Roughly eight in 10 consumers participating in a recent survey are frustrated with the housing market, inflation and the increasingly worsening economy — reflecting record-setting dissatisfaction from respondents of Fannie Mae‘s Home Purchase Sentiment Index (HPSI).
The index, which tracks consumer confidence in the housing market, fell 3.4 points from May to June, dropping to 64.8 — its second-lowest reading in a decade. Compared with the same period last year, the index is down 14.9 points.
“In June, a survey-record 81% of consumers reported that the economy is on the wrong track, suggesting to us, and corroborated by other recently released consumer confidence measures, that people appear to be growing increasingly frustrated with inflation and the slowing economy,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
Additionally, four of the index’s six components, those asking consumers whether it’s a good time to buy, sell and in what direction they expect mortgage rates will move, decreased from May to June.
About 21% of survey respondents also expressed job stability concerns, the highest percentage in 18 months. And approximately half of all surveyed said it would be “difficult” to get a mortgage, the greatest number since 2014.
“This month’s HPSI reading reflects these macroeconomic and personal financial concerns, with housing sentiment additionally diminished by the recent rapid increases in mortgage rates,” Duncan said.
What lenders should know about today’s economic climate
Between continuing rate hikes from the Federal Reserve, the ongoing war in Ukraine and continued economic recovery following the pandemic, mortgage lenders across the country are managing a volatile housing market. Learn how updating your mortgage technology stack can help you get ahead in today’s unpredictable lending environment.
Presented by: Polly
Mortgage rates, following the Federal Reserve‘s inflation-fighting monetary policy, averaged 5.30% this week, according to the latest Freddie Mac PMMS index. Rates have been trending downward in recent weeks, but it’s still well over the 2.90% 30-year fixed-rate purchase rates the same period a year ago.
The HPSI results for June are consistent with the Fannie Mae Economic and Strategic Research Group’s forecast of a slowing housing market through the rest of 2022 and 2023, Duncan added.
Citing higher mortgage rates as the housing market’s “primary constraint,” the ESR Group projected total home sales to fall 13.5% to 5.96 million units in 2022. About 5.29 million homes are expected to sell in 2023.
The GSE also lowered its projections of mortgage originations to $2.6 trillion in 2022 and $2.2 trillion in 2023. Regarding the overall economy, Fannie Mae raised the second quarter GDP to 2.5% for 2022 but said it will be offset by a slower growth forecast in the latter half of the year as inflation continues to eat into real incomes.
The Federal Reserve hiked its benchmark lending rate this week for the seventh time this year, capping a year of intense pressure on the housing market that pushed mortgage rates above 7% for the first time since 2002.
But now that the Fed has signaled a softer approach to cooling the economy instead of rolling out bumper rate hikes, potential home buyers are left to wonder: Will mortgage rates come back down? Or have buyers missed their chance?
No one knows exactly where mortgage rates will go in the months ahead. But most experts agree that we have seen the end of 3% mortgages for some time.
Mortgage rates have run up so far and so fast this year that many would-be homebuyers can no longer afford to buy a home. At the end of 2022, when rates were at 3%, few predicted that just a year later rates around this week’s 6.33% would come as a relief, having dropped from over 7%.
After starting the year at an average 3.22%, according to Freddie Mac, the 30-year fixed-rate mortgage took off last spring as the Federal Reserve embarked on a historic campaign to battle decades-high inflation by raising interest rates. By fall, mortgage rates had more than doubled, eventually topping 7% in October. Rates have receded slightly in recent weeks, but loans are still expensive — especially compared to the historically low rates buyers were getting during the pandemic.
Home shoppers have watched their buying power evaporate, with higher rates adding hundreds of dollars onto what they would pay each month.
High mortgage rates remain the primary impediment to home buying, according to a recent buyer and seller sentiment survey conducted by Fannie Mae. Homebuying and home-selling sentiment are both significantly lower than they were last year.
Based on the survey, people in the real estate market continue to expect mortgage rates to rise but home prices to decline, said Doug Duncan, Fannie Mae senior vice president and chief economist.
He said he expects mortgage demand to be dampened by affordability challenges, while “homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”
Is this the new normal?
While the Fed’s rate hikes are expected to continue, many analysts anticipate they will be smaller than the recent bout of three-quarter-point hikes and will start to taper off as inflation starts to cool, which should mean mortgage rates will likely come down too.
The Fed does not set the interest rates borrowers pay on mortgages directly. But its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.
If rates do drop, just how low will they go?
“If inflation continues to decelerate over the next several months, mortgage rates will likely stabilize below 7%,” said Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors. “That’s still double the previous year’s rate, but it’s better than an 8% rate, which is the historical average for the 30-year fixed mortgage.”
Looking ahead, Melissa Cohn, regional vice president at William Raveis Mortgage, said buyers should expect rates to level off in 2023 around where they were in the years before the pandemic — around 4% or 5%.
“We had an active and healthy real estate market then,” she said.
But Cohn said she does not expect a “meaningful” decline in mortgage rates until the third or fourth quarter of 2023. “Mortgage rates will drop a bit in December, we’ll see a brief flurry of activity, but there are likely to be more increases in the new year.”
And don’t expect to see rates drop at the same speed at which they rose this year, she said.
“We have to remember mortgage rates come down much slower than they go up,” said Cohn. “Banks will want to see proof that rates are meaningfully coming down and not a one-shot wonder.”
The weekly swings in mortgage rates this year have been about three times the size of those seen in a typical year, said Danielle Hale, chief economist at Realtor.com. The Fed’s extra-large rate hikes aren’t the only thing causing that.
Economic uncertainty is creating a larger gap or “spread” between the 10-year Treasury yield and mortgage rates. Typically, mortgage rates are about two percentage points above the 10-year Treasury yield, but recently the gap has been wider.
The main driver of the widening spread is greater interest rate risk, according to a recent report from the Urban Institute.
“The uncertainty about the effects of Fed policy to date and about the trajectory of future policy has resulted in large movements in interest rates,” wrote Laurie Goodman and Michael Neal, the report’s authors.
Consumer mortgages are packaged and sold off to investors. The higher myeortgage rates are, the more money investors can make. But as rates fall, more homeowners will choose to prepay their mortgages or refinance, making the loans less attractive to investors.
“Volatility increases the level of mortgage rates, compared to Treasury rates, because of the prepayment option,” said Chester Spatt, professor of finance at Carnegie Mellon University’s Tepper School of Business. “If you’re in a new loan at 7% and rates go to 6%, you may choose to prepay and refinance into a lower rate.”
It is abnormal to have such a large spread, said Lawrence Yun, chief economist for NAR, adding that other times when the spread was wider were during the 2008 financial crisis and the early days of the pandemic.
“Hopefully this large spread will dissipate by the spring home buying season,” he said. “If so, maybe buyers will face mortgage rates in the 5’s.”
What buyers can expect
Lisa Sturtevant, chief economist at Bright MLS, a multiple listing service in the mid-Atlantic region, also expects mortgage rates to fall further in 2023, but she doesn’t expect them to drop quickly.
