This is a Great Time to Buy a House, lf….

…it is a great time for you, in your current situation, and with your future situation taken into account.

We recently had a house built, and it was a great experience (most of it) and we feel really good about our house, neighborhood, and monthly payment as well as the payoff amount (and equity) on our house. Part of that has to do with the favorable market conditions for those who are looking to buy a house. But…not so fast…

First off–and what spurred this post–you ought to check out this post at Moneyning.com. Just because your current state of finances looks good, doesn’t mean everything will fall together easily when it comes to qualifying for a mortgage at a great rate. Don’t despair, it isn’t so bad, but this article will give you a few things to think about. By the way, Moneyning.com is a great, great personal finance blog…

The article just got me thinking about some things a person ought  to consider if buying a house is an option right now. One thing to consider is your current financial state…which we’ll not talk about right now. Your lender will talk to you about that, so I won’t. But–and this may be a much bigger deal–you ought to seriously consider what the next 5-15 years of your life are likely to look like, financially. Here are some things they you may want to consider…

1. Is my income steady? I know my current paychecks can more than cover our new house payment, but will I be getting paid more, less, or the same in a year? What about 5 years?
2. Is my job safe? Is my company currently laying people off, or hiring? How confident am I that I will be working in 5 years?
3. What things are likely to change in our five year future? Any children on the way? That will change a budget. Will our teenagers be driving in a few years? More insurance payments, gas payments, and possibly another car payment (though most 16-year-olds don’t need a car that couldn’t be paid for with cash). Will there be any new monthly payments showing up in the near future? Will I be getting a raise? Will my spouse be changing their employment status over the next 5-10 years?

My  goal isn’t to talk you out of moving, buying, or building right now. In fact, with interest rates as low as they are, I can’t think of a better time to do it. And having a budget and tracking your spending will help you answer these questions, and many more that you ought to consider. If your lender tells you “With your income, you should be able to make this house payment just fine” there are always, always, always more things to consider before you make a big change in your financial life…Once you’ve considered all of the questions regarding your future, you’ll feel a lot more confident in your decision.

Can you think of anything else someone ought to consider before moving houses, buying a house, or building a house?

Obstacles that (Almost) Everyone Faces in Personal/Family Finances…

I recently perused an article on Time’s MoneyLand site, entitled, “7 Obstacles to Financial Success”, which I quite liked (it was short and informative)…

Quickly summarized, the obstacles are:

 

1. Lack of discipline 
2. Materialism
3. Debt
4. Taxes
5. Inflation
6. Investment mistakes
7. Emergencies

 

You ought to read the article to get a small explanation on each one. Some of these points are more interesting for me to think about than others, but each one should be thought-out and acted on. For instance, even though you can’t always control whether an emergency is going to happen (wearing a seat-belt or helmet, not walking on banana peels, etc., can help) you can do some things to lessen the blow a catastrophe can have on your finances (have an “emergency” savings account, be properly insured, etc.). You can’t change the tax laws, but you can work with an accountant to lessen your tax burden. You can’t guess the stock market (well, you can, but not always), but you can diversify your investments appropriately so that market swings don’t nail you too hard. You can track our spending, start a budget, and work on self-discipline.

Anyway…enjoy your reading!

There is a Small Chance that I will Gladly Pay a Yearly Fee for my Credit Card…

…as much as I HATE the thought of it. I really, really, really, really hate monthly and yearly fees. Since we “downsized” to Netlfix+”over the air HD” instead of cable or satellite, I’ve loved not seeing a cable/satellite bill each month. But I still am bugged when I see the $7.99 Netlfix charge. I know, I’m lame. First World problems…I get it. Waaa. But still…

With that in mind, you’ll understand why I’ve never ever paid a yearly fee for having a credit card. But, after reading this article on why you might consider finding a card that has a yearly fee in exchange for the benefits, I may change my mind.

The point of the article is that this guy found a card that has such great cash-back rewards, that paying $75 a year for the card is totally worth it. Right now, we get cash back on our credit card, and there is no yearly fee. But if I could get more than $75 a year in cash-back benefits than I am currently earning, then paying $75 is worth it.

Almost everyone uses a credit card, and getting free money just for paying for things you have to pay for anyway makes sense. So if there is a way to maximize that benefit, I’m all for it.

I don’t know. I’ll have to crunch some numbers. Read the article and tell me what you think…

Having A/C Pummeled our Electricity Bill….

…but I’m not going to live without it…

When we had our house built, it was very cold outside. As a result, even though we had paid for it, the A/C unit wasn’t installed. Finally, this June, the guy came and put it in. Our electricity bill hasn’t looked the same since. I’ve learned that keeping our fans in our front room and bedroom do a lot for us, and having a programmable thermostat has been nice, but I’m always looking for ways to cut costs without being a total financial weirdo and making my family crazy…

I found this article this morning and thought you might benefit…

Ten Easy Ways to Lower Your Electric Bill from Get Rich Slowly

Enjoy…and stay cool…

PS…We installed a massive fan in our front room, and since our ceilings are vaulted, and the other side of the ceiling is over the kitchen (on the other side of the wall between our front room and kitchen), when we have our fan suck up (instead of blowing down) it pushed air up, into the vault, over the all, and into the kitchen, which keeps our kitchen cooler, too.

