Companies around the globe — from airlines and hospitals to banks and even courthouses — had operations grounded or disrupted by what was supposed to be an uneventful software update pushed out early Friday by CrowdStrike, a cybersecurity firm whose software is used by some of the largest corporate and government agencies in the world.
“This was not a cyberattack,” CrowdStrike said in a statement. “The issue has been identified, isolated and a fix has been deployed.”
The CrowdStrike issue came on the heels of a widespread outage involving Microsoft’s cloud platform, Azure, on Thursday night. Microsoft said the issues were unrelated. The CrowdStrike update affected customers running a version of the Windows operating system.
NBC News called the outage “arguably the largest global information technology outage in history.” At least five U.S. airlines — American Airlines, Allegiant Air, Delta, Spirit and United — issued ground stops on Friday, leaving airports around the world with crowded terminals and endless customer service lines. (Some flights have resumed.) Hospitals that experienced issues with their computer systems had to cancel non-urgent surgeries. In several states, 911 emergency lines were down.
Downdetector, a website that employs user reports and online indicators to report technical outages, detected user issues at dozens of U.S. companies. NerdWallet was not directly affected by the outage.
As of 1 p.m. ET, Downdetector was still reporting spikes in potential user issues at these companies:
The makeover includes a heftier sign-up offer for new cardholders, more points earned on some everyday purchases, changes to how you earn status, and an interest-free financing option.
The card will retain its $0 annual fee.
Here’s a breakdown of the card’s latest features.
What’s changing
Bigger sign-up bonus
The Marriott Bonvoy Bold® Credit Card now features the following welcome offer: Earn 60,000 bonus points and one Free Night Award (valued up to 50,000 points) after spending $2,000 on purchases in the first three months of opening the account.
That’s a significant improvement over the card’s previous offer: 30,000 bonus points after spending $1,000 on purchases in the first three months of opening the account.
More points for some everyday purchases — but less back on ‘other’ travel
The Marriott Bonvoy Bold® Credit Card will offer the following ongoing rewards:
3 points per $1 spent at participating Marriott Bonvoy hotels. (No change.)
2 points per $1 spent at grocery stores and on services that include rideshares, food deliveries, select streaming, internet, cable and phone. (Previously, these categories earned 1 point per $1 spent.)
1 point per $1 on everything else, including “other” travel purchases such as airfare, taxis and trains. (Previously, those forms of travel earned 2 points per $1 spent.)
Different approach to status
Previously, the Marriott Bonvoy Bold® Credit Card offered 15 Elite Night credits per calendar year, which would qualify you for Silver Elite status (and put you 10 elite nights away from Gold Elite status).
Now, you’ll receive automatic Silver Elite status, but only get five elite qualifying nights toward your next status tier (leaving you 20 elite nights away from Gold Elite status).
Silver Elite status comes with perks like priority late checkout (if available), 10% bonus points on qualifying hotel purchases and complimentary Wi-Fi. Terms apply.
An interest-free financing option
If you can qualify for it, the Travel Now, Pay Later option allows you to break up eligible travel purchases ranging between $100 and $5,000 into equal monthly payments without interest charges or fees. Purchases must be made directly with an airline or hotel participating in Marriott Bonvoy to qualify.
Update 6/30/24: The new 120k offer is now available via (newly generated) referral links (ht m16p). No referrals in the comments below.
The Offer
Southwest Business Performance | Southwest Business Premier
Southwest Rapid Rewards Premier Business Credit Card and Business Performance Credit Card are offering a signup bonus of up to 120,000 points:
Earn 80,000 points after you spend $5,000 on purchases in the first 3 months from your account opening.
Plus, earn an additional 40,000 points after you spend $15,000 on purchases in the first 9 months.
Offer slated to end 9/16/24.
Card Details
Premier:
$99 annual fee not waived the first year
Card earns the following rates:
3x for for every $1 you spend on Southwest Airlines purchases
2x points for every $1 you spend on Rapid Rewards hotel and car partners
2x points per $1 you spend on local transit and commuting, including rideshare
1x points for every $1 you spend on everyday purchases
Get 25% back on in-flight purchases
2 earlybird check-ins per year
Earn 1,500 tier qualifying points towards A-List status for every $10,000 spent, with no limit on the amount of TQPs you can earn
6,000 points anniversary bonus; the Plus earns 3,000 points anniversary bonus
Performance:
$199 annual fee (not waived first year)
Card earns at the following rates:
3x Southwest points per $1 spent on Southwest and Rapid Rewards hotel and car rental partner purchases
2x Southwest points per $1 spent on purchases in the following rewards categories: social media and search engine advertising; internet, cable, and phone services
1x Southwest points per $1 spent on all other purchases
Four upgrade boardings per year when available
Every anniversary year you will be reimbursed for the purchase of 4 upgraded boardings. Upgraded boardings are positions A1-A15. These can be purchased on the day of travel only at either the departure gate or ticket counter and aren’t always available. Price of these upgraded boardings varies based on the itinerary, I think it’s usually $30-$40.
The benefits of being in this boarding position is you may be able to get an exit row seat (and at worst you’ll get another seat you want) and you can find overhead bin space.
Anniversary year is defined as ‘the year beginning with your account open date through the first statement date after your account open date anniversary, and the 12 monthly billing cycles after that each year.’
Up to $100 Global Entry or TSA PreCheck Fee Credit
No foreign transaction fees
9,000 anniversary points each year
Inflight WiFi Credits, up to a total of 365 $8 credits per year for all WiFi transactions on the overall business card account
Earn tier qualifying points towards A-list status
See also these posts:
Our Verdict
We saw a similar offer last year, along with the high spend requirement to get the full bonus. I still consider it a nice offer for the large bonus and the fact that you’ll meet the 135,000 Companion Pass requirement with a single credit card signup.
Simply speaking, The Companion Pass timing isn’t ideal. Read this dedicated post where we broke down how it’s possible to delay signing up for the card until September and then get nearly two full years (2025 and 2026) of Companion Pass from this one card signup.
We’ll add this to our list of Best Credit Card Signup Bonuses. Before applying check out these 26 Things Everybody Should Know About Chase Credit Cards.