“We were in unprecedented territory with rates under 3%,” she said. “There is no reason to suggest we will be back there. But they will be down from where we’ve been.”
“Housing market activity will continue to be relatively sluggish — even if mortgage rates do begin to come down — since so many existing homeowners are locked into sub-3% loans and will still not be eager to move into a higher rate,” she said.
As a result, the inventory of available homes for sale will remain tight into 2023. In many markets this could guard against prices dropping by a significant amount.
“Prospective buyers may be tempted to try to ‘time’ rates to jump into the market when rates dip,” she said. “But timing rates is difficult.”
Instead, would-be buyers should shop around, getting quotes from multiple lenders, including different types like a large national bank, an online lender or a community bank or credit union.
“There is a lot of variability in rates, terms, and mortgage products in this changing market,” Sturtevant said. “It is more important than ever that buyers compare offers from different lenders to find the financing that works best for them.”
Known for its Renaissance-style twin pinnacles, the San Remo is one of New York City’s most recognizable — and most desirable — residential buildings, with countless A-listers calling it home over the years (including Bono, Steven Spielberg, Demi Moore and Bruce Willis, to name just a few).
But the building’s appeal extends beyond its long list of current and former celebrity residents.
Its history dates back to 1929 when acclaimed architect Emery Roth set out to build the first of New York City’s twin-towered residential skyscrapers. And he couldn’t have picked a better location, as the two towers, at 145 and 146 Central Park West on the Upper West Side of Manhattan, have two of the best addresses in town.
Towering over Central Park, the San Remo is now home to some of the world’s most coveted apartments. And one of these units has recently hit the market, sporting a $14.5 million price tag.
The massive 5,000-square-foot San Remo apartment has an impressive total of 11 rooms (originally 13), including a massive living room that overlooks the corner of Central Park West and West 74th Street, providing views east over Central Park.
“Apartment 3C at 145 Central Park West provides the discerning buyer an opportunity to buy an unaltered 4-bedroom-and-library layout in Emery Roth’s Neoclassical masterpiece, the San Remo,” said listing broker and Coldwell Banker Warburg President Frederick Warburg Peters.
RELATED: The Many Famous Residents of the San Remo, NYC’s First Twin-Towered Building
“While it needs renovation, the flowing layout and palatial room dimensions make for one of the finest homes available today in New York,” Warburg added.
The San Remo apartment also comes with a spacious library, a dining room, and a breakfast room, also featuring a staff room and service entries adjacent to the eat-in kitchen and elevator landings.
While the $14.5 million price tag is far from affordable (to say the least), it’s worth noting that the home is being offered for sale at yesteryear’s prices.
The listing price is equal to what the current owner paid for the unit four years ago, making it a unique opportunity for well-off buyers looking to move into the highly exclusive San Remo building.
For reference, Diane Keaton’s former San Remo apartment re-listed in 2019 with the same $14.5 million asking price. But prices in the Emery Roth-designed building tend to go sky-high, with the best example being actress Demi Moore’s former unit, a 14-room triplex, that listed for a mind-boggling $75 million back in 2015 (it ended up selling for $45 million two years later).
Additional perks of living in the building include access to amenities like door staff, laundry facilities, a gym, and more. Of course, owners will be directly across the street from Central Park, and near all of the shops and restaurants on the Upper West Side.
More stories you might like
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By Peter Anderson3 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited March 11, 2010.
If you’re a self employed person or are looking at taking the plunge and becoming an entrepreneur, one thing you have to consider is how you will save for retirement. Since you won’t have the option of a 401k, there are several other retirement account type options that you will want to think about using. Among them are:
SEP IRA
SIMPLE Plan
Solo 401(k)
Keogh Plan
Today I want to look at what many consider one of the better options for tax deferred investing for self employed individuals, the SEP IRA
What Is A SEP IRA?
First of all, let’s get the definitions out the the way. What does SEP IRA stand for? When I first started researching the topic I was reading lots of articles talking about how self employed individuals were taking advantage of the accounts, so I assumed it meant “Self Employed IRA”. After reading up on it a bit more I realized that my assumption was wrong. SEP IRA actually stands for Simplified Employee Pension Individual Retirement Arrangement. It is basically an easy way for small businesses to set up a retirement account option for their employees with minimal administrative costs or paperwork.
The SEP IRA is pretty much like a traditional IRA account, although it does have some differences, especially as it relates to the contribution limits. The contribution limits for a SEP IRA are higher.
SEP IRA Rules
As an employer there are rules and regulations you need to follow when you open a SEP IRA. Most of the rules that apply to Traditional IRAs also apply to SEP IRAs. Among the SEP provisions:
All eligible employees must be provided with plan benefits, and a separate IRA account. If you are self employed with no employees besides yourself, it isn’t an issue. If you have employees, it is something to consider.
Part time employees who are 21 years of age who have worked 3 out of the preceding 5 years, earning $500 or more annually will be eligible.
Only the employer can contribute to the SEP IRA. If you work for a company that provides one, only your employer can contribute to the account.
You have until the tax filing deadline of April 15th to establish and fund your SEP IRA.
Withdrawals from a SEP IRA are treated the same as withdrawals from an IRA account – with a 10% early withdrawal penalty, and taxes charged at your current rate.
Only income from the business can be contributed – you can’t contribute money from your day job if you have one.
SEP IRA Contribution Limits
Contributions to the SEP IRA are subject to yearly limits, however, they are higher than many other similar account types. For example, for tax years 2009 and 2010 you can contribute up to 25% of an eligible employee’s compensation, up to a limit of $49,000. Extrapolated from the 25% rule the income threshold for a SEP IRA is then $196,000.
Example: Let’s say you make $100,000 a year and you’re self employed. Under a SEP IRA you would be able to contribute 25%, or $25,000 to your plan.
No catch-up contributions are permitted for older employees.
Benefits Of The SEP IRA
There are several benefits to having a SEP IRA account. Among them:
If you are an employee at a small business that has a SEP IRA plan, you are 100% vested in the contributions your employer makes, right away. The money is yours!
Tax deferred investing!
High contribution limits for self employed individuals.
Easy to setup. Usually can be done simply by filling out IRS Model Form 5305-SEP
Less paperwork and administrative costs after the plan is setup.
Flexible annual contribution obligations – a good plan if cash flow is an issue. You can contribute 10% one year, and then 5% the next if you want.
Do you contribute to a SEP IRA as a self employed individual, or do you have one through an employer? How has it worked out for you? Have we missed any important details about the SEP IRA? Tell us about it in the comments.
You don’t have to wait six months to close your first deal! Today’s guest, Logan Walter, is a listener who has only been a full-time Realtor for eight months. Despite the fact that he hasn’t been in real estate long, he’s already closed 21 deals, including a million-dollar deal with one of the first people he told about his new career. How did Logan do it? He followed the three Cs. Listen to today’s podcast and discover why clarity, character, and competency are essential to a new agent’s success.
