A Shopaholic’s Dilemma – Saving and Budgeting

5052250997_0f994bb8b5_zFinancial discipline isn’t easy, and the spending patterns of the typical consumer are proof of that. In the United States in 2016, the average household had $16,061 in credit card debt. That’s not even factoring in other types of debt, such as mortgages, auto loans and student loans. All things considered, that average household racked up about $1,300 in interest charges.

One of the reasons that people accumulate so much debt, particularly credit card debt, is that they don’t manage their spending. Then, they end up with a mountain of debt and no savings in case an emergency hits. Learning how to stop overspending takes time and dedication, but it’s crucial for a bright financial future. There are a few simple ways you can budget better and build up your savings account.

  1. Write a Budget

Every household should have a budget. If you want to save money, you need to know how much you have coming in every month and where it’s going. A budget doesn’t need to be a long, tedious task. It’s actually fairly simple to make one, and you can do it on your computer or with a pen and paper. Calculate your approximate income every month. Those who receive an hourly pay or a salary can do this easily, but if your income varies, estimate an average monthly amount. Then, list all your current bills and expenses. While you may not be able to list an exact amount for every expense, such as food, you can still come up with an accurate estimate based on your spending history.

Ideally, you should be making at least 50 to 100 percent more than you’re spending every month. If that’s not the case, see if you can cut down on your expenses or find a way to secure additional income.

  1. Pay into Your Savings Account First

Here’s the number-one way to save money – make it a priority. That means commit a specific amount, such as 10 percent of your monthly income, towards saving. List it as an item on your budget. When you get paid, your first payment should go right into that savings account.

People who successfully save money do so by committing to it. The reason why it’s important to put money into your savings account first is because if you don’t, you’re likely to find ways to spend that money before the end of the month.

  1. Treat Your Credit Card Like a Debit Card

Credit cards can be an excellent tool to improve your financial situation. You can build your credit score when you use credit responsibly, and earn credit card rewards that get you a return on your spending.

Credit cards can also be your worst nightmare if you don’t use them wisely. The secret to using credit cards properly is using them as if they were your debit card. If you don’t have the money in your account to pay for something, don’t put it on your credit card. Pay off your bill in full every month so you don’t ever pay any interest.

  1. Think Long-Term

The hardest part about avoiding overspending is the temptation to make purchases for the short-term pleasure that it brings. You feel good when you buy that pair of shoes you had your eye on, or a new sound system for your TV. But every unnecessary purchase is money that you could have put in your savings account. Before you buy something, think long and hard about if you really need it. Take a day to decide. Often, you wake up the next day and realize that you really don’t need whatever you were planning to buy.

The difficult part about reining in your spending isn’t knowing what to do, it’s committing to it. Dedicate yourself towards improving your spending habits and you’ll be pleased with the results.

The Next Housing Crash: When It’s Coming and How to Protect Yourself

housingcrashWhile the shockwaves of the 2007-08 recession continue to reverberate, for the most part, the American economy as regained its feet. Unemployment is down, consumer spending is up, and house prices and interest rates have surpassed where they were pre-recession.

However, while most Americans revel in the positive economic developments, many market experts are concerned over potential warning signs of economic disaster to come. For one, housing prices haven’t merely recovered; they have skyrocketed in recent months, perhaps revealing another housing bubble. Worse, some lenders have fallen back on dangerous mortgage practices, such as accepting exceedingly low down payments and approving ludicrously low credit scores.

In truth, the housing market endures cycles of high and low mortgage prices that last roughly 18 years. If the market follows a pattern that has lasted more than 200 years, we can look forward to a few more years of market expansion, followed by a brief hypersupply phase where construction overshoots demand, and finally another recession. In 2024, there should be another housing bust ― but the impact of that bust depends on how lenders and buyers behave during the booming interim.

Financial experts are all but predicting another market crash, which could devastate homebuyers and homeowners. Fortunately, there are methods you can take to protect your property from the crisis to come.

Have a Stable Job

One of the most fundamental requirements to qualify for a mortgage is income. Trustworthy lenders scrutinize your taxable income to determine whether you have reliable and sufficient money coming in to pay for your home loan. It is possible to acquire a mortgage without stable income, perhaps by applying for “no documentation” mortgages, having a co-signer, or accepting excruciatingly high interest rates, but it is financially safer to find a steady job before buying your home.

