Should You Buy a House With Cash? Here's What to Consider
.Should You Buy a House With Cash? Here's What to Consider
Terri Williams Fri, June 17, 2022
In a hyper-competitive housing market, prospective buyers are pulling out all the stops to close bids on new homes—and for some, the winning tactic is a cash offer. In February 2022, 25 percent of home offers were all-cash, according to data from the National Association of Realtors, and in 2021, all-cash offers were more than four times as likely to win a bidding war.
With these chances, it's no surprise that prospective homebuyers have been going out of their way to make these offers. "Our quarterly report reveals that 57 percent of agents have seen buyers leverage their own retirement or securities funds to pay cash for a home," says Laura Tonelli, home trends expert at HomeLight, a San Francisco-based real estate referral company. In addition, she says that 49 percent of real estate agents polled have seen buyers take out a home equity loan or home equity line of credit for this purpose, and 38 percent of agents have seen buyers get short-term loans from friends or family.
Should You Buy a House With Cash? Here's What to Consider
Terri Williams Fri, June 17, 2022
In a hyper-competitive housing market, prospective buyers are pulling out all the stops to close bids on new homes—and for some, the winning tactic is a cash offer. In February 2022, 25 percent of home offers were all-cash, according to data from the National Association of Realtors, and in 2021, all-cash offers were more than four times as likely to win a bidding war.
With these chances, it's no surprise that prospective homebuyers have been going out of their way to make these offers. "Our quarterly report reveals that 57 percent of agents have seen buyers leverage their own retirement or securities funds to pay cash for a home," says Laura Tonelli, home trends expert at HomeLight, a San Francisco-based real estate referral company. In addition, she says that 49 percent of real estate agents polled have seen buyers take out a home equity loan or home equity line of credit for this purpose, and 38 percent of agents have seen buyers get short-term loans from friends or family.
So, you may have enough money to consider buying a house with cash. But is that a wise decision?
"Paying cash for a home as opposed to financing all or part of it is a big decision, and really should be made with the help of an accountant and/or a financial advisor," advises Bill Golden, realtor and associate broker at RE/MAX Around Atlanta. "Tax consequences need to be considered, both for the current situation and as a long-term investment—and every situation is different."
Below, learn all the factors you should weigh if you're considering paying cash for a house.
Long-Term Savings On The Cost Of The House
If your goal is to save money on the overall cost of the home, paying cash definitely provides an advantage. "If you can buy a home all-cash, you are spending less to purchase the same asset," says Ryan Serhant, founder and CEO of SERHANT. "By the time you finish paying off a mortgage, the home is going to cost you more than the initial purchase price because of the interest."
Serhant's view is shared by Brielle Mabrey, Washington, D.C.-based personal finance coach and founder of the financial empowerment firm Wisdom Then Wealth. "Two words provide significant motivation to buy a house with cash if you can do so: amortization schedule." This refers to the amount of principal and interest you'll pay over the term of the loan.
"For example, on a $240,000 mortgage at a 3.5 percent fixed interest rate with 360 monthly payments, you will pay $147,974 in interest on a standard payment schedule," she explains. "The total paid will be $387,974, with you paying 61.7 percent of your loan amount in interest."
Interest Rates
On the other hand, interest rates (although rising) are still pretty low. "Home mortgages tend to be one of the most affordable ways that individuals can access finance capital," says Aaron Dorn, chairman, president, and CEO of Studio Bank in Nashville, TN. "Many mortgage rates are actually lower than national inflation rates, which can further compound the long-term value of having a mortgage."
To continue reading, please go to the original article here:
https://www.yahoo.com/lifestyle/buy-house-cash-heres-consider-191742931.html
10 Genius Ways to Protect Your Money
.10 Genius Ways to Protect Your Money
Mark Henricks Thu, June 16, 2022,
SmartAsset: 10 Asset Protection Strategies for 2022
Asset protection strategies can protect investors, professionals, business owners and those with significant assets from loss due to lawsuits, creditor claims and other risks. This often involves moving assets from the owner’s personal control into various legal entities in order to separate them from claims against the owner. While not necessarily simple, inexpensive or guaranteed to stop all claims, asset protection can be an important part of a financial plan. A financial advisor can help identify the assets and strategies appropriate to your individual situation.
