put your best foot forward when you sell your home.
May 10, 2017
Home Buying 101 - Why the Relationship with Your Broker Should Be a Positive Partnership
Whether you are looking for your first home or moving up to the home of your dreams, having an experienced real estate broker or agent in your corner is a must. Real estate is a very specialized industry, and it requires a special kind of expertise. Choosing the right broker can make every part of the home buying process - from identifying the ideal property to finding an affordable mortgage to deciphering the confusing paperwork - a lot easier.
Before you attend a single open house or drive around your chosen neighbourhood, you should shop for a great real estate broker. You will want to choose a broker who is experienced in the neighbourhoods you are looking at, one who can help you with the ins-and-outs of the home buying process. Local expertise is particularly important, since it will help you target the right areas based on your purchase criteria.
Communicating Your Needs
Having a great broker in your corner is important, but what comes next will be even more critical. It is not enough to be a passive part of the home buying process - the relationship with your broker should be a positive partnership.
A big part of that positive partnership is communicating your wants and needs. You should work with your broker to create a list, and you should communicate your desires clearly.
Separating wants and needs is very important, since it will help your broker identify the most promising properties. If you have your heart set on granite countertops, your broker will not waste your time showing you houses with butcher block counters. Knowing your wants and needs ahead of time will make the job of the broker easier, but it will also simplify your home shopping process.
Sharing the Search
Even after communicating your wants and needs, you can further foster a positive relationship with your broker. While your real estate broker has access to a full range of listings, he or she cannot be everywhere. If you see a home you like, send it to your broker. Sharing the search will be good for everyone, so feel free to do some freelance shopping.
There are plenty of great websites designed with the home buyer in mind, and their listings are updated on a daily or even an hourly basis. You can even set your own search criteria and get notifications when a home fitting your needs shows up. Either way, sharing the search duties with your brokers will help you make the most of your home shopping.
Fostering a positive relationship with your real estate broker is an essential part of finding the perfect home. From communicating your wants and needs to sharing the search duties, there are plenty of ways to create such a partnership. With your combined efforts, you will have the home of your dreams before you know it.
April 26, 2017
Getting Your Whole Family on Board When Selling Your Home
If you are selling your home, this can be a challenge when you are in charge of getting your family on board as well. Selling a home with kids has its own challenges, but it isn't impossible. Here are four tips for selling a home when your whole family will be involved.
1. Keep Kids in the Loop
Selling the family home can be stressful on kids. While you might want to shelter them from the overall home-selling process, it is better to let them know what you are thinking for your family's future. Try to get kids excited about moving in general, and what they can look forward to in a new home.
2. Clearing out Your Home to Show
Whether showing your home to sell involves renting a storage unit or moving out completely, there will be disruptions in everyone's lives. It may be best to move into a rental to keep kids and pets safe while potential buyers are viewing your home. If you need to put items in storage, explain to younger kids this is temporary and that items will be brought back into the mix once you settle into a new home.
3. Get Everyone Involved
Kids aren't too young to help get your home ready to sell. Tasks such as cleaning and organizing can be done by all members of your family. If you can reward your kids for helping out with cleaning or DIY projects, they might pitch in more and be excited about the selling process. You and your spouse should set a good example with cleaning and fixing up so that your kids will follow suit.
4. Gear Your Home's Staging Toward Families
If your family will be staying in your home while selling, it will be hard to hide the fact that there are kids there. You can play this up and gear your home toward prospective families. But be sure to clean out clutter and items such as dogeared art work; your home should look fun and family-friendly, not disorganized and lived-in.
A family-friendly real estate agent can help with ideas for your home as well. Agents who work with families will also have buyers in mind that they can bring to see your home specifically. If you can get your family on board with getting your home ready to sell, the process can be handled smoothly from start to finish.
April 12, 2017
Buying a Home, Step One: Mortgage Pre-Approval
Whether you're looking to buy your first home, or haven't purchased a home in the past several years, you may be surprised to discover that searching your local real estate listings is not the best place to begin. You can certainly get ideas about what you're looking for by browsing through area homes for sale, and there's no reason not to do so. However, once you begin your home search in earnest, you'll want to have one important step completed.
Your first step in the process of buying a home is to get pre-approved for your mortgage. This will help you in a number of ways:
You'll have a firm budget to work with
You'll have time to compare and find the type of mortgage that best suits your needs
Sellers will see that you're a serious buyer
A pre-approved loan takes much less time to underwrite than one that hasn't been pre-approved
Each of these benefits work together to help smooth the entire home-buying process.