It’s now possible to activate all 5% category credit cards for the third quarter of 2024, including the Chase Freedom, Chase Freedom Flex, Discover IT, Citi Dividend, US Bank Cash+ and some smaller cards. In this post we’ll provide the activation link for each card and links to track your spend, along with strategies to help increase spend in these categories.
Dates: July 1st – September 30, 2024. Store purchases can usually be done until the last minute while online purchases should be given a buffer zone since the charge typically posts on the shipping date.
Chase Freedom – Gas, EV, Entertainment
Activation Link / FAQ / Sample Stores & Exclusions / Our original post
With the Chase Freedom and Freedom Flex cards, activate to earn 5% back this quarter on up to $1,500 in spend at gas stations, on EV charging, select live entertainment and movie theaters.
Gas and EV charging – Useful for gas and also for buying gift cards inside some gas stations and similar convenience stores
Select live entertainment and movie theaters
Tip: Click this link (login required) to check how far you are along the $1,500.
Discover – Grocery, Walmart
Activation Link / Our original post
With your Discover card, activate to earn 5% back this quarter on up to $1,500 in purchases at Grocery Stores and at Walmart.
Grocery Stores – always a useful category. Grocery stores also sell a wide variety of gift cards to other retailers.
Walmart – Walmart store purchases, online purchases, and gas purchases are included. You can buy a Walmart gift card online or in-store and then use that for Sam’s Club purchases as well. Walmart sells third party gift cards too.
Activate to earn 5% Cashback Bonus at Grocery Stores and Walmart from 7/1/24 (or the date on which you activate 5%, whichever is later) through 9/30/24, on up to $1,500 in purchases. Grocery Store purchases include those made at supermarkets, meat lockers, bakeries, smaller grocery stores, and grocery delivery services. All purchases made from Target, convenience stores, wholesale clubs, and discount stores are not eligible. Walmart purchases include those made at Walmart.com, through the Walmart app, in-store at Walmart Discount Stores, Walmart Supercenter Stores, Walmart Neighborhood Market Stores, Curbside Pickup, Walmart +, and Walmart Gas Stations. Purchases using Walmart Pay with your Discover Card will also be included. Purchases from individual merchants and stand-alone stores within physical Walmart locations may not be eligible for this promotion. Sam’s Club purchases are not eligible. Purchases made through affiliates of Walmart.com are not a part of this promotion. The Walmart.com logo is a registered trademark of Walmart Inc. Listed merchants are in no way sponsoring or affiliated with this program.
Tip: Login, then click this link to see you how far along the $1,500 you are.
Citi Dividend – Gas
Landing Page | Our Original Post
With your Dividend card, activate to earn 5% back this quarter at Gas Stations. Citi is different than the other cards in that you have a $6,000 annual cap rather than a $1,500 quarterly cap. You can get 5% back on up to $6,000 in this quarter or you can save the entire amount for a different quarter, or you can use part up each quarter.
Excludes gasoline purchases at warehouse clubs, discount stores, convenience stores or other merchants that do not use the gas station merchant category code.
U.S. Bank Cash+/Elan – Select your Categories
Activation link | Merchant List | Our Original Post
U.S. Bank Cash+ and Elan Max offer 5% cash back in two categories, up to $2,000 combined total per quarter. Keep in mind that Car Rentals was recently replaced with TV, Internet, and Streaming Services.
Here are the current options:
TV, Internet, and Streaming Services
Home utilities
Select clothing stores
Cell phone providers
Electronic Stores
Gyms/Fitness
Fast food
Ground Transportation
Sporting goods
Department Stores
Furniture Stores
Movie theaters
Tip: Login here, then scroll down and click on the red “View Your Cash+ History” button.
U.S. Bank Shopper – Select your Categories
Our Original Post
The U.S. Bank Shopper Cash Rewards comes with a $95 annual fee and offers 6% cashback on your first $1,500 in combined eligible purchases each quarter with two retailers you choose. Options include Amazon, Apple, Best Buy, Home Depot, Lowe’s, Walmart, Target, and many more. You must enroll each quarter into two retailers.
Bank of America Customized Cash Rewards
Our Original Post
The Cash Rewards card from Bank of America offers 3% back on one selected category, up to $2,500 per quarter. If you don’t select anything it defaults to gas. Once you selected a category for one quarter, that remains your category in the future unless you change it. Each calendar month you can change it if you’d like, but you’re always limited to $2,500 for the entire quarter.
Gas and EV charging stations (default category)
Online Shopping; this category also includes cable, streaming, internet, and phone plan
Dining
Travel
Drug Stores
Home Improvement/Furnishings
This category is especially lucrative for those who have Preferred Rewards status with Bank of America which can get you 5.25% back on one of these categories at the higher relationship level.
Lots of useful categories here. Important note: the Cash Rewards card also offers 2% back at grocery stores and wholesale clubs up to $2,500 per quarter, and that $2,500 limit combines with the Category Selection limit. After spending $2,500, you’ll earn 1% back on everything.
Other Cards with 5% Category
Nusenda FCU – Gas, Hotels, Airfare, Education
Landing Page | Our Original Post
Earn 5% this quarter on up to $1,500 in purchases on Gas, Hotels, Airfare, and Education.
This is on top of the regular 1% for a total earn of 6% back. (apparently no longer the case?)
Langley FCU – Walmart, Wholesale, Gas, EV
Landing Page | Our Original Post
Langley Federal Credit Union offers 5% back each month in one selected category, on up to $100 cash back total ($2,000 spend).
The category options at time of this writing: Walmart, Wholesale, Gas, EV.
Vantage West [AZ] – Select your Category
Landing Page | Our Original Post
Get 5x points on the category of your choice, up to $1,500 per quarter. Eligible categories:
Safe Credit Union Cash Rewards Visa card offers 5% this quarter on your choice of one category each quarter (with no apparent limit). This quarter the categories are:
Some of the best budgeting methods include proportional budgeting, zero-based budgeting, and reverse budgeting.
This article was originally published on Arrest Your Debt and has been republished here with permission.
A budget method sets out how an individual, company, or organization plans to spend money over time. Budgeting for beginners can be an extensive process, but a failure to budget is a quick path to long-lasting debt problems.
Multiple budgeting methods address different needs—some people might only need to set a budget for a specific purchase, while others might be looking for long-term financial strategies. Here, we’ll explore several different budgeting methods and valuable personal finance resources to help you address future financial questions.
