You live in an awesome apartment community, the perfect place where you want to spend your free time hanging out.
But how do you find the people who want to hang out with you, too?
Check out these tips on how to earn the label “cool neighbor!” and enjoy the social time you spend in your apartment community.
Hang-out prep tips
Rule #1 of hanging out is finding people to do it with — but you don’t want to jump the gun on this. You need to scope out your apartment community and ease into conversation to find out which neighbors are “hang-out-able.”
Luckily, it’s easy. Just walk around. Linger at the mailbox (not too long, stalker!) and say hello to anyone who looks interesting. The same goes for the pool, gym, dog park and even the parking lot. The more mobile you are, the more people you meet.
Once you’ve created a few “hello, how’s it going” relationships, start stretching out your conversations to see whether you have common interests. When you find a few peeps that like the same things you do, it just might be time to take your hang-out to the next level.
How to Handle New Neighbor Anxiety
Chill one-on-one
Now that you’ve pegged a few potential hanger-outers, a one-on-one meet up will give you a chance to get to know them better. Two-person hang-outs can be a little intimidating because it’s up to you to keep the convo flowing, but it’s the best way to focus on your new friend and build a rapport.
Now, this face-to-face time doesn’t necessarily mean sipping herbal tea and commiserating about the girl/guy who broke your heart in 4th grade. Keep your first hang-out light and casual, but be yourself. Set up a plan to play tennis, go for a walk, carpool to the grocery, or sit by the pool after work. Easy-going chit-chat and a no-pressure vibe will help you find out whether your new friend is ready for a group hang.
Ways to Break the Ice with New Neighbors
Host a group hang
Hanging out in a group is super fun when you have the right people in the room. Definitely invite the one-on-one hangers who seem like they’d get along with a variety of personalities. Then organize a larger hang-out event in your apartment community – a party, by any other name!
Consider hosting a dinner party, book club, wine tasting, game night or cookout by the pool. You can cast a wide net by posting flyers at the mailboxes and on bulletin boards to invite the entire community. Or keep it smaller and only invite people on your floor or in your building, as well as the folks you’ve hung out with individually.
However you choose to organize it, a group hang-out is a great way to relax and get to know more people in your apartment community, as well as introduce them to each other.
How to Host a Dinner Party in Your ApartmentHow to Host a Game Night in Your Apartment
Avoid awkward moments
Remember, hanging out properly is a skill. You don’t want to come off as the person who will never leave a party. Until you get to know people better, keep your interactions short and your conversation light. If you get invited to a hang, don’t be the first one to show up and the last one to leave. Arrive 5-10 minutes after start time, bring a drink or snack and leave while the energy is still up. People will love hanging out with you, and you’ll likely get invited back.
What If Justin Bieber Moved In Next Door?
Be mindful that if someone doesn’t seem interested in hanging out, there’s no need to push the issue. Just move on; there are plenty more people in your apartment community who will be worthy hang-out buddies.
While this may seem like a lot of guidelines for something as simple as hanging out in your apartment community, it’s smart to start off on the right foot. Once you get a solid crew of people to hang with, your social agenda at home will be set!
Last week, I wrote about a conversation with my investment adviser. In the article, I mentioned that my current income roughly covers my current spending except that I’ve been spending an average of $2,000 per month on travel. Because of that spending deficit, I’ve been drawing down my medium-term savings, which should last me until the end of 2014. Meanwhile, I’m exploring a variety of options to bring the income and spending into equilibrium.
Some GRS readers were taken aback by this.
“Maybe the name of this blog should be changed to Get Poor Quickly,” Marsha wrote. Brian from Debt Discipline expressed the common concern that withdrawing from my investments seems like a step in the wrong direction. And Greg wrote that this blog must be losing its way if I’m writing about “stealing from the future to maintain a current lifestyle of travel.”
Other readers, however, took a different view.
Frugal Scholar noted that there’s nothing wrong with taking withdrawals if my total savings can support them. The always-perceptive Sam wrote, “If J.D. is living a life of semi-retirement, which it seems to me he is, then it would make sense to pull money from investments as that is what one does in retirement.” And EMH was even more direct: “Why have all those investments and not use them?”
I spent a lot of time replying to comments on last week’s article. In doing so, I noticed that I’d done a poor job of sharing all the facts about my situation. I’ve been timid about total transparency, which means readers don’t have all the info they need to make a judgment. Today, I want to change that.
It also occurred to me that there are differing opinions about what savings are for. On some levels, those differing opinions are a result of each of us having different plans and priorities. But I think something that gets missed is that money is used differently at different stages of life.
The Stages of Personal Finance
In February 2009, I wrote a meditative article about the stages of personal finance. This then led to a series of articles on the subject. Here’s how I defined them:
In the zeroeth stage of personal finance, we’re fumbling in the dark. We have no financial skills and has no idea how to best use our money. We live impulsively, reacting to life around us.
In the first stage of financial development, there’s a candle in the darkness, and we’re drawn toward the light. We become aware that certain actions produce better financial results. We learn basic skills like frugality and saving and debt reduction. We still make many mistakes, but we now have some idea of where we ought to be headed.
During the second stage of personal finance, we can see the light at the end of the tunnel. We’ve moved beyond the basics to create a solid foundation for future growth. We’ve eliminated debt, built up our savings accounts, established emergency savings, and begun to set aside money for retirement. We learn that we are in control of our financial future and not at the mercy of some vast, uncaring universe.
In the third stage of financial aptitude, you light the way for others. (Boy, my metaphors were strained!) Our foundation is solid, and we now spend years (or decades) constructing a financial edifice that will support us for the rest of our lives. That generally means paying off the mortgage, supercharging our income (and thus, our saving rate), and preparing for the ultimate goal…
The final stage of money management is financial independence. At this stage, we no longer need to worry about money. We have enough saved to do whatever we please. Because we each have different goals, strengths, and weaknesses, financial independence means different things to different people. Financial independence is really just another way to say “retirement.”
When I started this blog, I had just progressed from the zeroeth stage of personal finance to the first. Over the next few years, I documented my progress as I achieved greater knowledge and control of my money. Today, I am fortunate to be in that final stage of personal finance. I am financially independent.
What do I mean by financially independent?
Some people believe you’ve achieved financial independence only when you can live off the dividends or interest your savings produce. Others — including me — take the stance that you’re financially independent if, given reasonable assumptions (4 percent inflation, 6.5 percent long-term real return on stocks, 4 percent withdrawal rate, etc.) you’ll also draw down your principal.
As I shared in the comments last week, I could stop working today and live off my savings for the rest of my life. In essence, I could choose to retire early — if I wanted. But I don’t want to, and for several reasons:
By continuing to work, I earn more money, which does two things. When my income exceeds my expenses, I add to my stockpile. When my expenses exceed my income — as they do now — income mitigates how much I need to draw down my savings.
Work gives me meaning. I enjoy writing about personal and financial freedom. It’s fun. Plus, the emails I get indicate I’m able to help other people pursue their dreams as well. So long as work gives me purpose, I’ll continue to work.
For me, work creates social connections. I get to meet readers and colleagues and financial professionals, which helps me expand my knowledge and learn about lots of other things.
And so on.
When people choose to continue working even though they could call it quits, they’re said to be semi-retired. I think that’s an apt term, and that’s how I classify my current state. I am semi-retired.
What Are Savings For?
Saving is a key part of personal finance. In fact, I’ve come to believe it’s the key part of personal finance. When we save money, we build smart habits today while protecting and providing for our future.
That said, saving plays different roles in different stages of personal finance.
