Jun 8, 2023 | Real Estate
Creating a household budget can be a helpful way to track your spending and ensure you are meeting your financial goals. You will need to examine your fixed expenses that are the same each month, such as rent or car payments and your variable expenses that change each month, such as groceries or entertainment. Dealing with debt can be challenging but incorporating it into your budgeting strategy can help you regain control of your finances. Here are some steps you can take to effectively manage your debt while budgeting:
Assess your debt: Begin by gathering all your debt information, including outstanding balances, interest rates, and minimum monthly payments. List your debts in order of priority, such as high-interest debts or those with approaching due dates.
Create a budget: Develop a comprehensive budget that covers all your income and expenses. Categorize your expenses into essential (e.g., housing, utilities, groceries) and non-essential (e.g., entertainment, dining out) categories. Make sure to allocate funds for debt repayment.
Prioritize debt payments: Allocate a portion of your budget specifically for debt repayment. While making minimum payments on all debts, focus on paying extra towards high-interest debts to reduce their impact over time. This strategy is known as the debt avalanche method. Alternatively, you can prioritize the debt with the lowest balance first (debt snowball method) for psychological motivation.
Reduce discretionary spending: Look for areas where you can cut back on non-essential expenses. This might involve reducing eating out, entertainment costs, or finding more affordable alternatives for certain services. Direct the savings towards debt repayment.
Negotiate with creditors: If you’re struggling to meet your debt obligations, contact your creditors to discuss possible alternatives. They may be willing to offer reduced interest rates, extended repayment terms, or debt consolidation options. Exploring these options can help make your debt more manageable.
Consider debt consolidation or refinancing: If you have multiple debts with high-interest rates, consolidating them into a single loan or refinancing them with a lower interest rate may be beneficial. This approach simplifies your payments and can potentially save money on interest charges.
Build an emergency fund: While dealing with debt, it’s crucial to simultaneously build an emergency fund. Having some savings set aside can prevent you from relying on credit cards or loans in case of unexpected expenses. Start with small, regular contributions until you reach your desired emergency fund amount.
Remember, managing debt takes time and discipline. Stay committed to your budgeting efforts and regularly review your progress. Over time, as you reduce your debt, you’ll regain financial stability and move closer to achieving your financial goals. It may take some time to find the right balance, but creating a household budget can be an effective way to manage your finances and achieve your financial goals.
May 27, 2021 | Real Estate Tips
The housing market is extremely competitive right now because mortgage rates are still near record lows. While mortgage rates are rising this year, the rates are still attractive to many individuals and families who are looking to buy a home. At the same time, when mortgage rates change, families need to re-evaluate their budgets. A change in mortgage rates will impact the monthly mortgage payment, so families need to know what they can afford.
Furthermore, because the market is so competitive, sale prices are going up as well. As mortgage rates and home prices rise, families need to determine what their monthly budget is. Even a small increase in the mortgage rate can make a big difference.
Families Must Do The Math To Figure Out Their Monthly Mortgage Payments
Families need to figure out what monthly mortgage payment they can afford before they make an offer on a home. The factors impacting the monthly mortgage payment are the loan amount, the interest rate, and the repayment period. Many homeowners take out a 30-year mortgage; however, borrowers might be able to adjust the term to meet their specific needs. A few important points to remember include:
- If the number of years over which the loan is paid back goes down, the monthly payment will likely increase
- If the interest rate on the loan goes up, the monthly payment will increase
- If the loan amount goes up, the monthly payment will increase
Families can adjust all of these factors to find the right monthly payment for their budgets.
There Are Ways To Reduce The Interest Rate On A Loan
Finally, there are steps that families can take to reduce the interest rate on their loans. For example, families might be able to put more money down to qualify for a better interest rate. This could reduce the monthly payment, keeping the loan amount within the family’s budget. Or, families might be able to pay down other types of debt such as credit card debt or car loans. If families have a lower debt to income ratio, they might qualify for a better interest rate. This could help families afford a larger house without having to spend more money.
Apr 23, 2019 | Mortgage
For most people, the mortgage payment is the biggest monthly expense. Whether you’re facing retirement or still working, it would be nice to be free of this debt. Although you probably can’t pay it off in one lump sum, it is possible to pay off your mortgage sooner than expected.
Here are four strategies to try.
1. Make Bi-Weekly Payments
You could shave eight years off a 30-year mortgage simply by breaking down your monthly payments into two payments instead of one. You’ll pay the same amount each month while the interest paid over the length of the loan is reduced.
2. Make Principal-Only Payments
If you look at your mortgage payment slip, you’ll notice that the majority of your monthly payment goes toward interest. Slash years off your mortgage by making occasional principal-only payments on top of your regular payments. Consult your lender to see how many of these are allowed per year. If they’re limited, maximize each opportunity by making as large a principal-only payment as you can manage.