The Traditional Budgeting Method
The traditional way to budget is rooted in the business and corporate world. Those who are willing to invest the time can use this method to handle their personal finances.
With this method, you study the income and expense figures from a previous month or year to help you plan out an upcoming period. You subtract the expenses from your take-home income, the funds in your checking account, or cash in your savings account. With this method, you’ll also need to account for inflation and any significant changes to your income.
Track Your Expenses
Check with your bank for options to get spending reports, and use banking apps to help streamline this process. You can then update your expenses daily or weekly for the most accurate results.
This type of accounting helps you understand what you’ve brought in, what you’ve spent, and what you have left each period. You can then decide where you may need to trim spending—especially if you find that your funds are running low each month. For example, you might see opportunities to lower food expenses by:
Using store-label or generic brand groceries rather than national name brands
Cooking more and eating out less
Opting for water instead of sodas at the restaurant
Change Your Shopping Habits
Switching up your shopping habits based on sales and price hikes is an excellent way to save money. Some common habits to target include:
Driving less can help lower your monthly gas or EV charging expenses.
Ordering online, especially if you can avoid shipping and handling charges.
Purchase foods that can serve multiple meals to reduce the time and money spent at grocery stores.
Wait to grab extra supplies until you’re already commuting from work or running errands.
Zero-Based Budgeting Method: AKA Zero-Sum Budget
In this approach, you give a task to every dollar you bring home. Since you account for every dollar of income, you should not have any money left over in your budget at the end of the month.
Here, you don’t simply rely upon expense categories. However, you would identify specific categories for food spending and then set funds aside for that distinct purpose.
Below is an example of a zero-based budgeting system for a particular month:
Total Monthly Income: $3,000.00
(-) Expenses:
Rent – $700.00
Electrical – $100.00
Water – $50.00
Cable and Internet – $175.00
Wireless/Cell Phone – $200.00
Grocery Shopping – $400.00
Dine out – $75.00
Car Payment – $200.00
Gasoline – $200.00
Car Insurance – $150.00
Credit Card 1 – $75.00
Credit Card 2 – $100.00
Doctor’s Visit – $25.00
Church Offering – $100.00
Deposit to Savings Account – $450.00
(=) $0 leftover after paying all expenses
You have all of your $3,000 in take-home pay allocated to various expenses and items in this example.
The zero-based method might not involve as much detail and time as you think. Remember that you have many fixed expenses such as mortgage or rent, car payments, and phone or cable bills. If one-time expenses crop up that are high priority, you can briefly pull funds from non-essential items.
Proportional Budgeting Systems
In a proportional budget, you devote a certain amount of your monthly income to specific categories. Unlike the zero-based method, you focus less on specific items. Instead, general areas of expenses guide the budgeting process.
The 50/30/20 Budget Method
The 50/20/30 method calls for you to reserve 50% of your funds for fixed expenses (i.e. rent & car notes), 20% for emergencies, long-term savings goals, and paying extra on your debts. The remaining 30% can then go to your wants.
Suppose you have a monthly after-tax income of $3,000. In the 50/20/30 budget, you distribute your money as follows:
(50%) Essentials: $1,500
(20%) Savings, Retirement, Emergency-Fund: $600
(30%) Discretionary: $900
The 50/30/20 helps you keep long-term savings in mind, but it might not be effective if your income is low and inflation is high. When the cost of living increases, it’s easy for the essential budget to exceed 50% of your monthly income.
The 60/40 Budgeting Style
The one-time MSN Money Editor-in-Chief Richard Jenkins developed another proportional budget. In the 60/40 approach, you spend 60% of your net income on committed expenses. This categorization of spending includes mandatory expenses and non-essentials to which you commit.
You then dedicate savings and money that might not have any utility beyond “fun” to the remaining 40%. Ideally, you can distribute these funds in 10% increments across three 401(k) or retirement plans, including a tax-free account. In developing his budgeting plan, Jenkins expressed a strong preference for saving well above the recommended 5% of income.
With enough income and the ability to shave expenses from your committed expenses, you might reach significant savings goals and future spending power in a few years.
Proportional Budgets for Would-Be Homeowners
If you plan to buy a home, your monthly debt payments should not exceed 43% of gross (pretax) monthly income. In calculating this debt-to-income ratio, you include car loans, student loans, credit card debt, and the anticipated monthly mortgage payment in debt. For example, your debt payments should stay at or below $2,580 per month on a monthly gross income of $6,000.
Also, consider the cost of maintaining your home. Some financial or home experts suggest budgeting 1% of your home’s price for maintenance. Other advisors include maintenance costs with mortgage payments and suggest that your housing costs do not exceed one-fourth of your income.
Reverse Budgeting: AKA Pay Yourself First Budget
Reverse budgeting makes saving the top priority. Most budgets have you start with mandatory expenses such as debt payments, food, and utilities. When you put the budget in reverse, you first decide how much to save and then set funds aside for your other expenses.
Reverse budgets should include a mixture of short-term and long-term savings goals. If you’re planning to buy a home or car or save a certain amount for college or retirement, start the process by estimating the cost of the particular benchmark.
Envelope Budget AKA Cash Envelope Method
Many budgeting techniques focus on determining how much to spend on particular categories depending on your financial goals. With the cash envelope system, you’re mentally forcing yourself into a planned spending limit.
Specifically, you label envelopes according to spending categories. Your take-home pay goes into particular envelopes based on your budget for each category. To that end, you might use some of the methods we’ve discussed, especially a proportional budget method, to decide how to allocate the money.
As you want or need to pay for something, you take money out of the envelope for that category and pay for the items with cash. Once you have emptied the envelope, you no longer spend on that category. With discipline and commitment, you resist the urge to borrow from another category.
Calendar Budgeting
Calendar budgeting encourages you to base your spending on your paydays and your monthly due dates. For example, if you get paid on the first and the fifteenth of each month, you would mark down those days on your budget along with the amount you expect to receive.
Next, you can mark down each fixed payment that will be due during your payment periods. If you receive $1,500 on the first and you have an $80 smartphone payment due on the 10th, you’ll want to jot down $1,500-$80 on your budget. Knowing how to read your paycheck stub is vital to effectively using this method.
