When the winter months hit, one thing is guaranteed â snow. A wintery white wonderland laid out on your lawn is a beautiful sight â when youâre cozy and safe inside your home.
However, snow can be very dangerous when itâs not handled properly. Here are three ways to help keep your family, and your home, safe this season.
1. Prep beforehand: Itâs always best to be prepared when you know there is a snowstorm coming. Have an emergency kit, snow removal tools, and flashlights on hand because once the storm hits you wonât be able to leave the house to acquire these items.
2. Remove snow from entryways first: When you go outside to shovel, be sure to remove snow from basement stairwells, windows, and walls first. Getting the snow out of these places quickly will prevent the snow from entering your home when it melts.
3. Pay attention to where snow accumulates: If snow is building up on the lower part of your roof, be weary of removing it. When youâre removing snow from a higher level, it can cause damage to you and your home. If there is too much snow, or you are worried for your safety, call a professional for help.
Now that you know these snow safety precautions, enjoy the weather. Go sledding in the backyard or curl up by the fire with hot chocolate and a good book.
The post Snow Safety for the Home first appeared on Century 21®.
Usually when it comes to options, more is better, but that may not be how you feel when you get to a home decor store. There is an overwhelming number of fabric, color, and style options. Don’t worry.
Take a deep breath and remind yourself that even the pros use formulas to create the styled rooms we all love. Use these tips and techniques to create a home you’ll love.
Adopt the Rule of One: One floral, one stripe, one check, and so on. Use this approach to limit your selection to no more than one of each so that you won’t have to worry about similar patterns clashing. Create a cohesive design by selecting similarly colored detail pieces like throw blankets, pillows and vases.
Start Small: If you’re uneasy about decorating with a large-scale or dominant pattern, use it in small doses. Decorative pillows are a great way to introduce patterns into your space without needing to make a big change.
Live Large: The larger the room, the bolder your use of patterns can be. To create a more intimate feeling in a big space, repeat a pattern or two. For example, use the fabric from window treatments on a chair cushion.
Give Texture a Try: Not into big blooms and colorful stripes? Create an alluring room by combining textures like hard wood and rugs and fabric in a variety of textures.
We hope that these tips help you create a beautifully decorated home. We’d love to know your tips for combining patterns and designs. Connect with us on Twitter and share your advice!
Booking a “staycation” (or a vacation at home) can be a stress-free, budget-friendly way to take a break. And, if done correctly, it can feel like a dream vacation.
Here are some tips to help you have the perfect staycation at home:
Clear your calendar. Block off at least 2-3 days. During this window, don’t book appointments, do errands, or plan to do work. Be protective of your vacation days. It may be tempting to keep to your regular schedule, but in order to truly relax and feel like you’re on vacation, you have to set aside quality time for yourself.
Add in amenities. Turn your home into a five-star resort with a few upgrades:
● hang a hammock in the backyard
● build a firepit
● give your bedroom a makeover
● turn your bathroom into a spa
● fix up the patio to enjoy dinners al fresco
● add a porch swing.
Play tourist. Get to know your city better, and see it with a fresh perspective. Do all the things you don’t normally have time for and treat yourself to the experiences that don’t fall into your daily routine. If your friends or family visited from out of town, where would you take them? Check out the current events at local theaters, museums, and concert venues. Find the new (or best) restaurant in town. You might even consider buying a guidebook to cover the most ground.
Bring the fun to you. You don’t have to go far to enjoy yourself. Tackle your lengthy reading list by curling up in a deck chair with a tall, refreshing drink. Break out the s’mores and take a mini camping trip. Binge-watch the popular TV series everyone is talking about, but you haven’t had time for. Host your own mini film festival. Transform your backyard into a water park.
Vacations are all about indulgence. Buy yourself that plush bathrobe you love to wear at hotels. Sleep on those super-high-thread-count sheets. Get a massage, manicure, or facial (or all of the above). Order “room service” (a.k.a. delivery). This is a chance to really spoil yourself – you deserve it!
On paper, making extra payments on a low-interest mortgage makes no sense at all. After all, the returns you can achieve from investing will almost always be worthmore than any interest you save by becoming debt-free.
So, why would anyone pay off mortgage debt any faster than they have to? When you consider the fact that the stock market typically returns around 10%, paying off a 30-year home loan with a rate that’s below 4% seems foolish at best.
And, that’s just the stock market we’re talking about. What about Bitcoin and other cryptocurrencies?
The reality is, Bitcoin alone has multiplied in value several times since the beginning of the pandemic. Where a single Bitcoin was worth $10,764 in September of 2020, values have easily grown 5X since then.
Still, my wife and I have decided we absolutely want to pay our Nashville home off faster than we have to. This is despite the fact we would almost certainly score a higher return by investing when compared to the interest we save.
But sometimes, a decision like this isn’t all about the numbers. It’s also about peace of mind, stability, and personal preferences toward debt in general.
So, why are we taking the steps to pay off our mortgage early? I break down all the details and strategies we’re considering below.
Our Mortgage Details
My wife and I moved from Illinois to Nashville, Tennessee in the summer of 2017. Itâs was a scary move. Probably the scariest decision weâve ever made as a family. This picture of the moving trucks showing up doesnât truly capture how terrified we both were:
We started building a home there pretty much right away, and we secured our mortgage in January of 2018.
