Save more, spend smarter, and make your money go further
Moving into your first apartment = a major adulting achievement.
But before applying for your future spot, you’ll need to get a few things in order. And no, we don’t mean going down the Pinterest rabbit hole of new home décor.
Get together the three key numbers that matter to your financial health, so you can know how lenders may view you, and which apartments you can qualify for. Most Americans move between May and September, meaning it’s a pretty competitive space for renters. Turbo Tip: landlords predominately favor detailed, lease applications that showcase a complete picture of your financial health so they are confident in choosing the best applicant.
So in order to stay ahead of the competition (and set realistic apartment goals), here are the 3 key numbers you need to know.
Credit Score
Your credit score is a BIG factor landlords look at when considering your application. Your credit score is more than just a number—it represents how financially reliable you are and how well (or poorly) you manage your debt. Depending on where your score falls on the credit score scale (which runs between 300 and 850), this might be a make-or-break for your dream apartment. Not sure what your credit score is? It’s easy to get a free credit score report from Turbo!
If you’re working on improving your score or building credit for the first time, the good news is that many landlords accept co-signers. A co-signer is a person who is obligated to pay your rent if you can’t. If you plan on using a co-signer, make sure you know his/her credit score and have the #RealMoneyTalk on financial responsibilities before signing a lease.
Verified Income
With rent prices on the rise, landlords need proof to ensure you’re able to make the allocated payments each month. You can show proof of your verified income through bank statements, pay stubs, or job offer letters. Pro Tip: on average, housing often eats up 25-33% of your yearly net income. So before you set your rent pricing parameters on Zillow or Craigslist, be sure to do the math.
Debt-To-Income Ratio (DTI)
While not all landlords may ask for your DTI ratio, it is a key financial health indicator that shows if you’re living within your means. What is a good debt-to-income ratio? Lenders typically like to see 36% or less, but your landlord may have differing standards. You might be tempted, especially if you’re starting a new job, to upgrade your living arrangements and lifestyle to be in line with your increased income, but try to avoid this temptation at all costs!
Find a roommate to split the costs of housing, rent a cheaper apartment, or live in a less affluent area. If you can save even a hundred dollars a month on rent, that’s more money you can put towards paying off your debt.
Additionally, when submitting your application for a new apartment, renters may also ask for your ID (either your license or passport), Social Security Number, past rental history, a reference, and a check for the deposit (typically last month’s rent).
Now that you’re ready to rent, get your numbers with Turbo today so you can see where you truly stand financially. The Target household items section is waiting!
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Save more, spend smarter, and make your money go further
If your finances are a constant source of stress and anxiety, you’re certainly not alone. In fact, 40 percent of American adults say they would have a tough time covering an unexpected expense of $400 or more, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017. Furthermore, 1 in 10 adults says they struggled to pay their bills at least once in the past year due to varying income.
A sobering truth bomb? Reducing financial stress when you don’t make enough is nearly impossible, explains Emily Guy Birken, author of End Financial Stress Now. “Even the kind of frugality that will theoretically bring you some relief will often require an investment of time or finances—and lacking money and time is exactly why you’re feeling overwhelmed.” (Cue the #facepalm.)
But instead of indulging in a self-pity party, there are a handful of things you can do today, regardless of your circumstances. To reduce money-related stress, to start Guy Birken recommends building some slack into your budget, which is possible at any income. Here are five simple ways to reduce stress about your money situation:
Adjust Your Tax Withholding
Do you normally receive a large tax refund every April? The average refund in 2018 was $2,895, which works out to more than $200 per month. Adjust your withholding so that you’re taking more money home from every paycheck, suggests Guy Birken. “How much more comfortable would you be if you could count on an additional $200 each month?”
To adjust your withholding, request a new W-4 from your Human Resources department and determine the proper number of allowances you should claim using the IRS calculator. “Making this adjustment is perfectly legal and an excellent way to increase your monthly net without having to earn more money or cut your spending,” says Guy Birken. “But just remember there’s a trade-off: It also means you won’t get a big payday from Uncle Sam at tax time.”
Start a Surprise Fund
A surprise fund is money that you conveniently forgot you had. While not intended to be as robust as your emergency fund, a surprise fund can help smooth out any small hiccups you may face money-wise.
I’m a big fan of “set-it-and-forget” it methods. By setting your savings on autopilot, that’s less mental energy you need to spend on making everyday decisions. Plus, you’ll be making steady headway without having to lift a finger.
Over the years I’ve relied on “surprise” funds to cover a small unexpected expense, or if I’m having a particularly “spendy” month. It’s prevented me from putting more on my credit cards than I can reasonably afford. The easiest way to create a surprise fund is to kick-start a savings account, then auto-save every week. Even if you sock away $5 a week, that’s $260 you can tap into should the need arises (and it will). Up your weekly auto-save amount to $10 a week, and that’s $520. That could help cover your bills or pay for groceries during a particularly lean month.