Value Proposition Budgeting
Value proposition budgeting, also called “priority-based budgeting,” prompts people to measure the importance of every item they spend money on. The more integral an expense is, the more it’s justifiable if a large percentage of your budget is spent on it.
Businesses and entrepreneurs might favor this method, as it illustrates which expenses are worth their weight in revenue and which you can trim down. Using this method before applying for small business loans can also help you stay within your limit.
Budgeting Methods FAQ
A lot of questions can surface when you’re building out a budget. Here are some of the most common questions we’ve encountered.
What is the best budgeting model?
Budgeting isn’t a one-size-fits-all process, so there isn’t one model that beats the rest. It helps to learn about as many different budgeting strategies as possible to help you construct a plan that suits your specific needs.
The following information will highlight some of the most prominent budgeting methods people use. However, incorporating ideas and budgeting categories from multiple different methods is also a fantastic strategy.
What Things Do I Need to Include in My Budget?
Excel spreadsheets, Google Sheets, a printable monthly budget template, or a budgeting app can all help you account for your income and expenses. Start by listing your take-home pay and other income you received in a given period. If you’re basing the budget on a year, find your W-2 form and subtract all of the taxes withheld from the gross income. As an easier approach, use your final pay stub for the calendar year or total the paystubs in the particular previous month.
Next, list your common expenses for each month. You might have debt payments such as mortgage, car, student loan debt, and credit cards. Other categories of expenses include transportation, food, clothing, utilities, entertainment, television, and other media and insurance.
Build a Better Budget with Credit.com
The budgeting method that works best for you is a personal preference and depends on your financial situation, goals, and ability to be detail-oriented. Whatever you use to create your budget, budgeting should enhance your financial literacy, help you find approaches to debt repayment and other financial goals, and afford you discipline and structure in your spending habits.
A successful budget involves total buy-in and a belief that you can achieve financial independence and finally fix your debt payoff problems. Choose one of these simple budgeting methods to take control of your financial future and reduce your overall money stress.
Check out Credit.com’s guide for managing debt if you need help recovering from a financial setback. When you’ve got the funds, our investing guide can help you learn more ways to strategically increase your income.
San Francisco is bursting with iconic landmarks and unique neighborhoods. From its famous bridge to its historic prison island, there’s always something fascinating to discover in the Bay.
Whether you’re riding the cable cars to your dream San Francisco home or looking for an apartment in Chinatown, San Francisco has a wealth of experiences to offer. Here are ten things that make this city such a special place to settle down.
1. Cable Cars
San Francisco’s cable cars are an iconic mode of transportation and a major tourist attraction. These charming vehicles climb steep hills and offer incredible views of the city. Riding a cable car is like stepping back in time, providing a unique perspective of the streets and architecture. The clang of the bells and the open-air design add to the nostalgic experience. Don’t miss the chance to hop on one and see San Francisco from this classic vantage point.
2. Union Square
Union Square is the heart of San Francisco’s shopping and entertainment district. This bustling plaza is surrounded by high-end stores, hotels, and theaters. It’s a great place to catch a show, dine at a fancy restaurant, or simply people-watch. Seasonal events, like ice skating in the winter, add to its charm. Union Square is a central spot that offers something for everyone, day or night.
3. Golden Gate Bridge
The Golden Gate Bridge is perhaps the most recognizable symbol of San Francisco. Its striking red-orange color and towering presence make it a marvel of engineering. Walking or biking across the bridge provides stunning views of the bay and city skyline. It’s a popular spot for photos, with plenty of scenic viewpoints on either side. The bridge is not just a passageway but an experience that captures the essence of San Francisco.
4. Haight-Ashbury
Haight-Ashbury is synonymous with the 1960s counterculture movement. This neighborhood retains its bohemian spirit, with vintage shops, colorful murals, and eclectic cafes. Walking through Haight-Ashbury feels like a journey through history, as the area still echoes with the vibes of the Summer of Love. It’s also a hotspot for music lovers, with several live music venues and record stores. This district is a must-visit for anyone interested in San Francisco’s cultural evolution.
5. Alcatraz
Alcatraz Island, home to the infamous former prison, is a top destination for history buffs. A ferry ride takes you to the island, where you can explore the cell blocks and hear stories of notorious inmates. The audio tour is particularly engaging, bringing the island’s past to life with real accounts from former guards and prisoners. The views of the city and bay from Alcatraz are also breathtaking. It’s a haunting yet fascinating glimpse into a darker chapter of San Francisco’s past.
6. Tech Industry
San Francisco is a major player in the global tech industry. The city and its surrounding area, known as Silicon Valley, are headquarters to many leading tech companies. Innovations from these companies have transformed how we live and work. The presence of tech giants attracts talent from all over the world, contributing to the city’s dynamic atmosphere. San Francisco’s role in the tech world is influential and ever-evolving.
7. Fisherman’s Wharf
Fisherman’s Wharf is a waterfront area packed with attractions and seafood restaurants. Here, you can watch sea lions lounging on docks, visit the historic ships at Hyde Street Pier, or sample clam chowder in a bread bowl. The area is also home to the famous Pier 39, which offers shopping, dining, and entertainment. Fisherman’s Wharf combines maritime history with modern fun, making it a favorite spot for all.
8. Chinatown
San Francisco’s Chinatown is the oldest and one of the largest in North America. Walking through its dragon-adorned gates, you’re transported to a community full of history. The streets are lined with shops selling everything from rare foods to traditional herbs. Visit the temples, enjoy authentic Chinese cuisine, or explore the bustling markets. Chinatown is a colorful, sensory-rich experience that offers a taste of the East in the heart of the West.
9. Alamo Square
Alamo Square is famous for its “Painted Ladies,” a row of colorful Victorian houses. This picturesque park offers panoramic views of the city, making it a popular spot for photos. The surrounding neighborhood features beautiful architecture and lush greenery. It’s a peaceful place to relax, have a picnic, or simply enjoy the scenery.
10. San Francisco Giants
The San Francisco Giants are a beloved baseball team with a storied history. Attending a game at Oracle Park, with its stunning views of the bay, is a treat for any sports fan. The team has won several World Series, adding to their legacy. The ballpark experience, complete with garlic fries and cheering fans, is electric. Supporting the Giants is a point of pride for many San Franciscans and a great way to experience the city like a local.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
You want to learn how to be frugal but not cheap… then, you are in the right place.
