Money Tips Archives - Hanover Mortgages

March 21, 2021

Tips for Improving Your Credit Score

Young man in denim shirt on the phone with credit card company, working to improve his credit score When you find an apartment you really love, you don’t want to give up on it due to a shaky financial track record. Even if you have a less than stellar credit history, there are many things you can do to improve your score in both the short, and long term. Follow along as we dive into how your credit score works and learn what you can do to work on improving your credit score, no matter your financial background.

Credit Score 101

What makes up your credit score anyway? Your credit score is a grade that tells lenders how you stack up against other potential borrowers. Basically, it’s a rough indication of how likely you are to repay a loan on time. The FICO credit score is an industry standard that is used in over 90% of lending decisions and by all three major credit bureaus. So, this score is most likely what your landlord sees. Don’t be caught off when they do–visit ApartmentSearch’s Moving Resources to find out what your credit score is right now, for free. If your credit score isn’t what you (or your landlord) had in mind, then keep reading and we’ll tell you how to work on improving your score in each of the five areas that FICO considers.

Improving Your Score

1. Make payments on time, every time.

Your payment history is the single most important factor contributing to your credit score. Don’t worry, a few missed payments here and there won’t damage your credit score beyond repair. Try these tricks from Forbes to help your score recover from a spotty payment history.

In the short run…

Get current! If you have any outstanding or missed payments, pay them off as soon as possible.
Negotiate! If you have a mostly clean payment history, ask your lenders if they will “erase” a missed payment from your record. Explain to them why your payment was late (you lost your job, had an unexpected expense come up, like a medical bill etc.) and offer to pay off the remainder of your balance in exchange for a clean slate.

In the long run…

Set up automatic payments for your credit accounts so that you never miss another payment again!

2. Avoid maxing out your cards.

Having a lot of loans, or even a lot of credit card debt, won’t necessarily hurt your credit score. With that being said, lenders will look at your credit utilization ratio (the percent of your total available credit that you have spent) to see what kind of relationship you have with debt. Do you rely heavily on credit to make monthly purchases? Do you frequently use up most of your credit each month? These behaviors are red flags that could be hurting your score, even if you pay off the balance in full each month. Here’s how you can reduce your credit utilization ratio to improve your score.

In the short run…

Raise your credit limits. If you have a good payment history, ask your lender to raise your total credit limit. This will lower your credit utilization ratio, and you won’t even have to change your spending habits.
Make two payments a month. The first payment will lower your Credit Utilization ratio, and the second will prevent you from paying a late fee and any additional interest.
Don’t close unused cards. Make a few small purchases on them each month to keep them active. Then pay them off to keep your balance down.

In the long run…

Keep your balance on credit cards as low as possible.
Pay off debt instead of shifting it around. The same amount of debt on fewer cards can actually hurt your credit score, says FICO.

3. It’s OK to be the new guy on the block.

If you are new to the credit market, or if you’ve never had a line of credit before, this will likely impact your credit score. Thankfully, the length of your credit history only accounts for a small portion of your overall score.

If you’ve never had a credit card…

Open one as soon as possible! Use it responsibly and make payments regularly and consistently.
Become an Authorized user. If you don’t qualify for your own credit card, ask a relative with a strong credit history to make you a user on their card. Again, be responsible and make all your payments on time. Over time, you will accumulate credit history that will enable you to open up your own card.
Be wary of new cards. Opening up new lines of credit can make lenders nervous. Without a stable payment history, who knows if you’ll be able to meet this new financial obligation?

In the short run…

Don’t open up lots of new credit cards at one time. Especially if you have a relatively short credit history, this can reduce your credit score.
Don’t open new credit cards that you don’t need to increase your credit line. This could negatively impact your credit score in the long run.
Know that checking your credit score WILL NOT lower it.

In the long run…

Only open up new lines of credit as you need them. If you can, use the credit you already have to make new purchases.

4. Mix it up, but stay on top of your accounts.

The two basic forms of credit accounts are revolving accounts (like your credit card) and installment accounts (such as student loans or mortgages, which you take on as a lump sum and then pay off over time). A mix of both demonstrates responsibility and financial security, provided the accounts are in good standing, says Credit Karma.

In the short run…

Consider paying for high ticket items on an installment plan. If you are going to make a big purchase (like a new computer or a piece of furniture) consider asking the store to put it on an installment plan, rather than paying for it with your credit card. Retail installment plans often have low or zero interest rates, so you might even save money in the long run.

In the long run…

Don’t open up lines of credit you don’t need. It won’t help your credit score to “mix it up” if you don’t use or pay off the new credit accounts.

Now that you are armed with knowledge about how to improve your credit score, it’s time to put it into practice! Take it a day at a time and you’ll soon see: repairing your credit may not take as long as you think. Head to ApartmentSearch.com to pick out your next dream apartment and give yourself a fun goal to work towards!

Source: blog.apartmentsearch.com

March 4, 2021

4 Things to Know Before Renting an Income-Restricted Apartment

Family sitting on couch in stylish income restricted apartment There’s no doubt about it: Like pretty much everything else in life, the cost to rent an apartment in the U.S. is going up.

Median monthly rent for U.S. apartments rose by 15 percent from 2000 to 2016, according to Harvard University’s Joint Center for Housing Studies. During that time, the median monthly rent went from $850 to $980.

To reduce the cost of an apartment, some renters turn to something called income-restricted housing. At complexes that offer income-restricted apartments, the monthly rental amount takes into account the renter’s income.

How does all of this work? Here are four things you should know before renting an income-restricted apartment.

1. Income-restricted apartments are designed to be affordable.

Income-restricted apartments are meant to help lower-income people afford a place to live. If you qualify for an income-restricted apartment, the savings can be significant.

To be approved for an income-restricted apartment, a household’s gross annual income must be at least 50 or 60 percent less than the median income of the area where you’re looking for an apartment. This percentage depends on the landlord and the type of unit you’re considering. The U.S. Department of Housing and Urban Development (HUD) sets the income guidelines each year.

Here’s an example of how income-restricted housing works.

As of April 2018, a single person making 60 percent of the median income in Phoenix would pay $777 for a one-bedroom apartment or $933 for a two-bedroom apartment in Phoenix, according to the Arizona Department of Housing.

By comparison, the average April 2018 rent for a one-bedroom apartment in Phoenix was around $860 and around $1,000 for a two-bedroom apartment.

The rent for an income-restricted apartment doesn’t go up or down based on your income.

So, if you pay $777 a month for a one-bedroom, income-restricted apartment that’s identical to the one-bedroom, income-restricted apartment next door, your monthly rent also is $777. It doesn’t matter that your neighbor’s take-home pay is slightly more than your pay, as long as both of you meet the income guidelines.

2. The landlord of an income-restricted property will check your background.

As apartment landlords usually do, the landlord of an income-restricted property will make sure you can afford the rent by verifying your employment and income. This also allows the landlord to confirm that your income matches what’s required for an income-restricted apartment.

In addition, the landlord normally will look at your credit record, rental history, and criminal background before approving your rental application.

By the way, don’t lie about income or anything else on your application. If the landlord discovers the lie before you sign a lease, your application could be rejected. Or if the lie is uncovered after you’ve signed a lease, you could be evicted.

3. Income-restricted apartments aren’t public housing.

Income-restricted apartments are owned and operated by private landlords.

But if you live in public housing, a government-run housing authority owns your building and is your landlord, according to the Massachusetts Law Reform Institute. In a few cases, a private company manages the property but the housing authority still owns it.

Typically, rent in public housing is based on a percentage of a renter’s annual income, so one renter might pay a lot less than a neighbor does for an identical apartment. This is known as income-based housing. Most residents of public housing pay 30 percent of their adjusted gross income, which is gross income minus tax deductions.

4. Income-restricted apartments often look like more expensive apartments.

In many cases, you can’t tell the difference between an income-restricted property and a traditional property, since they often appear a lot alike both inside and outside.

