Save money and refinance.

5 Ways to Cut Your Monthly Expenses

Save money and refinance.
Little changes make a difference!

Ever notice how your monthly expenses always seem to equal whatever salary you’re making, even after you get raises? The phenomenon is called “lifestyle creep” and it can keep you from reaching all kinds of financial goals, from paying down debt, to saving for retirement. One way to get lifestyle creep under control is to have any future raises you get direct deposited into savings – like a 401(k) account through your employer, or an Individual Retirement Account (IRA). But here are five things you can do right now to cut your monthly expenses.

  1. Make a Budget
    The first step toward cutting expenses is to make a budget, so you know exactly where your money is going. Start with major categories, like rent or mortgage, utilities, transportation, meals, clothing, and entertainment. Then break it down even further to ferret out items that are ripe for reducing. Many people, for example, are surprised to learn just how much they pay for pricey lattes and snacks from restaurants and vendors that would cost a fraction of that amount if they were made at home or purchased at a grocery store.
  2. Lower Your Mortgage Payment
    The biggest monthly expense for many people is their home mortgage. If you haven’t examined that loan since you bought your home years ago, it’s quite possible that you could save a lot of money – both now and over the life the loan – if you refinance at a lower interest rate. To know whether refinancing makes sense, you’ll need to add what you’ll spend on closing costs into the calculation of your new monthly payment.
  3. Get an Insurance Checkup
    If you have a car, you absolutely must have car insurance. But it pays to shop around periodically to make sure you’re getting the best deal. If you have a decent emergency fund on hand in case of an accident, one way to lower your premiums is to increase your deductible. Also be sure to examine your policy for “extras” you may not need. For example, you could be paying for roadside assistance both through your insurance policy and through AAA.
  4. Examine Your Auto-Payments
    Putting your regular bills on auto-payment can be a really smart way to protect your credit rating by ensuring you’re never late with a payment. However, if auto-pay causes you to keep paying for items or services you don’t really need or use, it’s no bargain. A few common culprits include unused gym memberships, subscriptions to magazines that aren’t read, and cable or satellite TV plans that include loads of premium channels that are rarely watched.
  5. Cut the Cord
    If you’ve already ditched your land line, good for you! If not, doing so is one of the quickest and most pain-free ways to trim your expenses. Most all of us have our cell phones with us all the time anyway, and if you really like the feel of a traditional phone in your hand, a VOIP (Voice Over Internet Protocol) plan that provides phone service over the Internet is a lot cheaper than traditional land line service.


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.