Maintain and Save

6 Ways to Maintain and Save

When we’re looking to save money, the first thing most of us do is scrutinize our every purchase to see where we can squeeze out unnecessary spending. After all, a nip and a tuck here and there can add up to a bundle of savings over time! What many forget, though, is the cost savings that can result from proper maintenance of the things we already own – especially the really high-ticket items, like a home and car, which can be costly to repair and even more expensive to replace.

R. L. Polk reports the average person holds on to a new vehicle for just under six years. That’s longer than it was before the Great Recession, but with the average new car price topping $33,000, it makes good budget sense to find ways to extend the ownership period as long as possible. Just think of the boost it would be to your retirement savings if you bought just one fewer car in your lifetime, and instead directed that cash to an IRA or 401k account!

Here are some simple things you can do to keep your car and other stuff in good shape for the long haul.

  1. Get Regular Oil Changes
    Be sure to read your vehicle’s owner’s manual to find out how often oil changes and other preventive maintenance is recommended. Nobody knows more than the manufacturer about what your car needs to continue running properly. Plus, not following the manufacturer’s recommended maintenance schedule could affect your warranty.
  2. Check Tires Regularly
    A flat tire’s not just inconvenient and expensive to replace. If not fixed promptly, a flat tire can lead to costly wheel damage. In addition to checking tire pressure monthly, have tires rotated, balanced and alignment checked regularly. Oftentimes, this regular maintenance is included in the warranty for new sets of tires.
  3. Following Cleaning Instructions
    If the tag says “dry clean only” believe it! Professional cleaning can add up, so you may be tempted to try laundering at home, but it’s a false economy if it means you ruin an expensive item of clothing. Instead, look at care instructions before you buy and decide then whether or not it’s a smart purchase.
  4. Rotate Your Mattress
    Some super-premium beds have different maintenance instructions, but if you have a standard mattress and box springs set-up, you’ll get longer life out of it by rotating it at least twice a year. If you notice sagging sooner, go with a three-month rotation schedule.
  5. Replace AC Filters Regularly
    A home’s air conditioning system is one of the most expensive items to replace if it goes bad. Twice-yearly maintenance is a prudent investment, and replacing filters regularly is really important since clogged filters can cause the system to burn-out prematurely.
  6. Maintain Exterior Paint
    Shabby and peeling paint doesn’t just make the outside of a home look unkempt. A proper paint job protects surfaces from the sun and weather, and helps ensure that cracks are repaired, preventing leaks and helping to keep destructive pests like termites at bay.

Establish good credit

5 Ways to Establish Credit

Establish good credit
Establish good credit today!

When it comes to getting a credit card, qualifying is actually one of the easiest parts of the process. Establishing a positive credit record, however, requires dedication and patience.

Whether you are new to credit or are trying to “clean up” past mistakes to reestablish a favorable record, you may encounter a frustrating paradox: you must have and use credit to create a credit history, yet many financial institutions are reluctant to extend credit to someone without an established record. But don’t despair – there are several good remedies for both situations.

A Secured Card
An excellent start is a secured credit card. You are granted a credit line based on a percentage of a cash deposit you make to your financial institution. Because deposits are usually low, so too will be your credit limit. Application and annual fees for secured cards are often higher then those associated with unsecured credit cards.

The Retailer’s Card
Consider a local retailer’s credit card. Their criteria is often less rigorous than larger credit issuers. Be sure they subscribe to the major credit reporting agencies though – if not, you won’t be establishing a credit history.

A Co-Signer
Another option is having someone with a positive credit record co-sign an account for you. This requires a great deal of trust on the part of the co-signer – if you fail to pay, he or she is responsible. You could end up jeopardizing a relationship as well as a credit record.

Review Your Credit Report
Finally, if you have damaged credit, you might need to rectify the past as you’re building your future. Paying old debts and correcting errors on your credit report as soon as possible might be the way to go.

Pay off Your Debts
Once you have a credit line, establish a good history by using it responsibly. Keep balances low, always pay on time, don’t pursue unnecessary credit, and stick with a few good credit instruments of various types.