Interestingly, this move took us from almost debt-free to nearly $1 million dollars in debt! That’s because our old house in Illinois was almost paid off, and because we started the whole process over during our move. If you want to learn more why we made the move, you can check out the YouTube video here:
Ultimately, the total price for our new home worked out to $955,165.10. After putting down two separate deposits of $75,000 and paying closing costs, our new VA home loan started with a balance of $843,511 and an interest rate of 3.625%.
This made our mortgage payment balloon to $4,397, which is a lot higher than any mortgage payment we have had in the past. Of that amount, $630 went into our escrow account for taxes and insurance each month.
If we decided to make the minimum payment on our 30-year home loan, the total amount paid in (including principal and interest) would work out to $1,384,863.44.
This means we would wind up paying $541,596.33 in interest alone!
We decided we don’t want to pay quite that much interest. We also know there is no way we want to owe mortgage payments 25+ years from now.
With that in mind, here are some of the early mortgage payoff scenarios we started considering:
Option 1: Making an Extra Payment
One of the most popular strategies for paying off a mortgage early involves making an extra payment each year. This strategy lets you pay your house off earlier than normal, but it’s not so aggressive that you have to sacrifice other financial goals.
When I ran the numbers for our mortgage, I found that making an extra payment of $4,397 per year would cut around four years off our repayment timeline and reduce our total interest paid to $456,442.
That means making an extra payment on our mortgage would save us around $85,154 in interest payments over time.
Knocking four years off our mortgage is good but we have goals of paying our home much faster. Since making an extra house payment a year didn’t cut it, I was curious to see what would happen if we made a double payment each year.
By making an extra $8,800 ($4,397 x 2) payment each year it did reduce our mortgage loan down another 3 years (so 7 years total). The total interest paid would be reduced to $395,763 or a savings of $145,833.
That’s a huge savings but still not fast enough for us. But I think you can see that making an extra payment (or two) is a solid way to save a ton of interest on your mortgage and pay your house off faster.
Wealth Tip: Making an extra payment each year on your mortgage can dramatically reduce your loan and save you thousands of dollars of interest.
Option 2: Refinance Our Mortgage
On April 30, 2021, I contacted a mortgage broker to find out how much interest we could save if we took steps to refinance our home loan. Based on our current loan amount, which was $794,000 at the time, refinancing to a 15-year home loan with an interest rate of 2.375% would increase our monthly mortgage payment to $5,798.95.
However, I was pretty put off by all the fees involved in refinancing, which you can see clearly in the screenshots below:
Not only were they asking for an origination fee and appraisal fees, but they wanted to charge processing fees, underwriting fees, and other fees galore. I would also have to pay a second VA funding fee in order to use my VA loan benefit.
Then there’s the hassle and stress involved in refinancing a mortgage. People who have refinanced in the past already know what I’m talking about!
But, even with the fees involved, this option can still lead to huge savings over time. Considering a new 15-year home loan of $794,000 with an interest rate of 2.375%, total interest paid works out to just $150,588 and some change.
That’s more than $390,000 in interest savings when you compare to just making the minimum payment on our mortgage for 30 years!
Btw, if you are considering refinancing your mortgage, always – and I mean ALWAYS – get at least two quotes from different mortgage brokers. And don’t assume the bank you’ve been with all of your life is going to give you the best rate.
Seth Burstein, the CEO of Fortunately.io shared on episode 92 of the Good Financial Cents podcast a crazy story about the rate his bank offered him when he was refinancing his own house. I promise you it’s worth listening to:
Option 3: Make a Large One-Time Payment
While not everyone has the desire (or the means) to make a lump sum payment on their mortgage, this is the option we’re considering right now. In the meantime, we’re also paying extra on our mortgage every month.
This decision isn’t one we’re taking lightly, but it’s one that seems to make sense based on where we are in our journey to wealth and our eventual retirement.
Of course, I feel blessed to be in a financial position that we can take a lump sum on our mortgage without sacrificing our other financial goals. In the end, we decided we wanted to pay an extra $100,000 toward our mortgage in a single payment.
But, where is the money coming from exactly?
First off, it’s important to know that we have ample cash on hand to survive an emergency. In fact, we have around three to four years of spending and bills socked away, which should be more than enough to handle something like surprise medical bills or a drop in income. I’m fine with all of that, and I’m also unwilling to deplete our emergency savings in order to pay off our mortgage.
So, I started searching elsewhere. When I started looking at where I would feel most comfortable pulling our money from, I took a cold, hard look at some of our investments. I instantly knew I wanted to leave our crypto accounts alone, so that left me with a few other places to choose from.
First off, I own some Facebook stock in a joint account with my wife. My original purchase was in 2012, and I bought 250 shares for $25.97 each.
Obviously, the company has morphed into a new one called Meta by now, and shares of the stock are selling for a lot more than I paid. In November of 2021, in fact, stock in Meta was selling for $335.89 per share.
I didn’t want to sell all of my Meta stock, but I knew I was comfortable selling some of it. Ultimately, I decided to go with some advice from my CPA, which he called the 50% rule. The rule basically works like this: If you’re not 100% certain on how much you want to sell, then sell half, or 50%. That way, you’ve locked in some profits, and you can’t be too mad at yourself if the price continues to go up.
Once I made the sale of half of my Facebook stock, I had secured $40,000 of the $100,000 lump sum payment I wanted to make toward our mortgage. From there, I had to figure out whether the rest ($60,000) was going to come from.
