Inside: Learn how to save money quickly, even on a tight budget. Get practical tips for how to save money fast on a low income. Simple savings ideas to implement today.
Saving money on a tight budget can feel like a high mountain to conquer, especially when you’re trying to do it fast.
Many people earn just enough to cover their essential costs, leaving little room for savings. However, with the right strategies, saving money fast on a low income doesn’t have to be a pipe dream.
This is something I started when we decided to pay off debt. Then, we choose to continue saving that money and investing it.
By understanding the flow of your money – where it’s coming from and where it’s going – you can make informed decisions that maximize your savings potential.
By prioritizing your spending and forecasting future expenses, budgeting can reduce the stress of financial uncertainty and introduce a sense of control and confidence in your money management skills. Thus, leading to you starting to save.
What is the best way to save money on a low income?
On a low income, the best way to save money is to thoroughly understand your expenses and prioritize your needs over wants.
In addition, by planning and tracking your finances meticulously, you can identify where each penny is going. Thus, allowing you to analyze your expenses. Once you have a clear picture of these, start looking for areas to trim down.
Remember, saving money is about being proactive and consistent. These small but steady steps can build up over time to help you save money fast, even on a low income.
How to Save Money on A Fast Income
1. Start with Clear Priorities
Before you can decide where to cut costs or how to allocate your funds, you need to know what’s most important to you.
What is your why for doing what you need to do? Is it building an emergency fund, saving for a down payment on a home, or maybe preparing for retirement?
Whatever your goals, outline them clearly. This is how you will save money.
2. Budgeting effectively to manage finances
To budget effectively on a low income, it all starts with a cold, hard look at your numbers.
Begin by listing all sources of income – that’s your foundation.
From each paycheck or income stream, subtract your non-negotiable expenses such as rent, utilities, transportation, and debt payments. What you have left is your discretionary income.
Then, it’s time to categorize and prioritize. Group your expenses into necessities and nice-to-haves. If your essentials consume most of your income, you’ll need to scrutinize the nice-to-haves list.
Every dollar saved from unnecessary splurges is a dollar that can be put towards your savings.
Use budgeting apps or tools to keep a real-time record of your spending. These can help you stay disciplined and provide a visual reminder of your progress.
3. Track and Slash Unnecessary Expenses
Now, you must meticulously and ruthlessly cut out the non-essentials.
Identify patterns and spot the recurrent, unnecessary expenses that are draining your funds.
Do you subscribe to multiple streaming platforms?
Are you forking out cash for a gym membership you barely use?
Are those daily specialty coffee drinks adding up?
It’s time to slash these expenditures.
Cutting these expenses is like giving yourself a raise.
4. Lower Housing Expenses Without Compromising Comfort
Living in smaller, more affordable housing to decrease rent or mortgage might be exactly what you need.
Opting for a smaller, more affordable space is a practical approach to significantly lower your rent or mortgage payments. When you choose to live in a compact setting, not only do you reduce the square footage costs, but often, utility and maintenance expenses decrease as well due to the reduced size of the living area.
If you are renting, try to negotiate your rent or lease terms with your landlord – they might be willing to offer a discount to keep a reliable tenant, or you may be able to agree on lower rent for a longer lease commitment.
If you’re a homeowner, explore the possibility of refinancing your mortgage to take advantage of lower interest rates. Alternatively, consider renting out a room or a portion of your living space, as the additional income can offset your mortgage or maintenance costs.
5. Save Money on Utilities with Simple Home Adjustments
Saving money on utilities might sound challenging, but you can often achieve substantial savings with a few strategic home adjustments. Let’s explore some cost-effective strategies and modifications you can make to your living space that could help reduce your bills.
Energy Efficient Appliances: Swapping out older appliances for Energy Star-rated ones leads to significant reductions in electricity use and water consumption.
Smart Thermostats: Installing a smart thermostat allows you to programmatically control your heating and cooling based on your schedule and preferences, potentially saving you a bundle on your energy bills.
LED Lighting: Switch to LED bulbs, which are more energy-efficient than traditional incandescent ones and have a longer lifespan, saving you on replacement costs as well as your electric bill.
Insulation Upgrades: Proper insulation keeps your home warm in the winter and cool in the summer, reducing the need for excessive heating or air conditioning.
Water-Saving Fixtures: Low-flow showerheads and faucet aerators reduce water usage, preserving this precious resource and lowering your water bill.
Not only do these simple home adjustments lead to savings on your utility bills, but they also contribute to a more environmentally friendly lifestyle.
6. Cooking at home instead of eating out
Cooking at home instead of dining out is an excellent way to save money, especially on a low income. When you eat at a restaurant, you’re not just paying for the food; you’re also covering the cost of service, ambiance, and the establishment’s overhead.
Plan a balance between meal prepped home-cooked meals and the occasional dinner out to keep your budget in check while still enjoying life’s little pleasures. Here are some frugal meals to get you started.
Remember, you don’t have to eliminate eating out entirely.
7. Canceling unused subscriptions and memberships
Stop draining money on services you don’t actively use. It’s surprisingly easy to forget about these auto-renewing expenses, so taking the time to audit your subscriptions can reveal opportunities for savings.
Recently, we tracked over $100 a month in my mother-in-law’s unused subscriptions and membership!
As such, it’s important to periodically evaluate your subscriptions and memberships to ensure they are still serving your interests and goals. If not, give yourself permission to cancel and save that money for something that offers tangible benefits in return.
8. Buying quality items that last longer
Investing in quality items that last longer is a strategic way to save money over time. While the initial cost may be higher, durable products can prevent the cycle of frequent replacements, ultimately contributing to long-term savings and less waste.
Remember, not every purchase necessitates the highest quality option. Examine which items you frequently use and can benefit from in the long run. For instance, driving a Toyota or buying higher quality shoes.
Once you’ve identified these, invest in quality for those and enjoy the satisfaction of a purchase that lasts.
9. Optimize Grocery Shopping
To optimize grocery shopping and manage your food budget effectively, start by thoroughly checking your current pantry supplies and making a precise shopping list to deter impulse purchases.
Utilize coupons and enroll in local store loyalty programs for exclusive discounts.
Embrace meal planning to avoid unnecessary spending.
Consider incorporating meatless meals, as this can contribute to consistent savings over time due to the typically higher cost of meat compared to vegetables and other plant-based options.
Plan meals around these cheap foods when you are broke.
By shopping smartly, you have the power to drastically lower your monthly food bill. Just remember, the key is preparation and discipline.
10. Repairing items instead of replacing them
Repairing items instead of replacing them can be a significant money-saving tactic, especially when budgets are tight. It’s often more cost-effective to fix a piece of furniture, mend a garment, or troubleshoot an appliance than it is to buy new one.
Consider the condition and value of each item before deciding to repair it. If the cost of repair approaches the price of a new item, or if it’s beyond your skill set, researching community resources or seeking professional help may be a wise choice.
11. Practicing the 30-day rule for non-essential purchases
Putting the brakes on impulsive buying can significantly boost your savings, and practicing the 30-day rule is a tried-and-true method to control those urges.
Before you make any non-essential purchase, wait 30 days.
If after a month you still feel the purchase is necessary or meaningful, then consider buying it.
Remember that the goal isn’t to deny yourself enjoyment but to ensure that each purchase is considered and valued. This conscious approach can lead to more satisfaction with the items you do choose to buy and a healthier bank balance.
12. Skip the Car Loan
Opting out of a car loan and finding alternative modes of transportation, such as cycling, walking, or using public transportation, can lead to significant financial savings.
Without a car payment, individuals can redirect the funds that would have gone towards monthly installments, insurance, and maintenance into their savings account.
This strategy can be particularly impactful for those with a goal in mind or working with a low income, as every dollar saved moves them closer to financial stability. Furthermore, the elimination of auto loan interest charges and potential debt can provide a more secure financial footing and peace of mind.
13. Using public transportation or carpooling to reduce fuel costs
Utilizing public transportation or carpooling can be significant in reducing fuel costs, particularly when you’re committed to saving money on a low income. These alternatives to solo driving not only save on fuel but also on parking fees, and wear and tear on your vehicle.
Another option is embracing car-sharing services, especially if you find that you don’t require a car on a daily basis. Services like Turo and Getaround offer the flexibility of having a car when you need one without the constant financial responsibility associated with ownership.
Remember, it’s all about what suits your lifestyle and frequency of need. By assessing how often you need a vehicle and comparing it with the total costs of ownership, car-sharing could be an excellent way to save money.
14. Selling unused or unwanted items for extra cash
Selling unused or unwanted items is a fantastic way to declutter your space and earn extra cash. You might be surprised how much money you can make by letting go of things you no longer use or need. From clothes you’ve outgrown to homeware that’s gathering dust, each item sold can inch you closer to your savings goal.
Take advantage of this opportunity; a thorough home audit could reveal a treasure trove of sellable items right under your nose. Not only does this increase your income, but it also helps you consider future purchases more carefully.
15. Taking advantage of free entertainment and community events
Leveraging free entertainment and community events is a delightfully frugal way to enjoy yourself without breaking the bank. From concerts and exhibitions to workshops and meet-ups, there’s often a wealth of activities that won’t cost you a penny.
In fact, here at Money Bliss, I have the most popular list of things to do with no money.
With a little creativity and resourcefulness, you can uncover a variety of enjoyable and inexpensive things to do.
