Categories
Investing

How to Save Up to Buy a House

This is a question that is being asked over and over again. How much will my house cost? Can I refinance my mortgage? Especially now that rates are so low, many homeowners are looking to refinance. Maybe you haven’t purchased a house yet but you want to in the future. If you want to know how much you need to save to buy a house you may want to use a mortgage calculator to see what your monthly payment may be. Let’s take a look at what determines home values and how you can figure out how much your home may cost.

What Determines My Home’s Value?

Public School Zone Districts

There are several factors that determine the value of your home. In America, one of the biggest factors is the school zone. Because your property taxes pay for the local school, bigger more expensive homes naturally contribute more in property taxes and usually have better schools. The public schools can afford to hire better teachers, stock the classroom with more supplies and sponsor extra curricular learning activities like field trips. Usually schools in low income neighborhoods have less in the way of funding and therefore, the teachers are usually not as good. So when you are looking for a home remember that a good school zone is a factor in the price of your home whether you have children or not.

Government Properties

Some homes have a lower cost because of government subsidies. For example, there is a program for Veterans that will allow you to purchase a home for a cheaper price if you have served time in the military. There is also a program called Section 8. With this program the government offers a subsidy to those with low income.
There are also programs to help with the upfront cost of purchasing a new home. If you are asking how much can I borrow then you should also know about private mortgage insurance. If you put up cash of less than 20% of the home’s value, then you will have to pay private mortgage insurance. There are government programs like the US Department of Housing and Urban Development. They can provide education on what it will take to purchase a home. Even if your home had a lower cost, it doesn’t necessarily mean that it has a lower value. You should seek the advice of a qualified appraiser to find out what your home is worth.

Location Location Location

The last and possibly most important factor in the value of a home is the location. If you are in a location with lots of development, you can be confident that the developers see opportunities in your area. When you are ready to sell your home most likely there will be buyers ready to purchase your home.

Whether you decide to refinance or you are looking to buy your own home, you need to make sure you are doing your research and save enough to avoid unnecessary fees. Compare mortgage rates in your area.

How to Save Up to Buy a House

Getting on the first rung of the property ladder has become increasingly difficult in recent years. Banks usually ask for a deposit of twenty per cent, a fact which generally leaves prospective first time buyers reeling.

So saving up to buy a house can be trying, especially if you have to pay rent on your current house or flat. It is essential to be prepared to cut back on your current expenditure to be able to save up for your deposit.

Here are a few ways you can get your spending into line and raise enough money for your dream house.

Set a target

You should try and set yourself a target for every month, this will help to motivate you and keep you on track. By calculating how much money you need to save every month and setting up a direct debit, which takes money out of your account every month after you have been paid, you will have a realistic idea of how long it is going to take to save up enough money for your deposit.

Shop around for the best interest rate

By looking into all the different types of bank accounts you will be able to get the best interest on your savings. Bank accounts offer differing interest rates, so make sure you shop around for the best deal. Search to compare mortgage rates in your area.

Curb your spending

Every time you avoid spending money on luxury items you should pay the amount you would have spent into your deposit savings account. You will be able to put away a significant amount of money by doing this.

It also keeps you in the saving frame of mind and every time you look at the balance on the account you will be spurred on.

Find cheaper accommodation

Moving in with your parents, if possible, will save a huge amount on your bills and rent. If this is not an option then you could consider finding cheaper accommodation. Every dollar you save on your rent can be put towards your new home.

Compare energy prices

There may be cheaper companies out there and by switching energy providers you could save a significant amount of money. You should also look at your bills; do you really need a car or cable TV?

Could you repair a garden hose on your own and save money on your water bill? By cutting out little luxuries you will be surprised at how fast you can reach your target.

Save every dime

Put all your loose change to one side at the end of every week. It may be a small amount of money, but every little counts.

What type of tactics do you use to save for a large purchase?

Search to compare mortgage rates in your area.

Originally posted 2012-09-10 06:00:28.

Categories
Budgeting & Saving

30+ Things Frugal People Don’t Do

Frugality is a lifestyle. Spending less so you can live more appeals to a lot of people. Practicing frugality often gets referred to as being cheap but there are distinct differences between the two.

