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    Tag: Savings Account

    How to Save for a House in 8 Steps

    by Marjorie Lowe

    January 12, 2021

    6:26 am

    Leave a comment on How to Save for a House in 8 Steps

    Home Ownership

    Budget, Buy, Buying, Buying a house, credit, credit card, credit score, debt, Extra Money, Fees, Financial Plan, Financial Wize, FinancialWize, Grow, Home, home inspection, Housing Finances, How To, keep, Products, rate, Saving, savings, Savings Account, savings accounts

    When you buy a home, you’re making an investment in yourself and your future. You’re building financial stability, equity, and experience. You have a place to call your own and you can customize the space just how you want. Yet, you might be wondering how to get to that point — this is why saving up is so important.

    There are some upfront costs to owning a home — primarily a down payment. Find out how much you should budget using a home loan affordability calculator and figure out how to save the amount you need. After all, the best way to save for a house is to formulate a budget that helps you work towards your house saving goals step by step. Soon enough, you’ll be turning the key and stepping into a home you love.

    How to save for a house

    Step 1: Calculate Your Down Payment and Timeline

    When figuring out how to save for a house, you may already have a savings goal and deadline in mind. For instance, you may want to save 20 percent of your home loan cost by the end of the year. If you haven’t given this much thought, sit down and crunch the numbers. Ask yourself the following questions:

    • What is your ideal home cost?
    • What percentage would you like to contribute as a down payment?
    • What are your ideal monthly payments?
    • When would you like to purchase your home?
    • How long would you like your term mortgage to be?

    Asking yourself these questions will reveal a realistic budget, timeline, and savings goal to work towards. For instance, say you want to buy a $250,000 house with a 20 percent down payment at a 30-year loan term length. You would need to save $50,000 as a down payment; at a 3.5 percent interest rate, your monthly payments would come out to be $898.

    Step 2: Budget for the Extra Expenses

    Just like a new rental, your home will have fees, taxes, and utilities that need to be budgeted for. Homeowners insurance, closing costs, and property taxes are a few examples of cash expenses. Not to mention, the cost of utilities, repairs, renovation work, and furniture. Here are a few more expenses you may have to save for:

    • Appraisal costs: Appraisals assess the home’s value and are usually ordered by your mortgage lender. They can cost anywhere from $312 to $405 for a single-family home.
    • Home inspection: A home inspection typically costs $279 to $399 for a single-family home. Prices vary depending on what you need inspected and how thorough you want the report to be. For instance, if you want an expert to look at your foundation, there will likely be an additional cost.
    • Realtor fees: In some states, the realtor fee is 5.45 percent of the home’s purchase price. Depending on the market, the seller might pay for your realtor fee. In other places, it might be more common to contract a lawyer to look over your purchase agreement, which is usually cheaper than a realtor.
    • Appraisal and closing costs: Appraisals assess the home’s value and are usually ordered by your mortgage lender. They can cost anywhere between $300 and $400 for a single-family home.

    Step 3: Maximize Your Savings Contributions

    Saving for a new home is easier said than done. To stay on track, first create a savings account that has a high yield if possible. Then, check in on your monthly savings goal to set up automatic contributions. By setting up automatic savings payments, you may treat this payment as a regular monthly expense.

    In addition to saving more, spend less. Evaluate your budget to see what areas you could cut down or live without. For instance, creating your own workout studio at home could save you $200 a month on a gym class membership.

    Step 4: Work Hard for a Raise

    One of the best ways to boost your savings is to increase your earnings. If you already have a job you love, put in the extra time and effort to earn a raise. Learning new skills by attending in-person or virtual training seminars or learning a new language could increase your earning potential. Not only could you land a raise, but you could add these skills to your resume.

    Sometimes, putting in the extra effort doesn’t always land you a raise, and that’s okay! When getting a raise is out of the question, consider looking at other opportunities. Figure out which industry suits you and your skillset and start applying. You may end up finding your dream job, along with your desired pay.

    Step 5: Create More Streams of Income

    Establishing different income streams could help your house savings budget. If one source of income unexpectedly goes dry, having other sources to cut the slack is helpful. You won’t have to worry about the sudden income change when paying your monthly mortgage.