Further, an established job is less likely to disappear during a slow economy ― especially if you develop a career that is indispensable regardless of the economy’s health. For example, retailers suffered greatly during the recent recession, and many retail workers lost their jobs; meanwhile, nurses, auto mechanics, IT professionals, and similar skilled workers maintained their income because people continued spending in those fields. Not only will your stable job keep your home secure, it will keep you employed and earning while the housing market does backflips.

Cultivate Your Net Worth

Similarly, having a higher net worth will keep you solvent during an economic downturn. Should your job prove non-recession-proof, you should be able to pull from other assets, such as savings accounts, to pay your mortgage and retain your home. A high net worth is less fragile than income ― and it is more fun, too.

To cultivate your net worth, you should make strong financial decisions when you have the income and market stability to do so. Those who build high net worth tend to boast the same few habits:

  • They live frugally within their means.
  • They grow emergency funds. At the least, your emergency fund should be able to pay three months of basic living expenses.
  • They pay down their debts, starting with the highest interest first. You might consider refinancing or seeking a NJ home equity loan to reduce your debt faster.
  • They work to increase their immediate income, taking side jobs or seeking raises.
  • They invest their money in long-term index funds. Day trading might seem to offer higher rewards, but it is much riskier than carefully managed, slow-growth funds.

When the housing market does crash, your high net worth will provide a cushion to keep you living comfortably despite disconcerting economic behavior.

Make a Down Payment

It might seem like a waste of money to make a down payment when so many lenders do not require one but down payments are as beneficial to homebuyers as they are to lenders. For one, making a down payment of at least 20 percent allows you to dodge private mortgage insurance, which would increase your monthly payment. In fact, the more money you can put in your down payment, the better, since you will never need to pay interest on that amount. Then, when the housing market turns, you will have a lower monthly mortgage payment and be that much closer to owning your home outright.

Buy Small, Pay Less

Few homeowners truly need as much space as they believe. Instead of looking for a four-bedroom, four-bath for you and your significant other, you should buy a smaller home that better suits your immediate needs. Smaller properties are more recession-proof for dozens of reasons: They cost less initially, and they demand lower insurance payments, taxes, maintenance fees, utility usage, and décor purchases. With a smaller home, you have more money to use to increase your net worth, and you will be less likely to default during the next market crash.

Eight Tips for New Drivers

7979445278_8421c8c3cb_zYou’re delighted to have passed your driving test; who wouldn’t be? However, this is only the start of your career as a driver and only the start of a lifelong learning curve. The uncomfortable truth is that you’ll have a lot of learning to do – one in five new drivers in the UK gets involved in a crash within a year of passing their test. One in three drivers killed in accidents is under the age of 25, even though only one in eight drivers is under 25.

If you’re wondering how to drive safer sooner, then these tips will help you. Read them and pass them onto a friend who’s recently passed their test – you may both be grateful!

You passed – so start another course

Extra driving courses, like Pass Plus, can give you more skills and knowledge, as well as expose you to less-than-favourable driving conditions. You’ll learn how to drive at night, in heavy rain, busy traffic, motorways and congested city centres. Not only can a course like this equip you for real driving, it could lower your insurance premiums.

Become familiar with your car

Don’t just get in and drive your car; spend some time in it, fiddling with the buttons, looking at the dashboard lights, finding the hazard button… If you build up a “body memory” of these controls, you’ll find it easier to use them in a big hurry.

Become a boy (or girl) racer for the day…

…by going on a racetrack day. You’ll be in a safe environment and you’ll get to find you how your car handles at high speeds, which is nothing like an F1 car! Going on a track day means you can satisfy your need for speed without needing motoringoffencelawyers.com because you’ve been pulled over.

Make sure that the boy-racing tendencies aren’t transferred onto normal roads. Drivers who reach 6 points within two years of passing their test have their licences revoked which means having to do the dreaded test again.

Always check your blind spot

Your mirrors are useful, but they can’t show you what’s just outside your peripheral vision. Your blind spot is big enough for a bike or another car, so ignore it at your peril. Check it every time you change your lane or make a turning.