Here’s a description of an income-restricted apartment community in Texas:

“Beautifully landscaped grounds contain a swimming pool, picnic area, and a playground. We provide a fantastic clubroom with full kitchen, a fitness center, and an on-site laundry facility. Our apartments offer walk-in closets, large patios, fully equipped kitchens, and full-size washer/dryer connections.”

Sounds pretty great, right? Income restricted rental programs may be more common than you realize. Rental companies will often offer conventional and income restricted apartments side by side. You just have to know where to look and ask! Even if you’re not eligible for such apartments in your area, you can still find affordable apartments on ApartmentSearch. Search for apartments by price and once you sign your lease, get paid $200 in rewards.

Source: blog.apartmentsearch.com

February 26, 2021

How To Make Extra Money With A Home Bakery Business

Do you want to learn how to make extra money by starting a home bakery business? Here’s the equipment needed to start a bakery, food laws, tips on pricing your baked goods, and more. Please enjoy this guest post from Denise Treco. Denise ran a home bakery as a side hustle, and today she is here to help you learn how to start a successful home bakery business as well. Enjoy!

If you love to bake, you probably had some friend or family member tell you should open a bakery.

Maybe that is your ultimate dream—whether it is or not, there is a way to take your passion for baking and turn it into a profitable side hustle. I am talking about a home bakery.

Under cottage food laws, which vary by state, you can operate a home bakery. Before I go deep into the details of starting a legal home bakery, I will share a little bit about my bakery experience.

I became a first-time homeowner so that my mom could live with me after my dad passed away. You know how everyone tells you owning a house can be expensive with repairs, taxes, etc.? Well, everyone was right.

I found myself in a position where I needed to make extra money outside of my 9-5 job as a marketing director for a nonprofit to support my mom and me.

I guess I should go back a little further to say how much I enjoy baking.

I was the person in my family who brought dessert for every holiday gathering or friend’s party and always made a birthday cake for my colleagues.

It never really occurred to me to use my hobby as a side hustle until I thought about ways to make extra money.

I started a legal home bakery, where I earned about $1,500 to $1,800 per month. I followed all the steps below, and after three years, I grew my business into a retail bakeshop, which I owned for about six years before I sold it.

There are benefits to starting a home bakery, but it is essential to research and follow your local food laws.

The beauty of it is that you can build it slowly or move more quickly if money is imperative— and you get to do it all from home.

The investment is relatively low, assuming that you own an oven, cake and cupcake pans, cookie sheets, a mixer, and a smartphone with a camera.

If I could do it, you can too.

All you need is a passion for baking, a few essential tools, your tried and true recipes, and the ability to promote yourself and your work to find customers.

Let’s take a look at the steps you need to take to become a home baker and grow your bank account in the process.

Related content:

How to start a home bakery to earn extra money

All good things need a plan, so start dreaming about it and then start writing your dream down.

The thing about plans is that they must be realistic, and during the first months of managing your very own home bakery, you will probably be overwhelmed.

The best way to plan for this is to take it one day at a time in the beginning. After you get experience working with a few customers, you can think a bit further and plan ahead.

Later on, you might be in the position to decide whether you want to dedicate yourself to your business full-time or you prefer to keep it as a part-time, occasional job.

Some crucial first steps to starting a home bakery are:

Researching your local cottage food laws
Determining what’s on your menu and where you need to work on fine-tuning your skills
Figuring out how to correctly price
Making yourself and your products known

Know your local food laws

You must understand the local laws in your area around owning a home bakery. You are allowed to legally bake and sell from your kitchen as long as you follow your state’s food laws. I should note that New Jersey is the sole exception.

These state regulations, called cottage food laws, are guidelines around licenses, inspections, what you can and cannot sell, how much you can earn, and if/how you can collaborate with businesses like local coffee shops, among other specifics. Visit Forrager.com for a detailed breakdown of the laws in each US state.

For example, Texas has no permits, licenses, or inspections beyond a required basic food handlers’ certification. Your gross annual income from the sales of these foods must be $50,000 or less.

Whereas in Oklahoma, the laws are fairly restrictive, with only certain types of baked goods allowed to be sold, and sales are limited to $20,000 per year, but no license from the health department is required.

You must learn what foods you can sell and what is not allowed. Generally, if a food requires refrigeration, freezing, or specific handling to remain safe, it’s probably not allowed.

Another important note is that some states require that the home be visited, inspected, and approved before you start.

If required, a local inspector will check your kitchen to ensure that all the rules are followed. Knowing that an inspector would critique my kitchen seemed so scary when I was preparing for the visit. But I followed my state’s guidelines, and it was straightforward and, ultimately, stress-free.

Some states require that the house is free of pets at all times. Others require simply that a pet is kept out of the kitchen.

In many states, home bakeries need to have a Food Safety Certification and depending on the state, the rules to obtain one can vary. You may need to take a class, an exam and pay a fee. The training ensures that you know how to prepare and store foods safely and keep your kitchen sanitary.

Starting a new venture can be a little daunting at times.

My advice is to take really good notes on every conversation you have. If you talk to your local board of health to clarify one of the guidelines, note who you spoke to and the day and time.

Always be professional and pleasant when reaching out to the county personnel in charge of cottage food operations. In my experience, it comes down to a small group of people who regularly deal with these issues. I found them to be very helpful and patient when I was confused and needed help.

Setting up your home bakery business

Choose a business name that no one else owns, with available social media handles and a website domain.

It’s also a good idea to have a personal connection to the name. Maybe a lovely story you can share with potential customers, use on social media, your website, or in the press.

Open a separate business bank account and track all your expenses. You may want to talk to legal and financial advisors about structuring your business, whether it be a Sole Proprietorship, LLC, or some other entity, and do some additional research about tax implications.

Essential tools for a home bakery business

If you are a hobby baker, you most likely have many of the necessary tools you need to start.

One mistake I made when I started is that I purchased a lot of stuff because “now I had a bakery business.” Truthfully, I could have waited until I needed them, but I got caught up in the idea.

The lesson here is that you may have to add tools or equipment, but be thoughtful about it before making those purchases. You would be amazed at how efficient you can become with constraints.

Here are the tools I found necessary:

Stand mixer (Yes, you can get away with a hand mixer, but a stand mixer is so much easier and will save you time.)
Oven
Oven thermometer
Cake and cupcake pans
Mixing bowls
Cookie sheets
Measuring spoons and cups
Spatulas
Whisk
Offset spatula

Depending on what’s on your menu, you might need more, such as a rolling pin and pie dishes, pastry bags, cooling racks, extra bowls for your mixer, silicone baking mats, or a digital scale.

Ingredients and supplies

The cost of ingredients can quickly add up when you become a home baker. Look at the price of a pound of butter. You will need to research options and look to buy all your ingredients at the lowest possible price.

And, all your baked items will need to be packaged or, at the very least, boxed. There are so many online resources available for supplies in addition to what you can find locally.

Facebook groups and other online resources can be very helpful, especially for home bakers. Even Facebook groups have specific ones based on the state, where you can ask for help or clarification on local laws and source ingredients and supplies.

This is also where your menu comes into play, which we will discuss next. If you have a menu that requires eight box sizes or several specialty ingredients, you can see how quickly the expenses add up, and you also need the space to store it all.

How to decide on what products to sell?

Most home bakers become overly enthusiastic when thinking about their menu and don’t consider the potential challenges with having too many options.

Many new home bakers offer everything and the kitchen sink trying to hone in on what customers want.

It’s understandable but creates a strain on your time and resources.

Let’s break this down.

Assume your menu has cakes, cupcakes, cookies, scones, and pies. And, you have orders on one day for a pie, a cake, 12 scones, and 12 cookies. That’s a lot of different doughs and batters you have to make, and you would need different sized boxes.