Listen to today’s show and learn:
About Logan Walter [1:34]
Logan’s start in real estate and his love for Real Estate Rockstars [2:03]
Why Logan decided to get into real estate [4:50]
Closing 21 deals as a new real estate agent [6:29]
Logan’s first day in real estate [7:25]
Simple real estate scripts for FSBOs and expireds [10:17]
Reaching out to friends and family after starting a career in real estate [15:53]
The video that helped Logan close his first seven-figure deal [17:38]
Logan’s first real estate deal: a land sale [20:23]
Logan’s sales stats and splits [21:22]
Examples of phone calls and door knocking paying off [23:40]
What’s working for lead generation in Dallas right now [25:54]
The hours a new agent can expect to work [28:32]
Strategies for winning clients from canceled listings [30:31]
The three Cs for success in real estate [35:30]
Where to find and follow Logan Walter [38:15]
Logan Walter
Prior to becoming a real estate agent, Logan worked in full-time ministry at churches in Richardson, Austin, and Frisco. As a minister, he focused on building relationships and meeting peoples’ needs, and as a real estate agent, that focus has not changed.
Logan’s mission is to understand his client’s real estate goals, and then work hard to help them achieve those goals. Over the past 25 years, Logan has lived and worked in Tarrant, Dallas, Collin, and Denton Counties and is happy to help people buy and sell properties all over the Dallas-Fort Worth metroplex.
Logan and his wife Maddie currently live in Frisco, TX with their three kids: Simon, Clark and Sylvia. When he’s not talking about real estate, he is often discussing music, sports, books, and movies. His favorites include The Beatles, The Dallas Mavericks, Dune, and The Princess Bride.
Related Links and Resources:
Thank You Rockstars!
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui
While a major renovation project can set you back tens of thousands of dollars, there are way more affordable ways to give your home a new look.
See Our List: 100 Most Influential Money Experts Read: How To Build Your Savings From Scratch
Here are some ideas for upgrading your home that will cost just $20 or less.
Invest in New Decor and Accessories
“Whether it’s using books for decor or finding a new art piece, accessories can make a [room] feel totally new,” said Yasmine El Sanyoura, home designer at Opendoor.
You can find affordable home decor at places like Target and HomeGoods.
Know: 5 Brand-New Items at Dollar Tree That Cost Way More at Target Costco’s Best Deals? Employee Reveals 10 Standout Buys for Your Money
Rearrange Your Furniture
Moving around the layout of your furniture can instantly make a room look and feel different, and this is an upgrade you can make at no cost.
Take Our Poll: Are You Planning To Buy or Sell a House This Year?
Change Out Your Throw Pillows
Switching out your throw pillows can give your living room or bedroom a new look.
“Throw pillows are magical,” said Lisa Modica, interior designer and owner of Cherry Tree Interior Design. “Grab some in a few colors and patterns that match your color palette in your room, fluff them on your sofas and chairs, and you’re set.”
DIY Art
If you’re artistically inclined, consider painting a mural on a blank wall or DIYing your own canvas art. You can find plenty of inspiration on places like Pinterest.
Opt for Thrifted Furniture
Thrifted furniture can be pricey, but you can also find gently used furniture that people are giving away for free. Check places like Craigslist and Facebook Marketplace for furniture steals.
“When you’re shopping for used furniture, there are a few things to keep in mind,” said Dan Wiener, founder of Homedude. “First, make sure the furniture is in good condition. Second, make sure the furniture is the right size for your room. Third, make sure the price is right. And fourth, make sure the style of the furniture matches your home décor. Often, gently used furniture can be found at a fraction of the price of new furniture.”
Add a Chic Throw Blanket
Throw blankets instantly add warmth and dimension to a room. You can find affordable throws at Walmart and Target.
Save More: 8 Items To Stop Buying at Grocery Stores If You Want To Save Money
Bring in Some Greenery
“Plants are an inexpensive way to upgrade your living spaces,” said Stefan Bucur, founder of The Rhythm of the Home. “They add fresh greenery and a lively presence.”
You can find small- to medium-sized houseplants at affordable prices at places like Trader Joe’s and Home Depot. Faux greenery is often even cheaper, and you can find small fake plants for $20 or less at Target.
Declutter and Organize
A thorough decluttering session can make a space look refreshed, and it doesn’t cost a thing.
“A cluttered area always looks less impressive than an organized area,” Bucur said.
Restyle Your Bookshelf
Bookshelves can make a statement — or they can just look messy. Consider restyling your bookshelf by arranging books by color, and adding small affordable decorative pieces to tie everything together.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: 9 Easy Ways To Update Your Home for $20 or Less
Here’s a good sign mortgage rates might be moving even lower than they already are.
Pontiac, Michigan-based United Wholesale Mortgage (UWM), which refers to itself as the #1 wholesale lender in the nation, has launched an exclusive new program that offers mortgage rates as low as 1.99% on the 30-year fixed.
That’s basically the lowest rate in history on the popular loan program, and a direct jab at local competitor Quicken Loans, whose CEO recently said 30-year fixed mortgage rates wouldn’t fall below 3%.
UWM CEO Mat Ishbia announced the new loan program, known as “Conquest,” in a Facebook Live post this morning. Let’s learn more about it.
Conquest: What’s in a Name?
Exclusive program designed to help mortgage brokers win new business
Offers “significantly better pricing” than UWM’s other offerings
Mortgage rates range from 1.999% to 2.875% on the 30-year fixed
Rates may be even lower (or higher) based on mortgage market conditions
First off, UWM is a wholesale-only lender, meaning they don’t work directly with the public. Instead, they work with mortgage brokers, who are consumer-facing liaisons.
So if you want a loan with UWM, you’d need to hook up with a broker who is approved to work with UWM.
Anyway, the new Conquest program was basically launched to grab more market share as UWM goes head-to-head with Quicken Loans for nation’s largest lender.
While Quicken is #1 thanks to a recent stellar first quarter, UWM hasn’t been far behind lately.
And Ishbia didn’t mince words this morning, saying, “Conquest is about domination.”
In other words, he launched the program in an attempt to become #1 by taking back borrowers from competing lenders.
He said if you lost a loan two months ago, or even two weeks ago, the goal is to go get it back via Conquest.
Apparently, February, March, and April were their best months of all time, so they’re already in a great spot to fight for the overall lead.
And Ishbia sees the purchase market coming on strong in June, meaning a product that differentiates could separate them from the crowd and keep home buyers coming back.
Who Is Eligible for a 1.99% Mortgage Rate via Conquest?
Conventional home loans only (Fannie Mae/Freddie Mac)
No government loans (FHA/VA/USDA)
Home purchase loans and rate and term refinances
No cash out refinances
Primary and second homes only (no investment properties)
Must obtain financing via a mortgage broker who works with UWM
Borrower must not have recently closed a refinance through UWM (in the past 18 months)
Max rate lock period of 22 days
The program went live on May 13th, and per Ishbia, rates have only gotten better compared to what was on the rate sheet since then.