That’s when I looked at another investment account I have with the Robinhood investing app. This is an account I started building with dividend stocks several years ago. While my initial investment involved $100,000 in dividend stocks, I ultimately invested another $100,000 for a total of $200,000.
Eventually, I got bored buying dividend stocks and realized I could also buy cryptocurrency through Robinhood. From there, I purchased Dogecoin, Bitcoin, and Ethereum through the app.
Between all of the holdings, we were up between $80,000 to $85,000 in a fairly short amount of time. I know I said I didn’t want to sell any of our crypto assets, so you’re probably wondering why I ended up selling the crypto I had with Robinhood. I ultimately made this move because, unlike other platforms that let you buy and sell crypto, Robinhood doesn’t have its own wallet. That means you don’t have any way to earn interest on your crypto holdings.
Either way, I ultimately found the other $60,000 for our mortgage by selling my dividend paying stocks and taking some profits from crypto. And that’s how I came up with $100,000 to throw at our mortgage right away.
What About The Extra Annual Payments?
In addition to making a lump sum payment on our mortgage, we’re also planning to make an overpayment on our mortgage every month. And, this is where being a business owner can be a lot of fun.
For the past few years, for example, we’ve had all our kids on our business payroll since they each play a role within our social media presence and even our ads. Being on payroll has allowed my two oldest sons to boost their savings and also max out their Roth IRAs. My younger two are also adding money to their Roth IRAs on a monthly basis, although we haven’t maxed them out yet.
In the meantime, my wife is also on the payroll since she is an integral part of our business as well. Between the two of us, we have been maxing out our 401(k) plans for the last several years. This wasn’t always the case, but we really ramped up our savings when the business took off six or seven years ago.
Also note that we have had a profit-sharing 401(k) plan the entire time, so we have been able to contribute a lot more than the average person can contribute to a 401(k). To give you some perspective on how much weâve been able to save in our self-directed 401k plan with profit sharing hereâs how much we were able to fund in 2020:
Over time though, some of our priorities have changed, and we have taken a deeper look at our finances as a whole. After looking at our retirement accounts and how much we’ve been paying our kids, we came to the conclusion that we really, truly want to pay off our home and become debt-free.
We decided to make a few specific moves as result:
We are going to cut back on our 401(k) contributions
We’re reducing payments to our kids
I’m calculating that this will free up anywhere from $80,000 to $90,000 per year we can use to pay off the house early. If we redirect some other funds toward this goal, I feel confident we can pay an extra $100,000 per year toward our mortgage until we’re entirely debt-free.
If we take this step and pay an additional $8,580 toward our mortgage each month after making the $100,000 lump sum payment, we should save $454,599.78 in interest on our home loan!
That’s a huge amount of savings, but this is about more than that.
Paying an extra $100,000 toward our mortgage each year will also help us become entirely debt-free in five years!
Why We’re Ditching Our Mortgage Early
When it comes to the great mortgage payoff debate, there are a lot of conflicting opinions out there. For some people, it’s all about the math, and they would much rather invest their extra cash for the long-term. But for others, the math doesn’t matter nearly as much as the peace of mind they get from becoming debt-free.
I asked a group of other business owners for their thoughts on paying off their mortgage early, and their answers were all over the place. While people had different reasons for paying off their home loans ahead of time, everyone seemed to agree the peace of mind they get is more important than the math.
Here are a few responses from the pay off your mortgage early camp:
“Weâre also actively pouring into our housing cost to have no mortgage in about 6 years from now. (Hopefully faster) While rates are stupid low right now here are the main reasons we want no house payment:
1. Timing: our house will be paid in full about the time our kids are leaving for college. It gives us extreme financial flexibility to then help them transition to adulthood.
2. Our age: Weâll be early 40âs with no house payment. We can pour the money that was going to a mortgage payment into our investment strategy during the greatest income earning years of our lives with plenty of time for compounding to assist into retirement.
3. Freedom/flexibility: with no major housing expense or consumer debts, our overhead/operating costs are minimal. If we want to take time off work to travel, have a catastrophic event, or weird market events occur, we donât need to worry about paying for a basic necessity in life.” – Casey Lewis, Real Estate Coach
“After paying off all other debt and building my full emergency fund, I got super focused on paying off my mortgage. I threw every bit of extra I had at it. By getting focused on that 1 thing, I was able to pay off $140k mortgage in 3.5 years. All of this as a single mother of a daughter with special needs. My daughter and freedom were my reasons!” – Ann James
“Did it in 2016 on our San Diego house. Total peace of mind thing for us, knowing that weâd never owe anyone any money ever again. Sold that house in 2019 and paid cash for our dream property in GA. Not an ounce of regret. We were otherwise debt free for many years before that and were maxing our retirement accounts. Now just throwing all that money into other investments.
Iâm an accountant by trade and âknowâ the math but still believe it was the best choice for us.” – Alise Brockman Jackson, Money Coach
Why Paying Off Your Mortgage Early Isn’t a Great Idea
Not surprisingly, plenty of other people disagree with the premise of paying off a mortgage early completely. Either they would rather invest their money for potentially higher returns, or they don’t want their extra cash “locked up” where they can’t get to it easily.
“In this environment, I would never pay off my mortgage.” – Larry Ludwig, Affiliate Marketing Expert
“We decided to not pay off our mortgage early because we feel the pros outweigh the cons pretty heavily when looking at the numbers.