What if your menu had cakes, cupcakes, and cookies? And your cakes and cupcakes were the same batters. You could double or triple your cake batter for multiple cakes and use that batter for cupcakes. You could measure your ingredients the day before or make the batter ahead of time. Small efficiencies add up over time.

Think about which of your baked goods get you consistent raves from family and friends. Is there an item you get asked to make over and over again? This favorite could be a signature item that becomes the cornerstone of your menu.

And be honest with yourself about your skill level. If you have never decorated a cake before, don’t start a home bakery with fancy iced cakes as your main menu item. One great thing about this business is that there are many menu options, including cupcakes, breads, cakes, scones, muffins, decorated cookies, drop cookies, pies, etc.

Don’t start with an overloaded menu, but aim to figure out a few types of treats to launch with. You can always add items as you go. You will have to be flexible as you find your rhythm and get feedback from paying customers.

Also, be sure to pay attention to what baked goods are available in your local area. Think about whether you can fill a need or put your unique spin on a product.

It is really important to remember: just because you don’t know how to do something now doesn’t mean you can’t learn.

What about labels?

You need labels.

I would put labels on anything, even on the cakes that I send to my friends.

People who will be eating your products need to read the ingredients to prevent a possible allergic reaction.

As with everything, each state has its requirements, even in the labeling department.

Generally, a label should contain at least these basic elements:

Name of product
A complete list of ingredients. This can be tricky because you will need to list even the ingredients in the ingredients. So, if you use Buttermilk, you should list everything in it. (Cultures, Milk, Sodium Citrate, salt, or what other ingredients you read on the label).
Allergens like Milk, Gluten, Egg protein, Lactose, Nuts, Seeds., etc., should always be listed
Quantity
Your business name and address

Pricing your goods

Determining how much to charge for products freaks most people out. I get it, especially when starting, you have no point of reference.

The pricing formula has a few key components to factor in:

The cost of the ingredients
The number of hours that it took you to prepare the product
The expense of the packaging materials
The cost of gas and electricity used (make assumptions to start)
Extra services like delivery
Your profit

Your friends and family will probably be among your early clients.

At first, you might even bake for free, but try to avoid doing that once you launch the business. Make sure not to bake for free too often because the ingredients cost money, your time costs money, and the whole idea is to make more money!

Placing a number on your work can be difficult. Most people tend to undervalue their work because they don’t recognize the value of their time. Don’t fall into this trap!!

If you factor in taking the order, shopping, preparing, baking, decorating, packaging, and dishwashing, the time quickly adds up.

You need to remember that if someone went to a retail bakery and selected a cake, they would pay the amount as marked. A customer wouldn’t question it. There shouldn’t be a negotiation for your prices just because you are a home bakery.

In the beginning, you might want to start lower than your target, but you still need to charge a reasonable price. Most of your customers will recommend your services to friends and family, and they will also talk about money and share how much it costs.

You may choose to offer discounts to family and friends. Once you launch, determine your friends and family policy so you can set expectations and avoid confusion and hurt feelings.

Pricing your products too low might create a vicious circle in which all customers will expect to pay a lower price. If you are way undercharging, customers might also think that your product quality reflects the low price. You don’t want to build a reputation as “the cheap baker.”

Proper pricing is a skill.

The more you do it, the better you get at it. Be thoughtful at the start, and as you gain confidence and skills, you can evaluate your prices as you go.

Marketing your home bakery

Now comes a crucial part that will be one of the most significant factors in your success: marketing.

You need customers who will buy your baked goods.

While your early customers will be friends and family, the goal is to build awareness to bring in a regular stream of buyers.

Here are several ways to start marketing your bakery:

Tell everyone you know that you have started a bakery business. This might be hard at first because you may be shy about talking about yourself. Look at it that you are providing a valuable service that people need. Your baked treats will add something special to holidays, birthdays, and anniversaries.
Treat your customers well—every time. Exceptional customer service is a potent marketing tool. Forbes shared a study that said people are more willing to share positive experiences than negative experiences on social media. If you go above and beyond for your customers, they will remember it. And recommend you.
Create social media profiles on Facebook and Instagram, where you share your menu, photos of recent orders, testimonials, and show your personality. Ask your friends and family to like your posts, share your page, and comment on your posts. This might not seem like it will bring you customers, but it will help the algorithms learn that you are an active business.
Leverage local Facebook groups. There is a Facebook mom group in my town that allows businesses to post once a week. Increase your visibility by being active in the group. Always follow the rules of the group; otherwise, you could be kicked out.
Network and collaborate with other businesses. Join your Chamber of Commerce and bring samples of your products to a meeting. Talk to other professional people, like photographers or florists, so that you can refer business to each other.
Get involved in your local community and offer your services for local events. Do you know someone who is involved in your local PTA?
Use testimonials from satisfied customers on social media to build social proof. Encourage customers to leave reviews.
You can also give your friends a few business cards to spread around to people who might need your services.
Build a website as your home base. You don’t have to start with a website but plan to add it when you can. You can begin with a simple page that contains the essentials—where you are located, what you sell, and how to contact you. Having an easily searchable presence online is essential. Think about how often you turn to Google to find a nearby business. Since you don’t have a storefront, a website can also help to legitimize a home bakery.

Final thoughts

It’s easy to assume everyone has your baking passion, talent, and interest.

Over the years, I have met many people who hate baking or simply do not have the time or interest. Those are your customers! But because it may be easy for you doesn’t mean you shouldn’t value it.

Starting a home bakery can be an immensely satisfying journey. Being able to support a family by doing what you love isn’t something that many people experience.

What’s particularly attractive about a home baking business is determining how much work you take on. You could earn $500 a month or more, depending on how busy you want to be.

A home bakery is the type of business that can start small, as simple as selling a cake to your neighbor, but can expand to a full-time business if that’s your goal.

The most important thing to remember is that it’s your business. It’s up to you to make the rules about how your business best fits into your life.

About the Author: Denise Treco is the founder of Whisk Warrior, the bakery business coaching and support system aspiring and experienced home-based bakers turn to when they want to transform their business. Snag a pricing cheat sheet to solve one of the most confusing aspects of a home bakery business: how much to charge.

Are you interested in starting a home bakery business?

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Source: makingsenseofcents.com

February 25, 2021

6 First Time Home Buying Mistakes I Made When I Bought My First House

Are you thinking about buying a house? Do you want to avoid common home buying mistakes?

I bought my first house when I was only 20 years old. Even though that was a little over 11 years ago, I have looked back many times and wondered how I did it. first time home buying mistakes

first time home buying mistakes

I made so many first time home buyer mistakes!

Of course, I was young and had a lot to learn. But, I definitely could have done more research to avoid many of the home buying mistakes I made, like not comparing interest rates or understanding the total cost of buying a home.

I’m not alone in how I approached buying a house. There are many people who simply do not understand everything that goes into buying a house, and that’s something that can negatively impact your finances and cause stress.

Over the years, I have received many emails about buying a house in your early 20s or when you’re young. I also get lots of questions from people who have been renting and are thinking about buying their first home.

I thought it would be interesting to look back on the home buying mistakes I made and explain how to avoid the same mistakes I made. Hopefully you can be a better prepared home buyer than I was!

The mistakes first time home buyers make can cost you money and may even lead to regret. Perhaps you’re wondering why you even bought your home!

One thing you may not know about me is that the first house I ever lived in was actually my own. Growing up, we always lived in small apartments and rented. I wanted to have a home of my own – moving so often as a child was tiring.

Buying a house and being a homeowner was a completely new thing for me.

I had never done yard work, had to deal with house maintenance, home repairs, or anything like that.

I was as new as could be when it comes to living in a house!

It was a buyer’s market when we started searching. It was back in 2009, so the housing market was coming down. This meant that a monthly mortgage payment wasn’t too much more than rent at an apartment.

I felt like I was ready to buy my first house, and I needed a place to live.

So, buying a house seemed like a logical decision.