However, there is a range of rates depending on loan characteristics, so mortgage broker partners may see interest rate options of 1.99%, 2.25%, 2.50%, 2.75%, and so on, with the lowest available to their best borrowers.
Remember, rates will always vary based on personal loan attributes, market movements, and so on.
He expects competitors to follow suit and offer similar rates, or even lower rates. But Conquest isn’t just about good pricing, it’s also supposed to deliver an excellent customer experience.
As such, it’s well-suited for brokers who can close loans fast, as the max rate lock period is just 22 days. And lock extensions on the program will be “very expensive.”
Ishbia said the best brokers they work with are closing loans in around nine days, so the 22-day rate lock period is apparently plenty long.
In terms of who’s eligible, it’s only available on home purchase loans and rate and term refinances. No cash out is permitted due to the recent turmoil in the mortgage market.
Additionally, it’s only for Fannie and Freddie conventional loans, no government loans like FHA, USDA, or VA.
Those with a VA loan can check out the VA Conquest loan program instead.
It is available on both primary residences and second homes, but not investment properties.
And as a borrower, you must not have closed a rate and term refinance in the past 18 months.
Ishbia said he expects Conquest to account for roughly 50% of their business volume.
Separately, he announced that the company removed overlays on conventional loans, though a 50% max DTI still applies to government loans.
In summary, this is great news for borrowers, whether they use UWM or not, because it means mortgage rates are likely heading even lower than they are today.
That’s due to the Fed continuing to buy mortgage-backed securities, namely 2% coupons, which is increasing their value and driving down rates.
It appears UWM is just trying to get a head start on the competition by marketing this new low-rate environment as a unique product.
Update: They now offer a 15-year fixed Conquest rate as low as 1.875%!
Long, long ago, in a mystical forest with good Wi-Fi, Goldilocks opened an investing account with $3,000 to invest.
At first, she considered pouring more money into her retirement accounts (which only holds mutual fund investments). But her Roth IRA was already maxed out for the year. Moreover, she knew that she would need this money sooner than age 65.
“Too cold!” she said.
Next, she considered investing in individual stocks. But even though she’d done her due diligence, she knew that investing in individual securities can be very risky. She didn’t need to become a millionaire overnight – she just wanted to make enough money to buy a cottage in a few years.
“Too hot!” she said.
Finally, she began browsing ETFs. ETFs are generally more stable, diverse, and safe investments than individual stocks, but they’re also more accessible than your retirement account.
“Juuuuust right!” she said aloud.
10 years later, Goldilocks’ investment had paid off – thanks to a steady 10% APY, her $3,000 investment had become nearly $8,000, so she was finally able to pay restitution and legal fees to the family of bears down the way.
Thanks to inherent diversity and steady returns, ETFs are a great place to stash a few grand to help you save for a big expense years or decades down the line.
What’s Ahead:
Large-cap stock ETFs
Large-cap ETFs typically bundle together blue-chip stocks or even an entire index, providing steady, sizeable returns. Warren Buffet once famously said:
“I just think that the best thing to do is buy 90% in S&P 500 index fund.”
So I’ve included two such options on the list.
You’ll also see a lot of Vanguard funds on this list because, well, they’re just awesome all the way around. Vanguard funds are extremely popular among investors because they combine industry-leading returns with incredibly low expense ratios.
ETF
Symbol
Fund info
Expense ratio
Schwab US Large-Cap Growth ETF™
SCHG
The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.
0.04%
SPDR S&P 500 ETF
SPY
The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index (the “Index”).
0.0945%
Vanguard S&P 500 ETF
VOO
The Vanguard S&P 500 ETF invests in stocks in the S&P 500 Index, representing 500 of the largest U.S. companies.
0.03%
Vanguard Russell 1000 Growth ETF
VONG
The investment seeks to track the performance of the Russell 1000® Growth Index. The index is designed to measure the performance of large-capitalization growth stocks in the United States.
0.08%
Mid-cap stock ETFs
Goldilocks’ choice – mid-cap ETFs – bundle together companies that have an exciting growth curve before them, but are established enough not to fold overnight.
If you can tolerate a little more risk in exchange for higher potential returns than an index fund, consider these top picks:
ETF
Symbol
Fund info
Expense ratio
Vanguard Mid-Cap Growth ETF
VOT
VOT seeks to track the performance of the CRSP US Mid Cap Growth Index, which measures the investment return of mid-capitalization growth stocks.
0.07%
iShares Core S&P Mid-Cap ETF
IJF
IJF seeks to track the investment results of an index composed of mid-capitalization U.S. equities.
0.05%
Vanguard Mid-Cap ETF
VO
VO seeks to track the performance of the CRSP US Mid Cap Index, which measures the investment return of mid-capitalization stocks.
0.04%
Schwab U.S. Mid-Cap ETF
SCHM
SCHM’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index.
0.04%
Small-cap stock ETFs
If you’ve looked at your asset portfolio recently and thought “hmm… needs a little more spice,” then a small-cap ETF might add just the right amount of kick.
These ETFs track small companies with big potential, so they present higher risk but higher potential reward than large- or mid-cap ETFs.
ETF
Symbol
Fund info
Expense ratio
Vanguard S&P Small-Cap 600 Growth ETF
VIOG
VIOG employs an indexing investment approach designed to track the performance of the S&P SmallCap 600® Growth Index, which represents the growth companies, as determined by the index sponsor, of the S&P SmallCap 600 Index.
0.15%
Vanguard Small-Cap ETF
VB
VB seeks to track the performance of the CRSP US Small Cap Index, which measures the investment return of small-capitalization stocks.
0.05%
iShares Core S&P Small-Cap ETF
IJR
IJR seeks to track the investment results of an index composed of small-capitalization U.S. equities.
0.06%
Schwab U.S. Small-Cap ETF
SCHA
SCHA’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Small-Cap Total Stock Market Index.
0.04%
International stock ETFs
ETF
Symbol
Fund info
Expense ratio
Vanguard Emerging Markets ETF
VWO
VWO invests in stocks of companies located in emerging markets around the world, such as China, Brazil, Taiwan, and South Africa.
0.10%
Vanguard Total International Stock ETF
VXUS
VXUS seeks to track the performance of the FTSE Global All Cap ex US Index, which measures the investment return of stocks issued by companies located outside the United States.
0.08%
SPDR® MSCI EAFE Fossil Fuel Free ETF
EFAX
EFAX seeks to offer climate-conscious investors exposure to international equities while limiting exposure to companies owning fossil fuel reserves.
0.20%
Vanguard FTSE Developed Markets ETF
VEA
VEA provides a convenient way to match the performance of a diversified group of stocks of large-, mid-, and small-cap companies located in Canada and the major markets of Europe and the Pacific region.
0.05%
Fixed income ETFs
ETF
Symbol
Fund info
Expense ratio
iShares Core U.S. Aggregate Bond ETF
AGG
AGG seeks to track the investment results of an index composed of the total U.S. investment-grade bond market.