Know your budget with a pre-approved home loan
If you're like most people, you have a good idea what you can afford to pay each month. Most likely, you also know how much you have available for a down payment. However, the total monthly mortgage payment can vary from one loan to the next. Additionally, even a small change in interest rate can mean a significant increase or decrease in your monthly expense.
By starting your homebuyer's journey with a pre-approved home loan, you'll shop for a new home with a firm budget in mind. You'll have a clear idea what your monthly payment will be, and that can save you from falling behind on payments after the purchase.
Shop for a mortgage before you shop for a home
In addition to traditional mortgage options, there is an array of other types of home financing. Your situation and your needs are unique to you. Shopping for the right mortgage for you can take time. You don't want to feel rushed when making this decision because you've already found the home you want to buy. It's important to have the home loan that best suits your current and future needs.
Beat out competing offers with pre-approved financing
Today's real estate market moves swiftly, and many sellers may receive multiple offers. In most cases, sellers will consider offers accompanied by a letter of pre-approval before those without. Savvy sellers, as well as their agents, know that it takes less time to close a home sale when the buyer's lender has pre-approved the financing.
March 29, 2017
Three Ways to Get on the Property Ladder
Property investment is more challenging than ever due to a buoyant housing market in major cities and the rising cost of living. Many people are concerned they'll never be in a position to buy a property, but the great news is there are several keys things you can do to get your foot on the property ladder.
1. Consult a financial planner. Once you've decided to buy a property, seeking financial planning advice is imperative. A financial advisor can save you a great deal of time and money, and help you avoid the costly mistakes made by many inexperienced home buyers. A financial planner will help you realistically assess your budget and suggest strategies to maximise your income and prepare for the future.
2. Develop a savings plan. There's no point trying to save a deposit for a house if you don't have a solid savings plan in place If you're serious about property investment. you need a plan, developed in consultation with your financial advisor, that allows you to build your nest egg while not sacrificing your quality of life today. After deducting your current housing costs, try to put aside the same amount which you have calculated you can afford to pay towards your mortgage each month. This way you'll be able to determine if you can realistically afford these payments before taking the plunge into property ownership. You'll be bringing the dream of property ownership closer to reality by making regular substantial contributions towards your deposit.
3. Research. While it's great to seek help from financial planners, it's also important to educate yourself on the property market and financial products. Research the areas you would consider buying in to get a good understanding of market values. Go to property listings well before you're ready to buy so that you have a solid idea of what you can expect to get for your budget and the different options available. If you're experienced at attending open houses you're far less likely to fall head over heels with a property and make an unwise decision based on your heart instead of your head. Talk with a Mortgage Broker to learn about the different types of loans available and discuss which one best suits your needs.
Property investment requires a great deal of financial planning and consideration, but it's worth it to get your foot on the property ladder.
March 15, 2017
Why Remortgage? 4 Excellent Reasons to Consider Refinancing Your Home
Your home is probably the most significant purchase you'll ever make, yet it's surprising how many people simply continue paying their mortgage every month without thinking too much about it. However, there's no reason to stick with your current deal if you're unhappy with it - and refinancing can often dramatically improve your daily finances. Here are four compelling reasons to consider a remortgage.
Receive a Better Rate
When you took out your mortgage, you were probably quoted a beneficial rate in a bid to earn your business. However, as time goes on you'll probably find the interest edges upwards - there's usually little reward for loyalty, and the most attractive deals will generally be given to new customers. However, a remortgage gives you the opportunity to negotiate a lower interest rate and therefore more affordable monthly payments, whether you stay with your current mortgage provider or move to a new one.
Change the Term
Lengthening the term will reduce your monthly repayments at the cost of more interest being paid overall. If your finances have taken a turn for the worse since you took the mortgage out, this can potentially make the difference between staying in your home or being forced to sell. The other side of the coin is that shortening the term will increase your payments but see you free of your mortgage more quickly, potentially saving a considerable amount of money along the way. Either way, a mortgage refinance gives you the flexibility to reorganize your finances around your primary asset.