For instance, when you’re accumulating or repaying debt, saving ought not be a high priority. Aside from a minimal emergency fund (of $500 or $1,000), your money is better directed elsewhere. That’s why in my beloved Balanced Money Formula — which urges folks to spend less than 50 percent of after-tax income on Needs, more than 20 percent on Saving, and the rest on Wants — debt repayment is actually classified as saving. There are few uses for money that provide a better return than paying down credit cards and other high-interest loans.
Once debt is eliminated, however, saving becomes a high priority. During the second and third stages of personal finance, we work to build three types of saving:
Short-term saving, such as in an emergency fund. Most experts urge people to save between three and twelve months of their current spending so that they’re prepared if something unexpected happens, such as a job loss or catastrophic illness.
Long-term saving for retirement. This is why we save in a 401(k), Roth IRA, and other retirement accounts. We’re saving for the far future when we’ll be unable to produce income at the level we can today.
Medium-term saving is what I commonly call targeted saving. For most folks, this takes the form of saving for a car or a house or a vacation or for college education. But other people use medium-term saving as a way to fund sabbaticals and mini-retirements. Others use this money to quit their job and take a chance on a new business or a new career.
We save money for two purposes: To protect against an uncertain future and to help us fulfill our dreams.
Short-term savings and long-term savings are generally defensive. They’re a form of self-insurance to shield us from the slings and arrows of outrageous fortune. Medium-term savings is used more for offense; it’s to pursue the things that provide us pleasure and purpose.
There seems to be a subset of people, however, for whom it’s never acceptable to spend savings. We’re all familiar with folks who spend too much and never save, but there are also people who save too much and never spend. They’re mocked in books like A Christmas Carol and Silas Marner. They’re demonized in movies like It’s a Wonderful Life. But for some reason, in real life, these types are often considered heroes. This puzzles me.
I see nothing heroic about dying with a fortune. I see nothing noble about saving and saving and never spending. Money is a tool. Its purpose is to provide comfort and pleasure for ourselves and for others. Saving isn’t an end in and of itself. We accumulate savings so we can do the things we want to do.
My Own Situation
In the past, I’ve been close to the vest regarding my financial situation. My attorney, my accountant, and my ex-wife all wanted me to keep things quiet. However, after some recent conversations — including one with Pat Flynn — I’ve decided to be more transparent. I can’t (and won’t) reveal everything, but I’ll share some broad info.
I’ve already shared that I’m currently outspending my income by about $2,000 per month because of travel. That’s what got some people riled up last week. I’ve also shared that I have enough medium-term savings to maintain this deficit until the end of 2014 (meaning I have about $25,000 saved for this purpose). I also have about $5,000 in emergency savings. Plus, I’m fortunate to have over a million dollars in long-term retirement savings.
Note: Yes, it’s true: While writing a blog about how to get rich slowly, I got rich quickly. This irony is not lost on me. One commenter last week suggested that this could cause problems since I didn’t have time to build the necessary mindset to manage the money. This is a valid concern, and one reason I’m trying to be cautious and make only “small moves.” I’ve read plenty of horror stories about people who squander sudden wealth.
In an ideal world, I’d be earning an income that meets my expenses. And, in fact, that was the whole point of last week’s article; I’m looking for ways to bring earning and spending into alignment. At the same time, I feel no shame about outspending my current earnings by $2,000 per month. Why not? Because that’s what my money is there for.
If I were still in debt, this $2,000 monthly deficit would be a concern. If I had only minimal savings, it would still be a problem. But I’d argue that even for somebody in the third stage of personal finance, deficit spending for a short time is perfectly acceptable. And if you’re in the final stage of personal finance? Well, then that’s actually how you’re expected to be living. When you’re retired, you’re drawing down your capital.
Note: Last week I wrote that Mr. Money Mustache would probably advise me to be more frugal. I was wrong. After reading the article, MMM e-mailed me to say: “Just enjoyed your latest post on GRS. I think you might be underestimating your passive income from savings…Since this is more than your spending by a wide margin, I would feel very confident that all your work income is 100% optional. Of course, you should still do enjoyable work because it makes you happy just as it makes me happy. But the paycheck is really just some icing on the cake.”
In fact, the fundamental problem of personal finance is figuring out how much to save so that you can live off your investments in retirement and die with a zero balance. (Or, if it’s your intention, to leave money to others.) A quick calculation (using conservative assumptions) shows that I could choose never to work again and even if I lived until 80, my assets would allow me to live on about $4,000 per month for the rest of my life. If I sold my condo, that number would climb to $5,000 per month.
And if I chose to spend $2,000 per month, which was the idea that created such a fuss last week? According to FIRECalc, my money will probably never run out! And, in fact, because of the extraordinary power of compounding, my savings will continue to grow forever.
The Bottom Line
Last week’s discussion was fascinating. If I were to draw down my savings in one fell swoop in order to buy a car or to purchase a house, I doubt anyone would object to my actions. After all, that’s how we think savings should be spent. But because I’m choosing instead to use my savings to fund travel and to buy time while I look for additional ways to make income, some people think I’m being foolish.
I suspect that even after this long discussion of saving and retirement, there will still be folks who believe it’s irresponsible for me (or anyone else, for that matter) to draw down savings for this sort of thing. If that’s you, tell us what you find objectionable. Under what conditions do you believe it’s okay to draw down savings? Does it matter which phase of personal finance you’ve reached? How do you decide when it’s okay to use the money you’ve saved to do the things you want to do?
This guest post from Ian is part of the “reader stories” feature at Get Rich Slowly. It’s the extended version of the story he shared in his prize-winning entry to this year’s GRS video contest. Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
It dawned on me in college, having experienced several different summer jobs, that I really didn’t like being employed. Sure, the money is nice — but it’s just no fun at all to spend your days working to reach some boss’s plans or goals. I’m sure there are some folks out there who find a 9-to-5 job fulfilling, but that sure ain’t me. There’s too much fascinating stuff out there to learn and do to spend 40 years in a cubicle. The mere thought makes me shudder, and I wanted nothing to do with a career.
Most of the financial advice out there is geared towards building up a big account to retire on. I figured that I would enjoy taking a different route — reducing the total income I needed to live on. With a significant reduction in expenses, it becomes feasible to live very comfortably on a part-time income, or even just income from hobbies. How do you reduce your expenses that much? Live off the grid.
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Planning
By “live off the grid”, I don’t mean abandoning all your possessions to live in a shack in the woods. I mean taking control of your necessities and providing them yourself instead of relying on other to do it for you (and paying them to do so). Going offgrid requires a greater up-front payment, which is rewarded by great benefits in the long term (sound familiar?). Building a house yourself is a huge investment in time, sweat, and cash — but it allows you to enjoy freedom from rent or mortgage for decades. Like cooking at home instead of going out, but writ large (hundreds of thousands of dollars large).
Note: My decision to follow this path was not purely a financial one — I simply am happiest out in the boonies. There are too many people in the city, and it’s just not enjoyable for me. I want some space. You may be different — and probably are.
The more I looked at the offgrid option, the more financial advantages I saw in it. By choosing an earth-bermed home design, I could minimize heating and cooling expenses, as well as exterior maintenance. Having my own well and septic system eliminate the water bill, and having my own photovoltaic system for electricity cuts out another bill. My consumable fuels for the home are limited to some wood for winter heating (easily collected from the property) and propane for cooking (for which a couple hundred gallon tank is nearly a lifetime supply). Add some food production on the land, and you can also reduce grocery expenses.
Does this mean intentional poverty? Absolutely not. It means that I can have great quality of life, make $10,000 per year with a part-time or online gig, and have more disposable income than most middle income debt-ridden wage slaves.
Execution
At the time I put this notion together, I was in the middle of getting a fancy engineering degree from a fancy university. I had been losing interest in engineering as a field to work in, and opted to jump to a more hands-on field of study and get the fastest two-year degree I could. I judged that it would be better to leave with some sort of diploma than drop out altogether.