I made many home buying mistakes, like I said. While I made it through everything, my mistakes could easily have led to major financial trouble.

Read on below to learn more about mistakes home buyers make and my first-time home buyer tips.

Related content on home buying mistakes:

Here were some of my home buying mistakes.

This was our first house.

I didn’t prepare.

I was only 20, so I didn’t really understand how things worked, even though I thought I did at the time.

I found an online mortgage lender, and back in 2009, that was kind of a new thing. The company ended up doing a bunch of odd things and made a bunch of paperwork mistakes. It almost seemed scammy because online mortgages were so new at the time.

While my realtor was great and a family friend, she recommended a mortgage loan officer to me, and I just used that person.

The loan officer was great and very friendly.

But, I didn’t compare interest rates at all, I didn’t try to raise my credit score before I started looking at homes, and more.

Instead, I should have been paying attention to my credit score and worked to increase it before I started looking at rates. Then, I should have applied with multiple mortgage lenders and found the best interest rate.

Basically, I didn’t prepare.

Had I spent time increasing my credit score and shopping around for better rates, I could have gotten a better interest rate and saved money on mortgage payments.

While a small percentage difference in interest may not sound like much, it makes a big difference in how much you pay each month and how much you pay over the course of your loan.

For example, here’s the difference in two 30-year mortgages on a $200,000 home (this is before annual taxes being added in to the monthly payment):

With an interest rate of 3.25% your monthly payment would be $870, and you would pay $313,349 over the course of your loan.
With an interest rate of 4% your monthly payment would be $955, and you would pay $343,739.

That’s a difference of $85 a month, and you will have paid $30,000 more once your mortgage is paid off.

Looking back, I would have done more research on the home buying process and the factors that impact interest rates.

One of the easiest things you can do to avoid this mistake is to start paying attention to your credit score. You can receive free credit reports and credit scores, and I recommend reading Everything You Need To Know About How To Build Credit to learn more.

I avoided adding up all of the costs because it was scary.

Okay, so I knew that having a house could/would be expensive, and luckily we were fine, but wow, are there a lot of costs!

I avoided adding them all up for a while because I knew they would be higher than I thought. Eventually I did, and I was right – adding everything all together was a doozy.

We didn’t start adding up these costs until we were farther along in the buying process, and this is one of the home buying mistakes many people make.

There are lots of people who only think about their mortgage payment, but there are so many more costs associated with buying a home

Before we purchased a home, we should have gone through all of the typical costs of owning a house and compared it to our housing budget. Comparing your current budget to your new homeowner’s budget will tell you whether or not you can actually afford to buy a home.

Here are some of the homeownership costs you want to consider:

Gas/propane. Many homes run on gas in order to have hot water, to use the stove, and so on.
Electricity. Generally, the bigger your home then the higher your electricity bill will be.
Sewer. On average, your sewer bill may cost around $30 a month from what I’ve seen.
Trash. This isn’t super expensive either, but it’s still a cost to include.
Water. Water bills can vary widely. I know many who live in areas where the average water bill is a few hundred each month.
Property taxes. Property taxes can vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may differ by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually and a difference of just $3,600 a year is $300 a month for life.
Homeowners insurance. Homeowners insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance as well as that can add up quickly depending on where you live – not thinking about these was one of the home buying mistakes I made.
Maintenance and repairs. Even if your home is brand new, you may have to pay for repairs, which is something that will come up eventually. No matter how old your home is, repair and maintenance costs will eventually come into play.
Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is in an HOA because the fees can be high and there may also be rules you don’t like.
Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes but can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?

I probably should have spent less on the actual house.

While the house we bought was less than the amount we were pre-approved for, I definitely think that we could have found a house for even less.

We bought at the top of our budget, and this is one home buying mistake that can really get you in trouble.

Thinking back on it, the amount that we were pre-approved for, as young 20 year olds, was pretty insane. I am very glad that we did not buy a house that was that expensive.

It’s not uncommon to be approved for much more than your budget realistically allows for. Just because the bank approves you for a $350,000 mortgage, for example, does not mean you can afford to buy a house at that price.

We bought at the top of our budget thinking that we would get better jobs eventually. While that worked out in our favor since we were each barely making above minimum wage, it was a decision that could have ended quite badly.

We were living paycheck to paycheck and didn’t have an emergency fund.

We were young and didn’t have high paying jobs when we bought our house. In fact, we were barely making more than minimum wage at our jobs.

While we never racked up credit card debt, I did accrue student loans and we were living paycheck to paycheck.

Had one major (or even minor) thing happened with our new house, the only option would have been taking on debt. This is not where you want to be if you have just taken out a big mortgage.

The best way to avoid this first time home buyer mistake is to set some money aside for emergencies before you buy, and to buy a house that fits in your budget. You want to be able to continue saving while making your new monthly home payments.

Make sure your home insurance covers what you need.

While I never had to use my home insurance, there were a few things that it did not cover, and I should have at least thought about them beforehand.

One of the biggest coverage issues was flooding. Flooding is a common problem where we lived in Missouri, yet I didn’t realize until a few years after I had already lived in the house that flooding was not covered unless you signed up for an additional policy.

Now, we weren’t in a floodplain – your lender may require you to buy special flood insurance if you live in a floodplain – but basement flooding was still a fairly common issue where we lived.

Another special insurance consideration are earthquakes. Many normal home insurance policies do not cover earthquakes.

You can avoid this home buying mistake by researching what is the best kind of insurance policy for where you live. Floods and earthquakes aren’t a problem everywhere, but in some places you may want to have that kind of coverage.

Have a larger down payment.

We were 20, and we didn’t have a lot of money saved up before we bought our house.

Therefore, we did not put down a 20% down payment. That might sound like a lot, but 20% is the recommended amount to put down if you want to avoid PMI (private mortgage insurance).

A lender charges PMI because putting less than 20% down makes the loan look like a riskier investment for them. PMI protects lenders from borrowers who default on their loans.

PMI is normally around 0.5% to 1% of the mortgage annually, and it’s added to your monthly payment. If you borrowed a $200,000 mortgage, you would likely pay between $1,000 to $2,000 a year until you paid down enough of your mortgage principal to remove PMI.

We put less than 5% down towards our house purchase, and this led to us having PMI.

I don’t remember exactly how much we paid each month for PMI, but looking back, I could have used that money to pay off my student loans faster, save more, and so on.

While having a larger down payment isn’t one of the home buying mistakes I could have easily changed back then, in general, just saving more money instead of frivolously spending it in the beginning would have been a good decision.

Related content: Can You Remove PMI From Your Mortgage?

So, what’s going on with the house now?

As many of you know, we sold our house over 5 years ago. We wanted to travel more, and selling our house made more sense than keeping it.

We actually sold it for quite a loss, as the market was further down than when we bought it.

I’m happy that we bought the house – it taught us a lot, gave us responsibility, and gave us a place to live! And, it taught us how to avoid home buying mistakes in the future.

One of the things I haven’t mentioned is what we paid each for our mortgage. Our monthly payments were just under $1,000.

Where we lived in the midwest is known for being a low cost of living area. I can’t imagine how we would have bought a house in some other parts of the U.S.

But, the low cost of living meant that buying a house at 20 was more doable.

Is it normal to regret buying a house? Is it normal to have buyers remorse after buying a house?

I don’t know what the statistics are on home buyers remorse, but it does happen. Hopefully with the tips before buying a house above, you can avoid that as much as possible.

Also, being realistic when it comes to what to expect when buying a house can help greatly as well.

What home buying mistakes did you make when you purchased your home?

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Source: makingsenseofcents.com

February 25, 2021

Mistakes I Made When I Bought My First House At The Age of 20

Are you thinking about buying a house? Do you want to avoid common home buying mistakes?

I bought my first house when I was only 20 years old. Even though that was a little over 11 years ago, I have looked back many times and wondered how I did it. first time home buying mistakes

first time home buying mistakes

I made so many first time home buyer mistakes!