What Is Asset Protection?
10 Genius Ways to Protect Your Money
Mark Henricks Thu, June 16, 2022,
SmartAsset: 10 Asset Protection Strategies for 2022
Asset protection strategies can protect investors, professionals, business owners and those with significant assets from loss due to lawsuits, creditor claims and other risks. This often involves moving assets from the owner’s personal control into various legal entities in order to separate them from claims against the owner. While not necessarily simple, inexpensive or guaranteed to stop all claims, asset protection can be an important part of a financial plan. A financial advisor can help identify the assets and strategies appropriate to your individual situation.
What Is Asset Protection?
Asset protection consists of a set of legal techniques used to protect assets owned by individuals and businesses from claims arising from lawsuits, debts and taxes. For instance, these strategies can limit the amount a driver can lose if someone is injured in an automobile accident in which the driver is at fault.
Asset protection is most useful for people with significant assets. Occupation also plays a role here. Business owners, especially those with employees, are among those most likely to be subject to lawsuits for damages. Others at risk include real estate investors and highly paid professionals such as physicians, especially surgeons and obstetricians.
Asset protection can also shield assets from loss due to divorce. In that sense, anyone who is married may be a candidate for asset projection.
Asset protection is useful but has its limitations. It may involve significant cost and complexity and is a lower priority for people with few or no assets. And asset protection can’t shield against all taxes or various liens such as mechanics liens.
10 Asset Protection Strategies
Asset protection is highly individualized. Every asset protection plan is likely to be different in some aspects from all or most other asset protection plans. However, there is a finite set of tools that can be used. Here are 10 of the most important:
Plan ahead. In most cases, when a lawsuit is filed or a tax bill is levied it is too late to try to protect assets. For best results, asset protection should be done before there is a need for it.
A limited liability company (LLC) is one of the most common, simple and effective asset tools for protecting assets. Creating an LLC and transferring real estate, vehicles and other assets into the LLC can shield them from lawsuits or other claims against the owners of the LLC. LLCs can also manage taxes by avoiding double taxation on corporate profits.
Asset protection trusts are irrevocable trusts that serve as repositories for assets removed from the control of the original owner. Assets transferred to an asset protection trust are often protected from creditor and lawsuit claims against an individual or business. International asset protection trusts based in offshore havens such as the Cook Islands and Nevis offer even more protection.
Family limited partnerships let owners set themselves up as general partners of partnerships owning assets they wish to protect. Family members can be made limited partners. This is an effective way to manage estate taxes.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/10-genius-ways-protect-money-160000620.html
What Working with the Homeless Taught Me about Financial Planning
.What Working with the Homeless Taught Me about Financial Planning
Stacia Williams, Investment Adviser Representative, Founder Wed, June 15, 2022
I learned the importance of having a plan at an early age thanks to my father, a homeless camp and sack lunches. My father was a pastor, and he viewed helping the homeless as a calling. So, on Saturday afternoons, my family would prepare 125 sack lunches, with the contents of those lunches imprinted on my memory to this day – a bologna sandwich, a bag of potato chips and a Little Debbie.
We would rise at 6 on Sunday morning, load the sack lunches into a van and travel to a park where homeless people camped. There we handed out the treats. The sack lunches came with no strings attached, but my father took the opportunity to invite people to church, granting a hot lunch after the service to whomever accepted the offer.
What Working with the Homeless Taught Me about Financial Planning
Stacia Williams, Investment Adviser Representative, Founder Wed, June 15, 2022
I learned the importance of having a plan at an early age thanks to my father, a homeless camp and sack lunches. My father was a pastor, and he viewed helping the homeless as a calling. So, on Saturday afternoons, my family would prepare 125 sack lunches, with the contents of those lunches imprinted on my memory to this day – a bologna sandwich, a bag of potato chips and a Little Debbie.