3. Refinance When Rates Drop
If your mortgage originated when interest rates were high, refinance it now that rates are still historically lower. You may need to pay closing costs, but you’ll still end up dramatically lowering the amount of interest you are paying on your mortgage. While you’re at the refinancing game, consider getting into a shorter term length. This tactic will probably increase your monthly payment, but if you can afford it, it’s a good strategy for paying down your mortgage quicker.
4. Pay Extra Each Month
If you can afford it, pad your monthly payment with a little extra as often as possible. Just paying $50 or $100 extra will enable you to get rid of your mortgage a little faster. Find the extra money by cutting back on small niceties, such as subscriptions, take-out food and more. You won’t notice the lack of small conveniences, but you will certainly notice a shortened mortgage loan term.
When you work to pay off your mortgage faster, you essentially save thousands of dollars in interest over the life of the loan. Implement one or more of these ideas to become mortgage-free just a little bit sooner.
If you are interested in purchasing a new property or listing your current home, be sure to contact your trusted real estate professional.
Mar 15, 2019 | Real Estate
Are you saving up money for a down payment? Saving money to put down on a home is always a smart idea, but there are right ways and wrong ways to go about it. Understanding how to best save for a down payment will go a long way toward ensuring you’re ready when you finally find the house of your dreams.
Here are four down payment money saving mistakes to avoid.
1. Not Saving Enough
It’s very admirable to have a goal of saving exactly 20% for a down payment. However, this is a common mistake new home buyers make. First of all, consider loan programs that allow for a lower down payment.
In addition, there are lots of other costs associated with buying a home that you must also plan and save for, including:
- Closing Costs
- Title Fees
- Miscellaneous Fees
- Time Off Work
2. Not Keeping Track Of The Source Of The Money
Many lenders have strict rules about where the money comes from for a down payment. Pay careful attention to the source of your down payment money, and keep accurate records. You may be asked to present these financial records to prove the source of funds as part of the mortgage review process.
3. Borrowing The Money
In addition, many lenders may allow only a certain percentage of the down payment to come from a family member. They want to know that you have the resources to come up with the down payment yourself without relying on favors from family members. Don’t make the mistake of borrowing excessively for the down payment, even if it’s from a third party lender.
4. Not Keeping Money In Reserve
It’s essential to keep some money in your savings account that isn’t earmarked for the down payment. You’ll need to disclose how much you have in savings and it will factor in where you get approved or not. Lenders want to see a history of consistent saving. This shows that you’re a financially responsible person with cash reserves in the event of an emergency.
The sooner you can start saving money for a down payment, the better. As you save, keep these four down payment money saving mistakes in mind so you have the best possible chances for being financially ready to act when you do find the house you want to purchase.
If you are considering a new home purchase, please contact a trusted real estate professional to assist you with this valued investment.
Mar 7, 2019 | Mortgage
Having an excellent credit score is very useful. The following are some tips on how to maintain a superb credit score.
Open Credit Accounts When You Do Not Need Them
If you don’t have any credit accounts, you will have a low score. The best time to open them is when you do not need them. Keep a small balance on them and pay it all off at the end of each month to avoid paying interest.
Charge Up To Half The Credit Limit Then Pay It All Back Within A Few Months
If you must use a credit line, only use half of it and pay it back quickly.
Buy Big Ticket Items With A Credit Card For Cash Back And Points
Even if you can pay cash for a big ticket item, you may find it beneficial to buy it with a card that gives a reward for making a purchase like cash back or rewards points. Then pay off the balance as quickly as you can.
Ask For An Increased Credit Line
For credit accounts that you have been paying on time, call the customer service department and tell them you are thinking about buying something that is slightly above your credit limit. Ask them if they can extend the limit. This usually works even if you do not actually buy something.
You can attempt to raise your credit limit this way about once per year. As you increase your available credit capacity while maintaining all accounts in a “paid as agreed” status, your credit score should go up.
Move Credit Balances To A New Card With Zero Interest
Many credit card companies offer a zero-interest period for transfers of credit card balances from another card. After doing this, transfer this balance, once again, to another card that has a similar offer before the zero-interest period expires.
Close Old Accounts When New Ones Are Open
Having too many credit card accounts can lower your score. Keep about half a dozen cards. Close the ones that you transferred the balance from to zero interest cards.
Use Automatic Payments To Make Sure Bills Are Paid On Time
Never miss a payment or pay late. You may want to use automatic bill payment systems to make sure you never let a bill slip by.
Monitor Credit Card Activity For Unauthorized Use
Monitor all credit card activity in real time. Immediately take action if you notice an unauthorized charge. Monitor your credit history file on the three credit bureau services of Equifax, Experian, and Transunion.
If you are interested in buying a new home or selling your current property, be sure to enlist the help of your trusted real estate professional.
