Now we’ll rank the top mortgage lenders in Wisconsin, based on the most recent year’s completed loan volume.
These are the largest lenders in The Badger State based on available HMDA data for 2021. Collectively, more than 800 lenders funded $70 billion there during the year.
Interestingly, it appears that Wisconsinites are big on using their own local companies instead of larger, national brands.
At least when it comes to home loans, as the top three mortgage companies are all headquartered in the state.
Read on to see which company led the way in mortgage origination last year in Wisconsin.
Top Mortgage Lenders in Wisconsin (Overall)
Ranking
Company Name
2021 Loan Volume
1.
Summit CU
$2.7 billion
2.
Associated Bank
$2.4 billion
3.
UW Credit Union
$2.4 billion
4.
Rocket Mortgage
$2.3 billion
5.
Wells Fargo
$2.0 billion
6.
Chase
$1.9 billion
7.
U.S. Bank
$1.8 billion
8.
Landmark CU
$1.8 billion
9.
Fairway Independent
$1.7 billion
10.
Johnson Bank
$1.6 billion
As noted, a Wisconsin-based lender topped the charts in 2021, per HMDA data from Richey May.
It was none other than Madison-based Summit Credit Union, which funded $2.7 billion in the state of Wisconsin last year.
In second was Green Bay-based Associated Bank with a close $2.4 billion, followed by Madison-based University of Wisconsin Credit Union (UW Credit Union) with $2.4 billion.
This is interesting for a few reasons – one being that the top three are all Wisconsin-based, and the other that the top three consist of two credit unions and a bank.
That bucks the trend of nonbank mortgage lenders ruling the roost in many other states throughout the nation.
In fourth was the nation’s top mortgage lender, Rocket Mortgage, which funded $2.3 billion. They also happen to be situated fairly close to Wisconsin.
And in fifth was San Francisco-based Wells Fargo with $2.0 billion, formerly the top lender in the United States.
The rest of the top 10 included Chase, U.S. Bank, Landmark Credit Union (New Berlin, WI), Fairway Independent Mortgage (Madison, WI), and Johnson Bank (Racine, WI).
All told, six of the top 10 mortgage lenders in Wisconsin are based in the state, which is pretty impressive.
That might lead all other states in terms of the number of homegrown companies in the top-10 list.
Top Wisconsin Mortgage Lenders (for Home Buyers)
Ranking
Company Name
2021 Loan Volume
1.
Associated Bank
$1.2 billion
2.
Fairway Independent
$1.1 billion
3.
Chase
$878 million
4.
U.S. Bank
$649 million
5.
Summit CU
$640 million
6.
UW Credit Union
$633 million
7.
Johnson Bank
$610 million
8.
Wells Fargo
$608 million
9.
Rocket Mortgage
$467 million
10.
Newrez
$442 million
If we look at home purchase loans only, Associated Bank took the top spot with $1.2 billion funded, followed by nonbank lender Fairway Independent Mortgage with $1.1 billion.
In third was NYC-based Chase with $878 million, trailed by U.S. Bank with $649 million and Summit CU with $640 million.
Others in the top-10 list for home buyers included UW Credit Union, Johnson Bank, Wells Fargo, Rocket Mortgage, and Newrez.
So when it came to purchase lending, five of the top 10 were Wisconsin-based. Still pretty impressive.
Generally, consumers tend to flock toward local companies when buying a home.
Top Wisconsin Refinance Lenders (for Existing Homeowners)
Ranking
Company Name
2021 Loan Volume
1.
Summit CU
$1.8 billion
2.
Rocket Mortgage
$1.8 billion
3.
UW Credit Union
$1.7 billion
4.
Wells Fargo
$1.4 billion
5.
Landmark CU
$1.4 billion
6.
Associated Bank
$1.2 billion
7.
U.S. Bank
$1.1 billion
8.
Chase
$968 million
9.
Johnson Bank
$907 million
10.
Freedom Mortgage
$830 million
When it came to mortgage refinances, amazingly a Wisconsin-based lender still took the top spot, but just barely.
Summit CU funded roughly $1.8 billion in refis last year, just enough to beat out Rocket Mortgage’s similar tally.
UW Credit Union took third with $1.7 billion, followed by Wells Fargo with $1.4 billion and Landmark CU with $1.4 billion.
The rest of the best included Associated Bank, U.S. Bank, Chase, Johnson Bank, and Freedom Mortgage.
Once again, five of the top 10 were Wisconsin-based mortgage lenders, another feat for the home team.
Top Mortgage Lenders in Milwaukee
Ranking
Company Name
2021 Loan Volume
1.
Landmark CU
$1.4 billion
2.
Wells Fargo
$954 million
3.
Associated Bank
$943 million
4.
Chase
$902 million
5.
Newrez
$662 million
6.
Fairway Independent
$638 million
7.
UW Credit Union
$591 million
8.
Rocket Mortgage
$591 million
9.
U.S. Bank
$560 million
10.
Summit CU
$524 million
Top Mortgage Lenders in Madison
Ranking
Company Name
2021 Loan Volume
1.
Summit CU
$1.6 billion
2.
UW Credit Union
$1.5 billion
3.
Fairway Independent
$522 million
4.
The Park Bank
$394 million
5.
Truist
$349 million
6.
Thompson Kane
$288 million
7.
State Bank of Cross Plains
$278 million
8.
Oregon Community Bank
$254 million
9.
Old National Bank
$249 million
10.
Rocket Mortgage
$233 million
The Best Wisconsin Mortgage Lenders (by Customer Ratings)
Now let’s look at the top-rated Wisconsin mortgage lenders based on actual customer reviews, as opposed to mere loan volume.
While Summit CU is top overall, it’s hard to find mortgage-related reviews for credit unions. The same goes for banks, as they offer a variety of different services other than home loans.
If we consider mortgage lenders only, A+ Mortgage Services, Inc. out of Muskego has the best rating on Zillow, a 4.99/5 from over 400 reviews.
Several other Wisconsin-based lenders have 4.98/5 scores, including Waterstone Mortgage Corp., McGlone Mortgage, and Inlanta Mortgage.
Not far off is Fairway Independent Mortgage (4.95/5), Homefinity (4.95/5), and Go Mortgage (4.90/5).
Meanwhile, U.S. Bank has a 4.98/5 on Zillow, Wells Fargo and Chase have a 4.95/5, and Rocket Mortgage has a 4.48/5.
So the big guys and the local companies are all pretty well regarded. But take the time to research companies, ask for referrals from friends/family, and obtain multiple rate quotes.
Doing so should boost your chances of having a positive home loan experience.
These days I start every conversation with, “Yes, I have used ChatGPT,” just to get that out of the way for the sake of efficiency. The speed of discourse about Generative AI in all aspects of life from personal to business topics has been astounding. And while the use cases for generative AI as a consumer, such as internet searching, customer service and random poem writing for hours (who, me?) have been immediately obvious, specific application of this tech in the mortgage industry has been a more involved discussion.