We would rise at 6 on Sunday morning, load the sack lunches into a van and travel to a park where homeless people camped. There we handed out the treats. The sack lunches came with no strings attached, but my father took the opportunity to invite people to church, granting a hot lunch after the service to whomever accepted the offer.
That made for memorable rides from the homeless camp to church, because my father always asked the people to tell him their stories about how they ended up down on their luck. As the miles clicked by, I listened. Some people had been successful at one time but had been unprepared for a stock market crash that left their finances in ruin. Others fell on hard times after a spouse died. Whatever the story, a common theme emerged: They didn’t have a plan for withstanding life’s cruelest turns, and that was their downfall.
Those stories left an impression on me while also teaching me this lesson: Life can happen to anyone at any time.
Whether we like to admit it or not, that’s true for you and me if we don’t have a financial plan that will see us through the ups and downs. We all face plenty of risks in life, but your plan should address at least three of those risks: tax strategy, investments and longevity.
Tax Strategy
It’s common for people to owe money on credit cards, mortgages and automobile loans. But many people arrive at retirement without realizing that their largest creditor may not be one of these. Instead, it may potentially be the IRS.
That’s because so much of most people’s retirement savings is comfortably tucked away in traditional IRAs, 401(k)s or other tax-deferred accounts. Things get uncomfortable, though, when you begin withdrawing that money because that’s when the taxes come due. And, over time, the money in those accounts has grown, which means the amount owed in taxes has grown with it.
We have seen cases where individuals have been able to pay a significant amount less than what they thought they would have to by employing a tax strategy that helps soften the blow of the now larger tax burden. That is why we discuss potential tax liability with our clients; it is a significant part of overall financial health, especially in retirement.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/working-homeless-taught-financial-planning-083005173.html
The Invention of Money
.The Invention of Money
By John Lanchester July 29, 2019
When the system buckles, how do we know what money is really worth? In three centuries, the heresies of two bankers became the basis of our modern economy. When the Venetian merchant Marco Polo got to China, in the latter part of the thirteenth century, he saw many wonders—gunpowder and coal and eyeglasses and porcelain.
One of the things that astonished him most, however, was a new invention, implemented by Kublai Khan, a grandson of the great conqueror Genghis. It was paper money, introduced by Kublai in 1260. Polo could hardly believe his eyes when he saw what the Khan was doing:
He makes his money after this fashion. He makes them take of the bark of a certain tree, in fact of the mulberry tree, the leaves of which are the food of the silkworms, these trees being so numerous that whole districts are full of them.
The Invention of Money
By John Lanchester
When the system buckles, how do we know what money is really worth? In three centuries, the heresies of two bankers became the basis of our modern economy. When the Venetian merchant Marco Polo got to China, in the latter part of the thirteenth century, he saw many wonders—gunpowder and coal and eyeglasses and porcelain.
One of the things that astonished him most, however, was a new invention, implemented by Kublai Khan, a grandson of the great conqueror Genghis. It was paper money, introduced by Kublai in 1260. Polo could hardly believe his eyes when he saw what the Khan was doing:
He makes his money after this fashion. He makes them take of the bark of a certain tree, in fact of the mulberry tree, the leaves of which are the food of the silkworms, these trees being so numerous that whole districts are full of them.
What they take is a certain fine white bast or skin which lies between the wood of the tree and the thick outer bark, and this they make into something resembling sheets of paper, but black. When these sheets have been prepared they are cut up into pieces of different sizes.
All these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver; and on every piece a variety of officials, whose duty it is, have to write their names, and to put their seals.
And when all is prepared duly, the chief officer deputed by the Khan smears the seal entrusted to him with vermilion, and impresses it on the paper, so that the form of the seal remains imprinted upon it in red; the money is then authentic. Anyone forging it would be punished with death.
That last point was deeply relevant. The problem with many new forms of money is that people are reluctant to adopt them. Genghis Khan’s grandson didn’t have that difficulty.