At the same time, I started looking for affordable rural land. I had a small inheritance from a great grandparent that I had been saving for something significant and meaningful, and a piece of land seemed like the perfect use for it. I eventually found a 40 acre parcel in the Southwest for less than $500/acre. I ditched school for a week to camp out on it, and fell in love. It had a good southeast facing slope for my passive solar house plan, and everything else I wanted in a parcel.
Ian’s parcel of land
On the third day, I signed a bill of sale, wrote a check for the price (10% off since I wasn’t financing it) and made it mine. And then (sadly) headed back to school. A year later, I came out with my degree and a $35,000 bill from Sallie Mae. That student loan was my only debt, and it meant a monthly payment of something like $250. Not bad at all, by most standards.
I packed all my belongings into my truck (a paid-for beater of a 1970s Chevy) and embarked to find a job in the little windblown town nearby and build my house. Jobs were sparse, though, and I wound up making less than minimum wage as a commission mechanic. That $250 loan payment was a massive chunk of my income, and it became clear that I wouldn’t make any progress unless I changed my situation. So I packed up again, and moved to the big city (ugh). Not what I wanted to do, but it was necessary. After a couple false starts, I landed a bartending job that paid pretty darn well. Now that I was finally making more than I needed to just scrape by, I set about making some real progress.
Saving was immediately gratifying, because I brought home my day’s earnings in cash every night. I budgeted out what I needed to live on (rent, gas, food), and put that much in my living expenses envelope each evening. The loose change (a couple bucks worth usually) became my “fun” spending money, and everything else went into the student loan envelope. Every time the envelope crossed the $1000 threshold, I took it down to the Post Office and sent a money order to Sallie Mae. I didn’t eat out, I didn’t go to bars, I replaced my big beater truck with a little beater truck that got much better gas mileage, I didn’t have a TV, and I split an internet connection with a neighbor in my apartment block. I grabbed every extra shift at the bar that I could manage. It paid off. In 53 weeks, I zeroed out that student loan. (I have the closure notice from Sallie Mae framed.)
Then came a big moment of truth. I’d been focusing intensely on paying off that debt, and the house plan was a bit of a nebulous thing that I would do later, after the loan. Well, now the loan was gone, I had the good-paying job, and I was used to living on not very much. I could go do anything now! I could buy a slick new car, or a bunch of cool gadgets, or anything I wanted. Or I could make the earth-bermed, offgrid house a reality. It didn’t take much reflection to conclude that the house was what I really wanted. So I replaced my “Loan” envelope in the closet with a “House” envelope and went right on with the same budget. Soon the envelope filled up, and I replaced it with a shoebox. Eventually the pile of cash in the shoebox started making me a bit nervous, and I got a safety deposit box at my bank.
When my second year on the budget netted me as much as the first, I crunched some numbers and concluded that a third year would be enough to get me enough money to build the house. I informed my manager at the bar that I would be leaving on May 31st of the next year, when it had warmed up and I deemed that building season was in full swing.
During that third year, I started spending some of my savings to pay for some initial infrastructure that I had to hire out, like the installation of my well and septic system and the kit for my house (purchased from Performance Building Systems — a company I highly recommend). When I finally quit the bartending job (on exactly the day I’d selected a year earlier), I headed back to the property with a wad of about $40,000 in cash and a sturdy pair of work boots.
Ian has his work boots on
I spent that summer living in a neighbor’s barn and building. The house I’d decided on was a monolithic concrete arch, 24 feet wide and 36 feet deep. It came to 800 square feet total, and would be covered with 2-4 feet of earth when finished. The sides would be completely underground, and the front wall would be fully exposed, with a lot of glazing to let in light and warmth (you can see photos of a bunch of these homes at earthshelter.com). I first needed to dig into my hillside and lay a slab foundation, then construct the framework of the the house, build the front wall with concrete block, and then have the main framework shotcreted (concrete sprayed with a high pressure air hose, to form rounded structures). Once the shotcrete set, I began building wall framing inside, and running water and electrical lines.
It’s not finished yet — some things cost more than I’d expected, and by the time winter really set in, I had a lot of interior work still left to do and had run out of savings. So I moved back to the city to find another job, and I continue to work on the house on my weekends.
However, the house is complete enough that I could live in it if I had to. I’m working my current job (I leveraged my offgrid experience into a position in the solar power industry) because of a conscious decision that the income is worth the time, and I have an alternative option should I decide that I really dislike the employment. That option makes a big psychological difference.
I can reflect on my job and know that I’m working it for a specific goal. I already have enough saved up again to finish the house interior, and what I’m doing now is saving up to build and stock a good workshop. With a good selection of woodworking, metalworking, and automotive tools I will be able to indulge in fairly technical hobbies. I can easily live on the proceeds of custom niche machine work, or have fun restoring and selling an antique vehicle from time to time. In addition, things like building my own furniture and maintaining my own vehicles will save a lot of money, and be more rewarding than hiring others to do the work for me.
Thanks to the planning and hard work, I will retire by the age of 30 — if not sooner. That doesn’t mean I’ll spend my time watching TV and playing golf, it means I will be able to actually live life instead of sacrificing all my time to a job making money.
Questions About the House
Living off the grid isn’t what many people expect. With the dramatic recent reduction in solar power costs, you can really have every modern convenience without a power pole. You really can’t tell an offgrid home from the inside. The keys to doing this effectively are putting more attention into efficiency, and choosing the right power sources. Electric heat, for example, is extremely inefficient. Propane is a far cheaper way to cook, and a wood stove is a great inexpensive, renewable source of heating. Thoughtful home design to utilize solar exposure, prevailing wind currents, and other environmental factors can significantly reduce the amount of artificial heating and cooling needed in the first place. Modern efficient appliances and lighting further reduce electrical needs.
Because of my high altitude and sunny climate, I chose to use a solar hot water heater instead of an electric or propane type. It’s a simple system with an 80-gallon tank (which should be able to supply comfortable hot showers through 3 days without sun), and it reduces my propane needs to just cooking. Internet can be provided by either satellite or wireless broadband (my cell phone reception is iffy at the house, but my Blackberry can get a pretty decent signal).
What about my social life? Am I going to be some sort of loner hermit? The answer is definitely not.
I’m not someone who needs constant social interaction, but you get plenty of it in the boonies. It’s clear from both my own experience and talking to other folks living in similar situations, that there is much more community socialization when there aren’t many people than when there are lots. I’ve never known more than one or two neighbors when I’ve lived in a city with dozens of people within shouting distance. But when there are only five families in a square mile, you know all of them, and their dogs, and often their friends and relatives who occasionally visit. It’s true for my house now — there are a few permanent residents and a few weekenders and we all socialize regularly.
The other question I always get is about family. The short version is that I have no desire for marriage or children. The house isn’t big enough for a family, and it wouldn’t be feasible to put on an addition. If I wake up one morning and suddenly can’t live another day without offspring, I’ll just have to build a new house. But I don’t envision that happening.
Tips
If you’re considering doing something like this, I’d like to offer a couple quick tips from my experience. Just as a good financial decision now can have magnified implications down the road, time spent planning a house can prevent huge problems in construction. An hour spent fixing something in the foundation can prevent a day’s work in construction or a week’s work in finishing.
My other suggestion is to not let the traditional rule your decisions. If you’re putting this much work into a place to live, you clearly plan to be there for a long time. So don’t worry about building a house that will be easy to sell — build the house you really want to live in. My bedroom is minuscule by most folks’ standards, because I like the idea of a cozy sleeping space. (I also ran a small water line and drain to the bedside table, so I don’t have to get out of bed for a drink of water at night.) The pantry is huge, though, because I will be growing and preserving food. I’m building a house to live in, not to sell, so I don’t care if it appeals to a real estate agent or bank loan officer.