The thing that separates Generative AI from other types of artificial intelligence is that it can create new types of patterns and data such as narratives, images and even code, based off of existing data used to train the model. The possibilities are endless; however, the risks are also plenty since models that are not properly managed and tested can produce biased or incorrect results.
The highly regulated nature of the mortgage industry, paired with the mandate of ensuring fairness in the process for borrowers, tends to give pause in terms of introducing new tech that is not always easy to explain. Like any other form of automation and modeling, effective controls that curate data input and robust regular testing of output results are essential to this tech being adopted. That being said, there are a couple areas where Generative AI could have a transformative impact, such as increasing underwriting explainability without adding inefficiency, and breaking out of our old patterns of thinking when it comes to solutioning.
The cost to originate a mortgage loan has continued to rise annually. According to the MBA, it cost an IMB $12,450 to originate a loan, on average, in the fourth quarter of 2022. So, the last thing lenders want is to add additional steps or cost to the loan process. However, recent public statements from regulators suggest that demand for visibility and transparency into underwriting decisions is increasing.
Lenders are being pulled between the demand to show their work and the very real need to embrace automated underwriting technology for efficiency, consistency and quality. When reviewing the appraisal specifically, underwriters increasingly have a wealth of data at their fingertips. From GSE collateral underwriting tools to third-party appraisal review solutions to good ol’ Google searches, there is a lot of data an underwriter is considering in their thought space to analyze whether an appraisal is sound in its quality and accuracy.
That thought space, in which we rely on the training and experience of a human to consider (or not consider) available data, is difficult to document efficiently. Understanding what comparables were reviewed but ultimately not included in an appraisal and why could give even more confidence in the soundness of the analysis.
But with generative AI, a quick summary of available data and how it may or may not compare to a subject property could be generated on the fly. In the same way that Microsoft and others are creating “copilots” to automatically create slide presentations and docs, generated content relevant to an underwriting decision is within reach.
Today we trust the credentialing and experience of the person rather than asking them to always document their thought process. But what if we had access to a summary of the subject property’s local market environment on the fly in plain language? Instead of just a black box score, we would have a narrative of the data considered to generate the score.
I’ve been thinking a lot about the creative solutioning process and how that might change with generative AI. As a musician and songwriter, it is a common thing to build new ideas off of existing patterns and previously created content. Pablo Picasso is often quoted as saying, “Good artists borrow; great artists steal.”
On an album I recently released, I used generative AI to create the album cover and some of the loops in the songs. I let the AI produce the raw material but then edited the design and sounds to further refine it and add my own style. It has spawned a whole new vein of inspiration and patterns that I would have never conceived from scratch. Instead of stealing from another artist, in a way I’m stealing from a machine. Oh, and I finished the entire album in weeks, not months (this doesn’t mean it is good, but it was super-efficient and fun).
My point is that I don’t believe AI is going to replace existing jobs on a massive scale, but with a thoughtful approach to keeping humans in the loop we could see productivity and new solutions exponentially increase. With the ability to generate code, AI could help business experts finally create their own apps the way they have always hoped for without the ideas being lost in translation through a requirements process. A seamless path from creativity to execution is now forming. This democratization of tech capabilities could really benefit smaller lenders that don’t have the massive tech organizations of the top 10 lenders.
So while the risks of implementing generative AI without proper controls are real and well documented, the potential of finding solutions that finally reduce the cost of originating a loan is also real. Like any other modeling technique, data quality and curation are absolutely essential.
As an industry we can spend a lot of time being paralyzed by fear of the black box or we can develop standards to test the output of these models and their impact in a way that allows innovation to continue while mitigating risks. Yes, there is a high likelihood that this type of transformative tech will change the way we work. But by embracing the human in the loop approach, new patterns of creativity and innovation can emerge from generated raw materials. Regardless of whether generative AI makes you terrified or excited, the future is going to be anything but boring. And no, I did not use ChatGPT to write this article…maybe the next one.
Society’s obsession with celebrities is big biz! And when it comes to cashing in on it, paparazzi moguls François and Brandy Navarre are laughing all the way to the bank.
The couple just listed a palatial property in the upscale Los Angeles neighborhood of Pacific Palisades and they’re hoping to cash in $12,225,000 from their latest real estate venture.
Just the latest in a long streak of million dollar homes they bought (and later sold at a profit), François and Brandy Navarre’s house is listed with Zac Mostame and Santiago Arana of The Agency and Andreas Elsenhans of Westside Estate Agency.
From king & queen of the paparazzi to prolific real estate investors
Celebrity photos are a hot commodity. Whether an A-lister is caught canoodling with a beau, dropping their kids off at school, or simply out and about doing everyday errands, there’s big bucks in celebrity photos — which are taken by photographers dubbed ‘the paparazzi’.
Just ask François and Brandy Navarre, paparazzi moguls and real estate developers who are testament to the multi-million dollar industry of paparazzi pics.
The couple are co-founders and owners of the most successful celebrity gossip and paparazzi agency in Hollywood: X17.
Known for their aggressive tactics, hiding drones and long zoom lenses in pursuit of the perfect pic, the Navarres have built their dynasty off famous folks doing their ‘regular’ routines of getting groceries, exercising in their neighborhoods and going on the school run with their kids.
Of course, with great success comes great responsibility. Last year, X17 was sued by Prince Harry and Meghan Markle over unauthorized images of their son Archie. Jennifer Aniston also sued the couple over topless photos taken outside her Malibu home.
And many other celebrities — such as Kristen Bell, Dax Shepard, Halle Berry, Britney Spears and Jennifer Garner, to name a few — have been outspoken about the invasive and unsafe elements of having to deal with the paparazzi on a daily basis.
Like it or not, society’s obsession with celebrities is a money-making industry and the Navarres have profited in a big way — becoming as wealthy as their A-list clientele.
And as it turns out, their profitable paparazzi dynasty has afforded them some luxurious digs in the competitive Los Angeles real estate market.
A look at the Navarres’ past real estate ventures
According to Dirt, in 2021 the Navarres sold an 8,500-square foot estate in Los Angeles’ Pacific Palisades for $13.7 million.
And in 2005, they purchased a Pacific Palisades home for $5 million, which was located next door to Conan O’Brien’s estate, which they later listed for sale asking $15.9 million.
The former paparazzi couple also bought a beach house in 2000 for $1.7 million. The Malibu home has been for sale and for rent since 2016, with a listed price of $7.5 million and a summer rental rate at $45,000 per month.
Their latest home in Pacific Palisades has just hit the market
And now, the Navarres have listed another property for $12.225 million.
Located in their seemingly favorite upscale neighborhood of Pacific Palisades, the stunning estate is overlooking the Riviera surrounded by serene greenery and landscapes.