He took measures to insure the authenticity of his currency, and if you didn’t use it—if you wouldn’t accept it in payment, or preferred to use gold or silver or copper or iron bars or pearls or salt or coins or any of the older forms of payment prevalent in China—he would have you killed. This solved the question of uptake.
Marco Polo was right to be amazed. The instruments of trade and finance are inventions, in the same way that creations of art and discoveries of science are inventions—products of the human imagination. Paper money, backed by the authority of the state, was an astonishing innovation, one that reshaped the world.
That’s hard to remember: we grow used to the ways we pay our bills and are paid for our work, to the dance of numbers in our bank balances and credit-card statements. It’s only at moments when the system buckles that we start to wonder why these things are worth what they seem to be worth.
The credit crunch in 2008 triggered a panic when people throughout the financial system wondered whether the numbers on balance sheets meant what they were supposed to mean.
As a direct response to the crisis, in October, 2008, Satoshi Nakamoto, whoever he or she or they might be, published the white paper that outlined the idea of Bitcoin, a new form of money based on nothing but the power of cryptography.
The quest for new forms of money hasn’t gone away. In June of this year, Facebook unveiled Libra, global currency that draws on the architecture of Bitcoin. The idea is that the value of the new money is derived not from the imprimatur of any state but from a combination of mathematics, global connectedness, and the trust that resides in the world’s biggest social network. That’s the plan, anyway.
To continue reading, please go to the original article here:
https://www.newyorker.com/magazine/2019/08/05/the-invention-of-money
Stop! Don't Make These 6 Dumb Mistakes With Your Financial Windfall
.Stop! Don't Make These 6 Dumb Mistakes With Your Financial Windfall
By Kentin Waits
Maybe your lottery numbers finally came in. Maybe a favorite aunt remembered you in her will. Heck, maybe one day while you were shootin' at some food, up through the ground came bubblin' crude — oil that is! Texas tea! Whatever the source, you're the lucky beneficiary of a financial windfall. Revel in it and protect your new-found wealth by avoiding these six dumb moves.
1. Act Impulsively
Receiving money unexpectedly is exciting, and it can send even normally down-to-earth folks straight into the stratosphere. In those dizzying weeks and months following a financial windfall, we're really not ourselves, so making big decisions during that time is usually a terrible idea.
Stop! Don't Make These 6 Dumb Mistakes With Your Financial Windfall
By Kentin Waits
Maybe your lottery numbers finally came in. Maybe a favorite aunt remembered you in her will. Heck, maybe one day while you were shootin' at some food, up through the ground came bubblin' crude — oil that is! Texas tea! Whatever the source, you're the lucky beneficiary of a financial windfall. Revel in it and protect your new-found wealth by avoiding these six dumb moves.
1. Act Impulsively
Receiving money unexpectedly is exciting, and it can send even normally down-to-earth folks straight into the stratosphere. In those dizzying weeks and months following a financial windfall, we're really not ourselves, so making big decisions during that time is usually a terrible idea.
Instead of spending or investing immediately, take a time out. Collect yourself. Adjust to your new wealth for six months or a year and just let the cash sit in a money market account or CD. Remember, high emotion and sound decision-making usually don't mix.
2. Buy a New Car
Even if you're paying cash, there are many reasons to avoid buying a new car. Not only is it the most cliché thing you can do with a windfall, but it's also one of the quickest ways to lose roughly 25% on every dollar you spend.
The minute you sign the paperwork and drive off the lot, that new car becomes used. Depreciation takes a quick and silent bite out of your new ride. Let someone else absorb that financial hit; buy a pre-owned late-model car that's still under warranty.
3. Loan Money to Friends and Family
Making loans to friends and family is a sure way to take the wind out of your financial windfall. Loans have a curious way of never getting repaid, and once your bank balance dwindles, hard feelings can set in and slowly erode relationships.
If a loan is unavoidable, find out how to increase your chances of repayment without sacrificing the relationship. Better yet, if someone dear to you truly needs a hand up, simply make a one time cash gift with no repayment expectations.