0.05%
Vanguard Total Bond Market ETF
BND
BND’s investment objective is to seek to track the performance of a broad, market-weighted bond index.
0.035%
Vanguard Intermediate-Term Corporate Bond ETF
VCIT
VCIT seeks to provide a moderate and sustainable level of current income by investing primarily in high-quality (investment-grade) corporate bonds.
0.05%
Schwab 1-5 Year Corporate Bond ETF
SCHJ
SCHJ’s goal is to track as closely as possible, before fees and expenses, the total return of an index that measures the performance of the short-term U.S. corporate bond market.
0.05%
What does large-cap, mid-cap, etc. mean?
To start, “cap” refers to market capitalization, or the total value of a company’s shares on the market. For example, if a company has 1 million shares on the market valued at $10 a pop, their market cap would be $10 million.
Large-cap ETFs are comprised of companies each with a market cap of $10 billion or higher. The Vanguard Mega Cap ETF (MGC), for example, contains around 250 of the biggest companies in the USA, from Amazon to Apple. Since they’re often full of blue-chip stocks that provide slow-but-steady returns, large-cap ETFs are considered a safe, long-term investment.
Mid-cap ETFsare comprised of companies each with a market cap in the $2 to $10 billion range. All ETFs are designed to succeed and make money, so mid-cap ETFs are filled with midsized companies that are in the middle of their “growth curve,” so to speak – they’re high-performing, high-potential companies that may become the next blue-chip, so mid-cap ETFs balance risk and reward.
Small-cap ETFsare comprised of companies each with a market cap of “just” $300 million to $2 billion. Fund managers who design small-cap ETFs cast a wide net, aiming to scoop up “the next big thing.” As a result, these ETFs have higher growth potential than most ETFs, but also steeper downside if the smaller companies within end up folding.
International ETFsare, as the name so subtly hints, full of non-U.S. stocks and securities. There are country-specific ETFs, foreign industry ETFs (think non-U.S. automotive stocks), and even ETFs representing emerging markets like sub-Saharan Africa and Brazil.
Fixed income ETFs, aka bond ETFs, give you access to diverse bond investments. For the uninitiated, bonds are like loans you make to companies or governments that they pay back with interest. You can read more about bonds here, but the bottom line is this: fixed-income ETFs provide steady income in the form of dividends, so they’re a good choice if you want a safe investment that gives you a paycheck!
Read more:How To Invest In ETFs
Which type of ETF is right for you?
Well, it depends on both your goals and your risk tolerance.
If you can tolerate some risk in your portfolio, and want your ETF investment to pay off sooner than later (within five years), you may want to consider small-cap and mid-cap ETFs. They’re riskier, but have higher upside potential.
If you’re looking for a safer investment that will multiply your money over a longer horizon (5+ years), a large-cap ETF is probably a fit.
If you’d like your ETF investment to provide a trickle of cashback each month, fixed income ETFs are probably your best bet.
And finally, if you don’t mind doing a little research or believe strongly in the economic performance of a foreign market, you’ll be a fan of international ETFs.
Read more: How To Determine Your Investing Risk Tolerance
About our criteria
With hundreds of commission-free ETFs available, how did these become the winners?
To make this list, ETFs had to impress in all of the following categories:
Earnings potential.Naturally, the first thing looked at was the ETF’s performance over the past five years. A good sign of a healthy ETF is how quickly it bounced back in Q3 2020 after the market panic surrounding the COVID-19 pandemic. Springboarding back and surpassing Q1 levels are a sign of investor confidence, and helped solidify the ETF’s place on this list.
Expense ratio.Next, I looked at the ETF’s expense ratio. Your expense ratio is the percentage of your investment you pay to the fund manager for having shares of the ETF. Although measured in fractions of a percent, expense ratios make a difference – 0.80% of $10,000 is $80 and 0.04% is just $4, so ETFs with an expense ratio below 0.20% were favored.
Fund reputation. You’ll see a lot of repeated names on this list because funds like Schwab, BlackRock (iShares), and especially Vanguard have a proven track record of building well-crafted, reliable ETFs with low expense ratios. Fund reputation matters in the long run because big funds attract big money, which helps to generate higher returns for you!
Solid fundamentals.ETFs aren’t just random grab bags of stock and securities – each one is a carefully curated list, with selection criteria driven by both AI and human logic. There are some wacky and unique ETFs out there – such as Millennial ETFs and Space ETFs – and I’ll cover more of them in an upcoming piece. But this list isn’t for the experimental, exciting stuff – it’s for safe, dare I say boring, places to stash and multiply your savings.
Conscious investing.Finally, this was more of a small thing in the back of my mind, but I wanted each ETF on this list to score average or above average for “conscious capitalism.” No fossil fuels, no sin stocks (learn more about sin stocks here) – and not just because it’s not the way of the future, but because investments in conscious capitalism generally outperform “sinful” investments in the long term.
Commission-free ETFs solve a big problem for young investors
Commission-free ETFs aren’t just great because they’re cheap – they actually solve a pretty serious problem plaguing young ETF investors.
You see, ETFs have heftier commissions and trade fees than stocks because ETFs can be resource-intensive to create. Let’s say you’re a fund manager and you have an idea for an ETF. The process to get your ETF approved by the SEC isn’t unlike getting your new drug approved by the FDA; you have to research a ton, understand the risks, and propose your ETF to the government.
Once your ETF is approved and available, you probably want some additional compensation for your work beyond just capital gains from your ETF.
You don’t want to charge a high percentage trade fee, because big-ticket investors will be turned off. So, instead, you charge a $10 to $20 fee per trade of your ETF.
Big-ticket investors who drop $50,000 on a trade couldn’t care less about a $20 fee, since that represents just 0.04% of their investment. But if you’re a young investor, investing maybe $50 to $100 out of each monthly paycheck, a $20 per-trade fee is way too high – basically pricing us out of ETF investing. 🙁
Thankfully, many brokerages have realized that their per-trade fees are too high for young investors and have eliminated commissions on trades of certain ETFs. At first, funds like Vanguard and Fidelity only let you trade commission-free on their own platforms, but now, they’ve expanded their commission-free goodness to wide platforms like J. P. Morgan Self-Directed Investing.
And it’s not just the junk ETFs that get traded commission-free – in fact, it’s often quite the opposite. Firms like Vanguard and Fidelity will let you trade their most successful ETFs for free – presumably because they don’t really need the commission.
Disclosure – INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Summary
If you’re looking for an investment vehicle falling somewhere between your boring retirement account and your exciting individual stock purchases, ETFs are an excellent choice. And now that the big funds are waiving commissions on their top-performing ETFs, there’s never been a better time to dive into the world of ETFs and inject some low- to mid-risk into your portfolio.
ETFs are also an excellent investment if you’re looking to multiply your money and cash out within 2 to 10 years. You can even leave your ETF investment until retirement, if you want, so it has plenty of time to multiply under compound interest.
Not all ETFs are made the same, however – and the SEC has approved some stinkers over the years, for sure. These ETFs, on the other hand, are universally considered top-ranked and well-supported within the investor community – and are a superb place to start.
