Category Archives: Loans

A Few Ways to Accelerate Your Savings

Stay on budget while adding to savings……

Sometimes it’s hard to save.  We all go through times when life gets in the way with unexpected expenses.  But there are a few things that are easy, common sense ways, to continue to add to your savings.

If you have a loan you’re paying, say a car loan, when the maturity date arrives and the payments are all paid up, continue ‘paying the loan’, but put that amount into your savings account(s).  You got along without it these past years, so you still can.

Make lunches to bring to work and school.  Cook meals at home rather than eating out at restaurants…. homemade meals are far cheaper than eating out.

Make your coffee/tea/cocoa at home and put in a travel mug to take along.  Even one cup of your favorite beverage every day bought at your favorite stop, times seven days a week gets pretty pricey.  Get a pen and paper and figure out what it costs for a year…. until the figure is seen in black and white, quite often we don’t give it a second thought, and have no idea it is costing us that much.

Cut back at the grocery store by using store brands, coupons, watching for sale items and buying what you need while the sale is on (there is usually a 6 week cycle for items on sale). The snack aisle can be a costly aisle to walk down.  It’s another area where you add things to your cart without thinking of the cost.  Add the cost of the snacks in your pantry…. leave the snacks out of one grocery shopping trip….then every other. Put that money you would have spent into your savings.

Talk to all those you exchange gifts with, and instead of gift giving, maybe instead of individual gifts, you all could have a get together with each bringing a ‘grab gift’. Have a ‘potluck’ dinner with each bringing something to eat.  The money saved on gift giving can then go to your savings. And the get-together will be a lot of fun and make great memories.

If you get a pay raise at work, put the difference of what you had received before and the amount you now receive into your savings. Again, you got along without it before.

And of course, if you’ve been paying down your credit cards and now have zero balance(s), kudos to you!  But continue ‘paying’ the amount by adding it to your savings now.

All easy, but common sense ways to see more going to your savings.

 

 

Mortgage Dictionary – Some Terms To Know

Buying a home? ….terms to be familiar with.

  • Offer to purchase – You’ve found a home you’d like to buy – to ‘hold’ it, sign an Offer To Purchase and put approximately $1,000 down.
  • Home Inspection – It’s a wise idea to have the home inspected (approximately $500.  Both inside and outside is checked for any issues that need repair: insulation,  heating/AC, roof,  appliances, plumbing, etc,… You’re informed of anything that may be a cost issue for you.  If repairs will be costly, now is the time to back out, or have – in writing – that the owner will pay for the repairs. If you back out, your Offer to Purchase money is returned in full.
  • Down Payment – This along with the Offer to Purchase money, totaling (usually 20%), is now your Down Payment….It cannot be refunded.  If you are at this step, you’re buying the home. If you back out, the seller gets the down payment to keep.
  • Closing Costs – Depending on the cost of the home, closing costs usually run around $5,000. more or less.  These are costs for Registry of Deeds, R.E. Lawyer, Title Search and incidentals related to the closing of the property.
  • Homestead Act – Important to get at the time of closing.  The cost is $35. for $300,000. coverage in the event that you are sued up to that amount.  Let your lawyer know beforehand, and remind him/her again before the closing, that you want to get it, and have the $35. to give the lawyer at that time,  It’s also done at the Registry of Deeds, and is more than worth the charge.  It’s an important document, keep it safe.
  • Interest Rate – Choose a fixed over a variable.  Fixed stays the same, and you know what your paying all along.  A varied changes, sometimes dramatically, and can raise the mortgage payments.  If your Credit Score is high, you can get a lower (1/4 – 1/2%) rate.
  • PITI – Principal, Interest, R.E. Taxes, Insurance – Your mortgage will equal these four items… Principal and Interest is the part of the figure which is the actual mortgage figure reducing your loan.  Real Estate Taxes and Insurance are a part of the total figure, but held by the lender and they pay the taxes and insurance from the money held (escrow), when these bills become due. Taxes and Insurance may change occasionally.  The principal and interest figure remain the same, and each payment reduces the loan.
  • Mortgage Insurance – protects the lender if you default on your mortgage payments…it does not protect you. If you put a down payment of 20% or more, you don’t have to buy/pay for this.  But… any less than 20% down, means you must get Mortgage Insurance and make payments to it, until 20% of the cost of your home is paid. Try not to do this. Put 20% or more down. The more money you put down, the less the mortgage payment each month.
  • Condo Fees –  If you purchased a free standing home, you don’t have condo fees.  If you purchased a condo, the condo association charges fees for maintenance and upkeep of the building and land.  These are in addition to and separate from any mortgage related costs
  • Equity – principal and interest are paid either monthly or bi-weekly.  In the beginning of the loan, you’re paying almost all interest, and very little principal.  Each month, a bit more of the principal is paid and a bit less of the interest — over time, the principal outweighs the interest.  When the loan is paid in full, and the home is sold, the amount of principal is yours, if it’s sold for more than you paid, the difference is yours too minus closing costs. Equity is sort of a savings account for you.  It’s the best reason over renting (with rent, you pay it, it’s all gone). with buying, the principal paid comes back to you when sold.
  • Escrow – The ‘name’ of the account held by the lender holding the taxes and insurance part of your mortgage payment until the payments are due – they’re paid from that account by the lender, who will let you know the taxes and insurance have been paid.

 

 

Tweens and Teens

Be the money savvy one in the crowd

Everyone likes to have friends, be in a group, be popular.  But you have to be wise too.  Just because everyone else is doing it, doesn’t mean it’s the right thing to do…… you’ve definitely heard that phrase before….but it’s true. Think for yourself. Trust your gut.

The majority of those your age truly don’t know how to handle money.  Maybe it’s simply because no one has brought it up.  However, before you know it you’ll be out in the world, a job, college, an apartment….and bills.  Bills you incurred, and are responsible for paying.

Learn before then – when you’re receiving an allowance (hopefully you’ve done chores to earn it) or maybe babysitting or mowing lawns etc.  Doing something that gives you some money for yourself.  Learn how to budget, how to divvy your money into categories.  Saving, holding aside, spending.  By starting now, saving right from the beginning, you’ll be way ahead of everyone.

The first rule is….Pay Yourself First.  That means… Save … some. Be disciplined about saving. Open a bank account and deposit it as soon as possible after you receive it.  Put some aside if you’re saving up for something in particular, thus teaching you that until you have the full amount to pay for an item, you don’t buy it. And yes….. you can spend some, and have a little fun.

Loaning money to your friends….hmm….maybe to get a bite to eat, is okay, but the word ‘loan’, means the borrower will pay the money back to you as soon as possible.  Do it once, and once only….If they have ‘forgotten’ to pay it back, don’t be shy, ask for it.  Do not loan a second time If they have yet to pay back the first loan.  This works both ways….if you need to borrow a few dollars…, be responsible, pay it back as quickly as possible – it’s the right thing to do.

Learn how to use a check register (or make a spreadsheet).  It’s easy, and it lets you know where your money came from and where it went.  It will keep you watching for overspending and nip it in the bud…..in that way it won’t get out of control.  You will get in the budget habit right away, and you’ll have the pleasure of watching your savings grow as well.  Every cent counts.

If you learn how to handle money properly early on, you will be less apt to get into a financial mess later on.  Discipline is key.