Switch Mortgage Type
Economic conditions change over time, and this is reflected in fluctuating interest rates on typical mortgages. When you first bought your home, you may have opted for the security of a fixed-rate deal, but this may no longer be the most cost-effective option. Switching to a a variable-rate mortgage could let you take advantage of current low base rates. On the other hand, if you currently have a variable-rate deal, you may feel now is a good time to lock in a low rate by switching to a fixed deal.
Whether for home improvements, debt consolidation, or simply to take advantage of real estate price rises to get a little extra cash, if your outstanding mortgage is significantly less than your home's value you can unlock the difference with a remortgage. By taking out a larger loan, you can pay off your existing debt with some money leftover to spend how you like - and if you get a better mortgage deal in the process, then all the better.
A home loan is probably the biggest single financial commitment most people have in their lives. However, your current deal is not necessarily set in stone. Assessing your options and switching to a more appropriate package could give your finances a welcome boost for relatively little effort, so why not consider applying for a remortgage?
January 25, 2017
Timing Your Home Sale
Timing the sale of your home is easier said than done. There are all sorts of factors to consider, from seasonal advantages to the economic climate of a particular region. And that's in addition to political and national issues that might affect your decision about when to sell.
Nevertheless, taking a strategic approach can shave weeks or months off the selling cycle. That is, if it's feasible for you to wait. In some cases, you may have to move immediately for personal reasons. A new job or divorce might overrule, and you'll be forced to enter the market ready or not.
But when time and circumstances are on your side, you may be able to command a higher price or make a quicker sale.
Traditionally, spring is considered prime selling season. This is the time of year when homes "show" the best, especially in cooler climates. The garden looks great, the weather is nice. Maybe it's spring fever that drives real estate activity during this time. But if the fever gets too high, it can spell trouble. The law of supply and demand can shift if too many properties come onto the market.
Depending on the geographic location, summer and winter are generally the slowest months, although these months often favor the seller in terms of supply. Conversely, fall is busy, but ushers in competition as buyers have more to homes choose from.
An experienced real estate professional can help you time the sale of your home based on factors affecting your region. But given the current real estate market nationwide, the advice will likely revolve around what's best for you personally as well as financially, especially if you live in an area with a glut of homes on the market.
The key question to ask is, "Why are you selling?" Depending on the answer to these two questions, you can better time your sale.
1. Do you need or want to get the maximum price? And if so, are you willing to keep your home on the market indefinitely?
2. Do you need or want to sell it quickly? If so, are you willing to sacrifice profits or even take a loss?
You'll probably fall somewhere in the middle, hoping for a fairly quick sale at the best possible price.
As you can see, timing a sale is complicated. But with sound advice and a little luck, you'll time it perfectly.
January 11, 2017
How to Use Debt Consolidation Loans Effectively and Safely
Visit almost any financial site on the web, or watch nearly any daytime TV channel, and you're likely to see advertisements promising that a consolidation loan can solve all your debt problems. There's no doubt that consolidation can be an effective way out of financial difficulties, but there are very real dangers involved. Done badly, it can turn a poor situation into a disastrous one. If you want to enjoy the financial freedom that debt consolidation can bring, it's important to bear the following points in mind before committing yourself.
Can You Get a Low Enough Rate?
The basic idea behind debt consolidation is to rearrange your finances to make your monthly repayments more affordable, even if that means taking a lot longer to clear the debt. This relies mainly on obtaining a loan with a low enough interest rate to make it worthwhile. Unless taking out a new loan will significantly reduce your monthly expenses, it won't do anything to solve the underlying problem, even if it might temporarily stop the demands for repayment on your overdue accounts.
Are You Risking Your Home?
Wrapping up your unsecured debts into one bundle secured on property might be a quick way out of immediate difficulties, but if you get into trouble making your repayments, you risk losing your home to foreclosure. If debt consolidation is a response to a desperate situation, it might provide short-term relief, but only at the expense of delaying the problem with worse eventual consequences. Be sure you can fully afford your new loan before signing up, and don't rush into accepting a high-rate deal simply through desperation.
False Sense of Security
After paying off all your problem debts with your new loan, it can be tempting to see your situation as a clean slate. This isn't the case - you've not cleared any debt, just restructured it. If you then start to use your credit cards and other accounts to build up new debts, you'll likely end up in an even worse position than before. To avoid this, make sure you close your old, empty accounts, cut up your credit cards, and avoid all temptations to spend money that you can't afford to repay immediately.
In situations where debt is costing too much to be handled, consolidation can be an excellent tool for bringing your budget back under control. However, be sure to think carefully before heading down this path if you want to enjoy the benefits without risking disaster.
