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TURNING OVER A NEW LEAF

Sun, 13 Dec 2020 10:00:15 GMT

Homeownership is an integral part of the “American Dream.” For many, however, it simply is not feasible. With family obligations, student loans, and minimum wages, the upfront investment required for homeownership can be too great a task for some. Fortunately, in recent decades, the number of programs that have helped people realize this dream has grown exponentially. Purchasing, however, is still a home is a huge financial commitment. It is also an investment that can yield returns in the tens of thousands if handled properly.

Owning a home can also have a lasting positive impact on credit scores when the terms are consistently honored. Though the benefits may be broad, there are many responsibilities and even some drawbacks that also come with owning a home. For many people, renting makes better sense. Let’s compare the two options and decide if you should be renting or buying your home.

The idea that renting is a lesser option than buying is quite common. Many feel that renting is equivalent to “throwing away money.” However, several scenarios make renting a better decision, financially and otherwise. A common misconception is that one can compare monthly rent with a potential monthly mortgage amount paid as an owner to determine if homeownership is the best option. Unfortunately, deciding between buying and renting is a lot more involved. A host of factors come into play, such as how long you plan to live in the home, how much the value of the home can reasonably be expected to increase (this is also known as appreciation), what tax break would you become eligible for as an owner, what fees you will have to pay when you finally make the purchase, and your current credit situation, which will have a large impact on your financing options.

When renting may be better…

As a general rule, the upfront cost of purchasing a home (also known as closing costs) are normally absorbed within the first five or so years. After five years have passed, the home's value will typically have appreciated enough to cover what the owner paid to close the deal. At this point, it may be possible to sell the home without incurring any significant losses. What this translates to is a five-year minimum commitment to the purchased property. For adults in their twenties and thirties, mobility and options are common priorities. This crowd may be better suited for renting and leasing.

If you are currently enjoying an amazing deal on a rental property, it may be in your best interest, financially, to stay where you are. Controlled rent, where the rent is charged at a fixed amount and can only be increased at certain pre-set increments, is a prime example of the type of deal that would make renting a smarter option than buying. The money saved on rent can be used to pay off other debts, therefore improving your credit in preparation for homeownership in the future. Or, your extra cash could be used to take advantage of investment opportunities elsewhere.

Significant tax breaks are another thing most people assume every homeowner enjoys. We all know what happens when we ass-u-m-e. In this case, it is never safe to assume that buying a home will come with significant tax breaks. The federal government does allow homeowners to deduct the cost of the interest paid on their mortgage from their taxable income. This is a great benefit if you own an expensive home with a steep interest rate. However, on a low-priced home, the tax break may not be quite enough to consider it an incentive to give up your rental and buy.

When The Time Is Right To Buy…

If, after considering the points above, you still feel yourself leaning towards the “Ready to Buy” category, here are a few more items to factor in. The first is, how much home can you comfortably afford, or how big a mortgage can you obtain? A mortgage is a loan that is granted for the specific expressed purpose of purchasing a home. It is considered a “secure” loan because if you default for any reason, the lender can claim the property. Primary factors that determine your mortgage amount include your credit report, your ability to come up with a down payment, income, debt, and job history.

In addition to the mortgage itself, many other financial responsibilities and obligations are associated with owning a home that a newbie may find financially strenuous. Your mortgage payment will consist of two parts, principal and interest. The principal is the amount you borrowed from the lender, and the interest is the fee they charge for furnishing the loan. However, this is just the beginning. You will also need to be prepared to pay property taxes to your town, city, or country, insurance to protect your new investment, as well as Home Owners Association (HOA) or some other type of Condominium and Cooperative (co-op) fees, which are very common.

Considering all the details, the dream of owning a home can seem more like a nightmare if you haven’t taken the proper measures to prepare yourself and your finances. If you stay ready, you won’t have to get ready. Establishing and maintaining healthy credit is the best way to align yourself to achieve the goal of owning your own home whenever you are ready!

Financial Freedom

Sun, 15 Nov 2020 03:02:26 GMT

Life is expensive! For many, the issue is more about learning to live within your means less about having enough money. We intended to make you feel confident about stepping into the life you’ve always wanted. Having multiple streams of income is the new path to financial freedom. The idea of being a millionaire is naturally very attractive and would almost guarantee the luxury and opulence that so many seem to crave. Living the American Dream is a common goal shared by most if not all Americans and working people everywhere. Ideally, we want the maximum pay for minimal work, effort, or use of resources. If we can’t have that, we’ll accept being paid to do the things we love and are passionate about as a close second.