    For example, creating an online course as a passive income project may earn you only $5 this month. As traffic picks up, your monthly earnings could surpass your monthly income. To create an abundant financial portfolio, there are a few different ways to do so:

    • Create an online course: Write about something you’re passionate about and share your skills online. Sell your digital products on Etsy or Shopify to earn supplemental income.
    • Grow a YouTube channel: Start a YouTube channel and share your skills to help others within your industry of expertise. For instance, “How to start a YouTube channel” could be its own hit.
    • Invest in low-risk investments: From CD’s to money market funds, there are a few types of investments that could grow your cash with low risk.

    Paying down debt

    Step 6: Pay Off Your Biggest Debts

    Before taking on more debt like a mortgage, it’s important to free up your credit usage. Credit utilization is the percentage of available credit you have open compared to what you have used. If you have $200 in debt, but $1,000 available on your credit card, you’re only using 20 percent of your credit utilization. A higher credit utilization could potentially hinder your credit score over time. Not only can paying off debts feel satisfying, but it could also increase your credit score and prepare you for this next big purchase.

    To pay off your debts, create an action plan. Write out all your debt accounts, how much you still owe, and their payment due dates. From there, start increasing your payments on your smallest debt. Once you pay off your smallest debt in full, you may feel more motivated to pay off your next debt account. Keep up with these good habits as you take on your mortgage account.

    Step 7: Don’t Be Afraid to Ask For Help

    Whether your touring homes or want help adjusting your budget, don’t hesitate to ask for help. If you’re trying to figure out what your budget should look like, research budgeting apps like Mint to build a successful financial plan.

    If you’re curious about additional mortgage expenses, your budget, or investment opportunities, reach out to a trusted professional or utilize government resources. Not only are they able to help you prepare for your next big step, but they could also help you and your finances in the long term.

    Step 8: Store Your Savings in a High Yield Saving Account

    While you may have a perfect budget and a home savings goal, it’s time to make every dollar count. Before you add to your account, research different savings accounts and their monthly yields. The higher the yield, the more your savings could grow as long as your account is open.

    In September of 2020, the national average interest rate on savings accounts was capped at 0.8 percent. If you were to deposit only $100 into a high yield savings account with an APY of 0.8 percent, you could earn $80 off your investment over the year. This helps you save extra money by just putting your money into a savings account.

    In Summary

    • First, set a savings goal to match your estimated down payment and mortgage monthly payments. Then add your contributions to a high yield savings account to grow your money overtime.
    • Don’t forget to budget for extra mortgage expenses like appraisal costs, home inspections, realtor fees, or closing costs. Keep in mind, your monthly utilities and fees may also be more expensive than your current living situation.
    • Prepare for the additional costs by increasing your earning potential and optimizing additional income stream opportunities.
    • Free up your credit utilization by paying off as much debt as possible before buying a house. Keep up these good habits throughout the length of your mortgage term.

    When you purchase a home, you’re building a piggy bank for your future. Every month you pay your mortgage, you pay part of it to yourself because you own the home. Instead of paying rent to someone else, you reap your own investment when you sell. Most importantly, though, you’ll have a place that’s truly your own.

    Sources: Interest

    The post How to Save for a House in 8 Steps appeared first on MintLife Blog.

    Source: mint.intuit.com

    The 5 Best Financial New Year’s Resolutions

    by Marjorie Lowe

    January 12, 2021

    4:32 am

    Leave a comment on The 5 Best Financial New Year’s Resolutions

    Financial Planning, Home, Investing

    2021, Auto, Auto Loans, balance transfer, Budget, Buy, Car Insurance, credit, credit card, Credit Card Debt, debt, Fees, Financial Planning, financial resolutions, Financial Wize, FinancialWize, How To, invest, Investing, Loans, Main, New Year, new years resolutions, Original, Popular, rate, Refinance, refinancing, Retirement, savings, Savings Account, savings accounts, Student Loans

    Change has to start somewhere, and for many people that change is easier to make if the starting point has some meaning. It can be a birthday, an anniversary, or any other date with some symbolic weight. Most commonly, people choose the beginning of the new year.

    If you’re looking for some New Year’s resolutions that will truly change your life, consider adjusting your financial strategy. Here are five things you can do in 2021 to take your money game to the next level.