If you are looking to consolidate debt, contact me today to review your options.
December 29, 2016
Should You Borrow Money to Invest in Real Estate?
There's no disputing that real estate investment is one of the best business models for those looking to achieve long-term financial success. The one problem most would-be investors have, however, is the fact that real estate is a business with a high capital requirement. This leads many to borrow money to finance their real estate investments, a factor that can worry more conservative potential investors. So, should you use borrowed money to finance your first few real estate deals?
The Upside of Borrowing Money
Borrowing money for property is a common practice among real estate investors, even those who could probably finance all of their deals themselves. Borrowed money has the advantage of not coming out of pocket and not tying up massive amounts of your capital. Even for a successful real estate investor, tying up $100,000 or more in a property can be difficult for cash flow. Extrapolate that over the several deals that seasoned real estate investors may have going at any one time, and it is easy to see why borrowing money is a common practice.
The Risks of Using Borrowed Money
Of course, borrowed money also has its risks. Using borrowed money means that if a deal becomes unprofitable, there will still be repayment, not to mention interest, to deal with on top of the losses. Relying too heavily on borrowed money also makes your real estate investment business too reliant on banks or other lenders, preventing you from achieving financial autonomy in your business. This lack of autonomy can also lead into another problem, which is that banks are often wary of lending to real estate investors as opposed to actual home buyers. There are other sources of money, such as hard money lenders, but most beginning investors will not have access to those opportunities. Relying on a bank to lend you the money for your business may ultimately limit your business more than expand it.
Is Borrowing a Good Option for a First Investment?
As strange as it sounds, it is better to buy your first investment property with cash and then scale your business by borrowing money later on. However, this path will only be open to those who have the means to buy a property outright. For everyone else, borrowing will be a reality, regardless of whether or not it is optimal. If you need to borrow money for your first real estate investment, there are some things you can do to limit your risk. Firstly, start by investing in a property with a relatively low buy cost, so as to limit the amount of money you have to borrow. You should also be sure to find a deal that you are sure can turn you a profit, as losing on your first real estate deal while using borrowed money can all but put you out of business. Finally, only borrow what you need. If you can fund a portion of your investment yourself and only borrow part of what you need, you will find yourself paying interest on a smaller principal amount.
When is Borrowing the Better Option?
Although cash may always seem better, there are some circumstances wherein borrowing money is clearly preferable to using your own money. The best example of one of these scenarios is when buying a property to turn into a rental. Unlike a flipping deal, you will not make your money back on a rental property for years after the purchase is made. With that said, it makes little sense to invest your own money into a rental property unless you have so much capital that you can afford to have your money tied up for years or even more than a decade. A better approach for most investors is to borrow against the house and rent it out at an amount that produces a positive cash flow, thus generating some income and building equity in the house as it is paid off.
Another instance in which it makes sense to borrow for real estate investment is when an investor is buying a house or property at a higher price than what he or she normally deals with. Higher-priced properties require a larger initial investment but can also yield much higher returns than their low-price counterparts. Borrowing a portion of the price of a high-value property can be sensible, as it allows you to expand your established real estate business into increasingly larger deals.
Borrowed money is an integral part of the real estate business, but it does need to be approached with a proper respect for the risk that comes with it. For those who have enough capital to buy properties without damaging their own financial well-being, it is best to do so under most circumstances. However, for the majority of real estate investors, borrowing money to finance properties is necessary to some degree. If you do need to borrow money to finance a property purchase, be sure to invest in a property you know can turn a profit, and use the money you borrow wisely in order to prevent substantial financial risk.
December 14, 2016
Going Away for the Holidays? Protect Your Home against Burglars!
Burglars look for opportune moments to enter homes in search of valuables, and they don't take breaks for the holidays. In fact, many burglaries take place during the holidays, especially when people go away on vacation or to visit family. Here are several tips that you can use to burglar-proof your home during the holiday season.
Install a Security System
Whether you install a do-it-yourself security system or hire a professional service to do it for you, having security cameras reduces the likelihood that a burglar will choose your home. In addition to a security system, you might want to purchase a door alarm with a camera system to help protect against intruders. Some of the door alarms include video cameras with remote access, allowing you to interact with the people standing in front of your door. This type of system allows you to scare burglars away if they knock at your door to see if you are home.