16. Automating savings to ensure consistent contributions
Automating your savings is a hassle-free way to ensure you consistently contribute to your financial goals.
By setting up an automatic transfer from your checking account to a savings account, you’re essentially paying your future self first.
This ‘set and forget’ approach helps grow your wealth with minimal effort.
17. Negotiating bills and asking for better rates
Many service providers are open to negotiating prices if it means retaining a customer. Whether it’s your cable package, insurance, or even a credit card interest rate, it’s worth having the conversation.
Remember, the worst they can say is no. But often, companies will offer helpful options when they realize you are considering alternatives due to cost concerns.
One phone call could save you $1000 a year – just like when I decreased my cable bill!
18. Evaluating insurance policies for potential savings
When evaluating insurance policies, it’s critical to regularly assess your coverage needs and shop around for the best rates. Comparing policies from different providers annually can reveal opportunities for lowering premiums or finding more suitable coverage.
Utilize online tools and independent insurance agents to ensure a comprehensive review of available options.
Remember to inquire about bundling policies, as this can often lead to significant savings while consolidating your insurance needs effectively.
19. Meal Planning and Prep: Strategies to Reduce Food Waste
By allocating some time each week to plan your meals, you can ensure that you only buy what you need, thereby minimizing waste and cost.
Learning to meal plan starts with looking at a calendar and a local sales flyer to find the low cost deals.
By creating a weekly plan and incorporating budget-friendly recipes, you can not only eat healthier but also avoid the costlier option of dining out.
20. Forgo single use items
By choosing reusable items over single-use ones, you cut down on waste and habitual spending on disposables. This is also known as frugal green.
For instance, investing in a reusable water bottle, rather than buying single use water bottles.
By integrating sustainable products into your life, you also promote a culture of conservation and mindfulness, inspiring others to make eco-friendly choices.
21. Shopping for groceries with a list to avoid impulse buys
This is key! Especially when shopping with kids or a significant other!
Shopping for groceries with a list is a golden rule to avoid impulse buys, which can quickly derail your budget. By planning your purchases beforehand, you stick to the essentials and resist the temptation of sale items that aren’t on your list or don’t fit your meal plan.
Bonus Tip: Remember to always shop on a full stomach – hitting the grocery store hungry is a surefire way to end up with impulse purchases that aren’t on your list!
22. Buying generic brands instead of name brands
Opting for generic brands rather than name brands is a straightforward and effective way to save money on everything from groceries to over-the-counter medications. These products are often of similar quality and effectiveness but come at a significantly lower cost.
By making the switch to generics, especially for regularly used items, the aggregate savings can be substantial over time.
23. Making bulk purchases for commonly used items to save on cost-per-unit
When you buy in larger quantities, the cost per unit typically decreases, leading to savings that add up over time. Bulk buying works best for non-perishable goods or products you use consistently.
Make a point of buying non-perishable items or products with a long shelf life in bulk to avoid waste and ensure that you truly save money with each bulk purchase.
Just make sure you are going to use it!
24. Cutting costs on personal care by DIY methods
DIY methods for personal care are not just a trend – they’re a practical and often healthier alternative to store-bought products. By creating your own beauty and personal care items, you can significantly trim costs and take control of what goes on and into your body.
Even if you’re not the crafty type, consider starting small with something like a DIY sugar scrub or homemade toothpaste. This is something I did over ten years ago. You might discover a new hobby that enhances both your well-being and your budget.
25. Regular maintenance of vehicles and appliances to prevent costly repairs
Keeping on top of maintenance schedules helps prevent major breakdowns that can lead to expensive repairs down the line.
By making regular maintenance a non-negotiable part of your routine, you protect your investments and save yourself from future financial headaches.
I keep a list in my digital to do list, so I never lose track.
26. Shopping at thrift stores, garage sales, or second-hand websites
Shopping at thrift stores, garage sales, or second-hand websites is an excellent way to acquire items at a fraction of the retail cost. Not only are you being financially savvy, but you’re also participating in the circular economy, reducing waste, and often supporting charitable causes.
Shopping second-hand first is not just about saving money—it’s a lifestyle choice. With patience and persistence, it’s amazing what quality items you can find without impacting your wallet heavily.
27. Learning basic sewing to repair clothes
Mastering the basics of sewing to mend your clothes is a skill that pays off in multiple ways. You save money by extending the life of your garments, reducing waste, and developing a practical capability that can come in handy in various situations.
Honestly, sewing a piece of clothes is a very simple thing. Something that must be learned by the younger generations.
Consider setting aside some time to learn sewing basics via online tutorials, community classes, or even from a friend or family member—it’s a practical step toward financial savings and sustainable living.
28. Utilizing coupons and discounts for shopping
Using coupons and discounts strategically can lead to significant savings on your shopping bills. With a little planning and some savvy shopping techniques, you can ensure you never pay full price for essentials and other purchases.
Remember to only use coupons for items you were already planning to purchase; otherwise, you’re not saving money, you’re just spending less on something extra.
29. Consolidating debt to reduce interest rates
Debt consolidation can be a strategic financial move to lower your overall interest rates and simplify your monthly payments. By combining your debts into one loan with a lower interest rate, you can streamline your bills and potentially save significant amounts of money over time.
Make sure to shop around for the best debt consolidation options and read the fine print. The goal is to find a consolidation plan that truly puts you on a faster track to being debt-free without any hidden costs.
30. Tackle High-Interest Debts First to Free Up More Cash
Addressing high-interest debts is paramount in optimizing your financial strategy. Such debts, often from credit cards or payday loans, can spiral out of control if not managed promptly due to their compound interest rates, which can quickly exceed the original amounts borrowed.
This is known as the debt avalanche.
By zeroing in on high-cost debts, you ensure your income is spent more effectively and not wasted on steep interest fees, accelerating your path to financial freedom.
31. Choose the Right High-Yield Savings Account for Your Emergency Fund
Selecting the right high-yield savings account for your emergency fund is an essential move for growing your savings. High-yield accounts offer interest rates significantly higher than standard accounts, ensuring your emergency fund doesn’t stagnate and keeps pace with inflation as much as possible.
This is one of the bank accounts you need.
32. Implement The Envelope System
The Envelope System is a budgeting method that involves physically dividing your cash into envelopes for different spending categories.
Utilizing the cash envelope system promotes disciplined spending by providing a tangible limit on various expense categories, ensuring you stay within your pre-determined budget and facilitating more intentional money management.
This method also offers immediate visual feedback on spending patterns, which can lead to better financial habits and incremental savings as any leftover cash from each envelope can be added directly to a savings fund, making the act of saving more rewarding and motivating.
33. Using cash -back envelopes to track spending
The use of cash-back envelopes takes the traditional envelope budgeting system a step further by rewarding yourself with savings.
Whenever you spend less than the allocated amount in a budget category, you place the cash difference into a “cash-back” envelope, which can be used for saving or investing.
Adopting the cash-back envelope strategy can provide a rewarding twist to budgeting, making it a fun challenge to spend less and save more.
Boost Your Income: Creative Side Hustles and Opportunities
Boosting your income can provide substantial financial relief, particularly when you’ve maximized your ability to cut costs and still find your expenses stretching your budget thin.
Generating extra income, be it through a side hustle or achieving a raise enhances your ability to save and invest.
With additional streams of revenue, you gain more financial flexibility to achieve goals like paying off debt faster, saving for a significant purchase, or building an emergency fund.
Finding a side hustle or part-time job for additional income
Exploring a side hustle or part-time job is a proven way to supplement your income. In today’s gig economy, there are numerous opportunities for flexible work that can be customized to fit your skills and schedule.
A side hustle can not only pad your wallet but also provide an outlet for creativity and passion, possibly even offering a new career trajectory down the line.
Explore Gig Work and Passive Income Streams
Exploring gig work and passive income streams can accelerate your savings efforts, especially when your regular income isn’t enough to reach your financial goals. These alternative income ideas often provide the flexibility to work on your terms and build up earnings over time.
These revenue channels provide a proactive approach to increasing your disposable income. Researching and choosing the best options for your skills and financial situation can help you build a sound extra income strategy.
Take Advantage of Bank Bonuses and Credit Card Bonuses
Banks often offer attractive incentives to new customers, and high-interest savings accounts can grow your deposits at a faster rate than traditional accounts. The same is true for credit card issuers offering big bonuses.
Taking time to research the best offers and account terms can net you a nice bonus and put your money to work earning more money.
Learn How to Invest Your Money
Learning how to invest your money is paramount to building wealth over time. While it can seem intimidating at first, understanding the basics of investing can enable you to take advantage of compounding interest and market growth to increase your savings exponentially.
Start small, stay disciplined, and continually educate yourself as you grow your investment portfolio. Over time, your investments can become a significant source of wealth and financial security.
Learn how to invest in stocks for beginners.
FAQs: Navigating the Path to Low-Income Savings Success
Saving money when your income barely covers your fixed expenses requires a strategic approach. Begin by scrutinizing your budget to cut any non-essential costs.
Look for ways to reduce your fixed monthly expenses, like negotiating bills or refinancing loans.
Every small change can contribute to your savings, so focus on making incremental adjustments that together can enhance your financial situation.
Even when funds are tight, saving money is possible by making small but impactful changes.
Prioritize reviewing your expenses and identifying areas to cut back, such as non-essential subscriptions or eating out.
Round up loose change or small amounts from your daily transactions into savings.