I thought it would be interesting to look back on the home buying mistakes I made and explain how to avoid the same mistakes I made. Hopefully you can be a better prepared home buyer than I was!

The mistakes first time home buyers make can cost you money and may even lead to regret. Perhaps you’re wondering why you even bought your home!

Buying a house and being a homeowner was a completely new thing for me.

I had never done yard work, had to deal with house maintenance, home repairs, or anything like that.

I was as new as could be when it comes to living in a house!

I felt like I was ready to buy my first house, and I needed a place to live.

So, buying a house seemed like a logical decision.

I made many home buying mistakes, like I said. While I made it through everything, my mistakes could easily have led to major financial trouble.

Read on below to learn more about mistakes home buyers make and my first-time home buyer tips.

Related content on home buying mistakes:

Here were some of my home buying mistakes.

This was our first house.

I didn’t prepare.

I was only 20, so I didn’t really understand how things worked, even though I thought I did at the time.

While my realtor was great and a family friend, she recommended a mortgage loan officer to me, and I just used that person.

The loan officer was great and very friendly.

But, I didn’t compare interest rates at all, I didn’t try to raise my credit score before I started looking at homes, and more.

Basically, I didn’t prepare.

Had I spent time increasing my credit score and shopping around for better rates, I could have gotten a better interest rate and saved money on mortgage payments.

While a small percentage difference in interest may not sound like much, it makes a big difference in how much you pay each month and how much you pay over the course of your loan.

For example, here’s the difference in two 30-year mortgages on a $200,000 home (this is before annual taxes being added in to the monthly payment):

With an interest rate of 3.25% your monthly payment would be $870, and you would pay $313,349 over the course of your loan.
With an interest rate of 4% your monthly payment would be $955, and you would pay $343,739.

That’s a difference of $85 a month, and you will have paid $30,000 more once your mortgage is paid off.

Looking back, I would have done more research on the home buying process and the factors that impact interest rates.

I avoided adding up all of the costs because it was scary.

Okay, so I knew that having a house could/would be expensive, and luckily we were fine, but wow, are there a lot of costs!

I avoided adding them all up for a while because I knew they would be higher than I thought. Eventually I did, and I was right – adding everything all together was a doozy.

We didn’t start adding up these costs until we were farther along in the buying process, and this is one of the home buying mistakes many people make.

There are lots of people who only think about their mortgage payment, but there are so many more costs associated with buying a home

Here are some of the homeownership costs you want to consider:

Gas/propane. Many homes run on gas in order to have hot water, to use the stove, and so on.
Electricity. Generally, the bigger your home then the higher your electricity bill will be.
Sewer. On average, your sewer bill may cost around $30 a month from what I’ve seen.
Trash. This isn’t super expensive either, but it’s still a cost to include.
Water. Water bills can vary widely. I know many who live in areas where the average water bill is a few hundred each month.
Property taxes. Property taxes can vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may differ by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually and a difference of just $3,600 a year is $300 a month for life.
Homeowners insurance. Homeowners insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance as well as that can add up quickly depending on where you live – not thinking about these was one of the home buying mistakes I made.
Maintenance and repairs. Even if your home is brand new, you may have to pay for repairs, which is something that will come up eventually. No matter how old your home is, repair and maintenance costs will eventually come into play.
Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is in an HOA because the fees can be high and there may also be rules you don’t like.
Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes but can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?

I probably should have spent less on the actual house.

While the house we bought was less than the amount we were pre-approved for, I definitely think that we could have found a house for even less.

We bought at the top of our budget, and this is one home buying mistake that can really get you in trouble.

Thinking back on it, the amount that we were pre-approved for, as young 20 year olds, was pretty insane. I am very glad that we did not buy a house that was that expensive.

We were living paycheck to paycheck and didn’t have an emergency fund.

We were young and didn’t have high paying jobs when we bought our house. In fact, we were barely making more than minimum wage at our jobs.

While we never racked up credit card debt, I did accrue student loans and we were living paycheck to paycheck.

Had one major (or even minor) thing happened with our new house, the only option would have been taking on debt. This is not where you want to be if you have just taken out a big mortgage.

Make sure your home insurance covers what you need.

While I never had to use my home insurance, there were a few things that it did not cover, and I should have at least thought about them beforehand.

Now, we weren’t in a floodplain – your lender may require you to buy special flood insurance if you live in a floodplain – but basement flooding was still a fairly common issue where we lived.

Another special insurance consideration are earthquakes. Many normal home insurance policies do not cover earthquakes.

Have a larger down payment.

We were 20, and we didn’t have a lot of money saved up before we bought our house.

Therefore, we did not put down a 20% down payment. That might sound like a lot, but 20% is the recommended amount to put down if you want to avoid PMI (private mortgage insurance).

A lender charges PMI because putting less than 20% down makes the loan look like a riskier investment for them. PMI protects lenders from borrowers who default on their loans.

We put less than 5% down towards our house purchase, and this led to us having PMI.

I don’t remember exactly how much we paid each month for PMI, but looking back, I could have used that money to pay off my student loans faster, save more, and so on.

Related content: Can You Remove PMI From Your Mortgage?

So, what’s going on with the house now?

As many of you know, we sold our house over 5 years ago. We wanted to travel more, and selling our house made more sense than keeping it.

We actually sold it for quite a loss, as the market was further down than when we bought it.

I’m happy that we bought the house – it taught us a lot, gave us responsibility, and gave us a place to live! And, it taught us how to avoid home buying mistakes in the future.

One of the things I haven’t mentioned is what we paid each for our mortgage. Our monthly payments were just under $1,000.

Where we lived in the midwest is known for being a low cost of living area. I can’t imagine how we would have bought a house in some other parts of the U.S.

But, the low cost of living meant that buying a house at 20 was more doable.

Is it normal to regret buying a house? Is it normal to have buyers remorse after buying a house?

I don’t know what the statistics are on home buyers remorse, but it does happen. Hopefully with the tips before buying a house above, you can avoid that as much as possible.

Also, being realistic when it comes to what to expect when buying a house can help greatly as well.

What home buying mistakes did you make when you purchased your home?

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Source: makingsenseofcents.com

February 15, 2021

20 Grocery Shopping Tips to Save Your Family Big Bucks

Groceries make up a huge chunk of your family budget. With Mighty Mommy’s strategies and smart tips, you can drastically cut your food bill and enjoy hearty savings along with delicious meals.

Cheryl Butler

February 15, 2021

food prices rose 2.6% in 2020. That’s the biggest increase in nearly 50 years.

Whether the pandemic is the reason you’re spending more on food or you’ve just never taken the time to figure out a money-saving strategy for your grocery bill, now is the perfect time to turn that around. These smart grocery bill hacks will save you time and help you keep your hard-earned bucks in your wallet without the hassle of clipping coupons.

Have a plan to save money on groceries

1. Don’t wing it; plan it!

Hands down, the easiest way to save thousands of dollars each year on your grocery budget is to get on board with meal planning. No matter the size of your family, when you take time to plan your meals you’ll always be ahead of the grocery game. Having a plan, and a shopping list to match, will not only save time, but you’ll be less inclined to buy things you don’t need. Bonus: You won’t have to waste gas on extra trips because you forgot to pick up a key ingredient.

2. Get a meal planning app

A free meal planning app will eliminate the guesswork. Two of my favorites are Spoonacular, which syncs with your google calendar, and Yummly, where you can search for recipes based on meal course (such as entree or side), prep time, or fun new menu trends.

3. Keep your pantry stocked

You don’t need to have tons of extra space in your home to have a well-stocked pantry. You know what your family loves to eat, so make sure you always have the basic ingredients (like pasta, rice, seasoning mixes, and more) on hand. If you always have the basics to whip a meal together, you’ll be less likely to opt for pricey take-out. So, before you make your weekly grocery list, shop your shelves first. What do you have that you could use in your meal plan this week? What’s running low?