Simply put… frugal living is saving money at it finest.
To be honest, though, learning how to be frugal can come with spending more money than you planned in the name of frugality. The truth can hurt. But, in order to be frugal, you must save what you would normally spend.
That means you are economical with money.
The list of 175+ frugal living tips seems like a great place to start when you are learning how to be frugal, right?
Wrong!
You need to focus on a few basic habits first. Set yourself up for success. And then, slowly incorporate more frugal ways to save money.
In this post, that is exactly what you will learn.
The frugal habits you need to be successful along with the best frugal life hacks to guarantee success.
Let’s dig in…
Can being Frugal make you Rich?
Absolutely yes!
The key is to save money from your frugal hacks.
Remember the age-old saying, “A penny saved is a penny earned.”
Every penny will slowly add up to the next money milestone.
If you don’t believe me, then check out this millionaire’s story of being frugal.
How Being Frugal can Cost You?
It can IF you are not careful.
Being frugal is about saving money. However, it is possible to spend more money in the name of frugality.
The first example would be being more than you need just because it is a good sale, deal, or clearance price that you don’t want to miss out on.
Next, in your search to find the cheapest option, you actually spend more over time replacing it because the quality isn’t quite the same.
There is a fine line between frugality, being cheap, and simply overspending on deals.
Just be weary of overspending money in the hunt of saving money.
How to be Frugal with Money
These are the habits you want to embrace to become a frugal person.
Personally, I like to think being frugal is being picky with my money.
I loathe my investment accounts going down, so why would I want to buy things that we don’t need or don’t matter in the long wrong. That is why I choose to be frugal with money.
Specifically, I choose to be economical with how we spend money.
Now, let’s dig in to understand how to be frugal with money.
1. Know Your Goals
First, you must know your goals. If you don’t have a goal, then you aren’t going to make any progress. Period.
In today’s society, it is SO easy to spend money without even realizing it. That is the point of business – they are out to market for your money (and they are good at it, too).
You must prioritize you first.
This is something we hear over and over. Prioritize your self-care before taking care of others. The same holds true for your money.
Action Step #1 – Sit down and write out your financial goals.
If this is something you haven’t done before, then check out our helpful guide to rocking your financial goals.
2. Understand your Spending Habits & Triggers
This one is HUGE!!
If you don’t know how and where you spend money without thinking, then you will never be able to stop the spending. You can’t slow the bleed.
First of all, I will admit that uncovering your spending habits is hard. It is introspective. It can be painful. Maybe even demoralizing.
But, until you let go of your previous financial failures, you won’t be able to move on.
This is an important step to make serious progress in your life. You may be amazed how this seemingly simple things will hold you back.
Action Step #2 – Review bank statements or credit card transactions. Look for things you bought without planning for them.
This will highlight your spending habits.
As for your triggers, watch your emotions and think what you automatically do when you are happy, sad, mad, and celebrating.
3. Save First
Oh my, pay yourself first.
This is something I focus on a lot at Money Bliss and for good reason. Saving money is the backbone to financial success.
If you don’t save money, then you are left scrambling when you need cash or stuck going into debt. This is a vicious hamster wheel that debt will overtake you.
Start by saving $10 a day. Many times you can find that money by uncovering your spending habits.
From there, look at increasing your saving percentage each month.
Action Step #3 – Figure out how much you save each week, each month, and your saving percentage. Brainstorm ways to increase how much you save.
To help our readers, you will find many spreadsheets and printables to help you figure out how much you save and track your savings progress. Once signed up on our email list, you will receive the password.
4. Spend Less Than You Make
Your expenses must be lower than your income. Period.
If you are currently spending more than you make, then you must look at ways to drastically cut expenses. Stop hoping that your situation will change and actually do something about it.
This seems like a very easy math concept. Yet, most people struggle with basic money management.
If you don’t believe that saving an extra $5 day, then think about having $1825 in your pocket.
Now, let’s flip it the other way, if you are overspending by $75 a week, then by the end of the year, you are in the hole $3900 plus interest if you took out debt.
Action Step #4 – Figure out your bare bones budget. Then, decide what fun spending items to keep to make sure you spend less than you make.
Here is a guide to help you figure out your bare bones budget. Also, you will find bare bones budget printable in our free library area.
5. Patience
Lastly, you must have patience.
Changing your money management won’t happen overnight. While you can have quick wins and successes, this is the race won by the turtle.
Patience comes with planning and that is one thrifty habit you should pick up.
When you become frugal with money, you plan how you spend your money and save your money. Many times, that means waiting for a sale to buy an item you need or accumulating money for another date.
Action Step #5 – Show self-restraint and try a no spend week or month.
By holding a no spend challenge, it will help you reshape your finances as well as help you prioritize what is important. As a reader, you have access to our no spend printables, too!
Frugal Life Hacks
These are the specific frugal hacks to save money.
These are the key areas you need to focus your energy on. Over time, they will become habits.
1. Pay Yourself First
Yep, this one again.
If you are frugal, then you pay yourself first.
You are focused on two things – how to save more money and how to make more money.
This pay yourself first concept will have you winning at money management – guaranteed!
2. Budget
A frugal person always has a plan on how they plan to spend their hard-earned money.
This makes sure that spending is always below income.
While many people hate the term “budget,” it doesn’t have to be constricting. We like to call it a “Cents Plan.” You make a plan for your money.
Just like you make a plan for your time on the weekend. Same concept.
The more you save now, the greater freedom you will have later.
3. Cook Meals at Home
Cooking food at home costs at least 25% of eating out. While the convenience of eating out is nice, it comes at a monetary and wellness cost.
You can make healthy meals under $10 for six servings. And not be a slave in the kitchen.
Shop the outer area of the grocery store. The expensive stuff is in the middle.
Hint: Try to incorporate a meatless meal 1-2 times per week. Plant based meals are cheaper to make.
4. Shop Less Often
This goes for general shopping, buying groceries, and adding items to your Amazon cart. The more often you go, the more likely you are to spend more money.
Decide ahead of time when you plan to shop (remember that patience concept from earlier).
For example, to get groceries for our house. I plan two pickups per month at the local grocery store and then have organic produce delivered on odd weeks with Misfits Market. Then, Costco run every month to 6 weeks. (Mind you… I have two children that are hitting the pre-teen phase.)