Seek free entertainment options and consider generating additional income through side hustles or selling items you no longer need.
Each penny saved is a step towards your financial cushion.
Setting Realistic Savings Goals and Celebrating Milestones
Setting realistic savings goals is a key to financial success, particularly when managing a low income.
Determine what you can feasibly save without overstretching your budget. Whether it’s $5 or $50 per week, every bit helps.
Celebrating your achievements, no matter how small, can inspire continued discipline and dedication towards your financial objectives.
Being realistic and flexible with your budget will help you manage your finances more efficiently, ensuring that you set aside money for future growth, even when funds are tight.
This is a great step towards habits of financially stable people!
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
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If you’re running a business, you probably know that managing cash is critical to your success — so let’s share some tips on doing that even better. Solid cash flow is vital to keep a business thriving, whether you’re a sole proprietor or the head of a larger enterprise. Even businesses with strong earnings can struggle with cash flow. That’s why cash flow can be a sure sign of how healthy a business is — or is not.
So let us help you optimize that cash flow. We’ll share some smart insights and helpful tips on:
• What cash management for business is
• Why it’s so important
• Ways you can improve your business cash management
Let’s get started.
What is Business Cash Management?
Simply put, business cash management is basically the way you track and manage the money coming into and going out of your business – usually on a cash flow statement. Positive cash flow means more money is coming in through revenues or borrowing than is being used to pay expenses, such as payroll and rent.
That said, good cash management also means not having too much cash on hand. In that scenario, business owners, while cautious, may be missing out on future earnings growth when they neglect to invest cash back into the business.
Here’s another way to frame this principle: Take a look at your business’s balance sheet and check the ratio of current liquid assets to liabilities. A ratio that’s greater than one indicates good health (you’re not losing money), but if that ratio gets too high, you could be holding onto too much cash or other assets that could better be invested elsewhere.
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The Importance of Cash Management for Businesses
Cash flow is the essence of all businesses. Without cash, a business will struggle to meet expenses, pay suppliers, repay any investors, and, often most importantly, grow the business through marketing and/or new opportunities.
Strong cash management strategies can help business owners avoid taking on debt. It also gives them more control over everyday activities, decisions, and growth opportunities. What’s more, smart cash management is the best way for owners to fulfill their vision for their enterprise while meeting both their short, intermediate and long-term needs. There’s certainly a lot riding on cash management, so let’s dive into ways to optimize it.
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6 Tips for Managing Cash Flow
Cash management can be especially challenging for entrepreneurs and small business owners. Yet it is one of the most important financial strategies business owners must master. These six tips can help.
1. Learning Your Cash Flow Cycle
A cash flow cycle is the time it takes to purchase your supplies and materials (or prepare the work that goes into providing a service), transform them into a product, sell your offering, and collect payment that can go into your business bank account. Sounds simple but a lot can go haywire during that process.
That’s why it’s important for business owners to constantly update and monitor their balance sheets and profit and loss statements. Ideally, you want to know at any given time what happened in the cash-flow cycle last month. Also important: Knowing your projections for what’s going to happen next month.
Understanding your cash flow cycle can help identify and address inconsistencies such as a late-paying customer or a build-up of inventory. If your business is seasonal or cyclical, you want to be well-prepared for both the intensely busy times…and the lulls.
Recommended: How to Track Your Monthly Expenses: Step-by-Step Guide
2. Getting Payments on Time
Reminding customers to pay on time is one of the easiest but most necessary ways to manage cash flow. Late payments are a fact of life; common, even. Having receivables come in even a day or two past the due date can wreak havoc with your cash flow cycle and your bank account.
Consider setting up email reminders to all customers ten days, seven days, and two days before payment is due. Technology today makes it a snap to pre-schedule email blasts. If the payment is still late or only a partial payment was made, don’t hesitate to follow up with a personal note or phone call.
This simple solution can really work. Customers will pay more attention to timely payments when they know you are paying close attention.
3. Turning Over Inventory Quickly
Having an abundance of inventory on hand at a given time means that a bundle of cash is tied up in that unsold stock. That could be an issue, because those funds might otherwise be working to pay for operations and expenses. What’s more, if all of that inventory bought upfront doesn’t sell as expected, it could mean losses on top of that lack of cash. That could hurt your growth and business valuation.
Many small business owners have learned that, in terms of cash, it’s better to turn inventory more quickly. Of course, this will vary widely depending on your business – perhaps your product is handmade jewelry, perhaps its reconditioned air conditioners. As an example, you might want to boost inventory turn-over from twice a year to five times. More targeted marketing could contribute to this acceleration.
That said, finding the right inventory management to fit with your cash flow cycles takes some time and experience. Recent supply chain issues have shown how challenging inventory management can be. Again, constant monitoring of the cash flow cycle can help guide how you tweak things.
Recommended: How Much Does It Cost to Start a Business?
4. Understand Invoice Financing
Let’s say you hit a cash management hitch. If you do find yourself in a position where you have too much inventory on hand and you need cash to cover expenses, there is a path forward. Invoice financing companies will advance a full or partial amount of your outstanding invoices. You repay that amount plus interest after the invoice is paid.
This generally should only be considered as a stop-gap measure. Like credit cards, interest payments on invoice financing can add up fast and quickly get out of control. Consider the fact that annual percentage rates for invoice financing products can reach as high as a jaw-dropping 64%.
5. Cutting Costs
Monitoring and cutting costs on expenses is another tool for managing cash flow. After all, if less cash goes to pay overhead, more can be invested in the business. A few suggestions: Relying on online marketing efforts that can be less costly than traditional methods, outsourcing tasks that take too much time and money in-house, and reducing energy costs. You might also want to renegotiate outdated contracts and prices with suppliers. These are all areas business owners can consistently monitor to keep costs low.
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6. Comparing Loans
Sometimes, a business could use a helping hand to smooth out its cash flow. Let’s say you have outstanding accounts receivable — in other words, you know money is due but you don’t have it yet — and you need the cash now. In this situation, taking a business loan can be an option to help bridge the gap.
Cash flow loans (like invoice financing explained above) are short-term loans or lines of credit. These are often used to cover expenses or to take advantage of opportunities that can increase revenue.
A working capital loan is another option that can be used to finance everyday business operations such as rent, payroll, or restocking inventory. These loans are not designed to finance long-term assets or investment. Companies with seasonal or cyclical sales often rely on working capital loans to provide relief during slow periods.
One caveat: Working capital loans are often tied to your personal credit, so missed payments or defaults will affect your credit score. Consider that carefully before you sign on.
In addition, there are a variety of small business loans available that are used to finance long-term expenses such as real estate, equipment purchases, or business expansion. These include SBA loans, business lines of credit, and term loans.
Whatever type of loan you choose, be sure to compare your options carefully. Look at terms, APR, and how much lending you qualify for among several lenders before taking on any short or long-term debt. Spending some time and energy on research will help ensure you get the right form of financing.
The Takeaway
Cash flow management is an essential part of running a successful business of any size. Carefully monitoring cash flow, and learning some simple strategies to maximize it can take your small business to the next level.
Whether your business is a full-time job or just a side gig, it’s important to keep your business cash flow separate from your personal cash flow. In both cases, you’ll want to find a bank account that pays a competitive rate, charges no or low fees, and makes it easy to access your money.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
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Feelings of Financial Insecurity in America Soar to Record High, Even as Consumer Anxiety About the Economy and Recession Recede Northwestern Mutual’s 2024 Planning & Progress Study finds just over half of U.S. adults expect recession this year, a significant drop from two-thirds who said the same in 2023 One-third (33%) of Americans say they … [Read more…]
Mr. Cooper Group was profitable in 2023, a year marked by its acquisition of Home Point Capital and Roosevelt Management Co., along with the fallout from a cyberattack. Mr. Cooper’s strong performance was mainly due to its servicing business, which benefited from a higher interest rate environment.
During a call with analysts on Friday morning, company executives addressed some of the concerns raised by Treasury Secretary Janet Yellen, who said this week that U.S. regulators are monitoring risks stemming from nonbank mortgage lenders, especially failures resulting from market strains.
Dallas-based Mr. Cooper is expected to reach $1.1 trillion of unpaid principal balance (UPB) in mortgage servicing rights (MSR) by the end of March, a target announced in July 2021 when the portfolio was at $650 billion.
“While the overall portfolio has grown considerably, and we expect it to grow by another 25% this year, only half of it is owned MSR. The other half is subservice for a number of clients,” vice chairman Chris Marshall told analysts. “If there are any limitations on concentration, I think it would be focused more on people, on owned MSR. So, I think we have quite a bit of room for us to grow before that becomes a concern for anybody.”
At the end of December, Mr. Cooper had $992 billion in MSR, up 14% year over year. Of that total, 59% was in owned MSR, 5% was in special servicing and 35% was in subservicing. According to Marshall, the company seeks a balance of 50% owned MSR and 50% subservicing.
“And if you look, in total, we’re still in kind of a single-digit market share,”Chairman and CEO Jay Bray said. “It’s a scale business. You have to build and invest in technology. So, we don’t have any concerns about continuing to grow the platform. The key for us is sustainability.”
Executives also added that, in terms of capital, the target for the companyis “so much far ahead of what is required of banks”that “it’s not a concern,”according to Marshall. “I can’t even imagine it becoming anything of a conversation. (…) You should think of us as having a rock-solid balance sheet.”