4. Sink It All in Stocks
To continue reading, please go to the original article here:
Knowledge Is Not Understanding
.Knowledge Is Not Understanding
By Lawrence Yeo
The pursuit of knowledge is heralded as a virtue, but the attainment of understanding is far more important.
To explain what I mean here, we have to first delve into the difference between knowledge and understanding. On its surface, it may seem like a game of semantics, but if you explore this further, you’ll see that the nuances make all the difference.
The first question to address is: How do we attain knowledge?
Well, there are many ways we can approach this question, but a good place to start would be the current educational system.
Knowledge Is Not Understanding
By Lawrence Yeo
The pursuit of knowledge is heralded as a virtue, but the attainment of understanding is far more important. To explain what I mean here, we have to first delve into the difference between knowledge and understanding. On its surface, it may seem like a game of semantics, but if you explore this further, you’ll see that the nuances make all the difference.
The first question to address is: How do we attain knowledge?
Well, there are many ways we can approach this question, but a good place to start would be the current educational system.
When you’re given a textbook, you’re effectively given a history of discoveries. It doesn’t matter what the content of that book may be: psychology, math, philosophy, linguistics, whatever. What you have in there is a distillation of theories and findings that other humans have happened upon.
In other words, you have a long recounting of experiences that are not your own. And in order for these experiences to make sense for the everyday student, they need to be compressed into a digestible format. A great textbook plays the game of simplification, not complexity. The more these experiences can be communicated as stories, the greater the likelihood that they’ll be adopted for mass market use.
Textbooks And Making Money
So any textbook you read has the forces of compression and incentives embedded into it. The removal of complexity and the generation of profit guide the distribution of knowledge, however subtly it may be.
What this means is that the way we absorb knowledge is dependent upon what others have deemed valuable. The scholars that put together these textbooks decide what pieces of information to include, and market forces determine which textbooks make it to each school. What the student is left with is the result of this piecemealing and marketing that has disguised itself as truth.
In this form, knowledge is not understanding. It’s merely an abstracted version of someone else’s lived experience; symbols on a page that attempt to summarize the nuances of each discovery.
So this begs the question: What, then, is understanding?
Well, true understanding can only be attained through personal experience. It’s when you viscerally feel the implications of your decisions and actions, and see how they ripple through other human beings. It’s when you realize that the profundity of what you read may not translate properly into the messy sphere of reality.
I was talking to someone the other day and she mentioned the idea of a “dumb smart person,” and I laughed upon hearing it. Essentially, it’s a funny way of articulating the difference between knowledge and understanding.
We all know the person that aced their way through school, got a prestigious job, but can’t hold a substantive conversation to save their lives. Or someone that makes a lot of money but has left behind a trail of broken relationships.
To continue reading, please go to the original article here:
What Is The Next Created Crisis?
.What Is The Next Created Crisis?
I think about the worker shortage the same way I think about the gas shortage.
It’s a created crisis. A made up mistake. In other words, and let me be crystal clear on this.
There is no worker shortage. How do I know? Because we are a capitalist country.
I see a bunch of old rich white men on television telling me how great capitalism is, and how it works for everybody. I even get to participate in capitalism. Like when the news says there is a gas shortage in North Carolina because the sky is falling, I pay double for a gallon of gas.
That is capitalism in action.
What Is The Next Created Crisis?
I think about the worker shortage the same way I think about the gas shortage.
It’s a created crisis. A made up mistake. In other words, and let me be crystal clear on this.
There is no worker shortage. How do I know? Because we are a capitalist country.
I see a bunch of old rich white men on television telling me how great capitalism is, and how it works for everybody. I even get to participate in capitalism. Like when the news says there is a gas shortage in North Carolina because the sky is falling, I pay double for a gallon of gas.
That is capitalism in action.
Economists call it supply and demand. When supply decreases, but demand remains the same, prices go up. It can happen when supply stays the same, but demand goes up. You see it with a lot of things because you participate in capitalism too. Prices go up when supply is low.