Being frugal involves optimizing what you have by being creative. You want to establish a lifestyle that doesn’t revolve around spending and obtaining more things to be happy. Frugal people value experiences over things but don’t sacrifice the health or welfare of themselves or their family just to save a few dollars.

[Tweet “The most important things in life aren’t things.”]

Here are 30+ things frugal people usually don’t do.

1. Fail to Implement a Budget

Budgeting accurately helps keep your finances in order. This allows you to control where your money is going. Frugal people remain frugal and spend less because they implement a budget in some shape or form to remain on track.

2. Spend Money Every Single Day

There are some days when you don’t have to spend a dime. Having a ‘no spend day’ or a ‘no spend weekend’ is a financial challenge that requires creativity and a clear focus. But the more you do it, the easier it will become.

3. Choose Wants over Needs

Frugality helps put your needs before your wants by prioritizing what is most important to you. It’s also important to be content with what you have. Greed and frugality do not mix well.

4. Have Enormous Cable Bills

Cable doesn’t make sense from a financial standpoint. If you don’t even have time to watch television nor the money to fork over for a rising bill each month, try going without cable and using a cheaper alternative to watch shows and movies. Consider Netflix ($8/month), Hulu ($8/month) or Amazon Prime (with free two-day shipping on items for $99/year).

5. Waste Food

Wasting food is something everyone should try to avoid. Food is a privilege in some countries. It’s important to be mindful of what you eat and the food you buy so you can avoid waste. Throwing away food is almost identical to throwing money in the garbage. Frugal people eat all of what they buy.

6. Make Impulse Purchases Based on Emotion

Frugal people try to keep their emotions in check. They realize that retailers tend to create a sense of urgency with their products and appeal to consumers’ emotions in order to increase sales. Asking yourself if you truly need the item can bring your shopping impulses to a halt.

7. Buy Brand Name Items and Clothes to Make an Impression

The idea of buying expensive name brand and designer clothes really serves no purpose in the life of a frugal person. Clothes that look nice, fit well, and are on sale (bonus) will suffice. Why spend money over and over again if you can buy timeless?

8. Shop as a Form of Entertainment

Shopping as a habit is expensive and is usually done to fill a void. Frugal people try not to associate spending money with fun and entertainment. Frugal consumers find more enjoyable ways to lighten their mood and have fun.

9. Drive Cars They Can’t Afford

Driving a car that you can barely afford to make payments on is not a wise decision and will often leave you drowning in debt. Frugal people practically despise debt and some even drive older, more economical cars to avoid going into debt over a depreciating asset.

10. Ignore Vehicle Maintenance

Failing to maintain your vehicle and schedule timely repairs can result in having to pay thousands of dollars to fix big things later on. The frugal way to keep your car running well for longer is not to avoid maintenance and repairs, but rather budget for these expenses ahead of time. This way, you can take care of them quickly without causing financial strain.

11. Go the Most Convenient Route

Convenient practices like ordering dinner to avoid cooking it, paying for valet parking, or driving when you can walk or bike will eventually start to add up and deplete your funds. This is why frugal people try to avoid ‘convenient’ money traps.

12. Avoid a Great Deal

Frugal people don’t sit around all day staring at their bank accounts and thinking of ways to avoid spending any money. They know how to spend. They just wait for a great deal and snatch it up as fast as possible!

13. Use Credit Cards To Inflate Their Lifestyle

Using credit cards to spend more than you can afford will lead to greater money problems. You can use credit cards frugally by optimizing them for points, spending on items you would normally purchase, and paying off the balance in full each month.

14. Ignore Giveaways and Freebies

Whether you consider yourself a frugal person or not, we all should appreciate an occasional freebie or giveaway. It only takes a few moments to enter a giveaway or respond to an advertised freebie offer. It’s typically a really good return on your invested time.

15. Run the AC or Heat When It’s Unnecessary

Frugal people are all about conserving energy and keeping utility costs low. They know that paying attention to the thermostat is worthwhile. There are several things you can do to avoid running the heat too soon and running your air conditioning too much.