When we bought our house we actually only put 10% down and took on PMI because we could earn more in the market than what the % was on PMI.
I actually called this morning and we are in the process of getting a new appraisal to get PMI knocked off after a year of owning the house and making minimum payments.
Pros of not paying off early:
1) We earn 8% in the market investing our money vs. 3% paying off our mortgage early.
2) Our money is far more liquid via investments than tieing it up in a mortgage. We can use this money to acquire/start new businesses, invest in short-term rental properties, etc.
3) We are young and want to leverage our time and high-risk tolerance while it makes the most sense.” – Kelan Kline of The Savvy Couple
All of these reasons make sense to me, but the difference in opinions really underscores why we call it “personal finance.” The decision to pay off your mortgage early is a personal one, and it doesn’t really matter what anyone else thinks.
I could make a huge list of bullet points describing every reason making extra mortgage payments feels right, but it all boils down to the peace of mind it brings.
Nothing in life is certain, and I’m not a proponent of living in fear.
However, I do believe in hedging my bets and focusing on areas of my life I can control.
I can’t really control whether my business model will even be relevant five or ten years from now, but I can easily control how much effort I put into paying off the one huge debt we have.
So, that’s what we plan to do â we’re paying our mortgage off over a five-year period while we continue to invest. Five years from now, I feel confident we’ll be glad we did.
The post We’ll Save $454,599.78 Paying Our Mortgage Off Early appeared first on Good Financial Cents®.
After moving into a new place, the biggest question you’re asking yourself is likely, “How am I going to decorate?”
A great use for all that blank, white space is a gallery wall. This is an easy way to feature your favorite framed artwork and personal photographs.
Follow our tips to style your own gallery wall:
1. Decide what to hang: Choose your medium (painting, drawing, photograph), size, and frame (including color, material, and shape). Don’t be afraid to mix and match! When adding variation, just make sure it’s balanced and doesn’t clash. If you have a collection of various frames but want to make everything uniform, consider painting them all the same color.
2. Plan the arrangement: Play around with the layout before you start putting nails into the wall. Decide if you’re going to group multiple pieces in a shape (diamonds, squares, and rectangles work well) or in a straight line. You might want to do a little sketch on paper (to scale). Then lay out your collage on the floor. Place each frame approximately one or two inches apart for cohesiveness. If you’re mixing sizes, start with the biggest piece and work around them with the smaller ones. Consider choosing one piece of art as the focal point and place it in the center.
3. Test your layout: Once you’re happy with the arrangement, cut out pieces of paper that fit each framed piece. Mock up your collage on the wall with paper and tape to help visualize the result. Make tweaks, and move the pieces around until the layout is just right.
4. Start hanging: This is the moment you’ve been waiting for! Break out your hammer and nails. Place the frames over the paper, replacing each cut-out with the actual piece.
Once you’re done, take a few steps back to admire your work! One of the best things about a gallery wall is that you can swap personal photos and art if you find a new piece that you want to feature.
You and your family spend a lot of time in the kitchen. Whether you are cooking a family meal, eating dinner, or enjoying a midnight snack, the kitchen is a family gathering point. Little renovations and adjustments can take your kitchen from good to great.
Island: Add an island. An island provides extra counter space, room for more seating, and much-needed storage space. If you are on a budget and can’t get an island installed, purchase a stand-alone version or even put a small table in the middle of the kitchen.
Range Hood: Range hoods draw up steam and smoke, circulate air, and keep your kitchen from smelling like whatever you’re cooking. Your neighbors will also appreciate it because it decreases the likelihood that your smoke alarm will go off when you are simply cooking pasta! There are a wide variety of range hood options. You can find one for almost any budget and, to decrease costs, you can install it yourself.
Countertops: Beautiful and durable countertops help to take your kitchen from good to great. If you are looking to sell, they are a great selling point for potential buyers. You can remodel your countertops without spending a fortune. The prices vary depending on the type of material you choose to use.
Backsplash: Cooking can be messy. Sick of oils and sauces making marks on the walls? Get a backsplash. Similar to countertops, the price varies based upon the material you choose. If you are on a budget you can also do it yourself!
Appliances: New appliances make a big difference. Prices range depending on the technology but they make cooking easier and more convenient. New appliances can also attract sellers and increase the offer price of your home.
Eat, drink, and be merry in a kitchen you and your family will love for years to come! We’d love to hear your thoughts on the next room we should tackle taking from good to great. Tweet your recommendations to @Century21!
Living with your parents has its perks: homecooked meals, childhood memories… oh, and free rent. So it’s not surprising that nearly half of 22-to-24-year-olds and just over one-fourth of 25-to-29-year-olds in the U.S. lived with their parents in 2019, according to the Federal Reserve Board. The top reason for doing so? Saving money.1
Your childhood home can also provide a safe haven when times get tough. During the coronavirus pandemic, for example, 52 percent of young adults ages 18 to 29 lived with one or both of their parents, according to Pew Research Center.2
At some point, though, you might feel the urge to get your own place. (And your parents probably wouldn’t mind, either.)
As you prepare to live on your own, you might want to explore the statistics behind financial independence and see the average costs of living expenses across the country. Financial expert Lindsay Dell Cook is also here to help fill in the gaps as you determine how much money you need to move out. She’s the president and founder of Budget Babble, which provides personal financial education and coaching services.
How much should you save before moving out?
Even if you think you know how to live on your own, you’re probably still wondering: How much money do you need to move out?