Capitalism.
What you are seeing is not a new narrative. It’s a bunch of business owners bemoaning the fact that they have to pay a better wage. Here in Arkansas, café’s pay $3 an hour, plus tips. The way they sold this to low income earners was “you can make more money on tips!” And sometimes that happens. Sometimes it doesn’t. But the wait staff puts up with a lot of crap for $3 an hour.
Oh yeah, did the business owner mention each shift is only 4 or 6 hours? They need that wage to be low so they can control costs. Except they don’t.
Beef costs more today because of processing plant changes. Produce costs more because of increased management at the border. They won’t let workers cross the border, so produce isn’t getting picked.
There is a shortage of truck drivers to deliver all the goods. It starts to become maddening when you think about it. Except, I know a guy who owns a trucking company. He made $250,000 last year. He pays his truckers an average of $60k each. His girlfriend works as his Manager of their two man office, and he paid her $180,000.
It’s his company, and he can earn what he likes. They do work hard, and stay busy.
But theirs is not the only story I know in real life. I have a friend in the lumber industry who runs close to the same margins. That is the advantage of owning the business. And it’s capitalism and it works just fine.
Because low wage earners don’t have much alternative other than to just work for the wage offered.
Until this year. For six months. They had a choice. They got some stimulus money. And they spent the hell out of it. The economy grew at 6.8%, a huge number. Wal Mart reported record breaking earnings.
The stock market and crypto markets surged to new heights because of spendable money.
$3 an hour for a 6 hour shift, plus $20 in tips couldn’t compete with $500 a week. It never will.
In Arkansas, the governor decided enough was enough.
To continue reading, please go to the original article here:
https://lowrychris.medium.com/what-is-the-next-created-crisis-d485a92e3481
Money: A Myth or A Conspiracy?
.Money: A Myth or A Conspiracy?
By Ashish Subedi
“It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning” — Henry Ford
Chasing bunch of cash, that is where everything sums up to, right? But, is that where everything should sum up to? It’s kinda both ‘Yes’ and ‘No’. But the bigger question is, what are those god like papers?
What are real assets?
Money: A Myth or A Conspiracy?
By Ashish Subedi
“It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning” — Henry Ford
Chasing bunch of cash, that is where everything sums up to, right? But, is that where everything should sum up to? It’s kinda both ‘Yes’ and ‘No’. But the bigger question is, what are those god like papers?
What are real assets?
Money? Well, that would be the current asset but everything grounds up to the actual physical properties. Lands, golds are the actual properties disguised as money.
Long before we had money, we used to have lands, golds as an asset. But these assets were very much hard to exchange. So, a bunch of brilliant people came up with a term ‘Money’.
For getting money, people had to reserve their actual property to the money lenders and this is how all it started.
History
It all started with Federal Reserve System. In early 19th century, a group of 6 brilliant and wealthy people had a meeting. One of them was Nelson Aldrich who led the meeting.
Other members were Henry Davidson, Frank Vanderlip, Benjamin Strong, Abe Andrews and Charles Norton. The meeting went for 9 days and they came up with Federal Reserve System and established a central bank in America.
“Central banks are the organizations responsible for money generation”
So, was that all what it took to make money the god?
People then had an idea about the central bank and what it can do. So, civilians was against them. On the other hand, Congress was also contra to their actions.
But, these 6 people were very smart for their time and made a conspired contract with the Congress.
Since, they had reach of many local banks, they published a fake and conspired news to the Civilians claiming that local banks were against Federal Reserve System.
Whereas, the local banks did what they asked. So, unknowingly people thought Federal Reserve System to be good.
To continue reading, please go to the original article here:
https://subediashish35.medium.com/money-a-myth-or-a-conspiracy-d1dfe468f73a
The Ten Commandments Of Personal Finance
.The Ten Commandments Of Personal Finance
From The Retirement Manifesto By fritz@theretirementmanifesto.com
Is it possible that there are some basic principles upon which your personal finance journey should be built? It turns out there are. I’ll warn you in advance – you may not like some of them.