Most of all, if you have a dream, you should do it. Stop fantasizing and start planning. No matter how many years it might take, it won’t ever happen until you start. And once you do start, you’ll be amazed at what perseverance and dedication can do for you. There’s no better feeling in the world than deciding how you want to live and making it happen.
While it’s still possible to request mortgage forbearance via the CARES Act if you’re having trouble making monthly payments, this option will eventually come to an end.
In fact, you might only have about two months left to contact your loan servicer for relief. So if you think you’ll need help, act sooner rather than later to avoid missing out.
This cutoff date depends on the type of mortgage you have, e.g. an FHA loan or a conventional loan.
What’s the Last Day to Apply for Mortgage Forbearance?
Fannie and Freddie loans – when the “national emergency” ends
FHA loans – June 30th, 2021
USDA loans – June 30th, 2021
VA loans – June 30th, 2021
Oddly, it’s not even known when that date is, at least when it comes to mortgages backed by Fannie Mae and Freddie Mac.
That’s because the GSEs currently have the end date for relief set to the end of the national emergency. So it might be a moving target given COVID-19 seems to just be getting started.
Seeing that the other agencies have extended into the first six months of 2021, the hope is Fannie/Freddie will also do at least that.
The FHA had set a deadline of October 30th, 2020 (which was extended to December 31st , 2020, then Feb. 28th, 2021, then to March 31st, 2021, and now to June 30th).
Similarly, the USDA had announced a deadline of December 31st, 2020 for approving forbearance requests, then aligned it with the FHA’s February 28th, 2021 cutoff date, and has since extended it until June 30th, 2021.
With regard to VA loans, it’s the same story as the FHA as government-backed home loans appear to have the same cutoff dates (other than USDA).
Whether these end dates all get extended in light of the continued uncertainty and ongoing economic disruption remains to be seen.
They’ve already been extended several times, so it won’t be a surprise if they move them into the future again, especially with COVID continuing to keep the economy shuttered.
Loan Servicers Will Have Their Busiest Season Ever
I spoke to Sapan Bafna, senior leader, Advanced Delivery Engines for CoreLogic, who is responsible for developing IntelliMods, a web-based loan modification decisioning tool, to get his take on how things might go once the CARES Act forbearance option runs out.
In short, he believes loan servicers will experience “their busiest season ever” as they process post-forbearance requests for millions of homeowners.
He developed IntelliMods as a result of the 2008 economic crisis and believes the industry will be held accountable for underusing technology and available data.
In other words, they could make a complete mess out of things once borrowers exit their CARES Act forbearance plans.
And that won’t be good for the industry, which only recently got past the many loan modification and foreclosure snafus from the Great Recession.
Still, things don’t seem nearly as bad this time around, at least for most homeowners.
[How Is Mortgage Forbearance Paid Back?]
What Will Be the Most Common Outcome Post-Forbearance?
Fannie and Freddie loans will likely go the payment deferral route
FHA loans will use the COVID-19 Stand Alone Partial claim option
USDA and VA loans will have full suite of existing home retention options on the table
When asked what would be the most common outcome after forbearance ends, Bafna broke it down by loan type.
He believes borrowers with Fannie- and Freddie-backed mortgages will take advantage of the payment deferral option, followed by a loan modification if they’re unable to resume making their regular mortgage payments.
For FHA loans, he expects most to go with the COVID-19 Stand Alone Partial claim option, followed by four new modification options that have been specifically created for the COVID-19 pandemic.
For USDA loans and VA loans, he believes “homeowners will be offered the full suite of existing home retention options.”
If all else fails, it is possible that some homeowners will have to go the deed-in-lieu of foreclosure route, or simply be foreclosed on.
The good news for the overall market is because of severe inventory shortages, additional foreclosed properties likely won’t put much if any downward pressure on home prices.
Of course, he did say “Some local markets have been hit particularly hard by the pandemic recession and will experience elevated unemployment and home-price weakness in 2021.”
At the same time, more resilient metros will rebound and actually see additional home price appreciation next year.
With regard to short sales, which were big after the most recent housing crisis, Bafna believes they’ll be “a small component since we currently see only around 3% of mortgages with negative equity.”
The House Rich, Cash Poor Conundrum
While it sounds like most homeowners will see relatively positive outcomes post-forbearance, he highlighted another issue regarding the many borrowers nationwide who are now house rich and cash poor.
Because property values have increased significantly over the past several years, but incomes have lagged, some homeowners may have difficulty refinancing their mortgages or otherwise accessing their home equity.
As such, a borrower experiencing financial distress because of the pandemic-related recession will be at the greatest risk of losing their home.
And while they might be able to sell via traditional channels due to their amassed equity, they’ll still incur moving costs, lose any homeowner-related tax benefits, and “forego the opportunity to build equity in their homes as prices rise in the future.”
This exemplifies the problem with real estate, which is an illiquid asset. Often there’s a lot of money trapped inside that can’t be easily accessed.
There are some options out there, like reverse mortgages and innovate products like Noah’s home equity sharing program, but no one solution is totally ideal.
The good news, even if hard to access, is homeowners have lots of equity this time around, which is a big improvement from a decade ago when their mortgage balances grossly outweighed their property values.
That should allow the real estate market to absorb the negative impact of the COVID-19 pandemic, even if it goes on for another year or longer.
Read more: There Will Be a 3-Month Waiting Period to Get a Mortgage After Forbearance
If you are in a relationship, you know how easy it can be to pass on having a date night due to kids, too much going on, or even finances. However, it is essential to your relationship to spend some quality time together. How do you do that? By having a date night, of course!
We’ve come up with some cute date night ideas that are fun and affordable ways to have a date night with your partner. We’ve kept them budget-friendly so you won’t have to spend a lot of money.
CLICK THE IMAGE ABOVE AND GET YOUR DATE NIGHT CARDS
To make this even more fun, we’ve created date night cards! Print them out and toss them into a box or a jar and draw one out and let fate determine what you will do for date night this week! With 50 ideas, you will always have something you can do together. And, some of these ideas may inspire some of your own!
FUN & CHEAP DATE NIGHT IDEAS
1. Make s’mores over your fireplace fire or home campfire. You can also try your hand at this fun s’mores dip recipe too!
2. Teach one another something new. If you know how to paint, teach your partner. Maybe he or she can show you how to build a shelf.
3. Take in the stars. Watch for shooting stars or try to find constellations.
4. Movie Night at home. Cuddle up on the floor with a few pillows and a blanket. Share a bowl of popcorn and your favorite beverage. If you have a great backyard, put the movie on your laptop and head outside.
5. Go on a bike ride around a local park or lake. Take time to stop along the way and take in the nature around you.
6. Take a nice long day hike up a local trail. Identify trees or plants along your trip.
7. Create an ice cream bar. Don’t forget the hot fudge!
8. Play a card game. You can play something as simple as Go Fish or learn a new game. Or, there is always a game of poker, to which you can add some “spice” if you wish.
9. Go for a nice long scenic drive together. For more fun, try to make only left (or right turns) and see where you end up.
10. Play a game of Mini Golf. Just check for coupons before you go!
11. Rent a movie or TV series. Watch all of the Harry Potter movies or every season of Grey’s Anatomy (which will last a few date nights).
12. Play a game of Red Neck Golf. For more fun, you could find plans to make it yourself!
13. Check out your local farmer’s market. You can also play the alphabet game and see if you can’t find products for every letter.