Overall, Mr. Cooper delivered $500 million in net income in 2023. Its almost $1 trillion servicing portfolio generated $869 million in pretax operating income last year. And by funding $12.6 billion in loans, it had a $100 million pretax operating income.
“A key theme for 2023 was operating leverage. We grew the portfolio at a double-digit pace during the year while at the same time cutting costs companywide,” Bray said. “In fact, since 2018, we’ve cut servicing costs by 30%.”
Bray said the company will return its focus to equity, which is expected to grow to 14% to 18% by the end of 2025, compared to its current level of 12.5%.
Cyberattack, changes in leadership
Mr. Cooper generated $46 million in net income in the fourth quarter. That compares to $275 million in the third quarter of 2023 and $1 million in Q4 2022 when it had a negative mark-to-market of $58 million.
The earnings in Q4 2023 included, among other things, mark-to-market net hedges of $41 million and $27 million related to a cyberattack it suffered in October. The company had the data of nearly 15 million current and former clients exposed in a hacking incident, which resulted in at least four class-action suits.
Despite the cyber incident, the company kept its servicing and origination businesses profitable. With 4.6 million customers, the servicing division brought in $229 million in pretax operating income in Q4, compared to $301 million in Q3.
Meanwhile, the originations division — which focuses on acquiring loans from correspondent originators and refinancing existing loans in the direct-to-consumer channel — brought in $10 million in pretax operating income in Q4, compared to $29 million in the previous quarter.
“Bear in mind that these numbers were impacted by the cyber event,” Marshall said. “Excluding that impact, we estimate EBT [earnings before taxes] would have doubled. For similar reasons, refi recaptures dipped slightly during the quarter but are now back up over 80%.”
The company’s total funded volume declined to $2.7 billion in Q4, down from $3.4 billion in the previous three-month period. Cash-out refinances represented 61% of the total, followed by purchase loans (25%), second-lien refinances (12%) and rate-and-term refinances (2%).
In January, the company announced Mike Weinbach, a former Wells Fargo and JPMorgan Chase executive, as its new president. He is succeeding Marshall, who was named executive chairman at servicing fintech Sagent.
Mr. Cooper’sliquidity reached $2.4 billion in Q4, with $571 million in unrestricted cash.
The past three years in the mortgage industry were cutthroat, with origination volume shrinking, and while things are looking better for 2024, lenders are still in a position where they must make bold moves to stem losses on the production side of the business, according to a report from Stratmor Group, a mortgage advisory firm.
More than half of mortgage executives who participated in Stratmor’s recent survey indicated that they do not believe their companies have turned the corner to become profitable when it comes to originations — excluding servicing.
About 85% of surveyed executives believed that their company was either not profitable or was roughly breaking even in production.
If lenders’ losses come in as expected during fourth-quarter 2023 and first-quarter 2024, it will represent eight consecutive quarters of losses for more than 350 independent mortgage bankers, said Jim Cameron, senior partner at Stratmor.
Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks have collectively been in the red for six consecutive quarters. Most recently, they reported an average net loss of $1,015 on each loan they originated in third-quarter 2023 — doubling the reported loss of $534 per loan in Q2, according to data from the Mortgage Bankers Association (MBA).
While lenders have been aggressively cutting labor costs — their largest type of expense — it has not been enough to reduce per-loan production expense.
Even with massive cuts to gross production expenses (from $44 million per company in Q3 2020 to $18 million in Q1 2023), the cost per loan has increased to more $13,000 as loan production units dropped off dramatically during that period.
As of Q3 2023, total loan production expenses were $11,441 per loan, up slightly from $11,044 in the prior quarter.
“As we head into 2024, it is clear we still have excess capacity and lenders must continue to be disciplined and aggressive in managing staffing levels,” Cameron said.
While labor is the priority when it comes to reducing costs, cutting down lease costs and making use of the hybrid work model; reviewing vendor contracts; and weeding out plug-ins with high costs and low adoption rates are needed, according to the report.
The silver lining for IMBs, in general, are their strong cash balances, the report noted.
After bouncing between the $6 million to $8 million range in 2018 and 2019, average cash balances now stand at about $11.5 million as of Q3 2023. Lenders sold off much of their servicing portfolios in 2022 and 2023, and balances would have been much lower without these moves, according Cameron.
“After a very challenging 2023 and not much relief expected in 2024, lenders must have a renewed focus on cash flow forecasting,” Cameron said.
“As a foundational need, mortgage bankers must ensure that they have a robust mechanism in place to forecast short-term, intermediate, and long-term cash flows. And coming in a close second is the need to get razor sharp with financial and operational reporting and monitoring of key performance indicators (KPIs). Mortgage bankers must be highly skilled at examining both costs and performance across a variety of dimensions, including fixed versus variable and break-even-point analyses,” he added.
Vendor and Lender Tools; Agency News; 2023: Hottest Year on Record
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Vendor and Lender Tools; Agency News; 2023: Hottest Year on Record
By: Rob Chrisman
Tue, Jan 9 2024, 8:37 AM
Is it just my imagination or do restaurants no longer have salt and pepper shakers on the tables after COVID? Is it just my imagination or do organizations with initials that begin with “N” have trouble keeping their leadership? In August of 2023 the chief of NAR resigned, last week it was the NRA, and this week it is NAR’s turn again, this time losing Tracy Kasper to blackmail!
Meanwhile, keeping on with real estate news, and realizing that anyone can sue anyone, news came out after Christmas that Zillow, which also owns Zillow Home Loans, is suing rivals over software that schedules property showings.
Agency news
Freddie Mac (FHLMC) and Fannie Mae (FNMA) still have the lion’s share of the applications coming through lenders. What’s going on with their conventional conforming products?
Fannie Mae SVC-2023-06 December Servicing Guide update advises large non-depository sellers/servicers of updates to the frequency of financial reporting requirements and provides other miscellaneous updates.
Fannie Mae and Freddie Mac are equipping lenders with updated resources for Uniform Loan Delivery Dataset (ULDD) Phase 5. Updates include an enhanced ULDD extension schema, featuring Phase 5 extension data points, and updated ULDD FAQs referencing the schema.
Fannie Mae posted the December Appraiser Quality Monitoring (AQM) list.
Pennymac Announcement 23-89 addresses Fannie Mae SEL-2023-09, Rental Income and Self-Employed Borrowers Update.
AmeriHome Mortgage Announcement 20231209-CL summarizes previously published changes made during December, additional changes made with the announcement, and recent Agency and regulatory news.
Mother Nature bats last
Yes, storms are a regular event around the world. For example, the storm hitting the Midwest and Southeast of the United States with blizzard conditions and potential flooding is “normal.”
What isn’t “normal” is 2023 being the hottest year on record, whether it is caused by man or part of a natural cycle over thousands of years. “Climate change deniers” can shrug it off, but when the increased likelihood of major storms, flooding, and forest fires impact mortgage pricing and insurance rates (if you can get insurance at all), and therefore your clients, it is a problem. Or if places like Honduras become unlivable due to the heat and lack of air conditioning, forcing shifts in where populations live, then it matters.
Tennessee Tornadoes: DR-4751-TN. and 4751-DR-TN Amendment 001.
On 12/28/2023, with Amendment No. 1 to DR-4751, FEMA declared federal disaster aid with individual assistance has been made available to three Tennessee counties, Cheatham, Gibson, and Stewart, affected by severe storms and tornadoes on 12/9/2023. See AmeriHome Mortgage Disaster Announcement 20231210-CL for inspection requirements.
Capital markets: pretty quiet out there
Economic data over the past week has highlighted the various effects tighter economic policy has had on different sectors of the economy. Interest rate sensitive areas remain the most strained, but 216k jobs were added during December and the unemployment rate remained at 3.7 percent, which shows labor markets have only moderated slightly. Most new jobs were concentrated in government, healthcare, and leisure and hospitality. November’s JOLTS report showed job openings continue to shrink as demand for labor slowly subsides and the quit rate fell below its pre-pandemic level.
December was also the 14th consecutive month of contraction in the manufacturing sector of the economy, according to the ISM Manufacturing Index. Spending on durable goods has fallen five of the last ten months compared to spending on services which has only dipped once in the past 40 months. However, demand for services is expected to moderate as the economy slows. Construction spending ticked up 0.4 percent in November though most spending was concentrated in single family housing. Multi-family construction spending has lost momentum as vacancy rates have risen.
After a lack of news to open the week (we learned that consumer credit increased by $23.7 billion in November), today’s economic calendar is already under way with the NFIB Small Business Optimism Index for December (91.9 versus 90.6, so a slight increase) and the November trade deficit ($63.2 billion, down from the prior month but little changed). Later today brings Redbook same store sales for the week ending January 6 and Treasury auctions headlined by $52 billion 3-year notes. Markets will also receive remarks from Fed Vice Chair of Supervision Barr. We begin the day with Agency MBS prices worse .125 from Monday’s close, the 10-year yielding 4.05 after closing yesterday at 4.00 percent, and the 2-year at 4.38.
Lender and broker services and software
Orion Lending slashed its annual expenses by $300,000 and boosted their conversion rate by 32 percent using Truv’s income and employment verification solution. “Truv transformed our verification process, expanding our reach and cutting costs,” asserts Richard Plummer, EVP of Operations at Orion Lending. Stop Overpaying. Contact TRUV today for your income, employment, insurance, and asset verifications.