Always look out for other drivers’ blind spots

Not all drivers are smart like you and they don’t check their blind spots when changing lanes or turning. Assume they haven’t and stay where they can see you in their mirrors.

Drive in the left lane

Not many people know this, but the left lane of the motorway is for regular driving and all the others are for overtaking. Highway Code 238 states this clearly and the police now have new powers to impose spot fines on middle lane hogs.

Try driving in bad weather

OK, you won’t like it, but you will encounter sleet, driving rain or ice at some point, so be proactive and meet it on your own terms. You’ll feel a wet road surface and adjust your driving style to cope with it. Bring an experienced driver along with you if necessary, until you feel confident to try it out on your own.

Put that phone down!

It’s illegal, and for good reason. You can’t talk or text on the phone and drive safely at the same time. You just can’t. Even hands-free is a bit dicey as it takes up a lot of mental space. Just don’t do it.

5 Essential Refinancing Tips for Homeowners with Poor Credit

new-home-1540889_640Homeowners refinance their mortgages for various reasons including getting a lower interest rate or a better loan term. Others refinance to move from an adjustable rate to a fixed rate while others use refinancing as an opportunity to consolidate their debts. The decision to refinance a mortgage requires careful consideration, calculations, and consultations with experts. You may end up paying a higher cost for your home if you rush into it.

If you have poor credit, you need to be more careful with the process. Your credit score has various implications, especially on interest rates. Before you sign the dotted line, consider the following tips:

1. Check Your Credit Score

You probably know that you have a poor credit score but you need to know your exact rating before you contact a lender. Some lenders disqualify homeowners with a low credit score from refinancing home mortgage loans. However, some accept to refinance but at a higher interest rate. Another advantage of keeping track of your credit score is that you can take steps to improve it as you consider the refinancing options. For instance, you can start paying all bills on time and paying off some debts to improve your score.

2. Determine the Value of Your Home

The value of your home at the time of refinancing influences the interest rate that the lender will charge on your mortgage loan. The market value of homes fluctuates all the time. It is advisable to observe the prices of homes in the housing market. If your projections are accurate, you can refinance your loan when the prices are going up.

One reliable source of information on the value of your home is the tax statement from the county. Check the most recent statement. Another alternative is to obtain a professional valuation or appraisal. You can also compare the prices of other similar homes for sale or recently sold in your area to estimate your home value. The value may be inaccurate because every home is unique but it will give you an idea of the current value.

3. Negotiate for a Shorter Term Where Possible

One benefit of refinancing a mortgage loan is that you can get a shorter term. With a short term, your monthly payments offset the principal and not just the interest. A long term means that you will pay for the interest for close to half of the term and then start paying the principal. Interest is charged on the principal. Hence, the lender stops charging interest as soon you clear the principal.

Before you sign up for a short term, consider the monthly payments. You will be paying a higher installment every month when you shorten the loan term. Consider all your current expenses and project any changes to your monthly budget throughout the loan term. For instance, if you have young children, you need to factor in their tuition fees and other expenses in your future budget. The calculations are necessary to ensure that you do not miss your payments in the future.

4. Compare the Terms from Different Lenders

The market has many lenders who refinance home mortgage loans under different terms and conditions. Compare the lending rates with all the lenders who accept your credit score to identify your best option. Your goal should be to incur the lowest cost possible after refinancing. Do not rely on the interest rate alone when comparing lenders. Some lenders give very low rates but charge high closing costs.

Closing costs include insurance, title searches, home appraisal fees, and charges on credit reports among others. It might be feasible to go for a higher rate with low closing costs in some cases. Ask for help from mortgage professionals where possible to ensure that you make the right decision. If you decide to lock your loan rate and pay the same rate throughout the term, ensure that you get a copy of the confirmation from your lender.

5. Ask about Prepayment Penalties

Lenders handle prepayments differently. Some impose a heavy fine on prepayments while some do not impose any penalties. Ask your lender about the prepayment penalties and read the fine prints on the loan document as well. You do not want to incur a high cost for getting out of debt earlier.

Refinancing your home mortgage loan gives you an opportunity to negotiate for a more favorable rate and loan term. You need to evaluate the loan terms from each lender carefully before agreeing to a new loan contract. Without careful consideration and comparison, you may incur a higher cost than necessary after refinancing.

