As a small business owner myself, I can understand the tendency to minimize costs and try to do it yourself. DIY may be popular these days because it promotes education and saves on families’ personal finances, but there is a different reality in the business world.Continue Reading...
Archives For Budgeting
Applying for a home loan isn’t always just a personal experience; you may want to consider making an application in the name of a company or a trust. So is that actually possible and what are the positives and negatives?
Trusts in particular are popular for protection of assets, and tax advantages. It’s important to know where you stand if you’re attempting to borrow as a trust, or as a company; will it really be advantageous?Continue Reading...
I’m sure you have all noticed that holiday stuff is everywhere now. Halloween stuff has been on the shelves for quite some time, and Christmas and winter items are starting to come out as well. It seems like just yesterday it was summer and 100 degrees out.
Traveling during the holidays can kill your budget, so there are many things to think about.
Below are ways to save on your holiday travel:
1. Think about your travel dates.
Can you be flexible with your traveling dates at all? Flying a couple of days before Thanksgiving and leaving a couple of days after will be very expensive, and also very busy at the airport. If it is possible, then try arriving or leaving the day of the holiday. Yes, this isn’t always ideal, but if it is possible, then it should be though about.
In general, days matter also. However, not when it comes to Thanksgiving though as these days I’m about to list are prime Thanksgiving traveling days. Flying on different days can also save you. Flying in on a Tuesday and leaving on a Saturday will save you much more money then leaving or coming back from your destination on Friday or Saturday.
Leaving at different times of the day can cost differently as well. Taking a 6am flight or an 11pm flight will most likely cost less than taking a flight during a more normal time.
2. Buy now.
Prices will most likely only go up from now until the holidays. There will be the occasional super sale on airfare, but would you want to risk that and possibly paying double if the sale never comes?
3. Use different airports.
Flying into airports that aren’t as busy can save you a lot of money. Farther airports might also be closer to your destination, so don’t always rule them out.
However, there are other factors to think about when doing this. How much will the additional cost is gas or a taxi cost? Can you use public transportation from this airport location?
4. Use a Rewards Card.
If you can get any extra money back, then why not? If you already have a travel or rewards card, then look into the details to see how you can get the most money back.
5. Looks at bidding websites.
If you’re booking a hotel, try bidding on websites such as Priceline. If you look at bidding tips websites, they can tell you what most people pay and what hotels you most likely are bidding on. I greatly recommend this so that you aren’t just shooting in the dark for a price and a hotel.
6. Use Airbnb or other home rental websites.
I have used Airbnb once before, and I got a great deal. Renting a place for a couple of days is most likely much cheaper than getting a room at a hotel.
7. Get the economy car.
If you need to rent a car, then try getting the economy car. It is most likely the cheapest and will get the best gas mileage. Also, see if your hotel will spring for the rental car cost, as some hotels do this nowadays.
8. Use public transportation.
If it is possible in the place that you are going to, then trying using their metro system. It will most likely be much cheaper, and you might possibly be able to get places faster since you will be avoiding traffic.
9. Use coupons on food.
Food on vacations can be a budget buster. Try looking for coupons or specials for the restaurant that you are about to go to. Also, eating during happy hour or during lunch time will be much cheaper than eating during dinner at most restaurants.
10. Cook at your place.
If you have a kitchen in your room, then cook! Go to the grocery store and stock up on foods that you will be eating.
How do you save on holiday travel?
A mistake that many new home buyers make is not looking at the total cost of the house that they are about to buy. Only looking at the actual mortgage amount is a big mistake, as looking at that amount alone can fool you.
The principal and insurance amount of your monthly home budget can actually be relatively small when compared to the whole amount.
My friend and her fiance are looking at houses right now, and they are making a mistake when calculating their housing costs. They are looking at houses farther away because houses in the more rural areas are much, much cheaper. However, the costs that they are saving by being able to get a newly built house in a far away area are eliminated because of the long drive they will have to venture on every morning. They will both work more than 60 miles from their jobs and won’t be able to commute together.
Commuting costs should definitely be thought as, as demonstrated above! They also both have horrible gas guzzling cars, and will most likely be spending a little over $1,000 on gas every month.
When looking at houses, you should be looking at the overall costs such as the costs listed below:
1. Property taxes.
Many estimate that these will be lower, but in reality, property taxes are high. For us, property taxes equal approximately one-third of our total monthly house payment.
2. Private Mortgage Insurance (PMI).
If you don’t put a large enough down payment on the house that you are about to buy, then you will have to pay PMI most likely. This can end up being a large amount tacked onto your monthly mortgage amount, such as $50 or $150 per month.
3. Home Insurance.
The neighborhood you live in and the type of house that you buy play a big role in how expensive your home insurance will be. You can of course try shopping around to find the best price, but there can be other things making your home insurance high. If you live in a risky weather area (such as floods, high winds, tornadoes, etc.), then this will cause your home insurance expenses to rise.
With houses, there will something that will go wrong eventually. Pipes might need to be placed, water heaters will need to be repaired and so on. Some of these expenses might be “low” and only be a couple hundred dollars, while others might be thousands. A family member needs their roof replaced, and they had multiple people bid on the replacement. The lowest bid they received was $65,000. And no, they are not being duped, they have a VERY steep roof and asbestos, so that’s the lowest that any place would offer. Keep these maintenance costs in mind!
Also, the furnace can be an expensive fix or replacement as well. A friend of mine had to spend $6,000 to get hers replaced. Keeping a home maintenance fund is very important just in case something does come up.
Your house looks nice now, but will it require a professional person to come by every now and then to make the landscaping look the same? Will you be able to do it yourself? If you have a very large yard (acres and acres), then you will have to either hire someone to come often, or you will have to put time, labor and buy a reliable mower to cut your lawn.