The midcentury modern home features 5 bedrooms, 4.5 bathrooms and a detached guest house.
Boasting an open floor plan and living area with vaulted ceilings and exposed beams, the luxurious Los Angeles home has jaw-dropping ocean views amid its 5,500-square feet.
The outdoor amenities include a pool, patio and plenty of gorgeous greenery to soak up the sweet California sunshine.
The plush property is listed by Zac Mostame and Santiago Arana of The Agency and Andreas Elsenhans of Westside Estate Agency.
More stories you might like
The House that Won Season 1 of HGTV’s ‘Rock the Block’ Competition is Now for SaleCelebrity Chef Giada de Laurentiis Sells Scenic Pacific Palisades Home for $7 Million Everything We Know About Adam Levine’s House in Pacific PalisadesHype House: the TikTok Mansion Owned by Some of the Internet’s Biggest Stars
Back in March I published the first post in what I call “The Digit + Axos Invest Experiment“.
The series of posts was designed to show just how easy it can be to save and invest using today’s automated saving and investing solutions.
To facilitate the experiment I opened two new accounts, both with free automated services that I discovered earlier this year.
The first account was an free online savings account from Digit, an account that helps take the busy work out of saving. It analyzes your checking account daily and at regular intervals it saves small amounts of money from your checking and puts it into your Digit savings account – without your intervention. It allows you to save money, a little bit at a time, without even realizing it.
The second account is a free automated investment adviser from the folks at Axos Invest. When you have an investment account from Axos Invest, their system will allow you to regularly invest in a taxable or tax advantaged retirement account, and it will automatically invest your funds in a portfolio of low cost ETF index funds. It’s a great new long term investing site, along the lines of Betterment or Wealthfront, but without any account management costs.
Digit and Axos Invest are both big on the idea of automating things in order to make them more efficient, more cost-effective and better for your bottom line. I liked the idea behind both sites, and after signing up I decided to take them on a trial run and to run an experiment.
Just how much could I save automatically for the year using Digit’s tools? How much would I be able to invest at no cost using Axos Invest? How much intervention would I need to have – and just how much could I save over time? First, let’s take a brief look at these two accounts.
Digit Savings Account
According to Ethan Bloch, the founder of Digit, the company was started to help people, “maximize their money, while at the same time driving the amount of time and effort it takes to do so as close to 0 minutes per year as possible”
So how does Digit work? You sign up for an account, and link your checking account. Digit will then analyze your income and expenses, find patterns and then find small amounts that it can set aside for you – without any pain for you.
So once you sign up and turn on auto-savings, every 2 or 3 days Digit will transfer some money from your checking to your savings, usually somewhere between $5-$50. Digit won’t overdraft your account, and they have a “no overdraft guarantee that states they’ll pay any overdraft fees if they accidentally overdraft your account.
Open Your Digit Savings Account
Axos Invest Investing Account
Axos Invest launched with the goal of being the world’s first completely free financial advisor. Their founders had a mission “to ensure everyone can achieve their financial goals, which starts with investing as early as possible. This is why there is no minimum to start and we do not charge fees.”
Axos Invest’s founders understood that one of the drags on the typical person’s portfolios is the fees that they’re paying to invest, as well as the friction point of having to invest thousands of dollars to start. They changed that with no minimums to invest, and no fees charged for investing. Axos Invest will be releasing some premium add-on products for their users, which they will charge for, but a basic investing account will not cost anything beyond the mutual fund expense ratios associated with your investments.
What do you invest in with Axos Invest? Axos Invest will invest your funds based on Modern Portfolio Theory (MPT). Your investments will be diversified, low cost and recognize the value of long term passive investing by investing in ETF index funds. Plus, when you sign up now, you’ll get a $20 Signup Bonus!
Open Your Axos Invest Investing Account And Get A $20 Bonus
The Digit + Axos Invest Experiment (D+AI Experiment)
So for my Digit + Axos Invest Experiment, the goal was not only to take these two free products for a spin, but also to show just how easy (and low cost) it can be to invest. There really should be no excuse to not get started.
When I started in early February my goal was to allow Digit to automatically pull money from my checking account and put it into my Digit savings. Whenever the amount in my Digit savings reached $75 I would transfer that money over to my Axos Invest account and invest it in their highly diversified set of ETF index funds.
Why was I doing it this way? I did it this way because Axos Invest has no minimums and you can buy fractional shares, so why not? I can transfer money in small chunks, and engage in a bit of dollar-cost averaging while I’m at it.
So how are things going now that we’re in the 4th quarter?
The Experiment In Progress
After setting up my Digit and Axos Invest accounts I put the plan in action and allowed my Digit account to start saving on my behalf.
Digit started saving small amounts in my account when I first began. $5 here, $15 there. Over time multiple transfers and deposits ended up adding up to larger amounts in my Digit account. My first transfer to my investment account was about $186.
From then on every time the amount reached around $75-$100 or more, I transferred the money to Axos Invest.
Amounts Withdrawn And Invested So Far
I’m now around 8 months into my little experiment, and I’ve withdrawn my Digit savings balance and invested it in my Axos Invest Roth IRA 20 times.
Here are the amounts that I have withdrawn and invested, with the most recent investment first:
$445.41
$173.84
$419.66
$112.68
$155.20
$142.02
$74.36
$79.76
$121.75
$82.03
$95.67
$81.27*
$93.28
$109.47
$76.20
$99.08
$99.32
$90.88
$74.72
$186.00
A total of $2812.60 has been invested in my Roth IRA over these months.
Here’s a screenshot from my Digit account showing my latest $445.41 withdrawal for the purpose of investing.
After withdrawing the money I then transfer it from my checking account over to Axos Invest. Here’s a screenshot from my latest deposit with Axos Invest. The screenshot shows how deposits can be used to purchase fractional shares of the ETF index funds used in the account.
Now that the latest deposit of $445.41 has gone through, I have $2,750.06 invested at Axos Invest, slightly less than the amount deposited since the investments (and the markets) have gone down almost 2.5% since I started.
Here’s my portfolio’s asset allocation in my Axos Invest account. It is a bit more aggressive than in my other retirement accounts.
The funds that Axos Invest currently uses, and their expenses, are shown below (but are subject to change)
Vanguard Total Stock Market ETF (VTI): 0.05%
Vanguard FTSE Developed Markets ETF (VEA): 0.09%
Vanguard FTSE Emerging Markets ETF (VWO): 0.15%
Vanguard Intmdte Tm Govt Bd ETF (VGIT): 0.12%
Vanguard Short-Term Government Bond Index ETF (VGSH): 0.12%
iShares Investment Grade Corporate Bond ETF (LQD): 0.15%
State Street Global Advisors Barclays Short Term High Yield Bond Index ETF (SJNK): 0.40%
iShares Barclays TIPS Bond Fund (ETF) (TIP): 0.20%
Vanguard REIT Index Fund (VNQ): 0.10%
We’ll see what kind of returns my account sees over the coming months/years, but I’m sure it will be close to what the market does. Since I’m not paying any account management fees to invest, I’ll be coming out ahead as compared to some other automated investment advisers.