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A Shopaholic’s Dilemma – Saving and Budgeting

5052250997_0f994bb8b5_zFinancial discipline isn’t easy, and the spending patterns of the typical consumer are proof of that. In the United States in 2016, the average household had $16,061 in credit card debt. That’s not even factoring in other types of debt, such as mortgages, auto loans and student loans. All things considered, that average household racked up about $1,300 in interest charges.

One of the reasons that people accumulate so much debt, particularly credit card debt, is that they don’t manage their spending. Then, they end up with a mountain of debt and no savings in case an emergency hits. Learning how to stop overspending takes time and dedication, but it’s crucial for a bright financial future. There are a few simple ways you can budget better and build up your savings account.

  1. Write a Budget

Every household should have a budget. If you want to save money, you need to know how much you have coming in every month and where it’s going. A budget doesn’t need to be a long, tedious task. It’s actually fairly simple to make one, and you can do it on your computer or with a pen and paper. Calculate your approximate income every month. Those who receive an hourly pay or a salary can do this easily, but if your income varies, estimate an average monthly amount. Then, list all your current bills and expenses. While you may not be able to list an exact amount for every expense, such as food, you can still come up with an accurate estimate based on your spending history.

Ideally, you should be making at least 50 to 100 percent more than you’re spending every month. If that’s not the case, see if you can cut down on your expenses or find a way to secure additional income.

  1. Pay into Your Savings Account First

Here’s the number-one way to save money – make it a priority. That means commit a specific amount, such as 10 percent of your monthly income, towards saving. List it as an item on your budget. When you get paid, your first payment should go right into that savings account.

People who successfully save money do so by committing to it. The reason why it’s important to put money into your savings account first is because if you don’t, you’re likely to find ways to spend that money before the end of the month.

  1. Treat Your Credit Card Like a Debit Card

Credit cards can be an excellent tool to improve your financial situation. You can build your credit score when you use credit responsibly, and earn credit card rewards that get you a return on your spending.

Credit cards can also be your worst nightmare if you don’t use them wisely. The secret to using credit cards properly is using them as if they were your debit card. If you don’t have the money in your account to pay for something, don’t put it on your credit card. Pay off your bill in full every month so you don’t ever pay any interest.

  1. Think Long-Term

The hardest part about avoiding overspending is the temptation to make purchases for the short-term pleasure that it brings. You feel good when you buy that pair of shoes you had your eye on, or a new sound system for your TV. But every unnecessary purchase is money that you could have put in your savings account. Before you buy something, think long and hard about if you really need it. Take a day to decide. Often, you wake up the next day and realize that you really don’t need whatever you were planning to buy.

The difficult part about reining in your spending isn’t knowing what to do, it’s committing to it. Dedicate yourself towards improving your spending habits and you’ll be pleased with the results.

The Next Housing Crash: When It’s Coming and How to Protect Yourself

housingcrashWhile the shockwaves of the 2007-08 recession continue to reverberate, for the most part, the American economy as regained its feet. Unemployment is down, consumer spending is up, and house prices and interest rates have surpassed where they were pre-recession.

However, while most Americans revel in the positive economic developments, many market experts are concerned over potential warning signs of economic disaster to come. For one, housing prices haven’t merely recovered; they have skyrocketed in recent months, perhaps revealing another housing bubble. Worse, some lenders have fallen back on dangerous mortgage practices, such as accepting exceedingly low down payments and approving ludicrously low credit scores.

In truth, the housing market endures cycles of high and low mortgage prices that last roughly 18 years. If the market follows a pattern that has lasted more than 200 years, we can look forward to a few more years of market expansion, followed by a brief hypersupply phase where construction overshoots demand, and finally another recession. In 2024, there should be another housing bust ― but the impact of that bust depends on how lenders and buyers behave during the booming interim.

Financial experts are all but predicting another market crash, which could devastate homebuyers and homeowners. Fortunately, there are methods you can take to protect your property from the crisis to come.

Have a Stable Job

One of the most fundamental requirements to qualify for a mortgage is income. Trustworthy lenders scrutinize your taxable income to determine whether you have reliable and sufficient money coming in to pay for your home loan. It is possible to acquire a mortgage without stable income, perhaps by applying for “no documentation” mortgages, having a co-signer, or accepting excruciatingly high interest rates, but it is financially safer to find a steady job before buying your home.