Just as THE Ten Commandments guide us away from our personal nature which is sometimes tempted to do things which seem fun at the time, but lead to long term harm, these “Personal Finance Commandments” can guide you away from doing things which will bring harm to your long term financial goals.
The Ten Commandments Of Personal Finance
From The Retirement Manifesto By fritz@theretirementmanifesto.com
Is it possible that there are some basic principles upon which your personal finance journey should be built? It turns out there are. I’ll warn you in advance – you may not like some of them.
Just as THE Ten Commandments guide us away from our personal nature which is sometimes tempted to do things which seem fun at the time, but lead to long term harm, these “Personal Finance Commandments” can guide you away from doing things which will bring harm to your long term financial goals.
In full transparency, I didn’t come up with the original list. That honor goes to this article from MoneyStepper, which I just read tonight. I liked the concept and the guidelines presented so much, I’ve decided to build on the original article with original thoughts of my own, including the “10 Commandments” title.
In my quest to “Help People Achieve A Great Retirement”, I think there’s a lot of room to share some of the best concepts I come across in my heavy reading on personal finance topics. This one’s a good one, and worth my effort to build upon the concept.
Strive to achieve as many of these commandments as you can, and you’ll be well on your way toward financial independence. Break them, and suffer the consequences.
The 10 Commandments Of Personal Finance
I. Keep Your Housing Costs Under 25% of Your Net Income
Personally, I like these “rule of thumb” guidelines to help you decide how much of something you can afford. When you’re shopping with a realtor, or talking to a banker, they often attempt to “stretch” you to a ratio that’s higher than you should really undertake. So, look at your last paycheck.
How much went into your bank account? If you rent, your rent should be less than 25% of your monthly NET pay (after taxes). Ditto on your mortgage payment. If you’re spending more than the 25% “commandment”, consider downsizing, or seek out a job with higher pay.
II. Keep Your Mortgage Under 2.5 Times Your Annual Salary
Interesting that the first two “Commandments” focus on housing costs. Appropriate, given the cost of the roof over your head is the highest expense you’ll incur in your personal finance journey. Manage it carefully, and don’t buy “too much” home. If you’re making $50,000/year, your home should be worth $125k or less.
III. Don’t Buy A New Car Unless You’re A Millionaire
I LOVE this one. Bottom line: buying a new car is stupid (yes, I said Stupid!). It depreciates immediately, and it’s expensive. It’s one of the worst personal finance decisions you can make. Don’t “Buy New”!
After a few months, it’s “just a car”. Within a few years, if you’re like most people, you’re “itching” for another one. AVOID the materialism – focus on the function. My wife and I have bought used cars for years, and paid cash for all but our first one.
To continue reading, please go to the original article here:
http://www.theretirementmanifesto.com/the-ten-commandments-of-personal-finance/
Is Getting Money Advice From Friends and Family a Good Idea?
.Is Getting Money Advice From Friends and Family a Good Idea? Experts Weigh In
Heather Taylor Mon, June 6, 2022
When it comes to money advice, many Americans look to friends and family for the answers. Key findings in a GOBankingRates survey on money expertise reveal that 46% of 1,001 surveyed Americans have sought financial advice from friends and family over the last year.
Talking about finances with loved ones still remains a bit tricky. On the one hand, parents who have open discussions about money with their children may be able to help them develop their financial literacy early in life instead of later. On the other hand, and in the current challenging economic climate, it can be detrimental to take advice from friends or family that is not relevant to your situation, or may actually bad financial advice. Where should you go for insight?
Is Getting Money Advice From Friends and Family a Good Idea? Experts Weigh In
Heather Taylor Mon, June 6, 2022
When it comes to money advice, many Americans look to friends and family for the answers. Key findings in a GOBankingRates survey on money expertise reveal that 46% of 1,001 surveyed Americans have sought financial advice from friends and family over the last year.