Install Outdoor Lighting
Since burglars often prefer to remain hidden, setting up additional sources of outside lighting can deter them from breaking into your home. Simply install motion-activated lights for the walkway, doors, and driveway, and put up individual solar lights along the perimeter of your home and outbuildings to keep burglars away from your property.
Don't Advertise You Are Leaving
Whether you plan to go away for a single day or an entire week, try not to make it too obvious. Don't mention your trip on social media websites until after you return home. If you are traveling with luggage or taking bags of gifts with you, try and pack your vehicle while it is still sitting in the garage.
Secure Your Valuables
While it won't be possible to hide all of your valuables, you should try to camouflage at least some of them. For example, you can hide laptops in the linen closet underneath a pile of towels or place expensive jewelry in a wall safe.
Pretend Someone Is Home
Although burglars have gotten wise to homeowners leaving on their lights when they go away, other strategies can help to convince them you are still there. In addition to connecting your lights to timers, connect a television to a timer to create the illusion that someone is home. Potential burglars will see the illumination from the TV and think that you are watching your favorite show.
November 24, 2016
Saving For College: Four Tips For Parents
One of the prime concerns of parents, especially parents of teenagers, is how their children will be able to afford college tuition. With prices going up each year at even state and community colleges, higher education is an expense that can burden students with debt for years to come. Though some debt is going to be a reality for the vast majority of students, there are several ways parents can set aside some extra money to help their children with college tuition.
Anything is Better Than Nothing
Many parents with limited financial resources believe that there is nothing they can do to help their children with the cost of college tuition. This, however, ignores the simple financial fact that any help, no matter how small, is better than nothing. College students often go through long application processes and compete fiercely for scholarships of only a few hundred dollars. If a parent can provide even $1,000, then, it's $1,000 less that the student will have to pay off with interest later in life.
Starting Early Means Larger Savings
Many parents don't begin saving for college until their children are in their early teenage years. While parents can still put together a decent amount of money to contribute to tuition by starting at this point, it is best to start earlier and set aside a regular amount of money each month or week. Say, for example, the parents of a five-year-old decide to put just $20 every week into a savings account for their child's education. In the 13 years between the starting point and the age of 18, when most students begin their college educations, the parents would be able to save an impressive $13,520. By starting the saving process early, even minimal weekly contributions like this can add up to a substantial amount of money.
Don't Be Afraid to Ask Relatives For Assistance
Although it is often seen as rude to ask relatives for money, saving for the education of a child is a special circumstance that negates this point of financial etiquette. Relatives, especially grandparents, will usually be more than happy to help with college savings to some degree. You can try to set up a set amount for them to deposit into the savings account on a regular basis, or ask them to set aside whatever they are willing and able to on their own and to contribute it when your child begins college. Whatever arrangement can be set up, multiple people saving toward college tuition will always produce a larger overall family contribution.
Make Larger Contributions When You Are Able
For some families, $20 per week may be all there is to spare for educational savings. However, there will likely be times when there is a little more money to put toward educational savings. Income tax time, for example, produces appreciable tax returns for many lower-income families. If you receive a large tax return and do not have debts or other expenses that require the money more urgently (which should always be taken care of before setting money aside for anything), it may be a good time to put an extra $100 into the college savings account. It is also possible that a new job, a raise or other special circumstances may increase family income. If this happens, you may want to consider increasing your weekly or monthly savings contribution. Your child's educational savings shouldn't come at the expense of bills and household necessities, but if you gain additional income, it is wise to use a small portion of it to build the savings.
Unless your family is quite well off or you come into a significant windfall, chances are that your child will have to borrow at least some money toward his or her education. However, parents can easily set aside enough to make at least some kind of contribution and reduce the amount their children will have to pay back with interest later on in life. Parents who plan well, begin early, ask relatives for added contributions and make larger additions to college savings when they can will be able to substantially ease the burden of college debt when their children begin to pursue higher education.
November 9, 2016
Curb Appeal on a Budget
If you're like most people looking to sell your home quickly, you already know the importance of curb appeal. While more and more homebuyers are looking online for homes for sale, a majority still do the trusty ol' drive-by before requesting a showing. If your home's exterior can't wow potential buyers from the street, you could be missing out.
Of course, if your home is for sale, you're getting ready to move--and that can put a strain on anyone's budget. So how can you boost your home's curb appeal without breaking the bank? You don't necessarily have to repaint or make large repairs. With minimal effort, you can entice curious homebuyers to want to see more.