“Wish you had a New Year’s resolution you could actually keep in 2024? How about 5? Contact PHH today and get on track to reduce delinquencies, shorten default timelines, resolve more loans in foreclosure, lower subservicing costs and increase customer satisfaction. No other servicer has been more highly decorated with top servicing awards from all three agencies (Fannie, Freddie, and HUD) over the past two years. We can onboard your portfolio (no matter the size) in 90 days or less, and a recent client saw a 70 percent reduction in complaints in the first 6 months after switching to PHH. What are you waiting for? Start 2024 by reaching out to Chris Sabbe today and let PHH help you reach your goals in the new year!”
Maximize your return on every loan with better secondary pricing and industry-leading technology. Now more than ever, lenders need solutions that allow scale while reducing operational costs and increasing revenue per loan. With Maxwell Capital, lenders can access competitive secondary market pricing on a wide array of products, including non-QM and jumbo, and full-service fulfillment support on both wholesale and mini correspondent offerings. Plus, Maxwell Capital customers gain access to Maxwell Point of Sale, a digital mortgage platform with built-in business intelligence to track and benchmark performance. Schedule a call with Maxwell today and start doing more for your bottom line.
“Processor & Underwriter Automation: Zoral’s automation platform delivers amazingly accurate results in record time! Improve processing and underwriting turn times from days to minutes. Zoral analyses, calculates, and compares LOS data to document data. Dynamic notifications and conditions provide your team with a concise roadmap of what is needed on every loan, at every milestone, all the way to CTC. Our engines accurately categorize, analyze, and calculate eligible income from all income sources, including 3rd party providers such as Account Check. Bank statements are analyzed to identify EMD, cash to close, large deposits, recurring debits, and credits etc. For the past 20 years, Zoral has been creating the most advanced, AI powered, automation solutions anywhere in the world. Our proprietary solutions are designed and built in-house and rapidly implemented. Stop messing with headcount at every turn of the market. Zoral’s automation platform will provide the elasticity to handle even the most unpredictable environments. To learn more about our automation solutions for mortgage, contact Peter Sandler.”
As we usher in the Year of the Wood Dragon, a mythical creature thought to signify unprecedented opportunities, the folks at Down Payment Resource (DPR) contend 2024 also will be the Year of Down Payment Assistance, with DPA offering unprecedented opportunities for lenders to qualify more homebuyers. DPR has been in the business since 2008, amassing a national database of 2,200+ verified DPA programs. As the original keepers of all things DPA, DPR makes it easy for lenders to match otherwise qualified applicants to assistance programs across the United States. DPA can help you qualify more buyers, especially LMI and minority buyers, reduce declined loan numbers and make you a strong contender for referrals and repeat business. That’s an unprecedented opportunity for 2024 you shouldn’t pass up. Need more info? Meet with Tani Lawrence at MBA IMB (Feb. 22-24) or schedule a virtual demo.
Partnering with the right subservicer can make the difference in growing your business and staying a step ahead of a dynamic mortgage market. LoanCare®, one of the nation’s top subservicers, can help you better manage and grow your portfolio in 2024 and beyond. We’ve serviced loans for banks, credit unions, independent mortgage companies, and portfolio investors for over 40 years with solutions for any servicing scenario. We’ll be at the MBA IMB Conference in New Orleans Jan. 22-24, contact us to learn why now is the right time to make LoanCare your servicing partner. And don’t miss Jerry McCoy, EVP, Performance Management at LoanCare speak on the conference panel, “Uncover the Hidden Financial Risks & Rewards in Your Servicing,” on Tuesday, January 23 at 1:30 p.m.
Broker & correspondent loan products
“Expanding your Non-QM products and liquidity options with eRESI Mortgage has never been easier. Come see what other eRESI correspondent partners tap into, whether it’s our industry-leading pricing or fast turnaround times, all while gaining direct access to our long-term capital base. Our partners often rely on our experience as a seasoned loan investor with a highly experienced leadership team dedicated solely to your success. We provide access to a streamlined technology platform, a full suite of Non-QM products (including Full Doc, Bank Statement, and DSCR), and a credit team that understands individual needs. We are also thrilled to announce the launch of our Closed-End Second Lien product, allowing borrowers to access their equity without having to refinance their existing loan. To learn how we can help you grow your business, contact your eRESI representative or email our Business Development team to get started (Contact)!”
“Welcome 2024 with AFR Wholesale®, where we see a golden opportunity for prospective homeowners to achieve their dreams. We invite dedicated professionals like you to join us in expanding your business horizons. Why include AFR in your New Year’s resolutions? 1. Empower Borrowers: Our comprehensive suite of services is designed to empower your borrowers, from flexible financing options to personalized support. 2. Grow Your Business: Partnering with AFR means tapping into a wealth of resources and expertise. Our collaborative approach is tailored to support your growth, ensuring you have the tools and support needed to reach new heights. 3. Optimism/Strategic Planning: Making AFR a part of your 2024 journey means joining a community dedicated to success, innovation, and excellence. Let’s make 2024 extraordinary together! Happy New Year! Ready to partner with AFR? Visit www.afrwholesale.com, contact [email protected], or call 1-800- 375-6071 today.”
There is a signalman up in Shasta County, California. He really wants to get a promotion, so he sends a letter to Union Pacific, and they send up an assessor.
He asks him what he would do if two trains were barreling down a track at each other.
The signalman says he would put one train on a passing loop.
“But what if the points are jammed?”
“I would throw the emergency switch”
“But what if the switch is on fire?”
“I would run out and use the lever on the line to switch the train into the passing loop.”
“But what if it was struck by lightning?”
“Then I’d get my uncle Frank.”
“Why?”
“He’s never seen a train crash!”
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I want to share a fantastic Q&A from this past week. A reader, “Vince,” wrote in and said:
Hi Jesse. I just reread your best of 2023 post about Compounding. Well, I’m late 50s. No debt. Have stayed the course, and am retiring with 4.2m dollars and 5.5m net worth. I’m the poster child for DCA, yearly rebalancing and living below your means but enjoying life. My wife and I know we’re very fortunate.
Here’s the irony. Bernstein said ‘when you win the game, stop playing ‘ To me, that means going to a 55/45 (or even a 50/50) portfolio in perpetuity because a 3% withdrawal rate is likely all we need to keep us happy. Yet, I’m giving up some return that comes with 60/40.
Thoughts? I can afford to be more aggressive, maybe much more so, but is it worth it? Or should I just chill, rebalance annually or every 18 months, and watch the portfolio grow but a bit more slowly.
Thanks!
Vince is in an awesome situation. To add some context to his message:
I wrote back to Vince and said:
Hey Vince. Thanks for reading and for writing in. It’s fun to chat with folks like you.
First off…wow. You find yourself in a terrific position! I love those details…dca, rebalance, live below your means. Do you mind if I ask…looking back, what was your rough average career household salary? And where did that salary max out? I’m just curious.
[And now I’m coming back up here after having written the entire email…this would be a wonderful blog post Q&A, with your permission. Happy to anonymize you entirely. Let me know your thoughts?]
Yes – great Bernstein quote. I have a thought experiment that might put you at ease…
Take your current household spending needs…let’s say, $150,000 per year.
Social Security will cover some…let’s say $50,000 per year (assuming you’re US? your country might have a different social safety net)
Therefore, your portfolio needs to cover $100,000 every year.
And I’m going to assume (?) the $4.2M you mention is fully investable.
If you went 50/50 in your portfolio – roughly $2.1M in stocks, $2.1M in bonds – you’d have 21 years of annual spending in bonds. Ideally, high-grade Treasury bonds. In theory, you have 21 years of buffer before you “need” to tap into your stocks.
Do we have faith that your stocks will outpace bonds over a 21-year period? That’s now the critical question. Based on the stuff I talk about on The Best Interest, my answer is: yes, 21 years is a sufficient period for stocks to do their thing.
Next question: can/should we pull that period closer to the present? 15 years? 10 years?
60/40 –> $2.5M stocks, $1.7M bonds –> 17 years
70/30 –> $2.95M stocks, $1.25M bonds –> 12.5 years
I think you can feel good about 60/40. 17 years of bonds is a great buffer.
But should you? You’re right that, technically speaking, you’re adding more risk to your portfolio. And for what reason? To die with a larger pile of money?
It all comes back to Bernstein’s quote: what game are you playing, Vince? Have you “won?” If not, that’s fine. But ask yourself: when will that answer change? What is “winning” to you?
For example, if you have big goals for your “Excess Money,” that’s a different story. Do you want to donate $1M to the dog shelter when you die? In that case, we should separate that portion of your money from the rest of your money, and invest it differently.
But if you’re main/most important goal is, “Live comfortably forever,” and the 55/45 gets you there…great! You’ve done it.
…now I’m curious, how much return are you actually giving up in the long run by shifting down from 60/40 to 55/45?
Assume 7% annualized inflation-adjusted returns for stocks and 2% inflation-adjusted for bonds
60/40 –> 5.00% per year, or 165% inflation-adjusted growth over 20 years.
55/45 –> 4.75% per year, or 153% inflation-adjusted growth over 20 years.
Definitely a difference. But not a huge one, IMO, especially when you (specifically you) won’t define success or failure based on that ~0.25% per year annualized difference.
Alright – that’s a lot. But I hope it helps.
If Vince’s portfolio is $4.2M and his annual needs are $100,000, he’ll be entering retirement following (essentially) a “2.38% Rule.” That’s way more conservative than the classic 4% Rule.