Talking about finances with loved ones still remains a bit tricky. On the one hand, parents who have open discussions about money with their children may be able to help them develop their financial literacy early in life instead of later. On the other hand, and in the current challenging economic climate, it can be detrimental to take advice from friends or family that is not relevant to your situation, or may actually bad financial advice. Where should you go for insight?
GOBankingRates spoke to several financial professionals about which risks and benefits to keep in mind when consulting friends and family for financial guidance.
Keep Intention in Mind
Matthew Vitlin, MBA and financial advisor at Northwestern Mutual, said if you are getting financial advice from friends and family, most people can generally assume that these people mean well and want you to succeed and make good decisions. Eliminate the concern, if you have any, that they may try to pull you down or steer you towards something that benefits them.
Speak to People You Trust
One of the biggest benefits in getting financial advice from friends and family is that the advice is coming from people you trust. Unless they work in the industry or want you to invest in their company, Vitlin said you know they won’t directly benefit if you follow their advice. As a result, there is no conflict of interest.
Talking with people you trust may also allow you to feel comfortable opening up. Grant Gallagher, MBA and head of financial wellbeing at Affinity Federal Credit Union, said convenience and comfort is a benefit of receiving financial advice from friends and family. They’re also usually accessible as a resource, happy to take a quick call or text late at night if need be.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/getting-money-advice-friends-family-110015703.html
How To Never Worry About Money Again
.How To Never Worry About Money Again
The No-Sweat Way to Protect Yourself From Financial Disaster By laura goldstein
Building a bigger rainy-day fund may feel daunting. Start by breaking it down into manageable chunks.
That nagging feeling that a bit of bad luck—a medical emergency or a layoff—could derail your finances is widely shared. A new survey from the American Psychological Association found that 54% of people rated paying for unexpected expenses a very or somewhat significant source of stress.
And people across the income spectrum tend to be underprepared. A Pew Charitable Trusts analysis finds middle-income households typically have the equivalent of 20 days of income to tap, and even high earners have just 52 days. Building a bigger rainy-day fund may feel like a daunting task, given all your expenses and savings goals, but you can start by breaking it down into manageable chunks.
How To Never Worry About Money Again
The No-Sweat Way to Protect Yourself From Financial Disaster By laura goldstein
Building a bigger rainy-day fund may feel daunting. Start by breaking it down into manageable chunks.
That nagging feeling that a bit of bad luck—a medical emergency or a layoff—could derail your finances is widely shared. A new survey from the American Psychological Association found that 54% of people rated paying for unexpected expenses a very or somewhat significant source of stress.
And people across the income spectrum tend to be underprepared. A Pew Charitable Trusts analysis finds middle-income households typically have the equivalent of 20 days of income to tap, and even high earners have just 52 days. Building a bigger rainy-day fund may feel like a daunting task, given all your expenses and savings goals, but you can start by breaking it down into manageable chunks.
Do It One Essential Expense at a Time
Aim to cover three months of one regular bill, like your mortgage, suggests RBC Wealth Management financial adviser Darla Kashian. Then move on to three months of utilities, then car payments, and so on.
This approach gives you the satisfaction of crossing one more potential problem off your list. Once you’ve hit three months of all essentials, make your new goal doubling your account to get to six months.
Why so long? “When things get rough, your emergency fund enables you to make good choices, where you don’t have to rush into a job you don’t want or dip into a credit card,” says Certified Financial Planner Board consumer advocate Eleanor Blayney.
Get It Out of Your Hands
Looking at your budget may help you find places to trim, but for big savings goals it may be easier and more sustainable to simply stash money away with each pay-check, just as you do with your 401(k), and live on what’s left. Set up automatic deposits to a separate account just for your emergency money.
Any employer that offers direct paycheck deposit can allow you to split the money between multiple accounts. Many banks will also allow you to give your accounts a nickname to match your goal—make this one “emergency” or even “Don’t touch this!” as a little extra reminder of how important this fund is for you.
Make It a Little Bit Inconvenient
To continue reading, please go to the original article here:
http://money.com/money/collection-post/3938823/save-money-emergency-fund/