Further, an established job is less likely to disappear during a slow economy ― especially if you develop a career that is indispensable regardless of the economy’s health. For example, retailers suffered greatly during the recent recession, and many retail workers lost their jobs; meanwhile, nurses, auto mechanics, IT professionals, and similar skilled workers maintained their income because people continued spending in those fields. Not only will your stable job keep your home secure, it will keep you employed and earning while the housing market does backflips.

Cultivate Your Net Worth

Similarly, having a higher net worth will keep you solvent during an economic downturn. Should your job prove non-recession-proof, you should be able to pull from other assets, such as savings accounts, to pay your mortgage and retain your home. A high net worth is less fragile than income ― and it is more fun, too.

To cultivate your net worth, you should make strong financial decisions when you have the income and market stability to do so. Those who build high net worth tend to boast the same few habits:

  • They live frugally within their means.
  • They grow emergency funds. At the least, your emergency fund should be able to pay three months of basic living expenses.
  • They pay down their debts, starting with the highest interest first. You might consider refinancing or seeking a NJ home equity loan to reduce your debt faster.
  • They work to increase their immediate income, taking side jobs or seeking raises.
  • They invest their money in long-term index funds. Day trading might seem to offer higher rewards, but it is much riskier than carefully managed, slow-growth funds.

When the housing market does crash, your high net worth will provide a cushion to keep you living comfortably despite disconcerting economic behavior.

Make a Down Payment

It might seem like a waste of money to make a down payment when so many lenders do not require one but down payments are as beneficial to homebuyers as they are to lenders. For one, making a down payment of at least 20 percent allows you to dodge private mortgage insurance, which would increase your monthly payment. In fact, the more money you can put in your down payment, the better, since you will never need to pay interest on that amount. Then, when the housing market turns, you will have a lower monthly mortgage payment and be that much closer to owning your home outright.

Buy Small, Pay Less

Few homeowners truly need as much space as they believe. Instead of looking for a four-bedroom, four-bath for you and your significant other, you should buy a smaller home that better suits your immediate needs. Smaller properties are more recession-proof for dozens of reasons: They cost less initially, and they demand lower insurance payments, taxes, maintenance fees, utility usage, and décor purchases. With a smaller home, you have more money to use to increase your net worth, and you will be less likely to default during the next market crash.

Eight Tips for New Drivers

7979445278_8421c8c3cb_zYou’re delighted to have passed your driving test; who wouldn’t be? However, this is only the start of your career as a driver and only the start of a lifelong learning curve. The uncomfortable truth is that you’ll have a lot of learning to do – one in five new drivers in the UK gets involved in a crash within a year of passing their test. One in three drivers killed in accidents is under the age of 25, even though only one in eight drivers is under 25.

If you’re wondering how to drive safer sooner, then these tips will help you. Read them and pass them onto a friend who’s recently passed their test – you may both be grateful!

You passed – so start another course

Extra driving courses, like Pass Plus, can give you more skills and knowledge, as well as expose you to less-than-favourable driving conditions. You’ll learn how to drive at night, in heavy rain, busy traffic, motorways and congested city centres. Not only can a course like this equip you for real driving, it could lower your insurance premiums.

Become familiar with your car

Don’t just get in and drive your car; spend some time in it, fiddling with the buttons, looking at the dashboard lights, finding the hazard button… If you build up a “body memory” of these controls, you’ll find it easier to use them in a big hurry.

Become a boy (or girl) racer for the day…

…by going on a racetrack day. You’ll be in a safe environment and you’ll get to find you how your car handles at high speeds, which is nothing like an F1 car! Going on a track day means you can satisfy your need for speed without needing motoringoffencelawyers.com because you’ve been pulled over.

Make sure that the boy-racing tendencies aren’t transferred onto normal roads. Drivers who reach 6 points within two years of passing their test have their licences revoked which means having to do the dreaded test again.

Always check your blind spot

Your mirrors are useful, but they can’t show you what’s just outside your peripheral vision. Your blind spot is big enough for a bike or another car, so ignore it at your peril. Check it every time you change your lane or make a turning.