A Recap Of My Progress So Far
So how is the experiment going 3/4 of the way through the year? In my book it’s been a rousing success. I’ve saved $2812.60 over the 8 month period. If we divide that over 8 months, it means an average saved of about $351.58/month.
Multiply the $351.58 by 12 months and it means that if I continue this experiment for an entire year, I could expect to see somewhere in the neighborhood of $4218 saved for the year.
If you look at that $4218 amount, it’s about three quarters of the annual $5500 contribution limit for a Roth IRA. So essentially, 3/4 of my year’s Roth IRA contributions are happening without me having to actually think about it.
The money is slowly coming out of my accounts – usually in amounts that don’t even really register. The savings amounts tend to be in the $10-50 range, although a few have been $100+. It’s amazing how fast those small amounts really add up!
The Power Of Investing Over Time
Let’s say you were in your 20s and you were to do something similar to what I’m doing with this experiment. You could end up with a pretty nice start to your nest egg over time.
Just setup automated savings and investments, and in my case that $4218 contribution for the year when extrapolated out over 30 years at an average 8% interest, will end up as just over $516,000 over 30 years.
To me that’s the power of long term investing. You can take small savings and investment amounts like this, and make it grow. In the end those small amounts end up adding up to a large lump sum in retirement. That’s pretty powerful. Why not get started now?
Join In The Digit & Axos Invest Experiment
I’ll be maxing out the Roth IRA this year when taking into account my small regular auto-investments with Betterment in addition to the Roth IRA from this experiment. Not too shabby for setting things on auto-pilot, and not even noticing the saving is happening!
Interested in joining the “Digit and Axos Invest Experiment”? I invite you to join in!
Open your accounts here:
After your accounts are open, sit back and wait for the savings to pile up – then invest! Piece of cake! Give it a shot and let us know how it goes!
How much money does it take to start an IRA? The easy answer is $0, but that won’t get you on your way to growing your money into retirement. The truth is, you can start an IRA with very little money. The keys to really take advantage of the power of Roth IRAs or Traditional IRAs are to understand your eligibility, the rules, and to consistently add to your account over time.
IRA’s are easy to start. Just open up a great online brokerage account. My personal favorite right now is M1 Finance.
Keep in mind that there are actually two main types of IRAs to consider, so make sure you understand which one you are eligible for.
Table of Contents
Which IRA Am I Eligible For – Traditional or Roth?
Virtually anyone can contribute to an IRA, Roth or traditional. The most basic requirement is that you have earned income. The difference between the two is based on when you’ll pay taxes.
A traditional IRA allows you to grow your money tax-free over time. You won’t pay income taxes on your account until you begin taking distributions in retirement age, or when you’re at least 591/2. You may be able to deduct your contributions on your taxes if you meet specific filing status and income requirements.
With a Roth IRA, on the other hand, you’ll contribute income that has already been taxed, so you don’t get a tax deduction right off the bat. Your money will grow tax-free, however, and you won’t have to pay income taxes on your account once you begin taking distributions in retirement.
Here is a tool to help figure out what type of IRA you’re eligible for:
Traditional IRA
Roth IRA
Contribution Limits
$6,500 total across all IRAs in 2023; if you’re ages 50 and older, you can contribute an additional $1,000
$6,500 total across all IRAs in 2023; if you’re ages 50 and older, you can contribute an additional $1,000
Who Can Contribute?
Anyone who earns an income and is under the age of 70 1/2
Anyone who earns an income
Do Income Caps Apply?
Income caps limit who can deduct contributions on their taxes unless you don’t have a retirement plan through work
Income caps limit who can contribute
How Do Taxes Work?
You’ll pay taxes on distributions once you begin taking them in retirement
Your distributions will be tax-free once you reach retirement age
Who Is This Account Best For?
Anyone who can deduct contributions and wants to reduce their taxable income
Someone who wants tax-free income in retirement
Heads Up: no matter which type of IRA you choose (or if you contribute to both), you’ll face an IRA contribution limit for each tax year. In 2023, you can contribute up to $6,500 in total to an IRA if you’re under the age of 50. If you’re 50 or older, the limit is $7,500.
How Much Money Does it Take to Start an IRA?
Now you know what type of account to open, so how much do you invest? Technically, you don’t need anything to open an IRA since the Internal Revenue Service (IRS) doesn’t set minimum contribution limits — only annual maximums.
However, individual brokerage firms have minimum requirements and you want to employ a healthy contribution strategy to maximize rewards.
When it comes to your contributions, remember that the important thing is to just get started. Small amounts of money can add up over time, and from there, compound interest can do its magic and help your account balance balloon. Here’s one way to think about it:
IRAMonthly Contribution
IRA Annual Contribution
$5
$60
$10
$120
$25
$300
$50
$600
$100
$1,200
$200
$2,400
$500
$6,000
$541.67
$6,500
Let’s say you’re 30 years old, and you contribute $100/month for a total of $1,200 a year to your Roth IRA. By the time you’re 67 and ready to retire, you’ll have saved $204,000 that won’t be subject to income taxes. That can go a long way to support a happy retirement.
Now that you understand the process a bit more, figure out which brokerage firm to use for your IRA, and how much you need to actually open an account and get the ball rolling. Once your account is up and running, you can figure out how much to contribute regularly, whether that’s $100 per month or $100 per week.
How Much Does it Cost to Open an IRA?
The cost to open an IRA can vary depending on the financial institution or brokerage firm you choose. Some institutions may have no account opening fee, while others may charge a one-time fee or an annual fee. Some firms may also have minimum deposit requirements to open an account.
As an example, M1 Finance requires a $500 minimum investment in their Roth IRA. Depending on the mutual fund you choose, Vanguard requires at least $1,000 for their Target Retirement funds up to $3,000 for their other funds.
In addition to account opening costs, there may be ongoing fees associated with an IRA account, such as annual maintenance fees or fees for certain transactions. It is also important to note that while Traditional IRA or Roth IRA contributions may be tax deductible or not taxable but there are limits to how much you can contribute annually.
How to Start Investing in an IRA
1. Compare online brokerage firms that offer IRA accounts
Different online brokerage firms have features that you’ll want to pay attention to. Some are better for hands-off investing, while others are better for those who want to get their hands dirty and really dig in.
Here are some of the things you should ask yourself when choosing a brokerage:
Would you rather be hands-on or hands-off with your account? A robo-advisor may take the burden off you when it comes to managing your investments.
What sort of investments do you want to buy? Pay attention to limitations with the broker.