Supercook is a time-saving app for doing a little planning based on what’s in your pantry. Enter the ingredients you have on hand and it suggests dozens of yummy, cost-saving meals you can whip up in no time!

4. Stock up during sales

Take advantage of sales to stock up. My rule of thumb for sale items is to buy one to use now and two for later. Just make sure you’re buying versatile, family-tested items you know you’ll use. Impulse items might end up abandoned on a pantry shelf long past their expiration date.

Try these produce hacks

5. Shop seasonal

My grandmother taught me early to take advantage of seasonal produce. Whether it was berry-picking season or time for autumnal root-veggies—nature always provided a palate of seasonal goodness. As tempting as it is to buy juicy strawberries in January, you’ll likely pay more for out-of-season produce. Pay attention to mother nature’s timetable.

6. Weigh your produce

Grocery stores have scales for a reason! I can’t tell you how many times I thought I could eyeball a bunch of cherries or a few heads of broccoli only to find that I bought way more than I needed.

7. Grab from the back

Your friendly grocer stocks the oldest products at the front of the shelves so they’ll get purchased before they expire. If you’re using that produce in a meal soon, go ahead and grab from the front. But if you’ll need to store your produce for a while, reach in and grab from the back to get something fresher that will last longer in your fridge or pantry.

8. Buy reduced

Of course, fresh produce is great! But don’t be afraid to buy from the “reduced” section in your favorite store. Bell peppers, tomatoes, bananas—there is always something that needs to be used immediately. If you’re going to use bell peppers in tonight’s recipe, go ahead and get the ones that are marked down for a quick sale. They’ll still be fresh and tasty, but you’ll save money. You’ll also make sure that produce doesn’t end up wasted when your grocer has to discard it.

9. Nix the pre-cut produce

As tempting and timesaving as the pre-cut straw carrots or apple wedges are, you’re probably paying way too much for the convenience. Buy the whole fruit or veggie and take a few minutes to prep yourself.

Older kids make excellent sous-chefs! Teach them to use a knife safely so they can chop veggies and fruits. They’ll learn valuable life skills while they help out in the kitchen. Check out the video below for a review of knife skills.

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Take advantage of your freezer

10. Stock up on freezing supplies

Freezing meals, leftovers, and fresh produce reduces waste and saves time and money, so keep the necessary supplies on hand. You’ll need sealable storage containers and bags. (Bonus points if they’re reusable—you’ll be both frugal and eco-friendly!) Have masking tape and markers on hand to date and label your items so you won’t have mystery contents taking up valuable space. I keep a simple freezer inventory sheet on a magnet on my freezer where I note the date and the item that was frozen.

11. Learn what you can freeze

Some surprising items that freeze beautifully: whole avocados, breadcrumbs in canisters or bags, dairy products such as cream cheese, sour cream, yogurt, shredded and sliced cheese, pancake mix, nuts, chocolate chips, hummus, or even premade peanut butter and jelly sandwiches. Soups and sauces freeze well in Mason jars (be sure to leave one or two inches at the top of the jar for expansion.) Buy chicken breasts and other meats in bulk when on sale and slice and bag individually in marinades or plain. Even cake mixes and containers of frosting freeze well.

12. Cook and freeze family favorites in batches

Batch cooking means making a double batch of a favorite recipe. You serve one batch and freeze the other. This technique requires planning and some extra work up front, but the reward is having a variety of your family’s “go-to” recipes available in a pinch. Betty Crocker has a helpful article full of great tips: Thirty Day Batch Cooking. I learned about batch cooking during my early pregnancies. The time and energy, and indeed the money I saved by employing this technique, was priceless.

As an Amazon Associate, QDT earns from qualifying purchases.

Recommended by Mighty Mommy

If you freeze a lot of food, the FoodSaver vacuum sealer is an excellent investment. It keeps frozen food fresher much longer and prevents freezer burn. I couldn’t do without it!

Incorporate these nifty cost-saving quick-tips

13. Don’t be afraid to try generic brands. Many come from the companies you already love.

14. Embrace “yellow sticker” items, especially meat. These are items reduced for a quick sale. They’re still safe to eat, of course. Or you can add them to your freezer stockpile.

15. Download your store apps. You’ll be able to take advantage of digital coupons or sales you didn’t see in your flier.

16. Shop in the middle of the week. This is when most stores offer their weekly deals.

17. Consider ordering groceries online. You’ll be able to see your order tally right before your eyes, and you won’t be as likely to make impulse purchases.

18. Download the Fetch Rewards app. This is like putting free money in your pocket every time you shop. Simply scan your receipts each time you shop and you’ll earn rewards and bonuses that you can cash in for gift cards at Amazon and your other favorite online shopping sites.

19. Shop with cash, not a debit card. Several years ago, I switched to shopping with cash. Knowing I have a set budget helps me stick to my grocery list. And speaking of grocery lists …

20. Never shop without a grocery list. You’ll buy stuff you don’t need and forget stuff you do! Pinterest has lots of free templates to get you started.

Don’t forget about the local dollar store—it’s useful for more than just party supplies! Most stores have staples like condiments and spices, but also grocery items like bread and beverages.

Are you interested in learning how to pay off student loans? Are you looking for the best way to pay off student loans?

Today, I want to talk about how I paid off my student loans, tips to pay off student loans, and answer many of your top questions about how student loans work. best way to pay off student loans

best way to pay off student loans

I graduated college with $40,000 student loan debt, and I paid off my student loans in just 7 months. It’s been several years since I paid them off, but I still receive so many questions about this topic.

There are approximately 45 million student loan borrowers in the U.S. with a total of $1.6 trillion in student loan debt. Yes, that’s trillion.

With so much student loan debt, it’s not surprising that I receive so many questions about how to pay off student loans. Student loans can stay with you for years, and they can affect almost every financial decision you make until they are paid off.

Student loans can prevent you from saving for retirement, make it harder to pay off other types of debt, find the job of your dreams, and so on.

Living with student loan debt can cause a lot of stress, and that’s one of the reasons I wanted to pay mine off as quickly as possible. I didn’t want to live with that debt on my shoulders any more.

In this article, you will learn how I paid off my student loans, and while it did take a lot of hard work, it was well worth it.

Paying off my student loans completely changed my life, and it’s something I’ll never regret.

Paying off student loans can lead to many benefits, such as:

Feeling less stress because you no longer have a huge debt hanging over you.
Having the ability to use that money towards other goals in life, such as saving for retirement or buying a home.
Gaining the option to pursue other goals in life, such as traveling more or looking for a better job.

I know these benefits are real because paying off my student loans is one of the best decisions that I’ve ever made.

No, it wasn’t easy to pay them off so quickly, but it was definitely worth it. No longer having those monthly payments hanging over my head is a big relief, and it allowed me to eventually leave my day job and travel full-time.

If you’re reading this article, then you’re probably interested in paying off your debt as well.

Below, I’m going to answer some common questions that I’ve received over the years about paying off student loan debt, the steps I took to pay off my student loans in 7 months, along with other questions you may have as well.

How I paid off my student loans.

You will want to read through the steps below if you are asking, “How can I pay off my student loans fast?”

Paying off your student loans so quickly is not easy, but it doesn’t mean it’s impossible. You have to find creative ways to make money, understand exactly how your student loans work, reduce your expenses as much as possible, and make a plan to pay off your loans.

Below are the 8 steps I took to pay off my loans, and then I will answer many of the questions I receive about student loans so you can understand the best way to approach your pay off. As you can see, there are many different student loan repayment methods.

1. Understanding my student loans

First off, I did everything I could to better understand my student loans.

I always think it’s best that you understand your debt so you can find the best strategies to pay it off. Understanding your loans helps you pay off student loans faster and save money over the course of your pay off.