Negotiate Your Bills
Easy wins in creating some slack in your finances include negotiating your bills, suggests Guy Birken. They’re considered easy because you technically only have to do it once. And because they’re recurring, that $20 you save every month on your cable bill comes out to $240 a year. “Internet, cable, cell phone, and auto insurance are service providers that are willing to adjust their pricing in order to keep customers,” says Guy Birken. “It costs them far more to land a customer than it does to keep a current one happy.”
Guy Birken recommends researching the lowest going rate for these services before you call. That way you know where you stand. And don’t be afraid to walk away if the provider isn’t willing to budge.
And while these are the easiest providers to negotiate with, don’t be afraid to ask for price breaks elsewhere—from your landlord to your healthcare provider,” says “Guy Birken.
Pro tip: You can also ask for discounts based on group affiliation. For instance, you may get a discount on your cell phone for being, say, a card-carrying AAA or AARP member or being affiliated with the military or a university. You may also be able to snag a slight discount if you sign up for auto pay, or opt for a different payment plan.
Cancel Unused Subscriptions
It can be easy to forget about the services we have signed up for, especially since so much is subscription-based these days, explains Guy Birken. Look through your credit card and bank statements and hunt for unnecessary services you’re still paying for and call to cancel.
Subscriptions you set on auto-pay are easy to overlook. One easy thing you can do is set subscriptions so they don’t auto-renewal. When you receive notification that your subscription is about to expire, that’ll give you a chance to gauge whether you need it or not.
Also look for services that you’re doubling up on. Do you really need a subscription to three different gaming platforms, or will only one do? Or let’s say you have a gym subscription and are also part of a local softball league. If you’re getting sufficient exercise by playing softball, you might be able to cancel your gym subscription.
Check Your Bank Balance
Ever feel blindsided by how much you’ve been spending—or rather, how little you’ve been saving? Avoid costly overdraft fees and feeling cash-strapped by month’s end by checking your balance on the regular. It only takes a minute but could help keep you mindful of how much you have in the bank.
This is something I do every morning. You can either log on to your banking app or through a money management app. If you find yourself running dangerously low on funds, then you can be more diligent about your spending. For instance, if I’m having a particularly “top-heavy” month in terms of spending, I’ll tone it done for the second half.
As you can see, you don’t necessarily have to get a huge raise or side hustle like crazy to alleviate financial stress. By doing these small things, you can build that slack that adds a bit of buffer in your budget—and helps you breathe a little easier.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or view of Intuit Inc, Mint or any affiliated organization. This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
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Jackie Lam is a personal finance writer. Her work has appeared in Investopedia, Magnify Money and The Bold Italic, and she’s been featured in Money, Kiplinger, Forbes and Woman’s Day. She runs heyfreelancer.com, a blog to help freelancers and artists with their money, and to balance their passion projects and careers. More from Jackie Lam
Apparently you can now use your tax refund to automatically buy I-series bonds from the U.S. government.
As recently as three years ago, I was a huge fan of tax refunds. Despite the arguments against them, I liked getting a tax refund because it was the only way I’d found to save. I’m able to save on my own now, so I no longer aim to get a tax refund every year, but I certainly don’t fault anyone else for doing so. If that’s what you need to save, then do it!
If you’re truly trying to save with the money, the U.S. government has a new option for you starting this year: Now you can buy U.S. Series I savings bonds with your tax refund. Instead of getting a cash refund, you can designate up to $5,000 of your refund to be delivered in actual paper bonds issued in your name.
I Bonds are savings bonds that are indexed for inflation. The earnings rate on an I Bond has two components:
The first is a fixed rate that remains the same for the life of the bond. (It’s currently 0.30%.)
The second is the variable “semi-annual inflation” rate. Twice each year (on May 1st and November 1st), this rate adjusts based on the current inflation rate. At the moment, it’s 1.52%.
The fixed rate and the variable rate are combined to get a composite rate, which is currently 3.36%. I know this is a lot of gibberish. All you really need to know is that I Bonds are a safe place to put your money so you don’t have to worry about it losing value to inflation.
Because of this, I Bonds are an attractive alternative to high-yield savings accounts, especially now. They offer higher rates of return, and I Bonds are state and local income-tax exempt. (Federal income tax on I Bonds can be deferred until the bonds are cashed in or stop earning interest after 30 years.)
One drawback? I Bonds aren’t as liquid as a savings account. You can cash them out whenever you want, but if you do so before five years, the bond is subject to a 3-month earnings penalty. (This is sort of like breaking a certificate of deposit early.)
If you’re going to use your tax refund to save, why not actually save, all while getting a great rate of return on your money?