Even if a bigger house may seem like a “deal,” it might not actually be. A bigger house will require more maintenance, landscaping, and higher utility bills.
You might say “oh I’ll buy this house but I won’t get internet, cable, cell phone, etc. so that I can afford the house payment.” How realistic is this though? If you know that you will be buying these things, then you should budget this into your housing costs so that you aren’t running later.
Did you forget about any housing costs when you first bought?
When my wife and I were just married, as I have shared before, we struggled to make ends meet. We had an emergency fund in place so we never had to stress about whether we were going to be able to pay the bills, but we always wanted to pay our bills with our income and not draw from the emergency fund. That is, after all, not the purpose of an emergency fund.
In order to achieve this goal, we had to cut back in many ways. This meant only eating out once a month and doing free hobbies. Naturally, we focused on hanging out, doing stuff outdoors, and board games. This is all great fun… for a while. Eventually, these free activities get old and they did. We got very tired of playing the same board games over and over. As a result, we were forced to find new hobbies that didn’t break the bank.
Find Cheap Shared Experiences
The first thing we did was to look for new ways that we could spend time together that wouldn’t break the bank. If it meant spending a little more money to have new experiences, we were okay with that. But we weren’t willing to spend too much money that would compromise our financial position. Here’s what we came up with:
Movie Night - One of the first things we did was implement a movie night. It wasn’t anything glamorous and 90% of the times, we got the movie from our local Redbox. That way we could make dinner at home and watch a $1 movie. It didn’t just involve sitting around the house, but it somehow became a time that we looked forward to. We eventually watched all of the movies that we wanted to on Redbox, so we had to splurge and spend $10 per month on Netflix. I know, big spenders!
New Scenery - Another thing that we did together was to explore new areas. If there was a park that we hadn’t visited, we scheduled a time to visit. In a matter of months, we saw several waterfalls, went on tons of new hikes, and just enjoyed experiencing new things. There are only so many times that you can do the same hike without feeling a little boredom.
Develop Personal Hobbies
Another thing that my wife and I realized is that we needed time to ourselves. Not only because it’s important to have alone time, but also because we each have different interests. My wife likes to do some crafts and I like to bike and build websites. We gave ourselves a little bit of spending money to find new personal hobbies.
Crafting - My wife instantly realize that the enjoyed doing crafts. Normally, she is not the stereotypical woman (doing all the girly things), but this was an exception. Yet, as many people probably already know, crafting can add up. She came back from the craft store the first time spending $80. Wow! That was a shock and forced us to find cheaper ways to continue this hobby. Now, we look for coupons or deals (like Jo-Ann Fabrics coupons) and are keeping her craft expenses to a minimum.
Biking - One of the first things I needed to do was to buy a bike. I looked on craigslist and wasn’t able to find a bike that I wanted. I ended up using some Birthday money to buy my bike and then enjoyed a practically free hobby. If only my wife could enjoy a free hobby.
Saving money while developing hobbies and discovering your interests is always a difficult balance. For us personally, we found the best success with prioritizing savings first and then allowing us to splurge a little bit as we made more money. This meant that we didn’t live with any regret and we were able to slowly enjoy ourselves even more.
Have you had success balancing saving money and enjoying yourself?
Everyone dreams of the day that their mortgage for their house will be paid off right? I know I do! We bought our house around 3 years ago, and would like to have it paid off in around 4 to 5 years. We have a long 30-year loan though.
There are many reasons why people want to pay off their homes early. Maybe you just hate debt and want all of your debt to be gone. Maybe you want to retire and lower your spending so that you are more prepared.
However, I do know that not everyone is in a rush to pay off their mortgages early. Your mortgage rate might be extremely low and you might be earning a much higher return in the stock market or in your other investments, which would persuade you to invest and throw your money at your investments instead of your house.
How is it possible that we can pay off our house so much earlier than the planned 30-year loan that we have? There are many reasons for this, mainly because of the fact that we plan on paying extra large payments to our mortgage debt soon. Our goal is to make a couple thousand dollars extra towards our payments every month, and we also hope to switch our payments to biweekly if our bank allows for it.
1. Increase your payment amounts.
This one is a no brainer. If you throw more money towards your debts, then of course you can pay your mortgage off more quickly!
Another way is to make more payments towards your debt. Did you receive a bonus for the holidays, signing on with a company, or for some other reason? Put that extra money towards your debt and make a new payment!
Even if you can’t put a large amount of extra money towards your mortgage payment, even a little bit helps if it is put towards your principal. That way you are not being charged all of that extra interest anymore.
2. Increase the amount of payments that you make.
As stated above, try and apply any extra money towards your mortgage. Everything counts and one extra payment is worth it.
This also goes hand in hand with making bi-weekly payments. With biweekly payments, you make a payment every 2 weeks. There are 52 weeks in a year, so instead of making 12 payments in one year, you are making 13 payments.
You are also shaving a little off interest as well. Not all banks will allow you to do this though, so first ask your bank. You might have to sign up for some sort of biweekly plan with them.
With paying your mortgage biweekly, you will most likely be able to shave AT LEAST a couple of years off your mortgage, and it’s really just that simple!
3. Refinance your mortgage.
Mortgage rates are extremely low right now, and everyone knows that. My friends don’t have the greatest credit in the world (they don’t have a car payment or credit cards, so they haven’t been able to build their credit the normal way), but still received a 30-year loan at what I believe was a 3.2%. That is great! Our mortgage is at 5%. We should refinance.
Refinancing your mortgage might cost a couple thousand up front, but in the end, if you can slash more than 1.5% to 2% off your rate, then it is probably worth it to refinance your mortgage.
Do you plan on paying off your mortgage early? Why or why not?