For me, I have shaved 30% off my grocery budget by implementing the strategy to shop less often.
5. Use Cash for Key Categories
If you are tempted to spend more than you should in certain areas, then you need to look at using cash.
When cash has been spent, you must wait until you full up that envelope again.
This helps so much with overspending.
You can do this with the cashless envelope system as well.
6. Own Less Stuff
The more items you have, the more it cost to buy and maintain.
So, by owning less stuff, you are accomplishing one of the most frugal life hacks to save money.
You don’t even need to become a minimalist. You just need to own what you need and that is it.
If you don’t believe me, look around and pack up anything you haven’t touched in the past 30 days.
7. Don’t Buy New
Buying new can be expensive. The best example of buying new is cars, trucks, and SUVs. The price instantly goes down the second you leave the dealership.
If at all possible, always look for used items that you can get at a discount or even for free.
With online forums and groups, it is much easier to find used items.
Of course, there is a caveat to this life hack; there are some things that are worth the investment and should be bought new. Just watch for sales or discounts.
8. Check your Receipts
It absolutely amazes me how many times I can be charged inccorectly. You would think with technology that this wouldn’t happen, but it does.
It takes a quick thirty seconds to scan your receipts and check for errors.
Sometimes, it may be the warranty you declined or double charged for apples. Other times, the sales price not have been rung up correctly.
Don’t hesitate to ask for the correct price!
9. Review Insurance and Ongoing Subscriptions
This may seem like a mundane task to do, but you could save yourself money.
This past summer, our homeowner’s and auto insurance went up again. We shopped around and ended up saving $1800. The same is true for cell phone and cable service.
You have to call and ask for discounts.
More often than not, these companies want you to continue as a customer and will lower your rate.
Insurance Options:
Automated Options to Save Money:
10. Switch to Reusable Products
When you throw something out, you have to buy new again.
This can fall into many categories. However, here are the main things you can reuse and ditch the waste.
This is what you want to look for:
11. Drink Water
Nothing is more frugal than drinking water.
The costs of various drinks can be a drain to any budget.
If you don’t like your tap water, then you can invest in a cheap filtration pitcher or even an under-mount filtration system. This is the one we installed and have been very happy with!
12. Watch Out for Fees
There are so many little pesky fees that can add up. Some examples include shipping, account maintenance, service fees, banking fees, etc.
While $2-8 may not seem like much, they will balloon over time. Look for promo codes or alternative ways to skip the fees.
13. Cut Cable or Unused Subscriptions
If you don’t use, then don’t spend money on it.
You can’t save money if you spend on things that don’t matter to you.
This is hard for many of us to do because we like conveniences and we don’t want to be seen as different.
Ways to Cut Cable:
The key when cutting cable is not to replace it with more subscriptions that end up costing more.
14. Collect Your Pennies
A true life hack to get you ahead financially is to know your money.
You know where you money goes. You know when you spend it. When you save it.
Also, you will never leave money on the table. If you see a penny, you pick it up and save spare change. If you lose a dollar, you want to get it back.
This means you are actively looking for ways to make more money. You want more pennies to collect that will add to your net worth over time.
15. Free Things to Do
The last frugal life hack is to always look for free things to do.
Here is a little secret… having fun doesn’t need to cost money!! We have been trained that having fun costs money. But, it is so not true!
Some of the best things in life are free.
For all of you, here is a guide of over 101 things to do without money.
Which Frugal Life Hack Will Save Money for You?
Being frugal is a lifelong habit. Yes, there are quick wins you can have here and there. But, in the long run, these frugal life hacks will have the biggest bank for your time.
Learning how to live frugally and be happy is about understanding your priorities and how you want to spend your money.
If you are serious about learning how to be frugal with money, then plan a time to examine your finances. In less than 30 minutes, you will uncover things to change the trajectory of your spending and saving habits.
Just remember… pennies do add up. So, watch your pennies and watch your net worth grow.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Buying a second home offers both a getaway and potential income, but the rules for a second home mortgage differ from your primary residence.
A second property can serve as a personal escape, allowing you to skip costly hotel stays during vacations. Additionally, if you rent it out, the rental income could potentially cover your mortgage costs, making the investment financially rewarding.
Before you jump in, though, you should understand the second home mortgage requirements. They’re a little different from the mortgage on your main home. Here’s what you need to know.
Verify your second home mortgage eligibility. Start here
In this article (Skip to…)
What is a second home mortgage?
A second home mortgage is a loan used to finance the purchase of a secondary residence, such as a vacation home, that the borrower intends to occupy for part of the year.
An interesting aspect of second home mortgages is that you might be able to rent the property out when it’s not in use. However, rental periods are typically limited to 180 days annually, and the potential rental income cannot be factored into your mortgage qualification criteria.
Verify your second home mortgage eligibility. Start here
To qualify for a second home mortgage, the property needs to adhere to several guidelines.
It should be a single-unit dwelling that’s suitable for use throughout the year, even if you only plan to occupy it seasonally
You must hold exclusive rights to the property, excluding any long-term leasing or timeshare arrangements
The second home should not be managed by a property management company
It usually needs to be a certain distance away from your primary residence
Second home mortgages are distinct from loans used for primary residences or investment properties due to the unique risk profile they present to lenders. The main difference is that you are not relying on your second home for everyday living. This scenario allows lenders to assume that, in times of financial difficulty, you may prioritize other payments over your second home mortgage.
Uses for a second home
Unlike your current home, a second home is not the dwelling you primarily live in, but it’s a property that you can use in various ways, either as a getaway spot, a secondary living space, or even as an additional stream of income.
When it comes to the function a second home can serve, the sky’s the limit, but generally speaking, they fall into three primary categories:
Vacation homes: This is perhaps the most popular reason people consider buying a second home. A vacation home serves as a retreat, a place to escape the everyday grind and enjoy some leisure time. Whether it’s a cabin in the woods, a beachfront condo, or a chalet in the mountains, a vacation home offers a getaway where you can relax and recharge.
Secondary residences: Sometimes, a second home serves a more practical purpose. It can be a dwelling near your workplace, reducing your daily commute and serving as a home-away-from-home during the workweek. Alternatively, it might be close to family members or in a location where you plan to eventually retire.