How much are you looking to invest off the bat? Fees and commissions can eat away at early earnings if the initial investment is too small.
Here are some of our favorite options:
$0 per trade
$0 mutual fund
$0 set up
0.25%-0.40% account balance annually
Open Account
Among the best brokerage accounts for beginners, we like M1 Finance for IRAs. You only need $100 to open an account with M1 Finance, which is a threshold most beginning investors can reach. M1 Finance IRAs also come with no hidden fees, the option to invest in fractional shares, and a helpful mobile app that lets you monitor your account growth no matter where you are.
2. Fund your account
Now it’s time to put the minimum amount in to fund your brand new account. As previously mentioned, different brokerages have different minimum requirements, so
3. Select your investment strategy
Your next step is building a system that will allow you to seamlessly build wealth over time. This means figuring out how much you can afford to invest in an IRA each month, but it also means choosing investments that will exist within your IRA.
Remember: Your IRA is nothing more than a retirement vehicle you can use to save and invest for the future. Once you open an IRA, you still have to choose the investments that do the work inside your account.
If you find you are able to deduct contributions to a traditional IRA because your employer doesn’t offer a retirement plan, you should strive to contribute as much as you can each month up to the $541.67 monthly (and $6,500 annual) limit. That way, you’re building up retirement funds in a hurry while maximizing tax advantages.
If you opt for a Roth IRA instead, you won’t get any tax advantages now, but you will later on since you won’t have to pay income taxes on distributions once you reach retirement age. Either way, the ultimate goal is striving to invest as much as you can each month up to account limits, and without harming your other financial goals.
In terms of selecting your portfolio, this component of your system depends a lot on which investment platform (brokerage firm) you choose to go with. If you choose an online broker and decide on stocks ask a key part of your portfolio, you could benefit from dollar-cost averaging. Here’s an example of dollar cost averaging into an individual stock with a fluctuating price:
BENEFITS OF DOLLAR COST AVERAGING
Month
Share Price (In $)
Shares Bought
January
15
3.3
February
13
3.8
March
12
4.2
April
14
3.6
May
13
3.8
June
12
4.2
July
13
3.8
August
14
3.6
September
16
3.3
October
16
3.1
November
17
2.9
December
16
3.1
Total Shares
42.7
Avg. Price Per Share
$14.25
Avg. Cost Per Share
$14.05
Some firms like M1 Finance let you set up “pies” of investments that are based on fractional shares.
With M1 Finance, you can build your own “pie” from more than 6,000 available stocks and funds, but you can also choose from “Expert Pies” that have been put together by in-house investment professionals.
That’s just one way this can work, but there are plenty of other ways to set up a portfolio depending on the firm you choose. For example, let’s imagine you decide to open an IRA with Betterment.
Betterment is a robo-advisor that helps you formulate an investment plan based on your age, your investing goals, and your risk tolerance. As a result, opening an IRA with Betterment is a breeze.
You’ll start by answering some basic questions about yourself, including your age, your income, and when you plan to retire. From there, Betterment will suggest a specific investment plan that is formulated to help you achieve your goals.
If you’re a knowledgeable investor who wants to select the stocks, bonds, ETFs, and other investments that live within your IRA, that’s perfectly okay, too.
Just remember that some brokerage firms will help create an investing plan for you based on how much you can invest and your long-term goals.
4. Make it automatic
To help in your effort to contribute consistently, and to remove some of the pressure, consider making your investments automatic with the click of a button. Many of the top brokerage firms let you set up automatic investments through their mobile apps or online platforms, including Betterment’s example below.
5. Check in regularly and stay on track
Part of the fun of putting away money for your future is watching it grow. Keep an eye on your portfolio to make sure you’re contributing the way you want to. It can be tempting during tighter financial times to stop contributing, but you can always reduce your contribution amount depending on your circumstances and then change it back later.
Don’t worry about small fluctuations and seek help from an advisor if necessary.
Know the IRA Rules
Whether you opt for a traditional IRA or a Roth IRA, you should know that plenty of rules dictate who can contribute, how much can be contributed each year, and whether contributions are tax-deductible.
With a Roth IRA, the rules are as follows:
Roth IRA contributions are made with after-tax dollars, so they are not tax-deductible.
Your money will grow tax-free until you reach retirement age, and you won’t pay income taxes on your distributions when you retire.
You can remove contributions to your Roth IRA from your account at any time before age 59 1/2, but you cannot take out any earnings without a penalty until then.
Married couples filing jointly can contribute the full amount to a Roth IRA provided their modified adjusted gross income (MAGI) is below $218,000. Those with incomes between $218,000 and $227,999 can contribute a reduced amount. Those with incomes over $228,000 cannot contribute.
Single tax filers can contribute the full amount to a Roth IRA provided their modified adjusted gross income (MAGI) is below $138,000. Those with incomes between $138,000 and $152,999 can contribute a reduced amount. Those with incomes over $153,000 cannot contribute.
With a traditional IRA, the rules are as follows:
Money invested in a traditional IRA grows tax-free. However, you will pay income taxes on distributions once you reach retirement age.
If you are covered by a retirement plan at work and you’re single, you can deduct contributions to a traditional IRA if your MAGI is below $73,000. You can claim a partial deduction if your MAGI is between $73,000 and $82,999. For those with incomes over that amount, contributions cannot be deducted on your taxes.
If you are covered by a retirement plan at work and you’re married filing jointly, you can deduct contributions to a traditional IRA if your MAGI is below $116,000. You can claim a partial deduction if your MAGI is between $116,000 and $135,999. For those with incomes over that amount, contributions cannot be deducted on your taxes.
If you are single and don’t have a retirement plan at work, you can deduct the full amount of your contributions to a traditional IRA regardless of your income.
If you’re married filing jointly and your spouse is covered by a retirement plan at work but you’re not, you can deduct the full amount if your MAGI is below $196,000. Those with MAGIs between $196,000 and $205,999 can deduct a reduced amount. Anyone with a MAGI of $206,000 or higher cannot deduct IRA contributions on their taxes.
And, as we mentioned already, both accounts come with an annual contribution limit of $6,500 for 2023. If you’re 50 or older, you can contribute an additional $1,000 for a total of $7,500.
Summary on How Much to Start a Roth IRA
Opening an IRA is a great way to save more money for retirement and the future, and that’s true whether you opt for a traditional IRA or a Roth IRA. Just remember that each type of IRA has pros and cons, and you’ll need to consider your tax situation now and what it might look like later.
Still, you shouldn’t get so caught up in the rules and minutiae of these accounts that you fail to open one altogether. Do some basic research then decide which brokerage firm will meet your needs the best. From there, open an account and start contributing as much as you can. The rest of the details will work themselves out, but only if you get started.
FAQs on How Much to Start a Roth IRA
What is the minimum amount needed to start a Roth IRA?