Images of devastation emerged after the Japanese earthquake and tsunami. We watched water sweep away vehicles and houses; we saw stunned men and weeping women in the ruins. But we also heard about survivors whose homes weren’t flattened or inundated, people who subsisted on stockpiled food and water while waiting for help. Living on the “Ring of Fire” means temblors and tidal waves are a fact of life — and so is disaster preparedness.
We need to be prepared, too. The Department of Homeland Security’s Ready America program says we should be able to sustain ourselves for at least three days after an emergency, whether that’s a hundred-year storm or a civil insurrection. How ready are you?
Right now, before anything bad happens, is the time to build your emergency kit — and you can do it on a budget. In fact, you probably already have some (or a lot) of what you need.
The (Sometimes Icky) Basics
During those three days you need to be fed, hydrated and sheltered. You also need a place to poop.
Yeah, that’s gross. You know what else is gross? The idea of everyone in your apartment building or subdivision yelling “Gardyloo!” and flinging slops out the window. Cholera epidemic, anyone?
When I was a kid, predictions of bad weather had us filling bathtub and buckets. That’s because if we lost power we lost our well pump, i.e., no way to flush the toilets. That’s still the first line of short-term defense; if you have any warning, stash yourself some water.
When that’s gone you’ll need at least one large container into which everyone can evacuate. Maybe a repurposed five-gallon detergent, paint or pet-litter bucket? If you don’t have one:
It’s possible to buy a toilet seat that snaps onto a bucket, which makes things easier. Or buy a prefab one (search online for “bucket toilet”) for $20 or less. Decide now where you’ll put your temporary toilet. The garage? The back porch? Maybe even in the actual bathroom? Anywhere but the place where you plan to eat and sleep. Trust me on this.
Ready for an overshare? Here’s how I’d handle disposal if the you-know-what hits the fan here in Seattle:
Use the bucket (in a former life, it held detergent)
Put soiled paper into a garbage bag (and tie it really tightly between uses)
Flush the contents of each, little by little, once the emergency has abated
Please do not do your business in the condo-complex yard, no matter how much fun it is to pee outdoors.
Important: You’ll want a bottle of hand sanitizer close to the bucket. Really close. E. coli is nothing to fool with.
Food and Drink
Ready America recommends one gallon of water per person per day. It’s easy to buy bottled water but much cheaper to fill up two-liter soda bottles, or inexpensive pitchers or jugs. (Don’t drink soda? Surely someone you know does.)
Refill the containers every few months; mark it on the calendar so you don’t forget. Don’t just dump the old water, though. Use it in some way, such as:
Watering houseplants or your garden
Bathing (add hot water unless you like your tub-time tepid)
Cooking
Filling pet dishes
Doing hand laundry
Washing vegetables or fruit
When it comes to emergency rations, you can go as stripped-down or as fancy as you like. But it must be something you’d eat anyway, because you’ll need to rotate and replace your stock. If an earthquake happens six years from now, do you want to be eating 2011 ramen?
Some obvious choices:
Canned beans, stews, soups, fruits, vegetables, meats and/or fish
Protein bars, granola bars, dried fruit
Powdered milk and cereal
Peanut butter or other nut butters
Crackers or pilot bread; I recommend the latter, because it lasts for-freakin’-ever
Note: For more on pilot bread, see this funny video from The Anchorage Daily News.
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Then watch a second, even funnier video from the same source.
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If you’ll have a way to heat water, consider a few instant soups or other dehydrated foods such as hummus or bean dip. Flavored noodle cups/bowls do go on sale; check Asian markets for the best selection. Hot drinks are both warming and soothing, so stock up on bouillon cubes, teabags, instant coffee and hot chocolate mix.
Survival Shopping at Bargain Prices
The camping section of your local sporting-goods stores has quite a selection of dehydrated meals. So do online stores that sell survival/disaster preparedness supplies. But I’m focusing on inexpensive ways to prepare.
So watch for sales and use coupons and/or rebates when possible. A few of my better supermarket deals: envelopes of pre-drained tuna for free, granola bars for a penny each, cocoa mix for 5 cents per serving, a large bag of M&Ms for 50 cents, 12 ounces of peanuts for 69 cents.
Olives, marinated veggies, sun-dried tomatoes and other fancy foodstuffs from the dollar store will liven up your basic grub. After two days of PBJs and canned beans, a few pickled vegetable will taste like manna.
The dollar store has cheap bandages and rubbing alcohol, too. So do places like CVS, Walgreens and Rite Aid; I’ve obtained baby wipes (aka “shower in a pouch”), hand sanitizer, analgesics, energy bars, crackers and batteries free or nearly free thanks to rebate programs at those stores.
About those batteries: Aim for at least one flashlight per room. Hand-cranked flashlights (and radios) don’t need batteries. If you can’t afford one right now, put it on your wish list; maybe Great-Aunt Irene will give you that instead of a cheese log next Christmas.
If you must use candles, select votive-type ones and set them inside wide-mouthed jars, placed in areas where no one can accidentally knock them down. Buy the votives for pennies at post-holiday clearance sales. Those sales are also good for cheap paper plates and bowls — not eco-friendly but really useful if you can’t do dishes for days.
Layering is essential in cool or cold temperatures. Watch for thermal underwear, wool pants and other useful items on Craigslist/Freecycle or at yard sales. I bought polypropylene longhandles and a down vest at a thrift store. Make sure everyone has a stocking cap, too.
Look around your house to see how much of this stuff you already own. Most of us at least have sweaters or sweatshirts. If you’re not in a super-cold area, a comforter might double as a sleeping bag. A hibachi could substitute for a bottled-gas camp stove — but remember you can use these things outdoors only, because carbon monoxide is deadly.
Miscellaneous Tips
You can’t truly be ready for a disaster. It’s always stressful and often terrifying. However, you can at least be prepared. Here are a few more items to keep in mind:
Learn the location of your local/regional emergency shelter, just in case.
Keep a cache of cash — smalls bills and coins — on hand. No power means no debit or credit if you do find a store that’s open.
Put supplies where you can get at them easily, not down in the crawlspace or up in the rafters.
Wheeled garbage cans make great storage: Your items will be protected and movable. Label each one so you can find what you need, fast.
Water left over after making tea? Don’t let it get cold again — pour it into a thermos.
You’ll want basic first-aid supplies, including an anti-diarrheal medication. Many of these items can also be bought cheaply or free with those drugstore rebates.
On maintenance meds? Get in the habit of refilling as soon as you’re allowed, i.e., don’t wait until you take your last pill to call it in.
Choose no-salt canned vegetables. Not only are they healthier, you can use the drained-off liquid to dilute canned soup. Save the syrup from canned fruits, too, to sip for quick energy, settle an upset stomach or sweeten a cup of tea.
Don’t forget pet food and litter. Factor in extra water for Fido and Fluffy, too.
Have some playing cards or small games that everyone can play. I suggest Mad Libs.