    Refinance Loans

    Interest rates are at near-historic lows, which makes this the perfect time to refinance your debt. Refinancing means switching your loans from your current lender to a new lender in order to take advantage of a lower interest rate. Refinancing can save you thousands of dollars, depending on the original interest rate and total balance.

     For example, let’s say you have a $200,000 30-year mortgage with a 5% interest rate, and you refinance to a 3% interest rate. Your monthly payment will be $244 lower, and you’ll save $31,173 in total interest over the life of the loan. 

    You can refinance auto loans, personal loans, and even student loans. However, if you have federal student loans, you may want to hold off on refinancing. Refinancing a federal student loan converts it into a private student loan. This means you’ll give up extra perks and benefits like income-driven repayment plans and deferment and forbearance options.

    Transfer Credit Card Debt

    If you have credit card debt, you can pay less interest by transferring the balance to a new card with 0% APR on balance transfers. These special discounts usually last between 12 to 18 months, during which time you won’t be charged interest on the credit card balance.

    For instance, let’s say you have a $5,000 balance on a card with a 17% APR. If you only make the minimum payments, you’ll pay $1,223.61 in total interest. If you transfer that balance to a card with 0% APR for 12 months and repay the balance in that time, you won’t pay any interest.

    There is often a small fee associated with balance transfers, around 3% of balance transfers. For example, if you transfer $5,000, you’ll pay a $150 fee. That still leaves a net savings of $1,073.61 in the scenario outlined above.

    Decrease Your Fixed Expenses

    One of the best things to do for your budget in 2021 is to decrease fixed expenses like your car insurance, internet, cable, and cell phone. Call those providers and try to negotiate a lower rate.

     Go through your transactions for the past few months and write down all the recurring subscriptions like Netflix, Amazon Prime, and DoorDash. Then, group them into categories like “frequently use,” “sporadically use” and “rarely use”. Consider canceling anything you rarely use.

     See if you can get a better deal on your most popular subscriptions. For example, if you and your significant other both pay for Spotify Premium, get a Spotify Duo account instead, and save yourself $83.88 a year.

    Open a Better Bank Account

    Most people are missing out on an easy way to earn money through your bank account. You could be leaving hundreds of dollars on the table if you still have a traditional savings account.

    According to the FDIC, the current average interest rate on a savings account is 0.05%. Many high-yield savings accounts offer rates between .40% and .60%. 

    Let’s say you have $10,000 in a savings account with .05% interest. After one year, you’ll have earned $5.04 in interest. If you moved that amount to a high-yield savings account with .5% interest, you would earn $49.92 in interest over that same time period.

    Start Investing

    If you’re not investing for retirement yet, this might be the most important financial resolution you can make. Thanks to the power of compound interest, you can start investing now and see huge growth by the time you’re ready to retire.

    IRAs and 401(k)s are the two main retirement accounts. Anyone can open an IRA, while only those who have access to an employer-sponsored 401(k) can open one.

     If you’re not sure how to invest in your retirement account, consider hiring a qualified financial planner through the National Association of Personal Financial Advisors (NAPFA).

    If you’re not ready to work with a financial planner, you can use a robo advisor like Betterment or Wealthfront, which will create a portfolio based on your age, income, and expected retirement age. Robo advisors have low fees and are designed to help beginner investors.

    How to Keep Financial Resolutions

    First, start small. Pick one habit to change at a time. If you try to accomplish five goals at once, you’ll burn out quickly and give up. 

    When you decide on a resolution, break it up into smaller, more manageable tasks. For example, if your goal is to talk to a financial planner about investing, break it down into the following steps:

    1) Research financial planners through NAPFA

    2) Send introductory emails to three financial planners

    3) Choose the one that seems like the best fit

    4) Schedule a consultation

    Give yourself a deadline to accomplish each of these tasks, and ask a friend to hold you accountable.

    Another tip is to tie your resolutions to a bigger goal. Like dieting or starting a new exercise plan, changing your financial habits is hard. If you’re used to grabbing lunch with your co-workers every day, bringing leftovers from home instead will seem like a huge change.

    The key is to imagine the future version of yourself who will benefit from the changes you make today. If your goal is to open and contribute to a retirement account, imagine yourself as a senior citizen living comfortably.