Is there an actual income benchmark that will guarantee an achievable life? Is it practical to expect to be able to actually have good credit and live a great lifestyle on your current income? Every social media outlet to be named is filled with images and quotes full of inspiration and motivation encouraging individuals to pursue their passions and never give up! These admonitions are edifying, however, a common conception about business is that “It takes money to make money.” After reading this article, you may not find it so far-fetched to believe that one can live quite comfortably and maintain healthy credit with any income, family size, and demographic.

At the core of the conversation is quality. Having good credit provides access and resources to improve the quality of our lives and mobilizes us to do the things we want to do most with the people we care for most. Naturally, what is comfortable for one may not be for the other. Family size, geographic location, and cost of living are just a few factors impacting what it takes to live comfortably. However, what we do all have to share is the fact that, unless you were born into wealth, you likely spend your time trying to strike a balance between the time you spend making a living and the time you spend actually living!

Nevertheless, there are a great many who do not seem to have an overwhelming yearning to accumulate wealth far beyond what they require to support a comfortable life for themselves and their families. In fact, more often than not, what many people really desire is the liberty that comes with no longer needing to trade time for money. Ultimately, what defines luxury for the majority is to simply reduce the amount of time spent trying to make money.

Localize: If you live far from your current job you may want to consider a move. Cutting your commute will increase your quality of life by reducing the stress and anxiety associated with driving in traffic. You will also save on gas and vehicle maintenance.

Make a Plan: When you’re thinking of buying, plan…plan…plan! There’s no reason to rush into a mortgage or property purchase. If you cannot comfortably handle the down payment, closing costs, and annual taxes don’t sweat it. It may not be time for you to buy. When you do buy, try to make a habit of paying “mortgage and a half”. By that I mean pay one half mortgage payment more than you are required. For example, if your payment is $800, pay $1200 to burn your mortgage early and free up your future income! A little discipline now can lead to a lot more freedom later.

Give to Get: This may seem counter-intuitive. But, hear me out! Luxury is not just about labels and digits on a paycheck. It is also very much about living your best life and doing the things that make you most happy and fulfilled. While volunteering will not earn you money, it’s a great way to incorporate doing something you enjoy and helping others all at once. Also, the skills you acquire can always be added to your resume and may even give you an advantage for future opportunities.

May these three simple steps encourage or even compel you to begin moving towards your best life, beginning with good credit!

COMMON SENSE CREDIT COMEBACK

Mon, 19 Oct 2020 03:05:18 GMT

By and large, there are two types of people in this world; those of us who are organized and those of us who are not! If you are routinely misplacing bills, checks, and statements that you should be cashing, paying, or filing part of the problem may be the sense of “too much”-ness. De-cluttering your financial life is as simple as simplifying and minimizing the ways that you handle and manage your money with the goal of leaving as little room for human error as possible.

Of course simplifying a part of life that, for many, is often the most complicated and produces the most stress sounds like a wonderful idea. If it’s so simple, why doesn’t everyone do it? My best guess is that the comfort that established routines and stability offer outweigh the perceived benefits of taking the steps to adjust. However, with just a few changes, anyone can enjoy the benefits of a decluttered financial life.

If you don’t already own one, start by purchasing a shredder. Most utilities, banks, and service providers offer virtual statements. There simply is no need to keep or store old bills and statements. Shop around to find the best deal for your budget and need. A cross-cut shredder is most secure, but one that cuts into strips will do the job. If you’re looking to save a few bucks, and who isn’t, try searching Craigslist.com or your local thrift stores before investing in a new one.

Now, whether you receive paper bills or electronic ones, make it a habit to pay them right away. If you are the type to open a bill and wait a few days or weeks before paying, you’re just adding additional steps to the process. During this time you run the unnecessary risk of losing the bill, forgetting to pay, and even accruing late fees. If your budget restricts you from paying every bill as soon as it arrives, decide right away what day you will pay. Most websites will allow you to pay on-line and even schedule your payments in advance.

Disposable spending money should be stored in an account of its own to avoid overspending or spending money that is needed elsewhere. Payment of utilities and other bills can also be automated. If your service provider will not automatically debit your payments check your bank’s on-line bill pay system.

Split up your income into specific categories and assign a specific function to each category. Then, automate deposits into these accounts. Money that will be set aside for savings such as a 401k retirement plan can be automatically deducted from your pay and stashed in a separate account.

Finally, get rid of all the paper. There are a number of apps you can choose from to store receipts quickly and easily. With a quick scan, any other important documents can also be stored electronically with virtual tools such as NeatReceipts and NeatDesk. These tools, essentially, eliminate the need to store and keep hard copies of receipts and other documents that tend to take up space and clutter up your life.

Not every recommendation above will suit you. However, if you read this far down you must have found some value in the tips that were mentioned. The key is to start. Begin by adopting the most useful and applicable tip for your life from above and progress from there. You may be surprised how one good habit deserves another!

The Five Factors of a FICO Score

Mon, 12 Oct 2020 03:08:20 GMT