A Financial Binder… (boring, I know)

This morning I spend a few minutes reading this blog post about a guy who is taking care of his aging mother’s finances as she goes into an assisted living situation. I wasn’t as interested in the details, since my parents don’t age and will never die. But A thought crossed my mind as I read about this guy’s efforts to track down his mother’s financial information. Things would be a lot easier if all of her financial information was in one place.

I’ve read about these before (I can’t recall where) and have always thought, in passing, that they were good ideas. Let’s say that I die today. I probably won’t, but if I did, I’m not sure my sweetheart knows the details of each of our accounts. She probably doesn’t know the user names and passwords of each of our online accounts (bills, banks, etc.). I’m not even sure she knows the login details of our Mint account. So I think I’m going to take some time this fall/winter (when I can’t be outside) and put together a Financial Binder that has all of that stuff. Just in case.

Security: I think this is an issue. If someone broke into our home, they probably would be a little letdown at the items that are available for stealing. But, if they found this binder, we’d have quite a problem. So, hiding/securing it is a big deal. Once I get it done, I’ll need to determine where to put it. Bank safety deposit box? I’m not sure what they can hold. A safe in our house. Not a bad idea. I’ll still need to figure that out. Any ideas?

Update:

After a little searching, I found that the USU Extension had a decent document that would help someone put together one of these binders. I am going to use it as a template, but I have a few other ideas that I’d like to add. I’ll update you when I get mine completed (give me a few months). Here’s the “PREPARING YOUR PERSONAL/FINANCIAL INFORMATION BINDER” document. Also, here is another handout that the extension must be using during classes on this subject.

Another update:

Ok, here is the google link I used to search this out. There is a ton of info. Rather than create links to all of it, you should just follow the google search link.

For My Old Students About to be New College Students!

I read an interesting article this morning concerning the finances of new college students. Since I just taught a bunch of graduating seniors who are headed to college in a few weeks, I thought I’d share:

http://moneyning.com/frugality/three-frugal-living-tips-for-college-students/

 

Let me add a few thoughts (above and beyond what is in the article):

1. While in college, you’re working on (among other things) making yourself more able to earn a living and provide for a family and future endeavors. One huge mistake college students make is going so deep in debt that they have to spend the first few “earning years” living paycheck to paycheck because of a high credit card balance. Don’t make that mistake.

2. One of the expenses in college that will break your bank is eating out. It is so easy to do, so convenient, and before you know it, you’ve eaten out more than 12-15 a week. At $6-$8 a meal, this amounts to around $120 a week…almost $500 a month if you’re not careful! Learn to make a grocery list, stick to it, and cook for yourself. Then, allow yourself to go eat for for more social occasions every once in awhile, not everyday out of necessity.

3. You are one step away from the next phase of your life, which, for my students, is probably one or two of three things: A Church Mission, a Marriage (probably children a few years later), or a Full-Time Career-type Job. You’ll hobble yourself if your finances are a wreck prior to engaging in these activities. At the very least, loan officers and employers check credit scores…so don’t make yourself look bad.

Good luck! You’re about to have the time of your life!

So, is it Going to Stick?

I think I’ve noticed a little pattern. Most of the people I know who had anything to do with the Great Depression still do many of the things they learned during the Depression. That is one thing I like so much about them. They still garden. They still save money and avoid debt like the plague. They still value hard work. In fact, even though many people who have been deeply affected by the events and repercussions of the Great Depression probably don’t need to be overly frugal because, by now, they are probably financially stable, they still are.

It seems like those events changed them.

So here we are, hopefully coming to the last half of the Great Recession. I think our family is doing some things differently because of the news, the stock markets, the housing market, etc., etc. For sure, the Great Recession has impacted almost every family in this country and many other countries. People, including us, are budgeting much more closely. People are driving differently. People are seeing debt and saving differently than they did in 2006. As I look at the way I view my monthly finances compared to how I used to see them, it is obvious that the last 3-5 years have changed me and my wife in a pretty fundamental way. The question is: Will our family still be practicing frugality, and all of the things that go with that, in ten years (assuming that in ten years we’re living through “The Great Prosperity”, which I doubt)? Are our current views only going to last until gas prices go down, houses start to sell, employment rates improve and the general financial health of the nation improves?

Here are a few questions to ponder:

1. What has changed for us, as far as our financial attitudes and habits, since the Great Recession started?

You may want to think about how you budget, how you try harder to save money, how you keep your resume up to date, whatever…

2. Which of these changes in our attitudes/habits are going to stick?

For instance, I think I’m always to going track our spending closely. I like doing it now and feel that it is empowering. I think I’m always going to focus on saving for short term. I think I’m always going to put as much of our finances on auto-pilot as is appropriate.