14. Visit your local aquarium. Don’t forget to take fish face selfies!
15. Play a game of “Chopped Challenge.” Have the kids put a few ingredients into a box for you and see what you can create together.
16. Visit your local museum. You can also check out a local art exhibit. Add more fun by having a scavenger hunt in the museum to find items like a blue shirt, tree, etc.
17. Get tickets to a local concert, performance, or show. Grab dinner at home before you go so you can save a few bucks
18. Visit your local zoo. Walk around imitating the animals you just saw. You’ll be guaranteed to laugh.
19. Attend a local sports game. Check out a high school or college game. If you live near a minor league team, tickets to these games are much less expensive than professional teams.
20. Spa Night. Give each other a massage, pedicure, or facial and soak in the tub.
21. Candlelight dinner. But, don’t make it! Try a fun fast food restaurant by soft candlelight.
22. Go to the driving range. FORE!!
23. Shopping trip. Make it more fun by buying something for one another that you like.
24. Plan your dream house. Go online and look on Pinterest for ideas. For even more fun, visit your local home improvement store and select your carpet, appliances and more.
25. Have a fondue night. Find some fondue recipes and make your dinner and dessert at home.
26. Play board games. See if you can finally finish a game of Monopoly.
27. Hit the playground. Push one another on the swings, go down a slide and get dizzy on the merry-go-round (if they have one).
28. Coffee talk. Go to your favorite coffee store and grab a cup and just talk. Set rules such as no mention of the kids!
29. Check out the bookstore. Skip the electronic books and go to a bookstore. Sit and read together or listen to an author reading from his or her book.
30. Bowling. Check out your local alley to find out when they might have rock and bowl or blacklight bowling.
31. Slip-n-slide. Dig out the kiddie pool or the slip-n-slide and have some fun!
32. Beer or wine tasting. If you live near a brewery or vineyard, go on a tour, and don’t forget the samples!
33. Volunteer. Find a charity you both love and volunteer your time to help out. You’ll get to spend time together while being able to help someone else.
34. Tour an open house. If your city offers a tour of homes, take in a few of them. Dream about what you would do or pretend to be a realtor selling it to one another.
35. Scavenger Hunt. Create a list of things you need to find around your neighborhood. You could turn it into a mini food drive for a local charity too!
36. Feed the ducks. Stop by the park and feed the ducks. People watch and come up with your own story about their lives.
37. Fly a kite. Bonus points if you make it yourself!
38. Build a fort blanket. Then, spend the night inside eating snacks, telling ghost stories, or watching a movie.
39. Take a class. Check with your local parks and rec department and take a class together. You can also take a DIY class at your home improvement store (and then make improvements at home).
40. Glamour shot. Get out the makeup and accessories and dress one another up. Don’t forget to take photos!
41. Strip games. Enough said.
42. Store hunt. Have fun at Walmart finding the craziest items on your list.
43. Nerf gun war. Borrow the kids’ guns and have some fun!! Make sure you have plenty of ammo!
44. Geocaching. Such a great way to have some fun outside.
45. Roller skating. Make sure you wear a helmet.
46. Backyard camping. Set up the tent and make a campfire (in your grill or fire pit).
47. Test drive vehicles. Not just any though, try your dream car!
48. Visit an arcade. Play the games your kids love. Or, pull out the Wii, classic Atari, or Sega and have fun at home.
49. Play the newlywed game. Create 10 questions and write down your answers. See if your partner can answer them correctly.
50. Love notes. Write a note or poem for one another. It is important to know how much you mean to the person you love.
There you go! Fifty fun ways to spend a day or night with your favorite person! Money won’t be an excuse for not doing something together with these cheap date night ideas!
Refinancing a mortgage can be a great financial move for homeowners to potentially lower monthly mortgage payments, tap home equity, or build equity more quickly by shortening the term of the loan.
Refinancing can save you money — but it can cost you money too. Before you start the refinancing process, you should know how it works, the benefits and drawbacks, and the steps you’ll need to take.
What Is Mortgage Refinancing and Why You Might Want to Refinance?
Refinancing a home mortgage is basically replacing your existing mortgage with a new one, typically with a different principal and interest rate.
There are many reasons why borrowers choose to refinance a mortgage, including:
To take advantage of lower market interest rates
To shorten the term of their loan
To withdraw a portion of their equity
To lower their monthly payments with a longer repayment term
To convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage
To remove or add another person to the mortgage
Choosing the Right Type of Mortgage Refinances
There are three main types of mortgage refinances: rate-and-term, cash-out, and cash-in.
Rate-and-term refinance: This type of refinancing allows the borrower to change the interest rate, the term of the loan, or both without advancing any new money.
Cash-out refinance: A cash-out refinance takes advantage of the built-up equity in the home and gives the borrower cash in exchange for a larger mortgage.
Cash-in refinance: A cash-in refinance allows homeowners to pay a large sum towards their principal balance during the refinance process.
4 Benefits of Refinancing a Mortgage
Your decision to refinance your home mortgage ultimately depends on your goal. Do you want to lower your monthly payments? Are you hoping to shorten the length of your loan?
Here are some common reasons that people choose to refinance:
Changing the length of your loan. By refinancing from a 30-year mortgage into a 15-year mortgage, you could pay it off in half the time. This also results in paying less interest; however, your monthly payment may go up.
Switching to a different loan type. Some homeowners choose to refinance their mortgage to change their loan types. For example, refinancing from an adjustable-rate mortgage to a fixed-rate mortgage. The interest rate for an adjustable-rate mortgage can go up and down over time but the interest rate for a fixed-rate mortgage doesn’t change.
Tapping into your home equity. Want to do some home improvements, pay off debt, or even take a trip? You can do a cash-out refinance to borrow more than you owe on your current mortgage.
Getting a lower interest rate. Interest rates fluctuate for a variety of reasons. Refinancing could make financial sense if you can get a lower interest rate than when you originally took out your mortgage. If you can secure a lower interest rate, you could potentially save money and pay off your mortgage faster.
Calculate how refinancing might affect your monthly payments with Total Mortgage’s Refinance Calculator and see how much you can save.
How to Refinance a Mortgage: 4 Key Steps
Refinancing a mortgage is very similar to purchasing a home; however, it’s a little less complicated. But how exactly does refinancing your home work? Here is a simplified step-by-step guide:
Understand your reasons for refinancing. Before you refinance, you need a clear goal. What do you want out of your refinance and what type of loan will help you achieve that goal?
Apply for a refinance. Once you’ve selected your lender, you’re ready to complete your refinance application, lock your interest rate, and submit any necessary documents. Keep inmind that you don’t have to refinance with your current lender. Exploring other landers’ options could increase your chances of finding a better interest rate with more favorable loan terms.
Appraisal and underwriting. The underwriter will review the application and documents and offer conditional and/or final approval of the loan. The lender will also order a home appraisal to verify the current home value.
Close on the loan. The home closing is when you and your lender will go over the loan documents and finalize all details. You’ll need to sign documents and pay closing costs listed in the Loan Estimate and the Closing Disclosure.
The time it takes to refinance a mortgage depends on several factors, such as credit checks, appraisals, and the lender. Refinancing a mortgage can take anywhere from 15 days to 45 days or longer, with an average of 30 days to close.
Costs of Refinancing a Mortgage
Refinancing isn’t free — but depending on your circumstances, it can be worth it. Closing costs typically include origination fees, home appraisal, and recording. Depending on where you live and your lender, there could also be an attorney fee and title search, and insurance.
Closing costs are generally a percentage of your loan amount —about 2% to 5% — though these are just estimates and costs may vary depending on the state and county where you live as well as your lender.
Not every closing will cost you money at the closing table. You could also have a no-closing cost refinance.