Here’s what you should understand about how student loans work:

Your interest rate. Some student loans have fixed interest rates, whereas others have variable rates. Fixed rates stay the same, and variable rates go up or down based on the market. You’ll want to figure out the interest rates on each of your loans because that may impact the student loan repayment plan you decide on. For example, you might choose to pay off your highest interest rates student loans first so you can pay less money over time.
What a monthly payment means. Many people believe that a monthly payment is all that you have to pay, are allowed to pay, or that by paying just the minimum monthly payment you won’t owe any interest. Those three things are so incorrect! Even if you pay the minimum monthly payment, you will most likely still owe interest charges (unless your interest rate is 0% – but that is very unlikely with student loans).
Student loan reimbursements. Some employers will give you money to put towards your student loans, but you should always do your research before assuming it’s just that simple. Some employers require that you work for them for a certain amount of time, that you have great grades, good attendance, and they might have other requirements as well. There are many employers out there who will pay your student loans back (fully or partially), so definitely look into this option.
Auto-payment plans. For most student loans, you can probably autopay them and receive a discount. Always look into this as you may be able to lower your interest rate by 0.25% on each of your student loans.

Related: How Do Student Loans Work?

2. I added up my total student loan debt

This is probably the most important step. I know that many of you will think I am crazy, but this is crucial to seeing success.

I recommend that you take time to add up the total amount of student loans that you have.

When you total your student loans, do not just estimate how much debt you have.

You should actually pull up each loan and tally everything, down to the penny. By doing so, you will have a much more realistic view of exactly how much you’re dealing with.

Plus, the average person has no idea how much student loan debt they have! Usually, they have far more than they originally thought.

3. I received an easy interest rate deduction

If you automatically pay your student loans each month or consolidate them, then sometimes you can get an interest rate reduction.

With Sallie Mae, I believe the reduction is 0.25%.

That may not seem significant, but it is something! Remember, every little bit counts when it comes to having a good student loan repayment plan.

Related: I recommend that you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can also connect accounts, such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. Plus, it’s FREE.

4. I found ways to make extra money

Making extra money is something I did a lot of back when I had student loans, and it was the big reason for why I was able to pay off $40,000 in student loans in just 7 months.

And, I believe that the fastest way to pay off student loans is to find ways to make extra money.

Making extra money can allow you to pay off your students loans quickly because there is no limit to how much money you can make. When you make money in addition to what you make at your current job, you have that much extra money to put towards your debt repayments.

Every extra bit of money I made went towards paying off my student loans, and I would usually make a payment as soon as the extra money from my side hustles hit my bank account. I did this so I was never tempted to spend that money.

Here are a few of the things I did to make extra money: started this blog and made money from it, sold items on eBay, mystery shopped, had roommates in my house, took paid online surveys, wrote for other websites, and much more.

If you want to learn how to pay off student loans fast, then I definitely recommend that you find ways to make extra money. Here are various ideas you can try:

Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $2.75 per month, plus you get a free domain if you sign-up through my tutorial.
Start a business. There are many business ideas that you could start in order to make extra money. You can clean houses, walk dogs, house sit, work as a freelancer, and much more.
Sell your stuff. There are many ways to make money selling things. We all have extra items lying around that can be sold, or you can even search for items that can be bought and resold for a profit.
Rent an extra room in your home. If you have extra space in your house, then you may want to rent it out. Learn more at What You Need To Know About Renting A Room In Your House.
Answer surveys. Survey companies I recommend include Branded Surveys, American Consumer Opinion, Swagbucks, Survey Junkie, Pinecone Research, Opinion Outpost, Prize Rebel. They’re free to join and free to use! You get paid to answer surveys and to test products.
Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I’ve found a legitimate job through there before), and so on.
Sell crafts. If you’re looking for creative ways to pay off student loans, this one is for you!

Learn more at 80+ Best Side Job Ideas To Make Extra Money.

5. I sought out ways to reduce my expenses

The next step is to pay off student loans faster is to cut your budget. Even though you may have a budget, you should go through it line by line and see what you really do not need to be spending money on.

There’s probably something in your budget you can cut.

Until you look everything over,, you may not realize how much money you are wasting on things you don’t need. And, it’s never too late to start trimming your budget and start putting that money towards important things like paying off student loans!

Even if all you can cut is $100 each month, that is better than nothing. That’s $1,200 a year right there!

Some expenses you may be able to cut include:

Lower your cell phone bill. Instead of paying the $150 or more that you may currently spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $15. YES, I SAID $15! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. If you are interested in hearing more, I created a full review on Republic Wireless. I’ve been using them for over a year and they are great.
Sign up for a website like Rakuten where you can earn CASH BACK for spending how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 cash back!
Pay bills on time. This way you can avoid late fees.
Shop around for insurance. This includes health insurance, car insurance, life insurance, home insurance, and so on. Insurance pricing can vary significantly from one company to the next. The last time we were shopping for car insurance, we found that our old company wanted something like $205 to insure one car each month, whereas the company we switched to charged $50 a month for the same exact coverage.
Save money on food. I joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first four weeks are free) and they send meal plans straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 or less per person.
Fuel savings. Combine your car trips, drive more efficiently, get a fuel efficient car, etc.
Trade in your car for a cheaper one. How much is your monthly car payment, if you have one? This can be an easy way to cut your budget drastically.
Live in a cheaper home. I’m not saying that you need to live in a box, but if you live in a McMansion, then you may want to think about a smaller home. This way you can save money on utility bills and your mortgage payment.
Learn to have more frugal fun. We don’t spend anywhere near the same amount of money on entertainment as we used to. There are plenty of ways to have frugal fun.

6. I created a plan to pay off my student loans

After you have completed the steps above, you’ll want to put it all together and create a plan.

Without a plan, you would just be all over the place, making it difficult to reach your goal of learning how to pay off student loans.

You should create a plan that details the steps you need in order to pay off your student loans, what will happen as you reach each step, when and how you will track your progress, and more.

Here’s what my student loan pay off plan included:

Setting up autopay on my student loans so I never missed a payment. I had autopay set up to pay the minimum payments on each of my student loans, and then I made targeted payments (more on this in the next point) with any extra money.
Paying off the student loans with the highest interest rates first. All of my extra money went towards my student loans with the highest interest rate, and once that loan was paid off, I put the money I was paying towards that loan towards the loan with the next highest interest rate until all of my loans were paid off. This helped me save money on interest charges
Put every bit of extra money towards my student loans. Like I said earlier, any time I made extra money, I immediately made a payment on my student loan debt, even if it was something small like $20. This meant all of my extra money went towards student loans, and I was never tempted to spend it on something else.
I checked my student loan balances a couple of times a month. Seeing my debt go down helped me stay motivated.

This plan took a lot of hard work and dedication, but it’s exactly how I paid my student loans off so quickly.

7. I stayed motivated with my student loan payment plan

For me, motivation was crucial for paying off my student loans. Luckily, I received great satisfaction each time I put even just a little bit towards my student loans.

But, staying motivated can be hard. Motivation is important because it can help you keep your eye on your goal to pay off student loans even when you want to quit, which can happen often during a big debt repayment.

Yes, student loan repayment can seem very stressful when you think about it. Many people owe thousands and thousands of dollars in student loans. It may feel like you are trying to scale a mountain.

However, think about how good life will be once all of your student loan debt is gone.

Please try to not let your student loans get you down. Think positively and attack that debt so that you can pay it off fast!

Trust me, once you finally pay off those expensive student loans, you’ll be much happier.

Some ways to stay motivated while you pay off student loans includes:

Remember the reasons for why you are wanting to pay off your student loan debt.
Make your goal visual with a debt thermometer.
Set smaller goals in between. For example: If your overall goal is to pay off $24,000 in debt in two years, then you might want to aim for $1,000 in debt payoff each month. This seems much more attainable than the $24,000 number, and this can help you stay motivated while still challenging yourself at the same time.
Keep track of your progress.
Think about how you will feel in the future.