The minimum amount needed to start a Roth IRA varies depending on the financial institution where you open the account. Some institutions have no minimum deposit requirement, while others may require a minimum deposit of $500 or $1,000.
Can I withdraw my contributions from a Roth IRA without penalty?
Yes, you can withdraw your contributions from a Roth IRA without penalty at any time. However, if you withdraw earnings before age 59 1/2, it may be subject to taxes and penalties.
Conventional loans are the most popular kind of mortgage, but a government-backed mortgage like an FHA loan is easier to qualify for and may have a lower interest rate. FHA home loans have attractive qualities, but borrowers should know that mortgage insurance usually tags along for the life of the loan.
As of March 2023, new FHA borrowers will pay less for insurance. The Biden-Harris Administration announced it was reducing premiums by .30 percentage points, lowering annual homeowner costs by $800 on average. The administration hopes the cuts will help offset rising interest rates.
What Is an FHA Loan?
The Federal Housing Administration has been insuring mortgages originated by approved private lenders for single-family and multifamily properties, as well as residential care facilities, since 1934.
The FHA backs a variety of loans that cater to the specific needs of a borrower, such as FHA reverse mortgages for people 62 and older and FHA Energy Efficient Mortgages for those looking to finance home improvements that will increase energy efficiency (and therefore lower housing costs).
But FHA loans are most popular among first-time homebuyers, in large part because of the relaxed credit requirements.
Recommended: Tips to Qualify for a Mortgage
FHA Loan Requirements
If you’re interested in an FHA home loan to buy a single-family home or an owner-occupied property with up to four units, here are the details on qualifying.
FHA Loan Credit Scores and Down Payments
Borrowers with FICO® credit scores of 580 or more may qualify for a down payment of 3.5% of the sales price or the appraised value, whichever is less.
Those with a poor credit score range of 500 to 579 are required to put 10% down.
The FHA allows your entire down payment to be a gift, from a family member, close friend, employer or labor union, charity, or government homebuyer program. The money will need to be documented with a mortgage gift letter.
FHA Loan DTI
Besides your credit score, lenders will look at your debt-to-income ratio, or monthly debt payments compared with your monthly gross income.
FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.
FHA Mortgage Insurance
FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, which can be rolled into the loan. As of March 2023, monthly MIP for new homebuyers is 0.15% to .75% — most often 0.55%.
For a $300,000 mortgage balance, that’s upfront MIP of $5,250 and monthly MIP of $137.50 at the 0.55% rate.
That reality can be painful, but MIP becomes less expensive each year as the loan balance is paid off.
There’s no getting around mortgage insurance with an FHA home loan, no matter the down payment. And it’s usually only shed by refinancing to a conventional loan or selling the house.
FHA Loan Limits
In 2023, FHA loan limits in most of the country are as follows:
• Single unit: $472,030
• Duplex: $604,400
• Three-unit property: $730,525
• Four-unit property: $$907,900
The range in high-cost areas is $1,089,300 (for single unit) to $2,095,200 (four-unit property); for Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the range is $1,633,950 (for single unit) to $3,142,800 (for four-unit property).
FHA Interest Rates
FHA loans usually have lower rates than comparable conventional loans.
The annual percentage rate (APR) — the annual cost of a loan to a borrower, including fees — may look higher on paper than the APR for a conventional loan because FHA rate estimates include MIP, whereas conventional rate estimates assume 20% down and no private mortgage insurance.
The APR will be similar, though, for an FHA loan with 3.5% down and a 3% down conventional loan.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
FHA Income Requirements
There are none. High and low earners may apply for an FHA loan, but they must have at least two established credit accounts.
Recommended: How to Afford a Down Payment on Your First Home
Types of FHA Home Loans
Purchase
That’s the kind of loan that has been described.
FHA Simple Refinance
By refinancing, FHA loan borrowers can get out of an adjustable-rate mortgage or lower their interest rate.
They must qualify by credit score and income, and have an appraisal of the property. Closing costs and prepaids can usually be rolled into the new loan.
FHA Streamline Refinance
Homeowners who have an FHA loan also may lower their interest rate or opt for a fixed-rate FHA loan with an FHA Streamline Refinance. Living up to the name, this program does not require a home appraisal or verification of income or credit.
The new loan may carry an MIP discount, but you’ll pay the upfront MIP in addition to monthly premiums. An exception: The upfront MIP fee of 1.75% is refundable if you refinance into an FHA Streamline Refinance or FHA Cash-out Refinance within three years of closing on your FHA home loan.
Closing costs are involved with almost any refinance, and the FHA doesn’t allow lenders to roll them into a Streamline Refinance loan. If you see a no closing cost refinance for an FHA loan, that means that instead of closing costs, a lender will charge a higher interest rate on the new loan.
You’ll continue to pay MIP after refinancing unless you convert your FHA loan to a conventional mortgage.
FHA Cash-Out Refinance
You don’t need to have an FHA loan to apply for an FHA Cash-Out Refinance. Whatever kind of loan the current mortgage is, if the eligible borrower has 20% equity in the home, the refinanced loan, with cash back, becomes an FHA loan.
The good news: Homeowners with lower credit scores may be approved. The not-great news: They will have to pay mortgage insurance for 11 years.
Any cash-out refi can trigger mortgage insurance until a borrower is back below the 80% equity threshold.
FHA 203(k) Loan
In addition to its straightforward home loan program, the FHA offers FHA 203(k) loans, which help buyers of older residences finance both the home purchase and repairs with one mortgage.
An FHA 203(k) loan can be a 15- or 30-year fixed-rate or adjustable-rate mortgage.
Some homeowners take out an additional home improvement loan when the need arises.
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FHA vs Conventional Loans
Is an FHA loan right for you? If your credit score is between 500 and 620, an FHA home loan could be your only option. But if your credit score is 620 or above, you might look into a conventional loan with a low down payment.
You can also buy more house with a conventional conforming loan than with an FHA loan. Conforming loan limits in 2023 are $726,200 for a one-unit property and $1,089,300 in high-cost areas.
Borrowers who put less than 20% down on a conventional loan may have to pay private mortgage insurance (PMI) until they reach 20% loan-to-value. But borrowers with at least very good credit scores may be able to avoid PMI by using a piggyback mortgage; others, by opting for lender-paid mortgage insurance.
One perk of an FHA loan is that it’s an assumable mortgage. That can be a draw to a buyer in a market with rising rates.
The Takeaway
An FHA home loan can secure housing when it otherwise could be out of reach, and FHA loans are available for refinancing and special purposes. But mortgage insurance often endures for the life of an FHA loan. The Biden-Harris Administration recently reduced monthly MIP for new homebuyers to help offset higher interest rates.
Some mortgage hunters might be surprised to learn that they qualify for a conventional purchase loan with finite mortgage insurance instead. And some FHA loan holders who have gained equity may want to convert to a conventional loan through mortgage refinancing.