This is a refinance where instead of paying upfront, closing costs are either rolled into the new loan or the lender may raise your interest rate. While this does mean that you need to come up with less money at closing, you could end up paying more over the long run.
Explore Total Mortgage’s Refinancing Options
Unsure if you should refinance? Refinancing a mortgage could potentially lower your monthly payments with more favorable terms. Another option is to use a mortgage refinance to tap your home’s valuable equity and use the cash as you please.
If you’re looking to refinance a mortgage, be sure to check out Total Mortgage’s list of branches across the US and find the one nearest to you. You can also apply online and get a free rate quote.
Alright, folks. It’s time to get into the spooky, fun-filled spirit of Halloween. Instead of focusing on the big metros that often grace our lists, we wanted to spotlight some of the smaller, unusually named communities that have haunting names.
But instead of just listing these small towns, we’ve gone a step further by explaining how (most of) these towns got their names. Some will frighten you. Okay, that might be a stretch. At any rate, this here is prime (albeit random) Halloween knowledge that you’ll want to share on October 31st!
Bad Axe, MI: Back in 1861, two surveyors set up camp in the area and came across a badly damaged axe. To mark the site, they made a sign that read “Bad Axe Camp”, hence the city’s name was born and was officially established in 1905.
Bat Cave, NC: This is the home of Bluerock Mountain, otherwise known as Bat Cave Mountain. It features a cave that houses several species of – you guessed it – bats! Fun fact: This mountain is reportedly the “largest known granite fissure cave in North America”. Sorry, it’s not open to the public.
Black Creek, GA: The origins of this tiny Savannah town have been buried six feet under, which is far beyond Google’s reach, apparently.
Casper, WY: Commonly referred to as “The Oily City”, Casper’s name originated from Lieutenant Caspar Collins who was killed in 1865 by enemy forces. Nope, that’s not a typo, folks, at least not on our part. The change in spelling is due to a typo that was mistakenly submitted when the town name was officially registered with the state of Wyoming.
Cape Fear, NC: Widely recognized as the name of a 1962 thriller (and its 1991 Martin Scorsese remake), Cape Fear is a tiny town halfway between the larger metros of Raleigh and Fayetteville. Cape Fear’s name dates back to a 1585 expedition in which a ship became stuck behind the cape. The crew was afraid they’d wreck, giving birth to the name Cape Fear.
Dead River Township, ME: Town history: Missing. Reward: Non-existent. Sorry.
Deadwood, OR: This small town takes its name from nearby Deadwood Creek, an area known for a series of wildfires caused by dead timber snags along the water.
Frankenstein, MO: Sorry to burst your bubble, but this small town does not take its name from the popular square-headed monster. It’s actually named after Gottfried Franken in honor of the land he donated to build a church back in 1890.
Pumpkin Center, CA: We’ve uncovered the grim truth. How odd that this town is just 13 minutes away from Bakersfield? RIP, pumpkins.
Sleepy Hollow, NY: Located on the coast of the Hudson River just minutes from White Plains, Sleepy Hollow was known as North Tarrytown up until 1996. At that time, residents voted for the name change in honor of local author Washington Irving’s story “The Legend of Sleepy Hollow”.
Slaughter, LA: The name of this small and fairly new Baton Rouge town comes from an award-winning fictional novel by Michael Ondaatje. Buddy Bolden: Coming Through Slaughter, is largely based on the legendary New Orleans jazz musician.
Slaughters, KY: A simple bet is how this town earned its name. Augustus G. Slaughter won a card game, ultimately winning the right to name the town as well as the local post office where he served as postmaster from 1860 to 1865.
Tombstone, AZ: During the late 1800s, U.S. Army scout Ed Schieffelin searched the area looking for “valuable ore samples”. Around the same time, three army officers were killed by Indians. Schieffelin’s friend told him, “The only rock you will find out there is your own tombstone.” Ed continued his search, eventually locating a stash of silver ore. He named this spot Tombstone, which became the name of the town. It’s since been dubbed “The Town Too Tough to Die”.
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47k salary is a solid hourly wage when you think about it.
When you get your first job and you are making just above minimum wage making over $47,000 a year seems like it would provide amazing opportunities for you. Right?
The median household income is $68,703 in 2019 and increased by 6.8% from the previous year (source). Think of it as a bell curve with $68K at the top; the median means half of the population makes less than that and half makes more money.
The average income in the U.S. is $48,672 for a 40-hour workweek; that is an increase of 4% from the previous year (source). That means if you take everyone’s income and divided the money out evenly between all of the people.
But, the question remains can you truly live off 47,000 per year in today’s society since it is below both the average and median household incomes. The question you want to ask all of your friends is $47000 per year a good salary.
In this post, we are going to dive into everything that you need to know about a $47000 salary including hourly pay and a sample budget on how to spend and save your money.
These key facts will help you with money management and learn how much per hour $47k is as well as what you make per month, weekly, and biweekly.
Just like with any paycheck, it seems like money quickly goes out of your account to cover all of your bills and expenses, and you are left with a very small amount remaining. You may be disappointed that you were not able to reach your financial goals and you are left wondering…
Can I make a living on this salary?
$47000 a year is How Much an Hour?
When jumping from an hourly job to a salary for the first time, it is helpful to know how much is 47k a year hourly. That way you can decide whether or not the job is worthwhile for you.
$47000 a year is $22.60 per hour
Breakdown Of How Much Is 47k A Year Hourly
Let’s breakdown, how that 47000 salary to hourly number is calculated.
For our calculations to figure out how much is 47K salary hourly, we used the average five working days of 40 hours a week.
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, divide the yearly salary of $47000 by 2,080 working hours and the result is $22.60 per hour.
47000 salary / 2080 hours = $22.60 per hour
Just above $22 an hour.
Key Points….
That number is the gross hourly income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
You must check with your employer on how they plan to pay you. For those on salary, typically companies pay on a monthly, semi-monthly, biweekly, or weekly basis.
Just an interesting note… if you were to increase your annual salary by $5K, it would increase your hourly wage to over $25 an hour – a difference of $2.40 per hour.
To break it down – 52000 salary / 2080 hours = $25.00 per hour
That difference will help you fund your savings account; just remember every dollar adds up.
How Much is $47K salary Per Month?
On average, the monthly amount would be $3,917.
Annual Salary of $47000 ÷ 12 months = $3917 per month
This is how much you make a month if you get paid 47000 a year.
$47k a year is how much a week?
This is a great number to know! How much do I make each week? When I roll out of bed and do my job of $47k salary a year, how much can I expect to make at the end of the week for my effort?
Once again, the assumption is 40 hours worked.
Annual Salary of$47000/52 weeks = $904 per week.
$47000 a year is how much biweekly?
For this calculation, take the average weekly pay of $904 and double it.
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x 52 weeks = 260 working days
Annual Salary of$47000 / 260 working days = $180 per day
If you work a 10 hour day on 208 days throughout the year, you make $226 per day.
$47000 Salary is…
$47000 – Full Time
Total Income
Yearly Salary (52 weeks)
$47,000
Monthly Wage
$3,917
Weekly Pay (40 Hours)
$904
Bi-Weekly Pay (80 Hours)
$1,808
Daily Wage (8 Hours)
$180
Daily Wage (10 Hours)
$226
Hourly Wage
$22.60
Net Estimated Monthly Income
$2,990
Net Estimated Hourly Income
$17.25
**These are assumptions based on simple scenarios.
47k a year is how much an hour after taxes
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with an all salary range up to $142,800.
When you make below the average household income, the amount of taxes taken out hurts your hourly wage.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
So, how much an hour is 47000 a year after taxes?