Everyone will have a unique answer, says Cook, because the cost of rent, your lifestyle and other factors can vary drastically from person to person. While the exact numbers will be specific to the individual, there is a way to figure out how to live on your own while remaining financially secure.
The key, according to Cook, is to estimate everything from your moving costs (hint: check out tips for moving on a budget) to the monthly expenses you’ll have once you’re living on your own. You’ll also want to keep your long-term savings goals in mind.
Below, Cook walks through each of the major expenses that you need to account for in your moving-out budget before you actually make the move.
Each category is accompanied by cost averages that can serve as a starting point as you determine how much money you need to move out. You’ll find costs by age range since these expenses tend to increase as you get older.
You can explore all of the costs you’ll need to plan for, or you can skip to any of the following living expenses to learn more:
Open up a spreadsheet, reference your favorite budgeting app or grab pen and paper, and let’s get started building your budget for your big move. By factoring in the categories below, you should be able to create your moving-out budget and determine how much you can afford in rent.
Rent and move-in fees: Account for these basic housing expenses
As you’re thinking about how much money you need to move out, your biggest expense will almost certainly be rent. Rents can vary from a few hundred dollars to thousands a month, depending on where you choose to live and if you have roommates to keep costs down. (Word to the wise: If you’re living with others, be sure you know how to split living costs with your roommates first.)
While rent is the first thing you might think about before moving out, Cook actually recommends saving it for last as you create your moving-out budget. That’s because the amount you can afford in rent will depend on what money you have left after subtracting all of your living expenses in the categories below from your after-tax income.
Remember: Once you sign a lease, you’re responsible for that monthly rent payment until the lease expires. It’s important to ensure that your budget can accommodate the rent payment.
Keep in mind that simply multiplying your monthly rent by the number of months on your lease won’t give you the complete picture of how much money you need to move out. You’ll need to account for a potential security deposit, move-in fees and pet fees to be fully prepared.
Security deposits and move-in fees
Cook recommends earmarking one and a half month’s rent for your security deposit and/or move-in fees if you don’t yet know where you’ll live. If you pay a security deposit, you’ll likely get it back after your lease is up (provided you didn’t do any major damage to the place).
Sometimes, landlords ask for a move-in fee instead of (or, less commonly, in addition to) a security deposit. A move-in fee can cost several hundred dollars, and it’s a one-time, nonrefundable expense, Cook notes.
Pet deposits
If you have a pet, keep in mind that many landlords will ask for a pet deposit as well, which Cook has seen as high as $500. “The pet deposit can actually be more significant than you would even imagine,” she says.
You may be able to negotiate a pet deposit with your landlord, which could help reduce costs in your moving-out budget.
Moving: Consider all the necessities for the big move
Cook says clients tend to underestimate how much it costs to move out of their parents’ place and into their new digs. A 14-foot truck rental (typically large enough for up to two bedrooms) tends to cost between $20 and $30 per day, in addition to a per-mile charge of 68 cents-$1.10, according to CostHelper.com.
For packing supplies, the consumer-focused site estimates the cost of a moving kit for a one-bedroom apartment (comprising 14-29 packing boxes, one roll of 55-yard moving tape and a marker) to usually fall somewhere between $69 and $90.
If you’re hiring professional movers, Cook suggests reaching out well before you’re ready to pack your boxes. “Just because you’re not ready to move doesn’t mean that you can’t reach out and just get a pulse on how much things might cost.” A moving-out budget that includes all the costs associated with your move can take the guesswork out of how much you’ll need to save.
Cook warns that a moving truck, packing materials and professional movers can add up. “Whatever you think it will be, add at least $200 to that,” she says.
Utilities: Keep the lights on and the water running
Gas, electricity, water—what would we do without them? You’ll need to make sure you have enough money earmarked in your moving-out budget to cover your bills to avoid any unpleasant surprises (like a cold shower).
When you’re touring new places to live, Cook recommends asking the landlord or current tenants about average monthly utility costs. Make sure you understand which—if any—utilities are included in your rent. Sometimes, Cook says, you can negotiate for your landlord to cover utilities if they’re really in need of tenants.
Home decor: Find a balance between old and new
When Cook’s clients move into their first places, they sometimes repurpose old furniture from their parents’ house or from other relatives. “There’s no shame in the hand-me-down game,” Cook says.
Some items might seem obvious in your moving-out budget, like a desk if you’re planning a home office, but it’s the little things that often get forgotten until you need them, like silverware, trash cans and bathmats. That can add up to big, unplanned-for expenses.
Cook encourages her clients to use all the secondhand items they can and then list every new household item they’ll need to furnish their apartment. Once they add up the expected costs, Cook increases the estimate by 10%. That’s because there are almost always extra little touches or necessities you’ll buy to make your new place your own.
Food and dining: Track your spending for a realistic estimate
Moving out of your parents’ house and learning how to live on your own comes with a lot of benefits, but one of the downsides is that you’re on the hook for all your meals. Cook says younger adults tend to drastically underestimate how much they’ll spend on food. “Some people spend the same amount on food as they do on rent,” she says.
The most straightforward way to determine how much you will spend on food is to track how much you are spending on food for at least a week. (If your parents treat you to a meal, ask them how much it cost so you can account for it.) When Cook works with clients to track their spending for the first time, food is the line item that raises the most eyebrows. “They’ll say, ‘Oh my gosh, I had no idea the line item for food would be so expensive,’” she says.