    When you’re tempted to skip this month’s retirement contribution to buy concert tickets, think about your future self, what you’d want for them and how they would appreciate your sacrifice. It can also help to remember some of the financial mistakes you’ve made in the past, and how much easier your life would be right now if you had made a different choice.

    The post The 5 Best Financial New Year’s Resolutions appeared first on MintLife Blog.

    Source: mint.intuit.com

    How to Build an Emergency Fund

    by Marjorie Lowe

    January 12, 2021

    4:24 am

    Leave a comment on How to Build an Emergency Fund

    Financial Advisor, Food Budgets, Personal Finance, Savings Account

    Buying, debt, Emergency Fund, Financial Advisor, Financial Goals, Financial Wize, FinancialWize, home repairs, How To, Main, money market accounts, Personal Finance, Retirement, Saving, savings, Savings Account, savings accounts

    You never know what life will bring. You can unexpectedly lose your job. A medical emergency can present itself, or you may have unexpected home repairs. So, as financial advisors would say, having an emergency fund to cover these ’emergencies’ makes good financial sense.

    An emergency fund then is a stash a money you save somewhere, usually in a savings account, to cover some of those unexpected surprises. These ’emergencies’ or unexpected events can be costly and they can threaten your financial well being when presented with them. It is therefore important to create one, know what a good emergency fund amount is, where you should keep your emergency savings, and how much you should save in your emergency fund.

    Ready to get started? Start your emergency fund today with CIT Bank.

    1. Where to put your emergency fund?

    High yield savings accounts or money market accounts are a great choice to put your emergency fund for two main reasons. First, they are safe. The point of having an emergency fund is to have that money available to you when an emergency arises. In other words, you want to make sure that your money is there when you need it.

    The worst thing you can do to your emergency fund is to expose it in the stock market. The stock market is so volatile that you can lose all of your money in a matter of minutes.

    So money placed in high yield savings accounts are safe because they’re not exposed to the stock market and they are insured by up to $250,000, making them some of the best places to stash your emergency fund.

    Second, they are accessible. They are liquid, and can easily get your cash within 24 hours, if not sooner.

    Related: The Best 5 Places to Keep Your Savings

    2. Emergency fund amount.

    How much should you have in your emergency fund?

    Your emergency fund amount depends largely on your unique circumstances. But financial experts recommend to have at least 3 to 6 months’ worth of living expenses. So if your monthly expenses is $2000, your emergency fund amount should be at least $6,000.

    3. Your emergency savings choice.

    CIT Bank 2.4% APY Savings Builder High Yield Savings Account is a great option for your emergency fund. It offers a very high APY 2.45%, multiple times better than what a typical traditional savings account is offering.

    Learn more about CIT Bank here.

    4. How to Start an emergency savings fund

    Starting an emergency fund is easy. Open a savings account to use strictly for unexpected expenses and start stashing money away every week, every month, or every paycheck. Even if you think you don’t have enough money to save, save smaller amounts in the beginning and increase it whenever possible.

    5. Reasons why you should have an emergency fund.

    If you don’t have an emergency fund, you may find yourself in hot water when an emergency arises.

    Apply for a loan. If you don’t have a safety net, you may be forced to apply for a personal loan. And a personal loan can put you into more debt. You will have to work hard to repay the principal, plus interest. And if you can’t pay your loan, a judgment can be entered against you.

    Take out a 401k loan. You’re allowed to borrow against your retirement account such as a 401k plan. However, just as any other loan, you have to repay it back according to the rules set by your account, or else you will get hit with a penalty. Also, taking money out of your retirement account prevents potential growth of your account.

    Selling stocks, rental properties. You may have to sell your stocks or real estate investments in case of emergency. However, that will cost you a lot of money like transaction cost, taxes, etc.

    Learn more:

    The 5 Best Places to Keep Your Savings

    Top 5 Reasons Your’re Not Saving Money

    Money Saving Tips: 6 Secrets to Saving Money

    4 Reasons CIT Bank Can Maximize Your Savings

    Working With The Right Financial Advisors.

    You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

    The post How to Build an Emergency Fund appeared first on GrowthRapidly.

    Source: growthrapidly.com

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