SoFi offers conventional fixed-rate mortgages with competitive interest rates and cancellable PMI, as well as refinancing. Check out SoFi’s low rate home mortgages.
Qualifying first-time homebuyers can put as little as 3% down, and others, 5%.
View your rate today.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information. SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. SOHL0622007
Save more, spend smarter, and make your money go further
After a brutal winter, many of us are ready to embrace spring with open arms! The arrival of spring also signals seasonal cleaning duties such as cleaning windows, putting away the winter wardrobe and breaking out the flip flops.
But don’t forget to include your personal finances in your spring cleaning “to do” list! Spring is the perfect time to tackle financial clutter–from refreshing budgets to going paperless to cleaning up your credit score.
Here are 5 tips that make it easy to do a financial clean sweep this spring:
1. Refresh your budget
Kick off your financial spring cleaning by refreshing your budget. Revisit the financial goals you set January 1. How are you doing so far? If you’re over budget, look at where you can make changes and cut back on spending. Remember to adjust your budget to satisfy current needs as well as long-term savings goals.
2. Reduce financial clutter – go paperless
You know that amazing feeling when you get rid of clothes you haven’t worn in years? Getting rid of that filing cabinet filled with old bills and credit card statements can feel just as freeing. A good way to cut down on clutter is to opt for electronic bill payments using a free bill-paying app like Mint Bills – which allows you to pay all your bills and schedule bill payments via an easy to use web and mobile platform.
3. Check your credit score
If you haven’t checked your credit score, now might be a great time. This number is a critical part of a consumer’s financial portfolio. Understand your score and the factors impacting it so you can learn how to improve it. If your credit score is low, commit to making your payments on time and focus on chipping away at large balances on your credit cards.
4. Pay off holiday debt once and for all
Cleaning up this debt quickly can put you in a much better financial position for the rest of the year. Start by clearing up your credit lines and pay off the purchases you made over the holiday season. If you have to, put yourself on a stricter debt payoff plan specifically focused on paying off the debt you accumulated over the holidays.
5. Sell unwanted items
Instead of throwing away your belongings to reduce clutter, consider selling your stuff to help boost your savings goals or earn extra money. Getting rid of old furniture? Try Craigslist. Cleaning out your closet? Try selling your clothing and accessories on Threadflip, a site that helps list, price, and ship the items for you.
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If you don’t pay your credit card bill, you could face more severe consequences than you might think. Though it will depend on your credit card issuer, you can generally expect to be charged a late fee as well as a penalty interest rate which is higher than the regular purchase APR.
Life happens, and, from time to time, payments are missed, especially if you’re dealing with emergencies such as losing a job or a family crisis. In the event you have skipped a credit card payment, it’s crucial you understand what can happen. That way, you can take steps to reduce the odds of it having a major impact on your financial health.
Here, you’ll learn more about this topic, including:
• What happens if you don’t pay your credit card bills?
• What if you miss one credit card payment?
• What happens if you only can make minimum payments?
• How can you pay off credit cards?
What Happens If You Don’t Pay Your Credit Card?
Consequences for missed credit card payments could include being changed late fees and possibly losing your grace period. It may also negatively affect your credit score since issuers report your payment activity to the credit bureaus — in most cases after 30 days.
There may be other consequences depending on how late your payment is and whether it’s your first time missing a payment.
Accruing Interest
When you don’t pay your credit card, interest will accrue and will continue to do so as long as you have a balance on your card. In essence, you are paying more for your initial purchase thanks to that interest.
The longer you go without paying your credit card, the more you risk your rate going up. Your credit card issuer may start imposing a penalty annual percentage rate (APR), which tends to be higher than your regular purchase APR. If this happens, you’ll end up paying more in interest charges. The penalty APR may apply to all subsequent transactions until a certain period of time, such as for six billing cycles.
Collections
Depending on your credit card issuer, your missed payments may go into collections if it goes unpaid for a period of time. You’ll still continue to receive notices about missed payments until this point.
More specifically, if you don’t pay your credit card after 120 to 180 days, the issuer may charge off your account. This means that your credit card issuer wrote off your account as a loss, and the debt is transferred over to a collection agency or a debt buyer who will try to collect the debt.
Once this happens, you now owe the third-party debt buyer or collections agency. Your credit card issuer will also report your account status to the major credit bureaus — Experian, TransUnion, and Equifax. This negative information could stay on your credit report for up to seven years.
It’s hard to tell what third-party debt collectors will do to try and collect your debt. Yes, they may send letters, call, and otherwise attempt to obtain the money due.
Some collections agencies may even try to file a lawsuit after the statute of limitations expires. In rare cases, a court may award a judgment against you. This means the collections agency may have the right to garnish your wages or even place a lien against your house.
If your credit card bill ends up going to collections, take the time to understand what your rights are and seek help resolving the situation. Low- or no-cost debt counseling is available through organizations like the National Foundation for Credit Counseling (NFCC).
Bankruptcy
You may find that you have to declare bankruptcy if you still aren’t able to pay your high credit card debt and other financial obligations. This kind of major decision shouldn’t be taken lightly. You will most likely need to see legal counsel to determine whether you’re eligible.
If you do file bankruptcy, an automatic stay can come into effect, which protects you from collection agencies trying to get what you owe them. If successfully declare bankruptcy, then your credit card debt will most likely be discharged, though there may be exceptions. Seek legal counsel to see what your rights and financial obligations are once you’ve filed for bankruptcy.
Making Minimum Payments
A minimum payment is typically found in your credit card statement and outlines the smallest payment you need to make by the due date. Making the minimum payment ensures you are making on-time payments even if you don’t pay off your credit card balance. Any balance you do carry over to the next billing cycle will be charged interest. You can also avoid late fees and any other related charges by making a minimum payment vs. not paying at all.
What Happens if You Miss a Payment
If you can’t pay your credit card for whatever reason, it’s best to contact your issuer right away to minimize the impact. Let them know why you can’t make your payment, such as if you experienced a job loss or simply forgot. For the latter, pay at least the minimum amount owed as soon as you can (ideally before the penalty or higher APR kicks in).
If this is your first time missing a payment but otherwise paid on time, you can try talking to the credit card company to see if they can waive the late fee.
Some credit card issuers may offer financial hardship programs to those who qualify, such as waiving interest rates, extending the due date, or putting a pause on payments (though interest may still accrue) until you’re back on your feet.
15/3 Rule for Paying Off Credit Cards
The 15/3 payment method can help you keep on top of payments and lower your credit utilization — the percentage of the credit limit you’re using on revolving credit accounts — which can impact your score.
Instead of making one payment when you receive our monthly statement, you pay twice — one 15 days before the payment due date, and the other three days beforehand. This plan is useful if you want to help build your credit history and pay on time.