Cooking meals at home can be an effective way to keep a lid on food expenses, but that takes some experience in the kitchen as you learn how to live on your own—a life skill that can take time to develop. If you want to sharpen your skills as an at-home chef, you can start watching online cooking tutorials and making meals at home while you’re still living with your parents.
Discretionary spending: Make room for “the fun stuff”
Unless you’re getting help from your parents (and there’s no shame in that), you’ll be on the hook for every purchase once you move out.
Managing your discretionary spending is a key component of mastering how to live on your own. You can think of your discretionary expenses as wants, rather than needs—and everyone needs a chunk of money available to cover things like a new TV, movie tickets or home gym equipment. How much you have in your discretionary budget each month will depend on your income and your other costs, Cook says.
Some discretionary expenses don’t occur on a consistent schedule. You can, however, plan for these costs in your moving-out budget.
Cook encourages clients to look at a calendar and note the weddings, vacations and holiday spending that will need to be paid for over the next year. Add up the estimated cost for each of these big, irregular expenses and divide by 12.
Each month, you can contribute a planned amount to a high-yield savings account that’s dedicated to these discretionary expenses. Whenever you need to book flights, buy gifts or update your wardrobe, you’ll have a savings account that you can dip into guilt-free. This strategy can help prevent you from stressing over money, too.
Healthcare: Prepare for expected medical costs
If you’re wondering how to live on your own but don’t have health insurance, Cook strongly recommends that you get it. You can get health insurance through your employer, your parents or in the healthcare marketplace.
“Medical expenses are one of the main reasons a person can end up in financial distress and debt,” Cook says. “Even if you’re young and healthy, it’s not a gamble worth taking.”
When you have health insurance, you might still pay out of pocket for certain visits, procedures and medication. Refer to your insurance plan to see what out-of-pocket costs you’ll need to pay and build those into your moving-out budget.
Emergency fund: Start building your safety net
An emergency fund is exactly what it sounds like: money that is stowed away in case you lose your job or unexpected expenses pop up. Experts agree that ideally, your emergency fund should be able to cover your living expenses for three to six months, should you ever find yourself without a steady source of income. “That would include rent, food and any other bills you have to pay, like a car payment,” Cook says.
Since an emergency fund is an important and potentially significant part of your moving-out budget, you may want to start saving for this line item well in advance.
However, don’t be discouraged if you emergency fund isn’t quite where you want it to be. If you’re ready to move out before you’ve built up your emergency fund, you can start small and continue to contribute to it once you live on your own. Just make sure you’re budgeting for it like any other expense.
Wondering where to keep your emergency fund? Consider opening a high-yield savings account to stash the cash. This will keep it slightly out of sight, so you won’t be as tempted to dip into it for nonemergency use. Plus, the higher interest rate will help your money grow through the magic of compound interest.
Student loans and other financial goals: Pay off debt and save for the future
In addition to an emergency fund, you want to account for other savings goals in your moving-out budget, Cook says. Whether you want to pay off your student loans, save for a vacation, plan for retirement or financially prepare for grad school, you need to be diligently putting that money away.
“You really want to make sure you understand your budget and ensure that your rent and other living costs are still allowing you to save,” Cook says.
Create your own moving-out budget
So how much money do you need to move out? Break out your calculator and add up your honest estimates of each of the above expenses to build your moving-out budget.
After doing the math, will you have enough money left over to save for your goals? If not, then Cook recommends revisiting your financial plan before moving out. “The bottom line is that you either need to be able to cut expenses, have a higher income or some combination of the two,” Cook says.
Don’t end your budgeting goals there. As you set out on your own, learn how to manage your first salary so you can cover your post-move expenses while saving for the future.
Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
1 “Report on the Economic Well-Being of U.S. Households in 2019, Featuring Supplemental Data from April 2020.” Federal Reserve Board. https://www.federalreserve.gov/publications/files/2019-report-economic-well-being-us-households-202005.pdf
2 “A Majority of Young Adults in the U.S. Live With Their Parents for the First Time Since the Great Depression.” Pew Research Center, Washington, D.C. (September 4, 2020) https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-of-young-adults-in-the-u-s-live-with-their-parents-for-the-first-time-since-the-great-depression/
3 “Majority of Americans Say Parents Are Doing Too Much for Their Young Adult Children.” Pew Research Center, Washington, D.C. (October 23, 2019) https://www.pewsocialtrends.org/2019/10/23/majority-of-americans-say-parents-are-doing-too-much-for-their-young-adult-children/
4 “Consumer Expenditure Survey, 2018-2019.” U.S. Bureau of Labor Statistics.”
6 “Report on the Economic Well-Being of U.S. Households in 2019 – May 2020.” Federal Reserve Board. https://www.federalreserve.gov/publications/2020-economic-well-being-of-us-households-in-2019-student-loans-other-education-debt.htm
To hear professional home inspectors tell it, Americans take better care of their automobiles than their homes. Consequently, every homebuyer should plan to spend the $400 to $600 necessary to have the house they like best thoroughly examined by an independent third party before closing.
But wait: Before you’ve made your final choice and order a home inspector to take a look, you should do some preliminary investigating of your own. That way, you can protect yourself from picking the wrong house and allowing a better maintained property to slip away.