Buying Vs. Leasing

Buying Vs. Leasing a Car

Buying Vs. Leasing

 

There are big differences between buying and leasing. Typically, if you were to purchase a new car, you would make a down payment and finance the remaining cost. At the end of the term, the car would be yours. Leasing is essentially renting, with your payment going towards the car’s depreciation. If the lease includes a purchase option, you may buy it at the end of a specific time period.

So which is better? That depends on your individual situation and needs. You will have to decide for yourself by analyzing the advantages and disadvantages of each:

Leasing Advantages 
There are short-term cost advantages to leasing. The monthly payments on a leased car are usually far less than on a loan – even for a luxury model. The down payment usually works out to be less than what you would pay for a bought car as well. Because the typical lease is for three years, most repairs are covered by factory warranty. Sales tax is cheaper too, as you only pay it on the financed portion.

An attractive feature of leasing is the ability to drive a new car every few years. You never have to go through the hassle of selling it; you just turn it in at the end of the term.

Leasing Disadvantages 
While the payments are often reasonable, you never gain equity in the car. If you were to buy it at the end of your contract, it would cost you a lot more than if you had just bought it in the first place.

Leases are restrictive. If you exceed the yearly mileage limit you can be assessed an extra charge. You must take good care of the car as well, as any nicks or dings can be considered “wear and tear” and could cost you.

Comparing lease offers can be very confusing, making it hard to know if you got a good deal. And you will find it difficult to get out of your lease early if you want to – a problem if your driving needs or financial circumstances change.

Buying Advantages 
When you buy a car, it’s yours. You can customize it and drive it as hard and far as you want, penalty-free. Rather than having infinite payments, buying means you will eventually pay the car off. Once paid off, if you want to sell it you can do so at any time, as Erik Fortier you are not locked into a contract.

Buying Disadvantages 
Down payments on bought cars can be substantial. Monthly payments are usually higher than a leased car, and once your warranty expires, you will be responsible for the maintenance costs. When you want to sell it (or trade it in) you will have to go through the hassle of doing so. And, as an investment, new cars depreciate rather than appreciate.


Home-Buying

8 First-Time Home Buying Mistakes

Buy the right home, for the right price!

Buying your first home can be exciting and nerve-racking at the same time. However, it is always better to start your home hunting with an idea of the mistakes you should avoid.

Mistake 1: Using the same agent as the seller.

How to avoid it: You may be told that you can save money by using one real estate agent for the transaction. However, the reality is that you are much better served by having someone looking out for ONLY your best interests.

Mistake 2: Buying points without considering how long you will stay in the home.

How to avoid it: When you buy points on a mortgage, you lower the interest rate on the loan by providing more money up-front. This certainly makes sense if you are planning on staying in the property long-term and will save a large amount of money by paying less interest over that time frame. However, if you plan on moving within a few years or are buying the home with the idea of selling it relatively quickly, it probably doesn’t make much sense to buy points.

Mistake 3: Using an adjustable rate mortgage to buy before you are ready.

How to avoid it: One of the reasons for the housing crisis of the late 2000’s and early 2010’s was that homebuyers were being encouraged to buy homes they couldn’t afford using a low initial interest rate that they could theoretically renegotiate as the value of the home increased. The problem came when many of those homes didn’t increase in value. Gambling that you will be able to refinance a mortgage or sell the home before the rate increases is not only risky, but puts you in a very stressful position as a homeowner.

Mistake 4: Including closing costs in the loan.

How to avoid it: The lender may provide you the option of including the closing costs in the mortgage loan if you are not able to meet this expense at the time of closing. However, financing these costs means paying more since you will have to pay interest too. You are better off saving up for closing costs ahead of time since this will cost you much less in the long-run.

Mistake 5: Being unaware of service contracts for your home.

How to avoid it: Hot water heater broken? Before you shell out the cash to have it fixed, check the paperwork to see if repairs are covered in a service contract included in the loan agreement. You don’t want to pay out of pocket for something that is already covered.

Mistake 6: Thinking a passing home inspection grade means no worries.

How to avoid it: The best home inspectors will give you notes on possible future trouble areas even if they are working fine right now. However, this isn’t always the case. Don’t assume that a home inspector signing off on a property means that there won’t be any major expenses in the near future. Assuming that repair costs will spring up eventually and preparing accordingly is the best practice.

Mistake 7: Not planning to have HOA fees.