Neaten Your Yard
You've probably done a good job already of cleaning up your yard. Keeping the lawn mowed and edged and the garden beds weeded is a no-brainer. That said, it might be a good idea to take it a step further by giving your yard the appearance of being easy to maintain. This can include:
. Patching bare spots in the lawn
. Adding a fresh layer of mulch
. Replacing annuals with low-maintenance perennials
. Patching cracked or pitted concrete
Clean Your Home's Exterior
Sweeping the porch may not be enough. Look up and make sure you get the cobwebs out of your overhangs and around the mailbox, house numbers and porch light. Clean your windows, inside and out. You may want to consider renting a power washer if your brick or siding looks dingy; you might be surprised at the difference it makes.
Low-Cost Exterior Upgrades for Curb Appeal
Sometimes, investing a small amount of money can help get more showings--which can mean selling your home more quickly. Some inexpensive upgrades that may make a big impact include:
. Painting your front door
. Replacing your mailbox
. Installing new house numbers (be sure to repair or cover any cosmetic damage left by the old ones)
. Adding potted flowers or hanging baskets to your porch
If any paths or entryways are too dark at night, consider installing some new lighting. Homebuyers are impressed by the safety and security of outdoor lights. Solar-powered path lamps and motion-detecting floodlights over the garage door are particularly impressive.
Never underestimate the value of good curb appeal. You’d be surprised how taking small steps can completely change how buyers see your home.
October 27, 2016
5 Tips for Buying Your First Rental Property
Investing in a rental property is a great step toward earning passive income and building wealth. Unfortunately, becoming a landlord for the first time can also be challenging and lead to a financial loss if you don't know what you're doing or what potential traps to avoid. Here are five tips for buying your first rental property that will help ensure your success and make the entire process less stressful.
Carefully Research Neighborhoods
The neighborhood where you choose to purchase your first investment home will have a huge impact on the success of your endeavor. Here are a few neighborhood features to keep in mind:
- Look closely at crime rates. Buying in a high-crime area may help you snag a bargain but you need to ask yourself if it's worth it. Areas with a lot of crime may not attract the best quality tenants, and you may find yourself dealing with the hassle and expense of frequent vandalism and break-ins. You will also be limited in how much rent you can reasonably expect to charge.
- Buy in the best neighborhood you can afford. If you are starting off with a small budget, purchasing a rental home in an 'up and coming' neighborhood that shows signs of gentrifying and appreciating in value can be a great opportunity. Just bear in mind that you will need to be patient as it may take years for rent prices in the neighborhood to go up significantly.
- Pay attention to schools in the area. If there are great schools close by, you will attract families who want to rent long-term. On the other hand, if you buy a home near a university you will always have potential renters but will have to deal with frequent tenant turnover and possible damage to your property.
Be Wary of High Vacancy Rates
The key to a successful investment property is to have it rented out continuously. Even if you only charge enough rent to cover your mortgage, property taxes, and related expenses, this is better than owning an investment property that sits empty for long stretches of time. If a high percentage of homes in the area seem to remain vacant for months at a time, chances are yours will as well.
Be Conservative When Estimating Expenses and Profits
It's important to think long-term when buying an investment property. Unless you are buying a home with cash, don't expect it to be profitable until you've paid down your loan quite a bit and built equity. At first, just aim to cover your expenses and always estimate these on the high end just to be safe.
Consider Hiring a Property Manager
Property managers will handle many of the time-consuming tasks involved with being a landlord, all for a small percentage of the monthly rent. They will find and screen tenants for you, run background checks, collect rent, call repair workers and house cleaners, and even perform basic maintenance. Hiring a skilled property manager often saves money in the long run, because it helps avoid costly vacancies and evictions.
Look for a Move-in Ready Home
Unless you have a construction background, make your first foray into real estate investment as easy on yourself as possible by buying a move-in ready home. Look for a home that can easily pass an inspection and is not in need of major repairs or renovations. On the other hand, cosmetic details like paint colors, old carpeting with nice wood floors underneath, and dated fixtures can easily be tackled by a novice without spending a lot of money.
By following these tips, you can move into investment property ownership without regret or worry.
October 12, 2016
Is Having No Credit As Risky As Having Bad Credit?