Investment properties: Renting out your second home as a short-term holiday rental can generate additional income without changing its classification. However, long-term rentals will reclassify your second home as an investment property, leading to different mortgage requirements and tax implications set by lenders and the IRS. To maintain your property’s status as a second home, limit rentals to short-term periods.
Second home mortgages vs. investment property loans
Rental homes and vacation properties are financed differently. If you can qualify for your purchase without the property generating any income, buy it as a vacation home. You’ll get a better mortgage interest rate, and qualifying is more straightforward when rental income is off the table.
However, if you need to rent out your place to afford it, your purchase becomes an investment property rather than a second home.
In this case, your mortgage lender will want to see an appraisal with a comparable rental schedule. This document tells the underwriter the property’s potential income. The lender counts 75% of the anticipated rent as income to you, and the monthly mortgage, taxes, and insurance are added to your expenses when calculating your debt-to-income ratio (DTI).
Investment property mortgages often require at least 20% down because it’s very difficult to get mortgage insurance for these purchases. Investment property mortgage rates can be 50 basis points (0.5%) or higher than rates for primary residences.
Compare investment property rate quotes from multiple lenders. Start here
Second home mortgage requirements
Second home mortgage rules are a bit stricter than primary home loans. Fannie Mae and Freddie Mac — the two agencies that set conforming loan guidelines — have requirements for both the borrower and the home being purchased.
Verify your second home mortgage eligibility. Start here
Borrower: Must meet required minimums for down payment and credit score, and not exceed maximum debt-to-income ratio
Property: Must be a one-unit single-family residence, suitable for year-round use, owned by the borrower
Residency: Occupied by the owner for a portion of each year and not rented full-time
Down payment: At least 10% down for borrowers with excellent credit. Higher for those with less-established credit
Cash reserves: Between two to six months, depending on the buyer’s financial situation
Credit score: Minimum credit score of 640, but potentially higher for those with smaller down payments and more debt
Income: Varies depending on down payment and credit score, but debt-to-income ratio should generally not exceed 45%
We go into more detail about each of these second home mortgage requirements below. Here’s what you need to know about financing a vacation home.
1. Borrower requirements for second home mortgages
The most important requirement for a second home loan is that you need at least a 10% down payment. This rule is non-negotiable.
Beyond the down payment rule, guidelines for second home mortgages can be flexible. Borrowers may be approved with:
A credit score of 680 or higher (typical)
A credit score of 640-679 (with a down payment of 25% or more)
A debt-to-income ratio (DTI) of up to 45%
If one area of your application is weaker, you can often compensate by being strong in others. For example, if your credit score is right at 640, you may get approved by making a bigger down payment. Or, if you have a high debt-to-income ratio, you could make up for it with an excellent credit score and 12 months of cash reserves in the bank.
Thanks to this flexibility, it’s possible to qualify for a second home mortgage even without perfect credit or a big down payment.
Check your eligibility for a second home loan. Start here
2. Property requirements for second home mortgages
To qualify for a second home mortgage, the property itself must meet specific criteria set by lenders. These requirements ensure that the property is indeed a second home and not an investment property. The property must be:
Owner-occupied: You must live in the property for a portion of the year, using it as a secondary residence. This is the most critical requirement for a second home mortgage.
Single-unit: The property should be a one-unit home, such as a single-family house, condo, or townhouse. Multi-unit properties like duplexes, triplexes, or four-plexes do not qualify as second homes.
Habitable year-round: The home must be suitable for year-round use, with adequate heating, cooling, and other essential amenities. Seasonal properties or those not built for continuous occupancy may not qualify.
Solely owned: You must have complete ownership of the property. Timeshares or other shared ownership arrangements are not eligible for second home mortgages.
Not rented full-time: While you can rent out your second home occasionally, it cannot be a full-time rental property. Lenders typically limit the number of days you can rent out your second home each year.
Not professionally managed: The property should not be under the control of a property management company that dictates occupancy. You must have the freedom to use the property as you wish, subject to the lender’s occupancy requirements.
Understanding and meeting these property requirements is essential to qualify for a second home mortgage and secure the best possible loan terms.
3. Residency requirements for second homes
You can’t finance a property using a second home mortgage and then rent it out full-time. To qualify for a second home mortgage, you must occupy the property for a portion of the year. Why? Because if you plan to rent the home full time, it’s considered an investment property — not a second home. Investment property loans have higher interest rates and different loan requirements.
In addition, lenders typically require that the second home be located a certain distance away from your primary residence. Properties located too close to your main home may not qualify as a second home in the eyes of lenders. It also helps if the house is in a resort community or area. In short, the property must “feel” like a recreational residence, not a rental property posing as one.
4. Down payment requirements for a second home
You can buy a primary residence with just 3% down in many cases. But it takes a 10% down to buy a vacation home — and that’s if the rest of your application is very strong (high credit score, low debts, and so on).
If you have a lower credit score or higher debt-to-income ratio, your mortgage lender may require at least a 20% down payment for a second home. A down payment of 25% or higher can make it easier to qualify for a conventional loan.
If you don’t have a lot of cash on hand, you may be able to borrow your down payment using a cash-out refinance on your primary home or, alternatively, a home equity line of credit or HELOC.
5. Cash reserves needed for a vacation home purchase
When you buy a vacation property, you’ll likely need cash reserves, which are extra savings that could cover your mortgage payments in case of a short-term income disruption.
Check your cash-back loan options. Start here
One month of reserves is equal to the amount needed to make one monthly payment on both your primary residence and future second home. You’ll need at least two months of reserves if you’re a well-qualified wage earner and at least six months if you’re self-employed or have weaker financials.
Having 12 months of cash reserves may help you qualify with a slightly lower credit score or higher debt-to-income ratio on your second home mortgage application.
6. Credit score needed to buy a second home
Credit score requirements are slightly higher for second homes than for primary residences. Fannie Mae sets its minimum FICO at 620 for primary home purchase loans. But a second home loan backed by Fannie Mae requires a minimum credit score of 640 — and that’s with a 25% down payment and DTI below 36%.
If you make a down payment of less than 25%, you typically need a credit score of at least 680 and low debts, or 720 with a higher debt-to-income ratio. Credit score requirements can also vary by lender so shopping around may help you find more lenient requirements.