He doesn’t need to expose himself to undo risk. 60% stocks, 55% stocks, 50% stocks…Vince will be successful in any of these portfolios. Since he has “won the game” of career financial success, he can “stop playing the game” by taking some of his chips off the table a.k.a. reducing his exposure to risk assets (stocks).
Stocks outperform bonds over long periods of time, and Vince will be able to leave his stocks untouched for decades (if he wants to).
Now, Vince did get back to me and shared some of his personal story. I want to share some of those details with you.
On his salary and investing: “I started at 35k in 1994 and ended at about 560k this year. One outlier year was about 600k. I’d bet my average was around 200k but there were so many big jumps it’s really hard to say. (I never moved jobs for a bigger salary. In fact sometimes I took less to be happier. Eventually , the money came). Also, I got married and we both worked so I’d guess 275k average over 30 years, but this may be off. As I mentioned, dca, rebalance, live below our means. Also, 95% indexing with 4 funds and occasionally buying a stock or two and holding it.
Vince’s top-end salary ($500 – $600K) is top 1% territory. His average salary ($275K) is top ~4%. Vince earned great money. But his starting salary is relatively low. Salary growth was essential for Vince’s success. The lesson: you can – and should – look for ways to increase your income over your career. It might take decades. But it makes a huge difference.
And Vince’s investing technique is…boring! Index funds, dollar-cost averaging, buy-and-hold, annual rebalance. Sound familiar?! The boring stuff, while BORING, really does work.
I’m not pulling your leg here with my articles and podcasts about boring, long-term investing. I’m serious. It works. Just look at Vince. Moving on…
On his lifestyle: “We drive old cars and jeans and t shirts are our preferred outfits. We researched our area before buying and our house that cost 350k is now worth about 1.2m. Actually, not the best 25-year return, but we’re very happy here.We want to keep living simply but comfortably. We’ve put 2 kids through college and have no debt. We love traveling but can do it rather inexpensively. In fact, we just spent a month in Portugal for a small amount. So 55/45 it is. THANK YOU!!!!!
(FYI, the housing return Vince mentioned is about 5.5% nominal / 2.7% real annual return. )
The important takeaway is Vince’s choice to drive cheaper cars and wear cheaper clothes than he otherwise could. By my math, you could buy a Corvette on a $500,000 salary. You could fly first class. You could eat caviar. But Vince is an example that wealth is what you don’t see.
“Wealth is created by a slow, steady drip of investment deposits, just like decades of waves carving a shoreline rock. Wealth is compound interest that grows slowly at first, then rapidly in the end. Wealth is what you choose not to spend money on. Wealth is quiet.”
It sounds like Vince still doing what he loves. He’s cutting costs where he can (or where he simply doesn’t care), but then spending where he wants to. That’s bimodal spending. Vince is enjoying the journey.
Vince is a success story. He’s won the game. And now, like a smart investor, he’s opting to “stop playing” by taking some of his investment risk off the table.
Thanks, Vince, for sharing your example with us.
Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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When it comes to supporting a charity, it doesn’t get much more convenient than donating at the card reader in the checkout line. But depending on your motivations and financial situation, it may not be the best approach.
More than two-thirds (68%) of Americans donate to charity at the register of retail establishments, according to a new NerdWallet survey conducted online by The Harris Poll Oct. 10-12. Some give because the cause is important to them, and others give because they feel guilty if they don’t. But whatever the reason, being thoughtful about your donations can ensure you’re giving without breaking the bank.
For customers, these donations likely look like an additional $5 or so on their total, or “rounding up” to the next dollar amount. In either case, the incremental giving adds up to hundreds of millions of dollars each year nationwide.
Many shoppers likely make the decision to donate in the moment. But thinking through why you donate ahead of time can help you make more informed decisions that align with your values and your financial goals.
Here’s how to decide whether you should give to charity on your next shopping trip.
Skip: If you want to have a significant impact and can give more
Small donations at the cash register may add up over time, but making a large donation could be more impactful for the recipient.
About one-third (32%) of Americans donate to charity at retail registers because the cause is important to them, according to the recent NerdWallet survey, and 26% because they like to be charitable. Donating at the register often means sprinkling a few dollars across numerous recipients as you go from store to store. If you want to have a bigger impact on one important cause, a larger donation can be a better fit.
Give: If a small donation suits you best
Donating $5 every few weeks on your grocery run may be easier on some budgets.
One-fourth of Americans (25%) say they give at the register because small donations don’t feel as costly, and one-third (33%) of Americans who donate at the register say they wouldn’t donate to charity at all if they didn’t donate at the cash register, according to the survey. If you already have your card out, small donations are convenient.
These campaigns work for that reason. Albertsons Companies Foundation, the charitable arm of the grocery store chain, raised $43.5 million for hunger relief at cash registers in 2022, according to Engage for Good, a marketing company that helps businesses and nonprofits raise money. That’s in addition to millions raised by the chain for Ukraine aid and other causes.
Skip: If you’re hoping for an easy tax break
Donating to charity can reduce your taxable income, but giving incrementally at the cash register can make claiming this deduction more difficult.
In order to claim a deduction for donations, they must be for a tax-exempt charity that is recognized by the IRS. Further, you must itemize deductions on your income tax return rather than taking the standard deduction. You’ll want to track these donations with documentation such as your credit card or bank statements. All of this is a lot to ask for a small donation at the register. If you want to deduct donations, direct contributions will be less of an administrative hassle.
Give: If it makes you feel good
Giving feels good, and feeling good can promote more giving. It’s a sort of generosity cycle.
A significant body of research supports that giving activates the brain’s reward system, which can lead to greater happiness. And the amount of happiness that comes from generosity isn’t dependent on the amount you give, according to a 2017 study in Nature Communications. In this way, giving small amounts not only adds up for the organizations, but also for the donors.
Skip: If it’s not in the budget
If your current financial situation has you cutting costs to make ends meet, don’t make it harder on yourself.
As we established, giving should make you feel good. But 13% of Americans say they donate to charity at the register because they feel guilty if they don’t, 10% say it’s easier than saying no, and 8% do it because they’re embarrassed to say no, according to the survey. A dollar here or there doesn’t seem like much when things are going well, but every dollar counts when you’re dealing with unexpected expenses, a job loss or other financial strain.
If donating to charity adds financial stress to your current situation, skip it. This isn’t the last time you’ll be asked.
METHODOLOGY
This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from Oct. 10-12, 2023, among 2,096 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.7 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected].
NerdWallet defines generations in the following way: Generation Z, ages 18-26; millennials, ages 27-42; Generation X, ages 43-58; and baby boomers, ages 59-77.
Disclaimer
NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.
“I threw my phone from the roof, and it broke. I guess airplane mode wasn’t working.” Plenty of folks will be traveling soon. Here’s some trivia for tomorrow at the dinner table! (One wonders if residential lending is heading in this direction) … But there are only 12 passenger airlines in the United States. That’s up from 10 just a few years ago but down from about 80 airlines at the peak industry in the 1980s due to a series of bankruptcies and mergers. Four of those companies (Delta, United, American, and Southwest) control 80 percent of the market, with the remaining 20 percent being low-budget airlines that are increasingly struggling. The average airline fare has declined 13 percent over the past year, and that’s been causing issues for the companies that specialize in lower fares, as many of their customers are now seeing the big guys as more accessible than before. (Today’s podcast can be found here, sponsored by Candor. Candor’s patented automated underwriting decision engine, CogniTech, is a state-of-the-art, 100 percent machine platform that can handle infinite loan scenarios. Hear an interview with the STRATMOR Group’s Garth Graham on M&A activity in 2023 and trends in the space heading into 2024.)
Lender and Broker Software, Products, and Services
With increased regulatory focus on property-valuation bias, lenders need robust risk-management processes in place. The recently released interagency proposals on AVM quality control and ROV-process guidance are designed to prevent valuation bias and help ensure industry stakeholders follow fair-lending practices. Watch our complimentary on-demand webinar to learn how you can prepare, and implement the tools needed to support the proposed AVM standards and ROV guidance.* Our experts discuss how to identify potential bias in valuations, ways to mitigate bias risk, how to monitor AVM and appraisal compliance with fair-lending requirements, and more. Watch this timely and important webinar here. *Check with your compliance or legal department for information on complying with applicable law.
Pipeline as dry as your mother-in-law’s turkey this time of year? Moisten it up with LiteSpeed by LenderLogix.
From zero to correspondent in 60 seconds… Building a correspondent channel requires exceptional customer service, precise execution, & immediate responses. Regular way, it’s costly & inefficient. Blue Water has solved this. Our comprehensive Correspondent-as-a-Service (CAAS) solution allows firms of ANY size to quickly streamline their operations and get up and running. Automated bidding provides instant pricing via email, branded portal & bid desk for sellers facilitated by our tape crack features and customizable seller settings. Ingest multi-seller tapes, price different product types, access agency pricing and LLPAs. (“Blue Water”) will integrate with your LOS for point and click onboarding, help you transfer loans, and manufacture clean product. Choose an optimal Servicing execution, best-ex in-bound loans and drive volume. Make $, grow your business and pay as you go with no upfront cost. From pricing, valuations, transactions, transfer, QC, to boarding, Blue Water makes it easy to scale up your business. Connect with our expert Sales Team.