But what about you? 

Using Mint.com to Track Peculiar Spending…

I wrote this post while on vacation. Nice, eh?

“Peculiar” spending describes transactions that aren’t normal monthly budget items. Going on vacation is peculiar since we don’t do it every month, and I’m not sure what it normally costs.

This vacation is different in that we really put aside money for the trip, and we’re really tracking every cent we spend while on vacation. First, I want to be sure we’re not going over the budget we set for the vacation. Second, I want to start keeping track of what we spend for this annual trip each year so that I can accurately set money aside for the trip.

Mint is great. It is making this process easy.

Whenever a transaction shows up on Mint, I check to see if it is money we spent on (or for) the vacation. If it is, I “tag” it as “CA Vacation 2011″. You can make any tags you want. “Christmas 2011″, or “Landscaping 2012″, or “Birthdays 2012″ or whatever. Go the transaction, then go to the place where you edit the details and tick whatever tag you want. There are a few built in, but I’ll create my own, I’m sure. I already clicked “CA Vacation 2011″ for the transaction where we ate dinner at Pizza Hut.

Now look at the bottom left corner of the “transactions” screen on Mint. It should show you all of your tags. Click on the one that you’d like to see a summary of. I want to see what we’ve spent on our vacation so far:

As of this writing, we’ve spent about $60. That is sure to go up, as gas is still expensive, we end up eating out a bit, etc., etc…

See? It shows all of the transactions that I’ve tagged as “CA Vacation 2011″. Now, once this trip is over, I’ll be able to see exactly what we spent on the trip. Next year, I’ll be able to budget a little more carefully. Plus, if we go under our budget for vacation during this trip, I can either send the unused money to savings, or go on another small vacation. We win either way. If we go over budget…let’s not even consider that…

If you are anything like my wife, you do your Christmas shopping throughout the year. If so, tag each Christmas transaction. Then you’ll be able to see what you spent, total, for 2011′s Christmas shopping. That will make it a bit easier to budget for 2012.

Mini-Post: Can I Afford That Payment?

There are not many things I hate dislike more than monthly payments. I would much rather just shell out money that I’ve saved up that be committed to some monthly fee/payment/charge. But, there are times when you kind of have to face a monthly payment, at least for a while. I was reading an article in our church’s monthly magazine, which discusses a way to know if you are going to be facing a payment you can make or not. When/If you click on the link, scroll all the way down to the last “story” entitled, “Can I Afford that Payment?”, by Cassy Budd, CPA, Associate Teaching Professor, School of Accountancy.

Biggest and Most Typical Short Term Savings Mistake!

Ok, maybe “Biggest and Most Typical” is an overstated title, a bit, but not by much. Today’s short post covers one mistake that many families fall into, mine included. It is kind of a trap, and it leads a lot of people to feel so much frustration that they give up on other financial goals and go down in monetary flames all of the time.

The mistake? Simply put: People make savings goals in a vacuum. Said in another way, people make short term savings goals, forgetting about every other financial goal they have, and ignoring other financial factors, and then feel really let down when the reach the end of their goal period and have come up short. It happens to us periodically. I’ll get all excited about some future thing we want to build/buy/fund, and then I put together a “plan” in my head detailing how we’ll set the needed money aside each month until the time of purchase. Months later, I wonder why we aren’t able to hit our goals.

Here’s an illustration: My sweetheart and I decide, while driving home one day, that maybe we need to build a deck. The deck will cost $2000. We start thinking about this month and realize that we were able to put $500 in the bank and savings. Our minds begin racing, and simple math tells us that we could save up like this for four months, and build the deck during the fifth month. What our minds don’t do, is start to add up possible costs that we might have over the next four months. We forget that we also signed one of our sons up for soccer that will cost extra money we don’t normally spend each month. We forget that we had a vacation planned that will be a one-time expenditure that is abnormal to our monthly budget. We forget about car registration that we typically take out of savings, etc., etc…you get the point. And at the end of four months, we’ve managed to squirrel away $1200 and can’t work on our deck. Then we’re let-down, and have less of a desire to try to save up for something else.

Better plan: Look back over 6-12 months of budget and see what we typically put away each month. Look forward over the course of our goal-time and see what expenditures we can guesstimate and plan for. Then if we still think we can save $250 a month for our project, we ought to plan on $200 just to be safe. Lastly, we ought to plan to have things happen that we can’t foresee and can’t control, just so we won’t be too let-down.

Lately we’ve been pretty good at setting and hitting decent goals. But a day or two ago I was imagining buying some thing and I quickly concocted the plan that would provide the money…and instantly realized that I was devising a plan without thinking about all of the other things we’re planning for…thought I’d share!