Make sure you have a manual can opener. You’ll feel darned stupid asking to borrow a neighbor’s.
How about it, readers: Any ideas for getting ready without breaking the bank?
Inside: A biweekly budget is a budget that is broken into two-week periods. Learn how to create biweekly budgets and download your free template.
Many people create budgets, but only a few budget on a biweekly basis.
That is an interesting statistic because 43% of Americans are paid on a biweekly pay period (source).
So, the thought process is more people should be interested in learning knowing how to create a biweekly budget. But, in reality, most people give up on budgeting or move to a budget-by-paycheck method.
Recently, we moved over to a biweekly pay period. And thus, we quickly had to change how we focused on budgeting.
While most financial bloggers and gurus would agree, budgeting with biweekly paychecks makes the whole concept of budgeting hard.
While biweekly budgeting isn’t easy, it can be done!
This post will show you how to create an easy-to-manage and effective biweekly budget so that you can conquer your financial goals in the most efficient way possible!
We will go through the exact steps I use to create a biweekly budget to cover two weeks’ worth of expenses, get one month ahead on your bills, or adjust your planning to cover your monthly expenses.
This is a basic example, and you should use your own personal situation when developing your own budget.
Do you struggle to keep your finances on track? If so, here are some tips for creating a biweekly budget.
What is a biweekly budget?
A biweekly budget is a budget that takes into account a person collecting a paycheck every 14 days. This type of budget is beneficial for those who are paid on a biweekly schedule, as it allows them to plan their spending more effectively.
However, many people find it difficult when bills are due on a monthly basis.
Difference between biweekly and semi-monthly paychecks
When receiving paychecks twice a month happens with two types of pay schedules either biweekly or twice-per-month. The difference between these two schedules is the number of checks per year.
Those who are paid biweekly receive 26 checks per year, while those who are paid twice-per-month receive 24 checks per year.
Making a budget on a biweekly income can be difficult because the total number of checks received in a year varies depending on the pay schedule you have.
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How does a biweekly budget work?
A biweekly budget divides your budget into two parts, one for each paycheck that is received. This can be helpful for those who want to better track their spending or for those who want to save money.
It can be helpful to think of your biweekly budget as two separate budgets – one for bills and one for everything else.
When you create a biweekly budget, you are essentially creating two budgets over the span of ten months. Then, in the other two months, you will receive three paychecks; thus, need to create three budgets.
Since many monthly expenses remain the same when switching from a month budget to a biweekly budget, knowing which expenses should be increased or decreased beforehand can make the process smoother.
Additionally, it is helpful to know how much money you will need for each check. That way, you won’t have to worry about bouncing checks or accidentally overdrawing your account.
How to create a biweekly budget
Creating a biweekly budget is a great way to start getting your finances in order. You can either create your own template or use one of the many templates that are available online for free.
One popular template is ours!
Money Bliss Biweekly Budget Template (see below to get your copy). This template is available as a free download and can be used in conjunction with our budget binder. The planner allows you to track your income and expenses, as well as financial documents such as bills and bank statements.
There are a few key things to keep in mind when creating a biweekly budget:
Adjust your budget as needed.
Be flexible when adjusting to this 2 week budget style.
Compare your regular expenses to your spending from the past month.
Now, here are the steps to creating a biweekly budget that works.
Step 1: Print out a calendar
You need to print out the dates you get paid from your employer. On the biweekly paycheck, Fridays are usually pay dates; you just need to know which Fridays!
So, print out a blank calendar. Write down when you get paid along with when your bills and expenses are due.
This will help you get an idea of where you are spending your money and where you can cut back.
Many people find it helpful to color code by category and add stickers. This will help you see your budget at a glance.
Step 2: Put in a buffer
This will help ensure that you don’t have to worry about going into debt if something unexpected comes up.
Ideally, you should try to save at least two weeks’ worth of living expenses so that you know you’ll be able to cover your costs even if something goes wrong.
For us, all of our income goes into an “income checking” account. Then, at the beginning of the month, we transfer money into our “bills checking” to cover our expenses for the month.
Then, we always have at least one month of expenses on hand – just in case.
Step 3: Organize expenses
The easiest way to do this is by category. There are a few different ways to categorize your expenses, but the most common are:
Fixed or recurring expenses: These are expenses that happen every month, like rent or utilities
Variable or occasional expenses: These are expenses that happen each month but vary in amount, like groceries or entertainment
Annual or quarterly expenses: These costs are less frequent, but take a good chunk of your budget like an annual insurance payment or kid’s sports fees
One-time only expenses: These are one-time only costs and you don’t anticipate them again.
For most people, the struggle happens when organizing expenses. The expenses you “forgot” about are what blow your budget. Honestly, these are not forgotten expenses – just something you forgot to plan for.
Step 4: Focus on Zero Based Budgeting
Additionally, it’s important to use a zero-based budgeting approach.
With this method, you start by assigning every penny of income a job, whether it be for rent, groceries, or savings. This way, you can make sure that you’re not overspending each month.
A zero-based budget is a type of budget that starts with the assumption that there is nothing in your bank account.
This includes both predictable and unpredictable costs.
In the next steps, you will lay out what paycheck will cover what bills.
For example, some costs, like your rent or mortgage payment, will likely stay the same from one biweekly period to the next. By taking into account both types of expenses, you can get a more accurate picture of how much money you will need each pay period.
Learn more about zero based budgeting.
Step 5: Write your first biweekly budget
Writing a biweekly budget is the first step to creating financial stability. It’s important that you set up a plan for each paycheck to make sure your bills get paid.
When creating your first biweekly zero-based budget, you’ll want to start by paying your immediate obligations. This includes any bills or fixed expenses like rent or car payments that are due during the first pay period. After that, focus on covering your variable expenses such as groceries, gas, or eating out.
To make sure every dollar has a job, you should consider these tips:
If you have any leftover money at the end of the month, send it to your savings or make extra debt payments.
Make sure that each category in your budget has a specific amount assigned to it.
Keep track of your spending so that you can stay on track and adjust as needed.
Paying your most important bills first is a crucial step in making sure that your finances are on track.
Step 6: Write Your second biweekly budget
The second biweekly budget is a budget that’s typically created for the 2nd paycheck of the month. This budget would cover the next two weeks and may need to cover expenses at the beginning of next month before you get paid again.
Just like creating a budget plan for the 1st paycheck, you will do the same again. Prioritize any fixed expenses first, then add in variable expenses or sinking funds to contribute to.
In order to make your budget as accurate as possible, you should account for fluctuations in your expenses. This is where the buffer comes in – you put a certain amount of money aside each month to cover any unexpected costs. Then, you can start planning for them in the upcoming months.
Once again, if you have leftover money after budgeting for the two weeks, you can either send it to your savings account or start paying down your debt. If you choose to save, make sure that the money is in a place where it will earn interest and grow over time. If you choose to pay down debt, make sure that the payments are more than the minimum amount due so that you can see results quickly.