Gross Annual Salary: $47,000
Federal Taxes of 12%: $5,640
State Taxes of 4%: $1,880
Social Security and Medicare of 7.65%: $3,595
$47k Per Year After Taxes is $35,884
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$35884 ÷ 2,080 hours = $17.25 per hour
After estimated taxes and FICA, you are netting $32,830 per year, which is $10,170 per year less than what you expect.
***This is a very high-level example and can vary greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.***
In addition, if you live in a heavily taxed state like California or New York, then you have to pay way more money than somebody that lives in a no tax state like Texas or Florida. This is the debate of HCOL vs LCOL.
Thus, your yearly gross $47000 income can range from $32124 to $37765 depending on your state income taxes.
That is why it is important to realize the impact income taxes can have on your take home pay. It is one of those things that you should acknowledge and obviously you need to pay taxes. But, it can also put a huge dent in your ability to live the lifestyle you want on a $47,000 income.
47k salary lifestyle
Every person reading this post has a different upbringing and a different belief system about money. Therefore, what would be a lavish lifestyle to one person, maybe a frugal lifestyle to another person. And there’s no wrong or right, it is what works best for you.
One of the biggest factors to consider is your cost of living.
In another post, we detailed the differences between living in an HCOL vs LCOL vs MCOL area. When you live in big cities, trying to maintain your lifestyle of $47,000 a year is going to be much more difficult because your basic expenses, housing, transportation, food, and clothing are going to be much more expensive than you would find in a lower cost area.
To stretch your dollar further in the high cost of living area, you would have to probably live cheap and prioritize where you want to spend money and where you do not. Whereas, if you live in a low cost of living area, you can live a much more lavish lifestyle because the cost of living is less. Thus, you have more fun spending left in your account each month.
As we noted earlier in the post, $47,000 a year is below the average income that you would find in the United States. Thus, you have to be wise with how you spend your money.
What a $47,000 lifestyle will buy you:
If you are debt free and utilize smart money management skills, then you are able to enjoy the lifestyle you want.
Have some fun money in your budget.
You are able to rent in a decent neighborhood in LCOL and maybe a MCOL city.
You should be able to meet your expenses each and every month.
Participate in the 200 envelope challenge.
Ability to make sure that saving money is a priority, and very possibly save $3000 in 52 weeks.
When A $47,000 Salary Will Hold you Back:
However, if you are riddled with debt or unable to break the paycheck to paycheck cycle, then living off of 47k a year is going to be pretty darn difficult.
There are two factors that will keep holding you back:
You must pay off debt and cut all fun spending and extra expenses.
Break the paycheck to paycheck cycle.
It is possible to get ahead with money!
It just comes with proper money management skills and a desire to have less stress around money. That is a winning combination regardless of your income level.
$47k Salary to Hourly
We calculated how much $47,000 a year is how much an hour with 40 hours a week. But, more than likely, you work more or fewer hours per week.
So, here is a handy calculator to figure out your exact hourly salary wage.
$47K a year Budget – Example
As always, here at Money Bliss, we focus on covering our basic expenses plus saving and giving first, and then our goal is to eliminate debt. The rest of the money leftover is left for fun spending.
If you want to know how to manage 47k salary the best, then this is a prime example for you to compare your spending.
You can compare your budget to the ideal household budget percentages.
recommended budget percentages based on $47000 a year salary:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$274
Savings
15-25%
$705
Housing
20-30%
$1018
Utilities
4-7%
$157
Groceries
5-12%
$313
Clothing
1-4%
$24
Transportation
4-10%
$157
Medical
5-12%
$196
Life Insurance
1%
$12
Education
1-4%
$12
Personal
2-7%
$35
Recreation / Entertainment
3-8%
$88
Debts
0% – Goal
$0
Government Tax (including Income Tatumx, Social Security & Medicare)
15-25%
$926
Total Gross Monthly Income
$3917
**In this budget, prioritization was given to basic expenses and no debt.
Is $47,000 a year a Good Salary?
As we stated earlier if you are able to make $47,000 a year, that is a decent salary. You are making more money than the minimum wage and close to double in many cities.
While 47000 is a good salary starting out in your working years. It is a salary that you want to increase before your expenses go up or the people you provide for increase.
However, too many times people get stuck in the lifestyle trap of trying to keep up with the Joneses, and their lifestyle desires get out of hand compared to their salary. It is okay to be driving around a beater car while you work on increasing your salary.
This $47k salary would be considered a lower middle class salary. This salary is something that you can live on if you are wise with money.
Check: Are you in the middle class?
In fact, this income level in the United States has enough buying power to put you in the top 95 percentile globally for per person income (source).
The question you need to ask yourself with your 47k salary is:
Am I maxed at the top of my career?
Is there more income potential?
What obstacles do I face if I want to try to increase my income?
In the future years and with possible inflation, in many modest cities 47k a year will not be a good salary because the cost of living is so high, whereas these are some of the cities where you can make a comfortable living at 47,000 per year.
If you are looking for a career change, you want to find jobs paying at least $55000 a year.
Is 47k a good salary for a Single Person?
Simply put, yes.
You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.
Learn exactly what is a good salary for a single person today.
Your living expenses and ideal budget are much less. Thus, you can live extremely comfortably on $47000 per year.
And… most of us probably regret how much money wasted when we were single. Oh well, lesson learned.
Is 47k a good salary for a family?
Many of the same principles apply above on whether $47000 is a good salary. The main difference with a family, you have more people to provide for than when you are single or have just one other person in your household.
The costs of raising children are high and will steeply cut into your income. As you can tell this is a huge dent in your income, specifically $12,980 annually per child.
That means that amount of money is coming out of the income that you earned.
So, the question really remains is can you provide a good life for your family making $47,000 a year? This is the hardest part because each family has different choices, priorities, and values.
More or less, it comes down to two things:
The location where you live in.
Your lifestyle choices.
You can live comfortably as a family on this salary, but you will not be able to afford everything.
Many times when raising a family, it is helpful to have a dual-income household. That way you are able to provide the necessary expenses if both parties were making 47000 per year, then the combined income for the household would be $94,000. Thus making your combined salary a very good income.
Learn how much money a family of 4 needs in each state.
Can you Live on $47000 Per Year?
As we outlined earlier in the post, $47,000 a year:
$22.60 Per Hour
$180-226 Per Day (depending on length of day worked)
$904 Per Week
$1808 Per Biweekly
$3916 Per Month
Next up is making $50000 a year.
Like anything else in life, you get to decide how to spend, save and give your money.
That is the difference for each person on whether or not you can live a middle-class lifestyle depends on many potential factors. If you live in California or New Jersey you are gonna have a tougher time than in Oklahoma or even Texas.
In addition, if you are early in your career, starting out around 38,000 a year, that is a great place to be getting your career. However, if you have been in your career for over 20 years and still making $47k, then you probably need to look at asking for pay increases, pick up a second job, or find a different career path.
Regardless of the wage that you make, if you are not able to live the lifestyle that you want, then you have to find ways to make it work for you. Everybody has choices to make.
But one of the things that can help you the most is to create a biweekly budget to make sure you stay on track.
Learn exactly how much do I make per year…
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To remain financially responsible, everyone must pay bills on a regular basis. These bills include your house payment, Dish Network with the HD package, water bill, Sirius satellite radio and few of the other essentials out there. Unfortunately, many people do not follow the same concept was it comes to investing.
The harsh reality these people may discover is that a steady saving and investing plan is sometimes necessary to help pursue such financial goals as paying for a wedding or new car, buying a house, and funding retirement. Everybody as their own opinion on the right way to generate wealth. One approach that is often seen consistently is called dollar cost averaging (DCA).