Even rookie buyers can get a good idea of just how well kept a house has been. Even when the seller has given the place a fresh coat of paint and trimmed the lawn, there still are often telltale signs that the owner may not have been as diligent as he could have. But keep it mind, it would be counterproductive to put every house under this kind of microscope. Once you narrow your choices down to two or three homes, it’s time to take a harder look. Then, after you make your final decision, call in the experts.
Look at Small Details
For example, a clean furnace filter can be taken as an indication the house has been well cared for. But who’s to say the seller didn’t just replace a filter that hadn’t been changed in years? If the filter hasn’t been changed regularly, the furnace hasn’t been working efficiently and it may not live up to its expected life span.
So how do you now? You don’t for sure. but if you spy a pile of spare filters tucked away in a storage closet, it’s a pretty good sign that the owner is on the ball. Someone who is in the process of selling isn’t buying extra filters he won’t use.
Home Service Log
Another clue that the furnace is in good shape is to look for a service log showing that the machine has been serviced regularly, at least once a year.
Of course, homebuyers, even those who have purchased several houses, shouldn’t substitute this kind of rudimentary investigation for a complete and exhaustive inspection by a trained professional. Even if the furnace has been serviced consistently, it could be on its last legs, and only a pro will be able to determine that.
Go Through the Motions as an Owner
Don’t be afraid to kick the tires and act like you’re already living there. You have every right to open closets, flush toilets, run the dishwasher through a full cycle, turn on all the stove-top burners, check the refrigerator and open the in the windows. The owner shouldn’t object – not if he really wants to sell.
If you are really interested in a property, make an appointment with the owner to return with your agents in tow. Give yourself plenty of time to give the place a good once-over. Then, you can decide if you want to proceed.
Tips from Professionals
Here, in no particular order, are some other suggestions from professional inspectors to help you decide if the choices you are considering are inspection-worthy:
Tips for Inspecting Basements
If the house has a basement, follow your nose. If there is a damp, musty smell, there’s usually an issue. A dehumidifier is another tip-off to a wet basement. They aren’t part of the decor. Also, look for stains or rot where the stringers, or side pieces, on the basement steps touch the floor. If there is a water problem, the moisture will wick into the wood. If there is nothing on the basement floor, that could be a sign of water problems. Inspectors love to see stacks of old magazines in the corner with spider webs. That means they have been there a long time and the there is no water problem.
Water Damage to Look for
Some owners will try to hide water damage in their bathrooms by re-caulking and grouting tiles. But you can beat them at their own game by tapping on the tile where it hits the tub or shower floor. The tile should sound and feel solid. If it sounds hollow, give it a nudge to see if there is any give to the wall. If there is, something’s going on behind there that isn’t good.
Electrical Inspections that are Amateur-friendly
After water issues, improper electrical wiring is the second most common defect found by home inspectors. It is difficult for an amateur to determine if the electrical system is adequate, but there are clues. If you see a lot of fuses lying around, especially burnt-out ones, it’s a dead giveaway that the wiring is probably undersized. Another sure-fire indication that the wiring is insufficient: A bunch of extension cords snaking around, hither and yon.
Always Check the Roof
Roofing problems also are fairly common, so look for shingles that are cupping at the corners. They may have to be replaced. If the roof appears to be sagging between the joists, the entire thing may have to be removed. And if there are already are two layers of shingles, the cost could be 20% higher or more. If the house has been well maintained, the owner will know exactly how many layers are on the roof, the age of the top layer and if new sheathing has been put down between the two layers.
Turning on Faucets is Always a Great Idea
Turn on the faucets on the bathroom sink and tub and flush the toilet, all at the same time. If there is an appreciable drop in water flow, there could be a serious pressure problem, possibly caused by mineral buildup in old pipes.
Keep in Mind…
* Maybe one in 20 houses examined by the pros qualifies as well maintained. But if the seller keeps a maintenance log backed by files of receipts, warranties, instruction manuals and color swatches, it’s probably a safe bet that the house has been a labor of love. Neatness counts, too. There should be access to all space, and nothing should be blocking the furnace or electrical panel.
Syndicated newspaper columnist, Lew Sichelman has been covering the housing market and all it entails for more than 50 years. He is an award-winning journalist who worked at two major Washington, D.C. newspapers and is a past president of the National Association of Real Estate Editors.
With a rapidly changing market and low inventory, homes are selling faster than ever. New listings can have several offers before you have even had the chance to see it. With this being the case, not only do you have to spring into rapid action, you have to come prepared with an offer that will stand out above the other buyers out there.
While it can be difficult to be the first of multiple offers coming in, you can make your offer the one that will get you the home that you have fallen in love with. The tips could be exactly what you need to get into your next home.
Get The Inside Scoop
Say you have decided to purchase a home that you have fallen in love with and you’re prepared to put in an offer on that home. Before you meet with your real estate agent to write the offer, you should ask your agent to get the inside scoop of what the seller may want by asking the listing agent.
When your agent contacts the listing agent, make sure that they ask questions about the home’s availability and if there are multiple offers for that home. If there are other offers, you will have to evaluate just what you are willing to do to get the home. Keep in mind that the listing agent may not be able to disclose anything to your agent at the request of the seller.
You should also ask your agent to inquire about the seller’s preferences and what they may want. Some sellers prefer you use a specific title company or have a specific possession date that would align with a date that is convenient for them. The more your offer aligns with the seller’s goal, the better a chance of getting your dream home.
While making an offer on a home can be complex, you should aim to make your offer as simple as possible. The fewer contingencies that you have put in place, the better.