As you can see, there are many ways to stay motivated.

8. I paid more than the minimum student loan payment

The key to speeding up your student loan repayment process is that you will need to pay more than the minimum each month.

Most student loans, especially many federal student loans, are set up for a 10 to 20-year repayment plan. But if you want to pay them off faster, then you must pay more than the minimum payment each month.

Not only does paying more than the minimum help you pay off your loans faster, it helps you save money on interest charges. For some people, that can make the difference of thousands of dollars saved over the course of their repayment.

Paying more than the minimum may sound hard, but it really doesn’t have to be. Whatever extra you can afford, you should think about putting it towards your student loans. You may be able to shave years and thousands of dollars off your student loans!

Common questions about the best way to pay off student loans

In this section, I am going to answer common questions that I’ve received about the best way to pay off student loans.

Is it smart to pay off student loans quickly? What is the smartest way to pay student loans?

There are many benefits to paying off your student loans early. For me, I hated the feeling of having all of that debt hanging over my head. No longer feeling that stress was the benefit.

I recommend sitting down and thinking about how paying off student loans quickly could positively change your life too.

It might mean you are eventually able to leave a job you hate, finally buy a house, travel more, retire early, and so on.

How does paying back student loans work?

Most student loans have a 6 month grace period where you don’t have to make your first payment until 6 months after you graduate or if you go to school less than half-time.

But, this all depends on the student loan, so you will want to make sure that you read the terms on your loan.

Even though you may not have to pay back your student loans right away, that doesn’t mean you can’t.

You can start paying back your student loans early, and you can pay more than the minimum monthly payment as well.

Your student loan servicer, whether federal or private student loan lender, will send you information to set up your repayment plan some time in that 6 month period. If you are still in school, I recommend starting to think about how you will pay off your loans.

Federal student loan borrowers have a few different options for paying back their loans, including income-based repayment plans, graduated plans, and so on. You should look into each option to see what makes the most sense for you.

No matter which option you choose, remember that you can always make more than the minimum payment, and that’s what you should do if you want to pay off student loans quickly.

Is it better to save or pay off student loans? Should I pay off my student loans?

A big question when paying off debt is if that should be your sole focus. Should you still be trying to save money while paying off your debt?

Or, should all of the extra money you have be going towards your student loan debt?

You may be wondering things such as:

Should I pay off debt or emergency fund first, as in set some money aside for emergencies?
Should I pay off debt or save up for a downpayment?
Can I pay off debt AND save money at the same time?

And so on and so on.

I paid off my student loans quickly, which meant that I focused entirely on my student loans and completely skipped any other financial goals. It doesn’t mean that’s the best decision for everyone, though.

I know several people who paid off their student loans quickly like me and didn’t have any money saved while they were doing so, and a couple of them wish they had an emergency fund.

It all depends on your situation. If you have kids, health problems, a house, people who rely on you financially, etc., then you may want to have at least an emergency fund.

I recommend reading Pay Off Debt Or Save Money – Is One Better For You? to learn more about this subject.

What other ways can you pay off student loan debt?

If you are looking for other ways to pay off student loan debt, there are plenty of other options.

These may include:

Asking your employer to help pay off your student loans
Refinancing your student loans
Seeking out student loan forgiveness

Below, I will be talking about these options in more detail.

See if your employer will reimburse your student loan debt.

Some companies offer their employees student loan reimbursements. I know of someone who received a $2 bonus for each hour that she worked to put towards her student loans.

$2 may not seem like a lot, but if you work full-time, then that’s over $300 a month (or $3,600 a year!). $300 a month for student loans is a good amount!

And, because it’s free money, it can all be put towards paying off your student loans quickly.

If you are looking for a new job, this may be something you will want to ask about.

Should you refinance your student loans?

By refinancing your student loans, you may qualify for better repayment terms, a lower interest rate, and more. This is great because it may help you pay off your student loans quicker.

This can be a good option if you borrowed private student loans and your credit score is better now than when you originally took out your student loans.

The positives of refinancing student loans include:

One monthly payment to simplify your finances
Lower monthly payments
Lower interest rates, and more

Companies, such as Credible, allow you to refinance your student loans. With refinancing, the average person can save thousands of dollars on their loan, and that’s incredible! You can save a lot of money with student loan refinancing, such as with Credible, especially if you have high interest federal or private loans.

Credible’s platform is similar to the way Expedia works for finding flights – with Credible, you simply search the available rates to find the best student loan rate for you. There is no service fee, no origination fee, and no prepayment penalty if you end up paying off your student loans faster.

To use Credible, it takes less than 10 minutes and just follow these steps:

Fill out a quick simple form (2 mins) – It only takes one form to see the many different lender options.
Choose an option you like (2 mins) – On Credible, you can easily compare the different lenders all in one place.
Provide your loan details (3 mins) – After providing more information about yourself, it takes one business day to receive your finalized offer.

Before refinancing a federal student loan, though, you will want to think about different federal benefits that you may be giving up. You may give up income-based repayment plans, loan forgiveness for those who have certain public service jobs (including jobs at public schools, the military, Peace Corps, and more). By refinancing your federal student loans, you may be giving up any future options for these loan forgiveness programs.

However, keep in mind that by refinancing your student loans, you may receive lower monthly payments, lower interest rates, and more. This may help you pay off your debt much faster.

For me, I didn’t qualify for student loan forgiveness, so refinancing would have definitely helped me if I knew about it back then.

How does student loan forgiveness work?

Teachers, nurses, and government employees may be eligible for student loan forgiveness through a program called Public Service Loan Forgiveness (PSLF). It is only available for Direct Federal Student Loans, including Direct Plus and Direct Consolidation Loans.

To qualify, you must be working full-time, make 10 years of on-time monthly payments under a qualifying repayment program, which includes:

Income-Based Repayment Plan (IBR)
Income-Contingent Repayment Plan (ICR)
Pay As You Earn (PAYE)
Revised Pay As You Earn (REPAYE)

You will have to certify your income and repayment plan every year, and PSLF does not apply to private student loans.

PSLF is one of the most confusing aspects of how student loans work, so I highly recommend that you contact your student loan servicer as soon as possible. They will explain exactly how to move forward with forgiveness.

Are there grants to pay off student loans?

Yes, there are grants that help people pay off student loans, but most student loan borrowers will not qualify for them.

The kinds of grants available are for health care workers, veterinarians, military personnel and surviving family members, and lawyers (specifically state defenders and prosecutors).

I recommend searching online to learn more about these grants if you fall into one of those categories above.

How long will it take to pay off student loans?

The time it takes to pay off your student loans depends on the kind of repayment plan you are enrolled in. There are 10 and 20-year repayment plans for federal student loans, or you can pay them off early.

As I’ve said, paying your student loans off early can be a very good thing, and you can possibly save thousands of dollars over your loan repayment period.

What do I do when my student loan is paid off?

After my student loan debt was paid off, we celebrated!

Paying off my student loans in full was an amazing feeling for me.

I can’t remember exactly what we did, but I think it involved a nice dinner, haha. Paying off my student loans opened up other doors for me – I felt more comfortable pursuing my side business full-time, as I no longer had a huge monthly debt payment hanging over my head.

For you, you may decide to do other things such as:

Pay off any other debt that you have
Fully fund your emergency fund
Save for retirement

And so on!

I hope you enjoyed today’s blog post on the various ways to pay off student loans, along with the common questions that I have answered.

If you have any questions about how to pay off student loan debt, please leave them as a comment below or send me an email.

Do you want to learn how to pay off your student loans? What other tips do you have on the best way to pay off student loans?

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About the Author

How I paid off my student loans.

1. Understanding my student loans

2. I added up my total student loan debt

3. I received an easy interest rate deduction

4. I found ways to make extra money

5. I sought out ways to reduce my expenses

6. I created a plan to pay off my student loans