16. Spend a lot on Gym Memberships

A gym membership can be a great source of motivation to help you get fit. However, a lot of people don’t fully utilize their gym membership given the amount of money they spend on it each month. On the low end, a gym membership generally costs around $58 or $696 per year. According to recent studies, about 67% of people with gym memberships don’t even use them. If you don’t go to the gym at least two or three times per week all year round you could be wasting quite a bit of money.

Whether you want a gym membership or not is your preference. But it would be wise to avoid a costly one and stick to free and natural workouts that you can do out in nature or in your home. There are plenty of mobile apps and YouTube videos to utilize. Used and affordable gym equipment is usually plentiful any time of year.

17. Believe Entertainment Is Expensive

A big part of being frugal is the ability to override the myth that you need to spend lots of money on entertainment. There are tons of free and low cost ways to entertain yourself and your family. Look around your neighborhood, research events and take advantage of deals.

18. Pass up a Thrift Store or Garage Sale

Garage sales and thrift shops are thrilling for the frugal shopper. Garage sale and consignment shop items that are in good condition beat department store prices every time.

19. Try to Overcompensate by Giving out Elaborate Gifts

This ties into the idea of trying to impress others with name brands. Sometimes it’s best to make gifts and provide the recipient with something they need instead of trying to impress them with a popular brand.

20. Purchase Work Lunches Each Day

When you work for an employer (especially in an office) lunch time can be a much anticipated release or break from the work day. If you go out and buy lunch each day though, you could easily waste more than $1,000 per year. Frugal people choose not to purchase work lunches each day. They bring a lunch from home to save that $1,000 for a vacation, home repair, or a memorable experience with loved ones.

21. Buy Snacks at the Movie Theatre, or Meals at Carnivals and Fairs

It’s not about being cheap. Who really wants to spend $5 on a soft drink, $4 on a box of candy and $7 on a bowl of popcorn that might be fresh? If you don’t want to avoid going broke just by snacking, it’s best to eat a large meal before you go out and drink water if you need a beverage. This allows you to focus more on the experience rather than the overpriced, subpar food.

22. Take Luxurious Vacations Without Reward Points

Many frugal people still go on vacations. Dropping $5,000-$10,000 on a vacation each year though is often not in the question. Instead of charging vacation expenses to your credit card and returning home with debt, you can churn credit cards and use the reward points and cashback to fund your travels.

23. Ignore Their Health Needs

Maintaining an adequate amount of medical coverage is very important, no matter the cost. Eating healthy foods and going to regular check-ups can help prevent costly medical problems in the future.

24. Spend Copious Amounts of Money on Summer Music Festivals

Frugal people might wonder why someone would pay hundreds of dollars to meet up with friends, camp outside and listen to music for a weekend. That’s because there are tons of free music festivals happening all over. Although frugal people may use credit card reward points to help pay for tickets to an occasional concert.

25. Buy Brand New Electronics Each Year

Keeping up with the newest versions of electronics is exhausting, not to mention financially draining. Frugal people try to keep up with their electronics for a few years at least instead of buying something new the moment it comes out.

26. Throw Away Broken or Old Electronics

When electronics break, instead of tossing them out and creating more waste, frugal people may try to fix up and sell older electronics for cheap or sell their parts if the item is broken. A broken iPhone is still worth a lot of money.

27. Put Off Investing

Putting off investing can put you in a rough financial situation when you get older. Some people who are nearing retirement age can’t even leave work because they failed to invest and save early. Frugal people love setting money aside for their future.

28. Buy Coffee Every Morning

Drinking coffee every day is normal. But buying it each day from a café or coffee shop is a bit much for frugal people. They usually make coffee at home and buy an occasional drink at Starbucks every now and then. This saves big money.

29. Pass up a Side Hustle

People who live frugally are always looking for more ways to earn money easily on the side. This is why it’s hard for a frugal person to pass up an opportunity to use their skills to earn extra money on the weekend, help a friend or start a side business.

30. Go on a Road Trip without Bringing Food

Road trips are very fun and they’re the perfect frugal getaway for a family or group of friends. To make the trip even more frugal and save money to use for attractions and other activities, bringing food along is a must. It’s also easier than stopping the car for a snack.