Always look out for other drivers’ blind spots

Not all drivers are smart like you and they don’t check their blind spots when changing lanes or turning. Assume they haven’t and stay where they can see you in their mirrors.

Drive in the left lane

Not many people know this, but the left lane of the motorway is for regular driving and all the others are for overtaking. Highway Code 238 states this clearly and the police now have new powers to impose spot fines on middle lane hogs.

Try driving in bad weather

OK, you won’t like it, but you will encounter sleet, driving rain or ice at some point, so be proactive and meet it on your own terms. You’ll feel a wet road surface and adjust your driving style to cope with it. Bring an experienced driver along with you if necessary, until you feel confident to try it out on your own.

Put that phone down!

It’s illegal, and for good reason. You can’t talk or text on the phone and drive safely at the same time. You just can’t. Even hands-free is a bit dicey as it takes up a lot of mental space. Just don’t do it.

5 Essential Refinancing Tips for Homeowners with Poor Credit

new-home-1540889_640Homeowners refinance their mortgages for various reasons including getting a lower interest rate or a better loan term. Others refinance to move from an adjustable rate to a fixed rate while others use refinancing as an opportunity to consolidate their debts. The decision to refinance a mortgage requires careful consideration, calculations, and consultations with experts. You may end up paying a higher cost for your home if you rush into it.

If you have poor credit, you need to be more careful with the process. Your credit score has various implications, especially on interest rates. Before you sign the dotted line, consider the following tips:

1. Check Your Credit Score

You probably know that you have a poor credit score but you need to know your exact rating before you contact a lender. Some lenders disqualify homeowners with a low credit score from refinancing home mortgage loans. However, some accept to refinance but at a higher interest rate. Another advantage of keeping track of your credit score is that you can take steps to improve it as you consider the refinancing options. For instance, you can start paying all bills on time and paying off some debts to improve your score.

2. Determine the Value of Your Home

The value of your home at the time of refinancing influences the interest rate that the lender will charge on your mortgage loan. The market value of homes fluctuates all the time. It is advisable to observe the prices of homes in the housing market. If your projections are accurate, you can refinance your loan when the prices are going up.

One reliable source of information on the value of your home is the tax statement from the county. Check the most recent statement. Another alternative is to obtain a professional valuation or appraisal. You can also compare the prices of other similar homes for sale or recently sold in your area to estimate your home value. The value may be inaccurate because every home is unique but it will give you an idea of the current value.

3. Negotiate for a Shorter Term Where Possible

One benefit of refinancing a mortgage loan is that you can get a shorter term. With a short term, your monthly payments offset the principal and not just the interest. A long term means that you will pay for the interest for close to half of the term and then start paying the principal. Interest is charged on the principal. Hence, the lender stops charging interest as soon you clear the principal.

Before you sign up for a short term, consider the monthly payments. You will be paying a higher installment every month when you shorten the loan term. Consider all your current expenses and project any changes to your monthly budget throughout the loan term. For instance, if you have young children, you need to factor in their tuition fees and other expenses in your future budget. The calculations are necessary to ensure that you do not miss your payments in the future.

4. Compare the Terms from Different Lenders

The market has many lenders who refinance home mortgage loans under different terms and conditions. Compare the lending rates with all the lenders who accept your credit score to identify your best option. Your goal should be to incur the lowest cost possible after refinancing. Do not rely on the interest rate alone when comparing lenders. Some lenders give very low rates but charge high closing costs.

Closing costs include insurance, title searches, home appraisal fees, and charges on credit reports among others. It might be feasible to go for a higher rate with low closing costs in some cases. Ask for help from mortgage professionals where possible to ensure that you make the right decision. If you decide to lock your loan rate and pay the same rate throughout the term, ensure that you get a copy of the confirmation from your lender.

5. Ask about Prepayment Penalties

Lenders handle prepayments differently. Some impose a heavy fine on prepayments while some do not impose any penalties. Ask your lender about the prepayment penalties and read the fine prints on the loan document as well. You do not want to incur a high cost for getting out of debt earlier.

Refinancing your home mortgage loan gives you an opportunity to negotiate for a more favorable rate and loan term. You need to evaluate the loan terms from each lender carefully before agreeing to a new loan contract. Without careful consideration and comparison, you may incur a higher cost than necessary after refinancing.