Orion Lending slashed its annual expenses by $300,000 and boosted its conversion rate by 32 percent using Truv’s income and employment verification solution. “Truv transformed our verification process, expanding our reach and cutting costs,” asserts Richard Plummer, EVP of Operations at Orion Lending. Stop Overpaying. Highlights include impacting $300,000 annually in savings as a result of increased conversion rates, 32 percent end-to-end conversion rate, an increase of $100 in savings per application, implementing Truv in a couple of weeks, and reduced the loan manufacturing time and approval process by several days. Contact TRUV today for your income, employment, insurance, and asset verifications.
Miscellaneous Wholesaler, Correspondent, and MI News
Angel Oak Mortgage Solutions announced the release of its new DSRC Loan Calculator, providing borrowers with a quick and straightforward tool to estimate whether or not a property’s expected cash flows are sufficient to repay the mortgage loan. In tandem with Angel Oak’s DSCR Loan program, the DSCR Loan Calculator helps you show borrowers what their monthly fixed payment or monthly interest only payment would be depending on the option they seek.
Fifth Third Correspondent Lending News 2023-7-11.13.23 discusses Final Document Reminders, and Fannie Mae Products 2-4 Unit LTV.
PRMG Product Update 23-52 clarifies information on Expanded Access including multiple Financed Properties requirements for Pime and Plus connect, prepay is no longer allowed in KY and LA. Also, due to prepay not being allowed in KY, Investor Premier is no longer eligible in KY. Updates to Choice Products Profile and/or Expanded Guidelines which includes revisions to investment properties standard prepay penalty amount and increased maximum interested party contributions. Revised guidelines for Short Term Rental income. Updates to Product Profile and/or Expanded Guidelines on Choice Stretched Prime and Choice Non-Prime, Choice DSCR, and Closed End Second Products.
Reach more clients with loan programs that allow Manufactured Homes. LoanStream Mortgage knows the complexity of financing these types of homes and can help your borrowers attain a mortgage by offering a variety of loan solutions to fit their needs. Loan Programs allowing Purchase & Refinance Manufactured Homes include Conventional – Fannie Mae FNMA, RefiNow, FHA, VA, MaxONE. The following are not allowed on these programs: Non-QM / NanQ, Conventional – Freddie Mac – FHLMC, USDA, and Jumbo ONE.
Did you know that borrowers can turn cash-only properties into their dream homes with a renovation loan? When homes don’t meet the minimum property requirements (MPR), Plaza Home Mortgage® has the solution. Renovation loans can help elevate homes to meet MPR standards, and the improvements can even take place after the closing process. What’s more, qualified borrowers can be approved based on the future value of the improved property, making this option accessible to even first-time homebuyers. Renovation is becoming an increasingly popular strategy in today’s high-cost, tight inventory housing environment. Plaza Home Mortgage® makes it easy to capture more business in this growing lending segment. We offer multiple renovation loan options and have a department of dedicated renovation specialists to walk you through every step.
An ADU, or Accessory Dwelling Unit, is defined as an additional unit on a residential lot in addition to the main house (or main multi-family building). Recently in Los Angeles County, Orange County and California as a whole, new laws SB9 & SB10 and guidelines regarding ADU’s have been modified to allow for more ADU construction as a way to help solve the CA Housing shortage. The newer laws allow for much higher density in transit rich areas or urban infill areas. Visit 17th Street Capital for Lending Criteria & Guidelines.
The availability of 2-1 Seller Paid Buydown options with CalHFA programs from Kind Lending. This new option will be offered on both CalHFA Conforming & CalHFA FHA 1st loans: the Seller or Agent may provide buydown funds, subject to the standard IPC limits, Lender paid buydowns are not offered. Buydowns are allowed for conforming and high balance loan amounts. The borrower is qualified at the note rate fully amortized (not the buydown rate).
National MI announced updates and clarifications regarding underwriting changes to support affordable housing initiatives, effective November 18, 2023. View National MI Announcement Bulletin: UW 2023-04, and Servicing Guide for details. Additionally, National MI posted a Rescission Relief Guide in alignment with Fannie Mae and Freddie Mac retirement of Covid-19 forbearance requirements for all forbearance evaluations with an evaluation date on or after November 1, 2023, including evaluations for new forbearance plans and evaluations for extensions to existing Covid-19 forbearance plans.
Arch MI noted, “In response to Fannie Mae’s recent Desktop Underwriter Release Notes expanding LTV ratios for 2- to 4-unit properties and to further support affordable housing, Arch MI reminds our customers that our EZ DecisioningSM Program allows 2 to 4 units at a maximum 95% LTV ratio as follows…” (See the bulletin for full details.)
Radian MI revised its Eligibility Matrices to include One Underwrite (AUS) to reduce the minimum FICO from 700 to 620 for 3-4 unit properties.
MGIC reminded clients of the tools that can help turn renters into first time home buyers.
Capital Markets
Markets largely shrugged off the release of Fed minutes from the November meeting yesterday as old news with no surprises. Minutes showed that policymakers see room for additional tightening if incoming data shows insufficient progress toward slowing inflation, but they would also like to see more evidence to suggest that inflation is slowing toward the central bank’s target. Yes, the markets are pricing in rate cuts as early as March of 2024, but the markets and the Fed have been on different pages for most of the post-pandemic economy. Higher-for-longer rates have created a frozen U.S. housing market as homeowners are reluctant to sell and buyers are squeezed. The U.S. 30-year fixed mortgage rate has risen 460 basis points over the past three years.
Existing home sales fell 4.1 percent in October to a seasonally adjusted annual rate of 3.79 million, according to the National Association of Realtors. That is the slowest pace of sales since August 2010. Sales were down 14.6 percent from one year ago, though the median home price rose 3.4 percent to $391,800, the fourth consecutive month of year-over-year price increases. Sales continue to be hurt by persistent lack of housing inventory, high prices, and the highest mortgage rates in a generation. The inventory of unsold existing homes grew 1.8 percent from the previous month to the equivalent of 3.6 months’ supply at the current monthly sales pace. Multiple offers are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.
As U.S. bond yields continue to fall, mortgage applications increased 3.0 percent from one week earlier, the third straight increase according to MBA. That kicked off today’s economic calendar, and was followed by October durable goods orders (soggy), and weekly jobless claims (209k, down from 231k, better than expected). Later today brings final November Michigan sentiment, Treasury announcing the auction sizes for next week’s 2-, 5-, and 7-year notes, and Freddie Mac’s Primary Mortgage Market Survey. Unlike Friday, today is not an early close, but it is likely to trade like one. We begin the last full session of the week with Thanksgiving looming tomorrow and an early close on Friday with Agency MBS prices better .125-.250 and the 10-year yielding 4.38 after closing yesterday at 4.42 percent.
Employment and Transitions
“It is with great pleasure that GHMC TPO announces the latest addition to our esteemed sales team: Mr. Tom Carroll. Tom assumes the role of National Account Executive, overseeing our Midwest region. We are excited about Tom joining our team and eagerly anticipate the opportunity for you to benefit firsthand from his experience and exemplary customer service. Furthermore, GHMC TPO has successfully completed the transition into the First Colony Mortgage family. We are on a mission to be the first choice of loan officers nationwide by offering consistent competitive pricing, superior service, and best in class technology. Check us out here or email Rex Hagood.”
“SWBC Mortgage fosters an environment where our Loan Officers can thrive and continue to provide exceptional service to their clients and partners, even during tough times. One of the most successful ways our team has stayed connected and engaged this year is by hosting educational workshops across the country. One in particular features Blake Hastings, SVP Corporate Strategy & Chief Economist at SWBC. As keynote speaker of 12 workshops, he has covered local and national economic analysis and provided dynamic forecasts for the coming months. Support is more important now than ever before. Because SWBC Mortgage has the right resources available to our teams, we are able to navigate challenges with resilience, while continuing to grow in a down market. To learn more about career opportunities at SWBC Mortgage contact Scott Brown, EVP of Retail Sales or visit us here.”
Movement Mortgage is helping builders and buyers navigate the high-rate environment with its new Lock It & List It program. Designed for new home builders, the program allows builders to lock in and buy down an interest rate today, PLUS pay up to the maximum amount of seller contributions toward closing costs. With Lock It & List It, builders can attract new buyers with competitive interest rates and closing cost savings, give buyers rate confidence with one free float down, and meet many buyers’ needs as the program is available for 30-year conventional, VA and FHA loans. By empowering builders to enhance home affordability and attract a broader pool of buyers, Movement is revolutionizing how builders navigate the complexities of today’s real estate landscape. Learn more here and contact Movement today to get locked in!
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Kansas City, MO is the sixth-largest city in the Midwest with over 481,000 people calling it home. Like all big cities, Kansas City has some great amenities like shops, entertainment venues and incredible restaurants.
Kansas City has some perks that not every large city in the U.S. can boast, though. Like the infrastructure — it’s designed to make driving less of a hassle. Raise your hand if you can’t wait to stop spending hours in bumper-to-bumper traffic!
Another perk of living in this city is the low prices. The cost of living in Kansas City, MO is 6.3 percent lower than that U.S. average. That number has dropped in the last year, too, by 2.3 percent.
To find out whether this city is for you, you’ll need to see if it meshes with your budget. Can you really afford the average rent in Kansas City, MO when you add the following factors into the total cost of living?
Housing costs in Kansas City, MO
The biggest expense in your monthly budget is housing costs. Where you live and what you pay for rent will have a direct and sometimes radical impact on the cost of living in Kansas City, MO.