The Takeaway
Missing your credit card payment may not be a massive deal if it just happens once or twice, but it can turn into one if you continue to ignore your bill. While it’s not exactly fun to have to pay a late fee, you may be able to negotiate with the credit card issuer to waive it if you are otherwise a responsible user. Even if not, it’s better than being bumped up to the penalty APR or, worse still, having your account go to collections.
Are you looking for your first or a new credit card? Consider the SoFi Credit Card. With perks like cash back rewards on all purchases, no foreign transaction fees, and Mastercard ID Theft Protection, it may be just the right choice for your personal and financial goals.
The SoFi Credit Card: The smarter way to spend.
FAQ
How long can a credit card go unpaid?
The statute of limitations, or how long a creditor can try to collect the debt owed, varies from state to state, which can be decades or more.
What happens if you never pay your credit card bill?
If you never pay your credit card bill, the unpaid portion will eventually go into collections. You could also be sued for the debt. If the judge sides with the creditor, they can collect the debt by garnishing your wages or putting a lien on your property.
Is it true that after 7 years your credit is clear?
After seven years, most negative remarks on your credit report, such as accounts going to collections, are generally removed.
Photo credit: iStock/MStudioImages The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated. 1See Rewards Details at SoFi.com/card/rewards. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website . This article is not intended to be legal advice. Please consult an attorney for advice. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. SOCC0523007
Save more, spend smarter, and make your money go further
In case you missed it, last week we hosted a Twitter chat on the topic of #HowWeSpend, where we covered everything from the biggest spending trends of 2014, tips on spending wisely in 2015 to hot topics like mobile payments and millennial spending habits.
With over 128 Twitter chat contributors and 697 mentions of #HowWeSpend, the chat was packed with great content and tips from consumer financial experts, Mint partners and Minters alike.
Check out some of our favorite tips and chat highlights below, or to follow all that was shared during last week’s chat, just plug #HowWeSpend in the Twitter search bar.
Thanks again to all of you who followed along!
#HowWeSpend Twitter Chat Highlights:
Q: How do you expect spending trends to vary in 2015 vs. 2014?
I expect that there will be a rise in spending by the “IndieWoman”: 27 & older, lives alone & has no kids. – @TheBudgetnista
Many economists predict 2015 may be the year more millennials finally enter the housing market – @Glink
Low gas prices and a strong dollar will mean more travel spending. Budget travel tips: http://bit.ly/1EBacox – @hperez
Q: How are mobile payments changing #HowWeSpend?
Mobile is convenient 4 sure, but avoid impulse purchases and monitor spending. – @hperez
I pay every bill that comes in mail or email via my bank’s mobile app. Easy way to track spending. – @sharon_epperson
Pay all your bills (utility, cable, credit cards) w/the #MintBills app – it’s easier than ever to stay on top of it all – @mintbills
Q: Let’s talk millennials. How are they saving differently than their parents?
Studies show millennials less likely to have savings to cover unexpected expenses. – @CHLebedinsky
Mint survey found millennials focus on fulfilling immediate needs (like rent, student loans) more than future saving – @mint
Millennials are far more comfortable with using smartphones, apps and online tools to help spend & save – @TheBudgetnista
Q: Best tip on finding the right balance between spending vs. saving?
Think of life on both sides of the = sign. income should be >/= to expenses and if not, one side needs adjusting – @OysterRiverPart
It’s important to understand the difference between items you actually NEED & those you simply WANT – @EFXFinanceBlog
Spend, spend, spend will lead to poverty while save, save, save will lead to resentment. Be responsible but also have fun! – @Steve_Repak
Q: What’s your personal secret to financial success?
Automate savings and bill paying. Use app such as #Mint to track spending. Don’t try to keep up with Joneses – @CHLebedinsky
Make saving and budgeting into a social game and enjoy it! When your having fun you will always succeed. – @pennypinchbros
My secret to financial success: 1. (again, my) BUDGET –@TheBudgetnista
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This is a guest post from freelance writer Jessica Ward.
For three years, I’ve been patting myself on the back. The household expenses remain the same every month, and we’re getting out of debt. In spite of increases in costs, we’ve found efficiencies and made room. But, as they say, after pride comes the fall. I discovered this month that we’re actually making less progress every month now than when we first started making monthly budgets!
Initially I thought this was a short-term trend, but when I looked back a little farther in the old budgets file, I discovered that we’ve really been on this path since day one. We have succumbed to “lifestyle creep.” Subtle upticks in our family’s expenses that don’t necessarily fall into line with real costs of living.
Slowly and stealthily, our lifestyle has edged back up. An extra meal out here, a technology upgrade there, all unnoticed because we haven’t spent beyond our planned expense cap, but unchecked because we didn’t notice that we had slowed progress towards our goals.
Identifying Your Budget “Creepers”
We use a zero-based budget. Money in equals money out, every month. Sure it might go “out” into a savings account or towards debt, but the checking account ideally zeros out every month. I neglected the second step of allocating everything. By way of example, here are some expenses that crept up on us this year, virtually unnoticed:
Family gym membership, $1,200 year. (We did elect to keep it for 2012, but are making other cuts to accommodate.)
Data plan on my husband’s phone (he doesn’t even know how to text). We cut this in July, but not after spending $240 for the year on unnecessary data charges.
A digital camera upgrade (rationalized with the old “it’s a business write-off” excuse) at $400.
An average of $200 per month additional eating out expenses, or $2,400.
An average of an additional $200 per month in charitable expenses, or $2,400 a year.
All told, we experienced an increase in lifestyle (and decrease in goal progress) of nearly $7,000. Had we minded our budget better, we’d be out of debt by now. That’s embarrassing.
Other people will have other areas of budget creep. Fancy coffee, storage unit, unnecessary gadget upgrades. Little upgrades like premium cable can be adding hundreds to your household expenses every year.
How to Creep-Proof Your Budget
If you’re feeling the budget creep, take the following steps to get back on track.
Set your budget, including all expenses, by prioritizing your household bills and financial goals, treating them just like a bill.
Revisit your budget and revise based on actual changes in costs. While our spending remained fixed, some expenses (fuel, food, and homeowner’s association dues) went up, and we sacrificed about $200 per month towards financial goals by not revising our spending (and income) expectations upwards or another area of the budget downwards (without sacrificing your progress to goals). When costs go up, it’s time to ramp up the “side hustle” income.
Maintain your diligence about buying bargains. Have you relaxed your efforts at coupons, sales, used/consignment, bargaining or trading? Have you even stopped price-comparing? Just because it’s in the budget, doesn’t mean you shouldn’t try to get a better deal.
Have old habits crept back? Extravagant gifts, daily lattes, extra vacations, and weekend getaways, or just too much eating out? Many of us have old financial habits that break our budgets. Keep a wary eye out for them.
Please, tell me I’m not alone in this budget faux pas? Has your budget suffered from creep?