How to avoid it: With all the costs popping up as you move through the buying process, it can be easy to forget about Homeowners Association Fee. Unless you have money to burn, a successful home buying experience is going to involve understanding first what you can afford and then the total monthly cost of the property you are looking at—including potential increases.

Mistake 8: Failing to plan for potential increases in insurance or property taxes.

How to avoid it: With a fixed-rate mortgage, you might think your mortgage expenses are locked-in. But think for a moment of parts of the country hit by natural disasters in the past few years. Many homeowners in these areas have seen dramatic increases in their homeowners’ insurance as a result. Hopefully you won’t be hit by any cataclysms, but even if the odds of this are low, it’s still wise to have some money set aside in a housing fund to cover increased costs.

Avoid jumping into your new home without being completely informed of the responsibility you will take.


Avoid Shopping

8 Amazing Ways to Avoid Binge-Shopping

Avoid Shopping
Avoid binge spending

 

It would great if we all made only rational, well-analyzed spending decisions. But none of us are robots. We’ve all made emotional buys at one point or another. Think back on things you bought because you had a rough day at work. Or maybe it was an argument that got you agitated. No matter the cause, purchases made on feelings instead of frugality can be rough on your bottom line. Here are a few ways to soothe yourself without draining your funds

1. Create “me” time

A In a lot of cases overspending happens because it gives you a sense of control over your surroundings. Instead of trying to grab control with money, take control of your time and your surroundings. Whether that means gifting yourself with a nice hot bath or time to work on that tinkering project in the garage, commit to unwinding on your own terms.

2. Connect with a loved one

Loneliness is another emotion that can turn you into a frenzied consumer. A call to a relative you haven’t spoken to in a while or even a spontaneous get-together with a friend can remind you of the wonderful bonds in your life.

3. Volunteer

It may sound strange, but in many cases the best way to help yourself is to work at making someone else’s life better.

4. Exercise

Scientists believe that for certain people splurge shopping releases the same amount of endorphins in the brain as skydiving. So if you are one of those people who gets a real charge out of filling a shopping cart, consider alternatives like going to the gym, walking or riding a bike to get your endorphin rush (if the plane and parachute are not available).

5. Enjoy nature

One of the best ways to get away from your problems is to, well…get away from them! Leave your connectivity behind and get back in touch with a favorite out-of-the-way spot.

6. Read

A little healthy escapism is always good for taking your mind off your day-to-day worries. Whereas passive media like television usually serves more as just a casual distraction, diving into a good book forces you to actively engage in the story.

7. Play

Be it with children or a pet, having some silly fun can shed a lot of stored up tension you might otherwise look to purge with shopping.

8. De-clutter

Because coming home to a place full of stuff can add to your stress level, give yourself a present and a future of increased serenity by hunting for items that can be donated or sold online or at a garage sale.


The 50/30/20 rule

What is the 50/30/20 Rule?

The 50/30/20 Rule is the simplest way to create a budget. It helps you keep your spending aligned with your savings goals. This very convenient, especially if this is the first time you try to organize your finances. Once you know how to achieve a balanced budget, you can further customize this rule around your unique expenses and goals.

50% of Your Income Goes to Essentials

Start by setting 50% of your income to pay essential items such as rent, utilities, car transportation and housing. This might be a little high in the beginning but once you get the hang of it you will be able to customize your budget to your needs. For instance, some people live in high-rent areas, yet can walk to work, while others enjoy much lower housing costs, but transportation is far more expensive.

30% of Your Income Goes to Your Lifestyle

Your lifestyle is important and although you may need to sacrifice some luxuries, you need to splurge once in a while. Therefore, 30% of your income goes to personal expenses like travel, dining out, cable, and even expensive coffee. If you travel extensively or work on-the-go, your cell phone plan is probably more of a necessity more than a luxury. It is up to you to decide which items are consider personal and which you should cut-off.

20% of Your Income Goes to Savings

The last step is to designate 20% of your income to savings. This is for your future, for everything unexpected that may come your way. This is the category you should think about after your essentials and before feeding your lifestyle expenses. It is your “get ahead” section and you must give it importance.

You don’t need to make a lot of money to budget properly. The 50/30/20 rule is only the beginning, you will customized this rule when you become an expert at budgeting.