Housing costs in the city are only 1.6 percent lower than the national average. Interestingly, this is a 13.8 percent increase over the cost of housing in 2020. One reason for the increase is that the demand for housing is up but the supply is not meeting that need.
The average rent in Kansas City, MO is $1,540 per month. However, there are neighborhoods throughout the city where you’ll find apartments for much higher (almost $1,000 more) and those for much less. If you look for apartments in the River Market area, you’ll be happy to learn that the average rent in that neighborhood is $2,338. On the other hand, if you look in the River View neighborhood, you’ll find an average rental rate of $720 per month.
Average rent prices in cities near Kansas City, MO
If you’re not sure you want to live directly in this city or aren’t happy with the average rent in Kansas City, MO, another option is to find an apartment for rent in nearby cities. The following cities range from 15 minutes to more than an hour away from Kansas City, so far enough from the hustle and bustle but close enough to still enjoy time spent in the city regularly.
Home prices in Kansas City, MO
You aren’t limited to renting in Kansas City. You might find that purchasing a home is, overall, more affordable for you and your family.
According to Redfin, the average cost of a house in Kansas City is $250,000, an increase of over 11 percent since 2020. As with rentals, the housing market is very competitive with most homes getting multiple offers and selling for 2 to 6 percent higher than the asking price.
Monthly mortgage rates are a little cheaper than the average rent in Kansas City, MO. You’d pay $1,079 per month with a 5 percent down payment or $909 with 20 percent down.
Food costs in Kansas City, MO
Kansas City is one of those awesome cities where you can get big city amenities but you don’t always have to worry about big city prices. Take food costs as an example. On average, they’re 11.4 percent lower than the U.S. average, which is a somewhat significant decrease over last year’s costs (5.7 percent higher).
In fact, if you love to dine out, you’ll be happy to know that there are a lot of amazing restaurants that cater to people on a budget. Like Happy Gillis Café + Hangout, where you can get a delectable dish of biscuits and gravy for $5 or a salad for $4.50. Or, try their Roasted Heirloom Tomato Grilled Cheese, made with farm toast, cheddar, roasted heirloom tomatoes, parsley, garlic, scallions and greens — all for $9.
If you’re in the mood for some fine dining, international cuisine or other specialty eateries, you won’t be disappointed. Kansas City offers Italian, gourmet barbecue, classic fare (think 1950s cocktail party) and much more.
Buying food in Kansas City, MO
If you’re like most people, you’re re-thinking how to maximize your budget since so much is up in the air during the pandemic. Cooking most of your meals at home is one way you can cut food costs significantly.
Let’s take a steak dinner for example. In the U.S., a good steak dinner can cost between $28 and $119, depending on the cut of meat and the restaurant.
If you make a steak dinner for two at home, you can expect to pay:
Steak: $22.06 (for two steaks)
Potatoes: $2.43
Lettuce (for a salad): $1.46
Sweet peas: $0.98
Your total comes to $26.93. The U.S. average for the same meal (cooked at home) comes to $30.66. Not only will cooking at home save you a few bucks (compared to the national average), but you’ll still be able to enjoy an incredible meal without having to leave the comfort of your own home — or paying $119 for the same meal.
Utility costs in Kansas City, MO
Besides food, utility costs take up another large portion of your monthly budget and can increase the cost of living in Kansas City, MO. Depending on whether your landlord covers these costs or not, utility fees can even increase the average rent in Kansas City, MO.
Overall, utility costs here are 3.2 percent lower than the national average. The monthly median energy prices are around $157.44 in this city, whereas the U.S. average is $161.20. One reason for the lower costs is power usage, which might be lower in this city than others because the weather here isn’t quite as extreme in other parts of the country.
Other utility fees to add to your budget include cell phone service (between $10 and $90), water and sewage (average = $109.67 per month), internet (average = $60 per month) and cable ($25 to $65).
If you’re looking to save on utilities (and who isn’t), you might want to look for apartments in Kansas City, MO that offer eco-friendly amenities. The savings can add up over time.
Transportation costs in Kansas City, MO
The best way to get around Kansas City is in a car. The walkability and bike scores (48 and 43, respectively) are relatively low, mainly due to the lack of bike lanes. There are some walkable neighborhoods within the city — Old Westport, South Plaza and Downtown Loop — where you can get some exercise and do a few errands.
The public transit score is lacking as well (37), though there are some options like the Kansas City Regional Transit company (RideKC). The company has a Park and Ride option and multiple buses. Their Transit app helps with planning your ride as it provides real-time information. You can also pay for fares and passes via Freedom On-Demand.
Most residents own their own vehicle since doing so gives them the freedom to come and go according to their schedule, not that of a bus company.
Transportation costs in Kansas City, MO are 11.8 percent lower than the national average. Fuel prices are currently at $2.50 per gallon, compared to $2.76 nationally. The national average for maintenance like tire balancing is around $52.40. The cost in Kansas City is $44.60.
Other transportation costs that can increase the cost of living in Kansas City, MO include parking ($6 to $20 for 2 hours), vehicle registration fees and insurance.
Healthcare costs in Kansas City, MO
Kansas City healthcare costs are an average of 9 percent lower than the U.S. average. For example, a trip to your doctor for your annual check-up will cost around $86.34. Elsewhere in the U.S., the same appointment costs an average of $112.81, though some people pay upwards of $234.
Over-the-counter medications are around 7.08 percent less than the national average, while prescription costs are about the same as the U.S. average (only 0.035 percent difference).
It’s important to note that determining healthcare cost averages is often difficult. What you pay compared to your neighbors is going to vary, sometimes drastically so. The reason for this is not just the insurance company you choose or the plans they offer. Some people will have higher costs because they don’t have insurance. Others because they have chronic health conditions. Finding out how healthcare costs impact the cost of living in Kansas City, MO will take some sleuthing, but it will be worth it to see if living in this city is within budget.
Goods and services costs in Kansas City, MO
Miscellaneous goods and services are, on average, 7 percent cheaper than other cities in the U.S.
It can be hard to figure in all the costs that go into living your life in a big city, but you can get a somewhat accurate estimate by looking at the things you purchase with relative frequency. Things like:
Petcare (vet services, grooming, etc.)
Gym fees and exercise classes (or Peloton membership fees)
Plants, potting soil and anything else you need to create and develop an apartment patio garden
Let’s say you want to take your partner out to a movie. The tickets will cost around $21.42. The national average for a Saturday trip to the movies runs about $22.24 for a couple.
If you’re a fitness buff, the average gym membership in Kansas City is $45 per month. A yoga class will cost you around $15.60, which is $0.60 higher than the national average.
Though it’s not easy to try and calculate everything you spend your money on each month (or quarter or year), it’s important to get a general idea of how much you spend on miscellaneous goods and services. These fees can significantly increase the cost of living in Kansas City, MO, and might even make the average rent in Kansas City, MO out of reach.
Taxes in Kansas City, MO
Another factor to consider in determining the cost of living in Kansas City, MO is the tax rate in that city, as well as county and state taxes.
Kansas City has a 1 percent earnings tax rate. Everyone in the city who earns an income (even if they work outside the city) must pay this tax, which covers the city’s cost for:
Snow removal
Road repair
Trash collection
Police, firefighter, ambulance and paramedic services
Historic preservation
Code inspections
As a resident here, you’ll also pay 8.86 percent sales tax. The state sales tax in Missouri is 4.23 percent. City and county taxes make up the additional 4.63 percent. How does this translate to cash? Let’s say you find a must-buy item with a $1,000 price tag. In addition to paying $1,000, you’ll also pay $88.60 in sales tax.
Finally, if you decide to purchase a home in Kansas City, MO, you’ll have the added responsibility and expense of paying residential property taxes. The Jackson County tax rate is 1.35 percent. If you buy a $250,000 home, you’ll pay a little under $3,400 per year in property taxes.
How much do I need to earn to live in Kansas City, MO?
Whether you can afford the cost of living in Kansas City, MO depends on what you earn. On average, residents of Kansas City earn $54,194 annually. This is slightly higher than the national average of $51,916.
If you earn the average annual income, can you afford the average rent in Kansas City, MO? Rent in this city is approximately $1,540 per month or $18,480 per year. This is nearly $3,000 more than the oft-recommended 30 percent rental budget.
Though the price is higher, it doesn’t mean you can’t afford to live in Kansas City, MO. If you’re comfortable cutting costs in other areas (walking and biking as much as possible to save on fuel or eating out less frequently), you can afford the cost of rent in this city. Also, remember that there are several neighborhoods in Kansas City and suburbs around it that offer great rentals for lower prices.
If you’re curious whether you can afford to live in this city, be sure to check out our free rent calculator.
Understanding the cost of living in Kansas City, MO
There’s no flat rate when it comes to the cost of living in Kansas City, MO. As nice as that would be (talk about easy calculations!), we all have varying needs. And those needs result in different housing, food, tax and healthcare costs.
That said, for many people, the cost of living and the average rent in Kansas City, MO is quite affordable. Much more so than many large cities across the country.
If you’re one of those people who want to take the plunge and move to this fair city, make sure to check out our rental listings to find apartments for rent in Kansas City, MO that fit your budget.
Cost of living information comes from The Council for Community and Economic Research.
Rent prices are based on a rolling weighted average from Apartment Guide and Rent.‘s multifamily rental property inventory of two-bedroom apartments as of August 2021. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.