Please keep in mind that systematic investing does not ensure consistent market gains. Dollar cost averaging is a strategy that involves continuous investment in securities regardless of fluctuating price levels of such securities, and the investor should consider their financial ability to continue purchasing through periods of low price levels.
DCA Defined
Dollar cost averaging is a technique often used in buying mutual funds in which investments of defined amounts are made on a regular basis. As a long-term, disciplined strategy, DCA can help you take advantage of the benefits of compounding to potentially build a sizable sum. Consider the accompanying chart, which shows the result of investing $100 in stocks every month from January 1998 to December 2007.1
The Benefits of DCA
Month
Share Price
Shares Bought
Jan
$15
3.3
Feb
$13
3.8
Mar
$12
4.2
Apr
$14
3.6
May
$13
3.8
Jun
$12
4.2
Jul
$13
3.8
Aug
$14
3.6
Sept
$16
3.3
Oct
$16
3.1
Nov
$17
2.9
Dec
$16
3.1
TOTAL SHARES:
42.7
AVERAGE PRICE PER SHARE:
$14.25
AVERAGE COST PER SHARE:
$14.05
Other Long-Term Benefits of DCA
Another potential benefit of using DCA is that it ensures that your money purchases more shares when prices are low and fewer when prices are high. Over the long term, the result could be that the average cost you pay for the shares may be less than the average price. Assume you invest $50 per month in an investment for 12 months and every month the share price fluctuates a bit. You can see that your $600 total would have bought you 42.7 shares. The average price per share, as calculated by adding up the monthly prices and dividing by 12, would have been $14.25. However, the average cost that you would have actually paid, as calculated by dividing the total amount invested by the number of shares, would have been $14.05 per share. Over the years, this method could potentially save you a lot of money.
In addition, DCA can offer the psychological comfort of easing into the market gradually instead of plunging in all at once. Although DCA does not assure a profit or protect against a loss in declining markets, its systematic investing “habit” helps encourage a long-term perspective, which can be soothing for people who might otherwise avoid the short-term volatility of the riskier, but potentially more profitable, investments, such as equities.
And last, DCA may help you make savvy investment decisions if you stick with it. For example, if your investment rises by 10%, you will likely post big gains because of the shares you’ve accrued over time. And if it declines by the same amount, take comfort in knowing that your next investment will purchase more shares at a less expensive price – shares that may regain their value and even exceed the higher price in the future.
Regular Investing Makes Sense
While investing a lump sum at the most opportune time can potentially profit you more than if you dollar cost average your investment, defining “opportune” is difficult for even the most seasoned experts. As a long-term strategy, you may find DCA to be more appropriate to help potentially lower your average cost per share, and allow you to feel more comfortable during uncertain markets knowing that you made sound investment decisions. Keep in mind, however, that you should consider your ability to purchase over long periods of time and your willingness to purchase through periods of low price levels.
1Source: Standard & Poor’s. Stocks are represented by the S&P 500.
2Richard E. Williams and Peter W. Bacon, “Lump Sum Beats Dollar Cost Averaging,” Journal of Financial Planning, April 1993, pp. 64-67.
Read What Other Bloggers Are Saying about Dollar Cost Averaging:
Dividend Growth Investor: Dollar Cost Averaging
Digerati Life: You’ve Got Money: Invest It All or Dollar Cost Average?
Cash Money Life: Pros and Cons of Dollar Cost Averaging
A universal life insurance policy can accumulate cash value in addition to providing a death benefit. There are two basic types of universal life insurance policies you should know about. With indexed universal life insurance, the cash value can increase based on the performance of a market index. With variable universal life insurance, on the other hand, a policyholder directly invests the cash value into securities.
A financial advisor can help you determine how life insurance fits into your financial plan.
Universal Life Basics
Universal life insurance is a kind of permanent life insurance. Permanent life insurance differs from the other main variety of life insurance, term life insurance, in that permanent life insurance does not expire and part of the premium is used to build up cash value in a subaccount. Term life insurance generally costs less and is for a limited number of years but provides only a death benefit, without any cash value feature.
There are two major varieties of permanent life insurance, including whole life insurance as well as universal life insurance. With both types the cash balance in the subaccount can increase, but with whole life the growth is based on a fixed interest rate while with universal life the growth rate can vary.
Whole life premiums are also fixed. A universal life policyholder can opt to pay a lower premium during a period when cash flow is tighter, or pay more to build cash value. These policies also may also include other features, including long-term care coverage and other living benefits.
Favorable tax treatment is an important characteristic of permanent life policies. The death benefit is free of income taxes. Funds in the cash value subaccount also grow tax-free, and policyholders can withdraw funds or take loans against the cash value while still alive without owing taxes on the proceeds.
Indexed Universal Life
Indexed universal life is one of the sub-types of universal life. With an indexed universal life policy, the cash value can grow based on the performance of a stock market index. This allows for a potentially higher return than a whole life policy with a fixed return.
Indexed universal life policies typically have participation rates describing the return’s relationship to the index. A 60% return rate means the cash value will earn 60% of the return posted by the tracked index. If the index returns 10%, in this case, the subaccount will earn 60% of 10% or 6%.
However, these policies also often have caps on the maximum return. In the previous example, if the policy had a cap of 5%, the subaccount would earn 5% instead of 6%.
In addition, indexed universal life policies often have floor rates describing the minimum return the return will post. A floor of 1% means the policy will return 1% even if the index posts a negative return.
Pros of indexed universal life include the ability to get a death benefit along with tax-free growth and distributions. Policyholders can also contribute unlimited amounts and use the money at any time, which are useful advantages compared to retirement accounts such as IRAs.
Cons of indexed universal life include caps on returns along with sales, administrative and other fees which are typically higher than other investment options such as exchange-traded funds. Also, withdrawals from the cash value subaccount may become taxable if the policy is surrendered or lapses.
Variable Universal Life
Another type of universal life insurance is variable universal life. It shares many of the features of indexed universal life, including tax treatment and the ability to pay flexible premiums and accumulate cash value in a subaccount. The primary difference is how funds in the subaccount are handled.
Instead of tracking an index, the cash value in a variable universal life policy subaccount can be invested directly in securities, such as stocks and bonds. Variable universal life policies do not have participation rates, cap rates or floor rates as indexed universal life does.
The return on a variable universal life policy cash value will reflect the actual performance of the securities, without any limits up or down. This means it is possible to get a higher return than with an indexed universal life policy but also to get a lower return as well as to lose money.
Pros of variable universal life policies include the possibility of a higher return while still getting favorable tax treatment and a death benefit. Cons include the possibility of a lower return or actual loss. Variable universal life policies also typically have higher fees than indexed universal life due to the added costs of managing the investments.
IUL v. VUL: Which One Is Better?
As outlined above, there are positives and negatives for both products. Which one is best for you will largely depend on what you want to get out of your life insurance policy.
Indexed universal life can be a good choice for someone who wants a death benefit as well as flexibility in paying premiums and the prospect of a somewhat better return on the cash value than is offered by a whole life policy. Indexed universal life buyers tend to be more risk-averse than variable universal life policyholders, who are willing to take the chance of higher returns in exchange for the possibility of a loss.
The Bottom Line
Indexed universal life and variable universal life are two types of permanent life insurance that let policyholders pay varying premiums and accumulate cash value. Indexed universal life cash value can grow based on the performance of a stock index. Variable universal life cash value can be invested directly into securities. Indexed universal life typically limits both gains and losses, while variable universal life offers the opportunity for higher gains as well as losses.
Life Insurance Tips
Life insurance can be an important part of a financial plan. A financial advisor can help you select which type of life insurance works best for your situation. SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
SmartAsset’s investment calculator shows you how much your investment will be worth over time assuming a constant rate of return and regular contributions.
Mark Henricks
Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.