Let's clear up one misconception, right off the bat: having no credit is not the same as having bad credit. 'No credit' simply means that your credit history - which tracks your loans and repayments over the years - is empty, and your credit score is '0' as a result. But having 'bad credit' implies a credit history tarnished by late or missing payments on your existing loans.
Why Bad Credit Is Risky
Rich or poor, urban or rural ... we all rely on credit to get the most out of life. And having poor credit affects your finances in many ways, all of them negative.
Poor credit can keep you from qualifying for a large mortgage on your dream home. It may prevent insurance agencies from offering you their lowest premiums. Even potential employers might pull your credit score (with your permission) when making a hiring decision. This is most often the case for positions with a high level of personal responsibility, especially around cash or finances.
Worried about your current credit history? Repaying your existing debts (if at all possible) is the best first action you can take, and your bank or credit repair specialist can help you with the more complicated steps.
Is It OK To Have No Credit At All?
Even financially savvy people are sometimes wary of opening lines of credit. After all, with thousands of dollars suddenly becoming 'available' to you, the temptation to overspend can be all too real. Why not just stick to cash, or to your debit card?
If you don't have any credit, you haven't necessarily made any financial mistakes. But here's the thing: Banks and other lenders aren't in the habit of simply giving away money. They need some assurance that they will be repaid in full (likely with a bit of interest to make the loan worth their while). Since nobody can see the future directly, these lenders have to make calculated decisions based on your credit history in order to decide whether you're trustworthy and responsible.
Show these lenders that you've consistently paid off your debts on time, and they'll be much more likely to grant you large loans (with more favorable interest rates) when you actually need them. Ultimately, playing by their 'rules' will open up new opportunities down the road - a much nicer home/mortgage, for example, or even just lower insurance premiums. These are things that you can't easily achieve without a good credit history.
Avoiding credit (and the temptation to overspend), might sound like a responsible choice on the surface, but it's not ideal in the long run. In fact, having a strong credit score is one of the smartest financial decisions you can make for yourself. And it's never too late to get started!
September 28, 2016
7 Tips for Buying a Condominium
There are many advantages to living in a condominium. You aren't required to mow the grass or shovel the snow (if any). You have access to amenities such as pools and fitness centers. And you probably have a choice location, as condominium buildings are often located in preferred urban neighborhoods.
However, there are also some negatives associated with condo living. To avoid making a purchase that you will later regret, it's important to ask certain questions before making a decision. Keep in mind the following tips.
1. Find out what the condo purchase includes. In addition to the unit itself, your purchase may include storage space and access to a parking spot. However, this is not always the case, so you need to inquire.
2. Inquire about fees. All condo corporations or associations levy regular fees. The fee typically covers insurance and maintenance, and it may also cover landscaping, utilities, and garbage collection. In addition to finding out about the current fee amount, it's a good idea to ask how often the fee has been raised and whether any increases are planned for the near future.
3. Ask about special assessments. Apart from the regular fee, condo corporations or associations sometimes levy a special assessment to cover a major expense, such as a new roof or a structural repair. Inquire about whether any special assessments are planned.
4. Review the rules. Each condo community is different, and each has a unique set of rules. For example, some communities place restrictions on pet ownership. Others restrict the owner's ability to rent out the unit. Still others implement 'quiet hours' or otherwise place limits on behaviors deemed problematic. You should review the rules from two perspectives - to ensure that they DO NOT prohibit anything that is important to you (like keeping a pet) and to ensure they DO prohibit activities you abhor (like noisy late-night parties).
5. Be cautious when buying a condo during the pre-construction phase. One problem that sometimes arises is that a developer fails to sell enough units and therefore decides to buy back the units already sold. When this happens, you could be asked to accept a price that is below what you paid for the unit. Another drawback of buying in the pre-construction phase is that the condo fee - set low to attract buyers - will probably go up after the building is constructed and occupied.
6. Research the management company. The condo corporation or association hires a management company to handle the maintenance and administration. Therefore it's a good idea to do some research to discover the reputation of the management company running the condo development that you are considering.
7. Find out about the ratio of rental units to owner-occupied units. Normally, the quality of life in a condo development falls as the ratio of rented units rises. In buildings where there are many renters, your neighbors change frequently and there is less sense of community. Also, renters are often less committed to following the rules.
Shopping for a condominium differs from shopping for a house in many ways. Before you begin your search for a condo, you should educate yourself about the unique considerations. These seven tips should provide the information necessary to begin this research.