Step 7: Start tracking
Now that you have your biweekly budget template set up, it’s time to start filling in the numbers and track your budget. This part can be a little tricky, but with a little effort, you’ll be able to save money and get ahead on your debt payments.
First, take a look at your income and expenses for the month. How does this compare to what you’ve budgeted? If you’re coming in under budget in some areas, great! You can either use this extra money to bolster your savings or make extra debt payments. However, if you’re over budget in some areas, don’t worry – we’ll work through that below.
Next, take a look at your sinking funds.
These are accounts where you save money each month to cover specific expenses. How much money do you need to save each month in order to cover your bills? If you’re not sure, take a look at your past bills and use that as a guide. Once you know how much money you need to save, divide it by two and put that amount into your biweekly budget.
This will help ensure that you always have the money you need saved when the bill comes due.
If you have any leftover money after filling in your budget, send it to savings or make extra debt payments.
You can also use this extra money to invest in yourself (by taking classes, for example), but be careful not to overspend!
Creating and sticking to a biweekly budget is a great way to start saving money and getting your finances under control.
Biweekly budgeting tips
When it comes to budgeting, biweekly budgets can be a helpful way to streamline the process. By taking an hour or so at the beginning of each month to set up your budget, you can avoid potential headaches down the road.
It’s also important to remember to write everything down! This includes both fixed and variable expenses.
Tip #1 – Change Due Dates of Bills
If you’re having trouble with your bills, don’t hesitate to call companies and ask them to change the due dates.
This is something I do whenever I open a new credit card. I want the credit card date to close at the end of the month.
Tip #2 – Age Your Money
You may also want to save up for one month’s worth of expenses so that you always have a cushion in case something unexpected comes up.
This is also the first step to stop living paycheck to paycheck.
When you have a cushion of savings, you’re less likely to fall into debt if something unexpected happens.
Tip #3 – Track Your 2 Week Budget
There are plenty of tools for budgeting out there. In fact, here are the best budgeting apps available.
It offers a variety of helpful tips for getting started, as well as ways to automate time-consuming tasks. With this tool, you’ll be able to improve your budgeting and financial insights in no time!
Many popular options include a budgeting app, Excel, or Google Sheets. Pick what works best for you
Tip #4 – Focus on Your Goals & Finances
In order to be successful, you’ll need to set financial goals for yourself and make plans to achieve them.
As with any other goal, it’s easier said than done! It can take a lot of time, work, and effort to reach your goal.
If you’re not sure where to begin or what goals are right for you, here are some examples:
This is just a sample of the types of goals you can set. If you’re not sure where to start, just think about what’s important to you and your family.
What are some financial goals that you have? Write down your goals and make a plan to achieve them.
What to avoid when you’re paid biweekly
When you’re paid biweekly, there are a few things you should avoid in order to make the most of your money.
You need to learn which payment type is best if you are trying to stick to a budget.
Since biweekly budgeting can be more difficult, you need to know the pitfalls to avoid.
Pitfall #1 – Spending All your Money Too Quick
First, don’t spend your money as soon as you get it. This will leave you with nothing left for the following two weeks.
When having to use one paycheck to cover most of your big expenses like mortgage/rent or insurance, that leaves very little money for groceries or gas
Try to have a savings goal and save for that.
For example, don’t wait until the end of the month to spend all your money. This can help you save more money and have something left over at the end of the month.
Pitfall #2 – Forgetting Bills
Second, don’t forget to budget for bills and other expenses. Make sure you have enough money to cover your costs, especially those non-frequent bills like car registration.
By doing this, you’ll be able to ensure that you have enough money each week to cover what you need.
Pitful # 3 – Quit Bi-Weekly Budget Completely
Yep, I get it budgeting your paycheck over a 2-week budget is difficult. It may feel like pushing a square through a circle. It takes a different mindset and a little more planning to make it happen.
If anything, try to avoid impulse buys. Wait until the next paycheck and see if you still want the purchase. That will help you not to overspend on unnecessary items.
What to do when you have a third paycheck?
This is the BEST benefit of a biweekly paycheck. Twice a year, you will receive 3 paychecks in a month instead of just two.
Looking forward to having a third paycheck, you can either save it or spend it.
If you save it, you can use it as a down payment on a house or invest it in a retirement fund. If you spend it, you can use it to pay down debt, remodel a house, buy a new-to-you car, or go on a vacation.
There are a few things you can do when you have an extra paycheck:
Use it to pay down debt: If you have high-interest debts, using your third paycheck to pay them off can save you a lot of money in the long run.
Invest it: If you’re comfortable with taking on some risk, investing your extra paycheck could lead to bigger returns down the road.
Sinking Funds: Those yearly expenses can weigh heavily on your budget. So, set extra money aside for those payments.
Put the money towards your goals: Whatever your ambition is, here is money to help you get there faster.
Spend it on something fun: Obviously, this isn’t the smartest option, but if you’ve been working hard and deserve a little treat, go for it!
Just make sure that you’re not spending more than you can afford.
Free Printable Bi weekly Budget Templates
There are a number of different printable 2 week budget templates that can help you get your finances in order. Most of them are simple and easy-to-use, and they’re not scary to look at. In addition, many of them have templates that you can download and/or punch holes into so that you can use them as binders or notebooks.
One great option is the budget tracking worksheet. This cute template is simple yet effective, and it will help you track your spending each month.
How do you make a monthly budget with biweekly pay?
There are a couple of ways to make a monthly budget if you receive biweekly paychecks. You can either budget by paycheck, divide out your expenses between biweekly paychecks, or focus on a monthly budget.
If you choose to budget by paycheck, you’ll create a new budget for each pay period and then stick to it. This method gives you a better understanding of the flow of money in your bank account and will help you keep track of your bills more carefully.
The other option is to budget monthly, which is for people who live paycheck to paycheck. In this case, you would budget off 24 paychecks and make plans for your two budget paychecks. Then, two of your paychecks would be budgeted for the monthly budget.
However, many people argue the Budget-By-Paycheck method can help reduce stress since it allows for more flexibility.
In either case, it’s important that you track your spending throughout the month so that you can make adjustments as needed.
Time to Create Your Bi weekly Budget Calendar
This budget will be a little more complicated than your monthly budget because your paychecks are not always going to be paid on the same day of the month. However, most of your bills are usually fixed and don’t change from month to month.
So, you need to plot out which bills you will pay with each paycheck ahead of time in order to make sure you have enough money to pay them all and keep them organized.
It is important to remember that when creating your budget, you need to give yourself some grace to make sure it works for you while you work on perfecting your budgeting style.
For us, having a buffer of money in our “income checking” account takes away the stress of bills and anxiety that we will run out of money. We understand that we need to use sinking funds for those variable expenses.
However, it is important to note that a biweekly budget tends to forget events such as birthdays or vacations from being considered in spending plans. So, make sure to include them.
Now that you have a good idea of how much money you make and how much money you need to live comfortably, it’s time to start creating your biweekly budget.
Also, taking time to understand your personal financial statement is important.
From all of the free and paid budgeting apps, here are our top budgeting apps to check out!
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