Some contingencies you might put in place range from a financing contingency to a home inspection contingency.
Also, when you put in an offer, keep in mind that it’s not all about price. You may be prepared to go well over asking, but remember that the best offer will be the sum of the terms that work best for the home’s seller. While you want to get this home, you do not want to overextend yourself financially.
Things Will Move Quickly
As you embark on your home search, you will want to see as many homes as possible. If you work with an agent that has a busy schedule, ask to utilize one of their team members to see the homes on your list.Remember, you will want to move quickly especially when the market is hot and your agent will do the best they can to work with you to get you the house you want.
One Last Tip
Writing an offer can be cumbersome and can take more time than you may be willing to wait. The key tip: be patient. Let your agent provide the seller and the listing agent with your offer and wait a few days to find out if they accept or not. This is completely normal so do your best to be patient in hopes that you are able to get your next home.
One thing that you may be able to do to get your offer accepted is to suggest to your real estate agent that they outline the terms and contingencies of your offer in a pager on the front pack of the offer package. This will give the seller and listing agent the opportunity to see what the offer entails from the beginning.
During a hot market where homes are selling as fast, you have to be diligent in writing your offer so that they will stand out from the rest. For more tips and tricks on the homeowner journey, read through our free How To guides onbuying,selling, andfinancing your home.
As a Sr. Marketing Coordinator for Homes.com, Dru provides information and resources for agents and Realtors spanning from market reports to technology advances in the industry. With the knowledge gained from working closely with real estate professionals, Dru also shares advice for consumers on how to best navigate the homebuying and selling waters.
The coronavirus pandemic has made it tough to buy a home, including vacation homes. Homebuyer sentiment is at a ten-year low, and millions of families are struggling with unemployment or small businesses that are in trouble. They are forgoing their traditional week or two at the beach or mountains this year and staying home. Short term rentals built a whole new economy in popular vacation spots and many vacation homeowners count on revenues from short-term rentals to pay their mortgages.
Perhaps the only good thing about these hard times for vacation owners are the bargains that are opening up in vacation destinations nationwide. Home sellers have been in control for years, especially in the hottest short-term rental markets. If you are fortunate enough to be immune from the economic crisis that is sweeping the nation, now is the time to buy that vacation home you’ve been considering.
Here are five of the nation’s most popular summer vacation destinations where bargains can be found.
Cape Coral-Fort Myers, Florida
Sales are 20% lower than last spring, and new listings are growing at a rate of 24 listings per 1000 households in the Cape Coral-Fort Myers market. Plenty of good deals are attracting a wave of buyers from Northern states despite the pandemic.
The Cape Coral-Fort Myers real estate market is rapidly growing, yet it still retains its small-town charm. Its quality of life, miles of Gulf Coast beaches, islands, and the economy continues to attract people. Homes.com lists more than 80,000 homes for sale in the Cape Coral area and about 9,000 in and around Fort Myers.
Lakeland-Winter Haven, Florida
Through April, sales were down 20% from April 2019, creating buyers’ market conditions in Lakeland-Winter Haven offer a dense suburban feel, and most residents own their homes. Located 25 miles inland from the Tampa Bay area. November, April, and March are the most pleasant months in the Lakeland-Winter Haven metro area. Click here to see available listings in Lakeland and in Winter Haven.
Santa Barbara, California
The California coast forms a crescent north of Los Angeles that connects breathtaking beaches, mountains, and vineyards. The Channel Islands National Park offers scuba diving, hiking, and whale watching. Santa Barbara’s downtown offers world-class shopping and dining.
Its real estate offerings feature a sizeable luxury home market and affordable houses as well. The pandemic is taking its toll. According to the local MLS, closings have declined from 142 closings between March 15, 2019, and April 15, 2019, but only 95 closings during the period this year. The drop in sales gives buyers an advantage in a market that features “Access Hollywood” quality listings. To see for yourself, check out Santa Barbara’s available local listings on Homes.com.
Saugatuck, Michigan
Not all excellent beach resorts are on an ocean. If you live in the Midwest, there’s a great one on the east coast of Lake Michigan. With sun, sand, and freshwater to offer, try Saugatuck. Saugatuck is a 150-old former logging town that became a local resort a century ago. Now Southwest Michigan ranks as one of Conde Nast’s 25 best places to go in 2020. Oval Beach on Lake Michigan, sand dune rides, a beach that is litter-less, a chain ferry across the Kalamazoo River, and hammocks on every porch make Saugatuck a great place for families to relax. Homes.com lists some beachfront properties that are more affordable than either coast. Best of all, it is an easy drive from Chicago and Detroit.
Ocean City, Maryland
This Mid-Atlantic shore town is straight from the 1980s with boardwalk, putt-putt golf, beach parties, and famous french fries. In fact, it’s one of the best boardwalk beaches in the US, according to National Geographic’s Traveler. Its real estate market is also more proletarian, featuring high rise condos and bungalows. The pandemic drove away sellers this year, and new listings fell 27% in April, a multi-year low, leaving fewer than 800 listings as the summer season opens. The pandemic also drove down asking prices, and the median new listing price is only $290,000, far below the median for the year, $352,000. Looking to buy? Browse available listings in Ocean City on Homes.com.
America is starting to open up just as the summer begins. As restrictions relax and more beaches open, 2020 might become a great year to get a deal on a beach property.
Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.