31. Compromise the Safety and Welfare of Others

Frugal people don’t opt to save money at all costs; especially when it comes to the expense of other people’s health or safety. They are not like the people you see on shows like Extreme Cheapskates. Since frugal people place needs and necessities above wants, it allows them to live a life that doesn’t compromise the safety and welfare of others.

32. Care What People Think about Them

Frugal people are judged a lot and sometimes negatively referred to as ‘cheapskates’ or ‘penny pinchers’. After you’ve been frugal for a while and you see the positive affects your choices have had on your lifestyle and your bank account, it won’t matter what other people think. Frugal people always have the last laugh. While others think they are cheap or poor for bringing lunch to work each day or living a different, simpler life, they are busy saving, investing, and living a fulfilling life.

Do you consider yourself frugal? Can you think of anything else that frugal people might not do?

Originally posted 2015-11-09 10:00:15.

Categories
Investing

Simple Steps to Become a Millionaire

“I want to be a millionaire, so freaking bad.” You might have been thinking it, but Bruno Mars sang it first. Many people strive to become a millionaire. In fact, there is even a day dedicated to those people. This year Be a Millionaire Day is May 20th. On this day we answer the question, “Who wants to be a millionaire?” with a resounding shout, “Me! I do!” While it may seem difficult to save a million dollars, there are a few tips you can use today to make it to millionaire status sooner rather than later.

Steps to Become a Millionaire

Start a Savings Account

If you plan to reach the Millionaire’s Club by saving money, then you must first open a savings account. In order to accumulate one million dollars within 30 years, you will need to save around $750 per month at a 4% interest rate.

Use this calculator to determine your required savings rate.

Lately, interest rates have been pretty low on traditional savings accounts. Instead of simply shopping at your local bank, try an online bank. Then, look into a certificate of deposit. A certificate of deposit or CD is a way for your money to earn more. CD’s sometimes have higher rates than traditional savings accounts. A Discover Certificate of Deposit is great option with flexible terms from 3 months to 10 years and you can open your FDIC insured CD account with as little as $2,500.

Begin Investing

Let your money work for you. Investing your dollars gives each dollar a job and that job is to earn more money. When you invest, each dollar has the ability to earn a return. If you decide to invest by purchasing 100 shares of stock in a company, and those shares rise in value, your money just earned more money!

However, you have to be careful because if those shares drop in value, then so does your investment and you could lose money. Investing is not as safe as saving in an FDIC insured savings account. However, over the last ten years, investments in the broad market index, as measured by the S&P 500 have averaged 8.3% per year.

Mind the Gap

The gap separates a potential millionaire from a person that will never make it. What’s the gap? The gap is the difference between how much you earn and how much you spend. That unspent portion is available for saving and investing. Growing the gap will allow you to accelerate your millionaire status. How large should that gap be? Well that depends on how soon you want to become a millionaire. A larger gap means faster millionaire status.

“The amount of money you have has got nothing to do with what you earn… people earning a million dollars a year can have no money and… People earning $35,000 a year can be quite well off. It’s not what you earn, it’s what you spend.” -Paul Clitheroe

Here are a few examples.

Patrick and Jenny are 25 and both earn $50,000 per year. After taxes they each earn a take home pay of $3,000 per month.

Patrick keeps his expenses low and saves $1,500 per month or 50% of his take home pay.

Jenny enjoys shopping, dinners out, traveling, and attending concerts. She saves $300 per month or 10% of her take home pay.

In ten years, Patrick has saved a total of $220,876 with an interest rate of 4%. If he maintains the same saving rate he will become a millionaire by the time he is 55.

In the same ten years, Jenny has saved a $44,176 at a rate of 4%. If Jenny lives long enough, she will become a millionaire by the time she is 88.

Ultimately, becoming a millionaire is a simple process that requires diligence and persistence. Ready to become a millionaire? Open a savings account, begin investing, and create a budget that allows you to spend less and save more.

This post was created as part of the Discover partnership program.

Originally posted 2015-05-20 10:00:28.