7. Income required for a second home loan
Debt-to-income ratio requirements depend on your down payment size and credit score. Fannie Mae allows a DTI up to 45% with a 660 FICO score and at least a 25% down payment. A 45% DTI means your total monthly payments add up to 45% of your gross monthly income.
Example: if you make $10,000 per month before taxes, your total monthly debt payments could reach up to $4,500. That includes your primary mortgage payments, second mortgage payments, auto loans, and other ongoing debts.
Unlike investment properties, you cannot use future rental income to help you qualify for a vacation home. You have to qualify with income from sources other than the property you are purchasing. If you’re buying a multi-unit vacation home, lenders will almost always treat your purchase as an investment property, whether or not you plan to rent it out.
Types of second home mortgage loans
It’s common to get a mortgage for a second home. Over half of all second home buyers use a mortgage rather than paying cash. When financing a second home purchase, borrowers have several mortgage options to choose from, including:
Check your eligibility for a second home loan. Start here
Fixed-rate mortgages (FRMs)
FRMs have an interest rate that remains constant throughout the life of the loan, providing predictable monthly mortgage payments. This stability makes budgeting easier for second home buyers.
Adjustable-rate mortgages (ARMs)
ARMs start with a lower interest rate than fixed-rate mortgages, but the rate can fluctuate over time based on market conditions. Adjustable-rate mortgages may be attractive to buyers who plan to sell their second home within a few years or who expect their income to increase significantly in the future.
Jumbo loans
Jumbo mortgages are designed for luxury second homes where the purchase price exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. These loan types often have stricter qualifying requirements and may have higher interest rates than conforming loans.
Interest-only mortgages
With an interest-only mortgage, borrowers pay only the interest portion of their mortgage payment for a set period, typically 5–10 years. This can result in lower monthly payments initially, but the payments will increase once the interest-only period ends and the loan principal must be repaid.
Can you buy a second home with FHA loans or VA loans?
The U.S. government doesn’t sponsor loans for vacation homes since government-backed loans are meant to encourage single-family homeownership. However, if your seller already has a government-backed loan against the property, you may be able to assume the seller’s loan.
Verify your second home mortgage eligibility. Start here
It’s also possible for veterans who qualify for VA loans to buy a new primary residence with a VA loan while converting an existing home into a second home. But the loan of choice for most buyers will be a conventional loan, such as those regulated by Fannie Mae and Freddie Mac.
Costs and fees associated with second home mortgages
In addition to the monthly mortgage payment, second home buyers should be prepared for the following costs:
Second home mortgage rates
Interest rates for second home mortgages are typically 0.25–0.50% higher than those for primary residence loans. As with your main home, it pays to shop aggressively for your best mortgage rate. Compare offers from at least three to five different mortgage lenders, and remember to look at their fees and annual percentage rates (APR) as well as the quoted mortgage rates.
Check your second home mortgage rates. Start here
Closing costs and down payment
Closing costs for second home purchases usually range from 2–5% of the loan amount and may include appraisal fees, title insurance, and origination charges. These costs are in addition to the down payment, which is typically 10–20% of the purchase price.
Private mortgage insurance (PMI)
Borrowers who put down less than 20% on a second home may be required to pay PMI, which protects the lender in case of default. PMI premiums are added to the monthly mortgage payment and can range from 0.5 to 1.5% of the loan amount annually.
Ongoing costs
In addition to the upfront costs of purchasing a second home, buyers should also budget for recurring expenses such as property taxes, homeowners insurance, HOA fees, utilities (electricity, water, gas, and internet/cable), and maintenance costs (landscaping, cleaning, and repairs). These expenses can add hundreds or even thousands of dollars to your monthly budget, so it’s crucial to factor them into your long-term financial planning to ensure that you can comfortably afford the ongoing costs of second home ownership.
How to apply for a second home mortgage
Applying for a mortgage for a second home is similar to applying for a primary residence mortgage, but there are a few key differences to keep in mind. Follow these steps to streamline your application process:
Step 1: Estimate your budget and loan amount
Before applying for a second home mortgage, establish a clear budget that accounts for the purchase price, down payment, closing costs, and ongoing expenses. This will help you determine the loan amount you need and ensure that you’re not overextending yourself financially. Use a mortgage calculator to estimate your monthly payments and assess how a new home purchase fits into your personal finance goals.
Step 2: Improve your credit score
Lenders typically require higher credit scores for second home mortgages compared to primary residence loans. Check your credit score and take steps to improve it if necessary, such as paying down debt, disputing errors on your credit report, and making all payments on time.
Step 3: Gather required documentation
Prepare the necessary documentation for your second home mortgage application, which may include:
Proof of income (W-2s, pay stubs, tax returns)
Bank statements and investment account statements
Identification documents (driver’s license, passport, Social Security card)
Information about your primary residence and any other real estate owned, including your current mortgage
Proof of insurance for the second home
Keep in mind that the IRS has specific rules regarding the classification of second homes for tax purposes.
Step 4: Shop around for the best mortgage rate and offer
Compare mortgage rates, fees, and terms from multiple lenders to find the best deal for your second home purchase. Consider working with a mortgage broker who can help you identify competitive offers from a wide range of lenders.
Step 5: Get pre-approved for a second home mortgage
Obtain a mortgage pre-approval from your chosen lender, which will give you a clear idea of how much you can borrow and demonstrate to sellers that you’re a serious buyer. Keep in mind that pre-approval is not a guarantee of final loan approval.
Step 6: Make an offer and provide earnest money
Once you find the perfect second home, make an offer and provide earnest money to show your commitment to the purchase. Your real estate agent can guide you through the negotiation process and help you craft a competitive offer.
Step 7: Schedule an appraisal and home inspection
Your lender will typically require an appraisal to ensure that the second home’s value aligns with the loan amount. Additionally, consider scheduling a home inspection to identify any potential issues with the property before finalizing the purchase.
Step 8: Finalize your loan application and close on your home
After your offer is accepted, work with your lender to finalize your loan application and lock in your second home mortgage rate. Review and sign the closing documents, pay any remaining closing costs, and take possession of your new home.
By following these steps and working closely with your lender and real estate agent, you can navigate the second home mortgage application process with confidence and efficiency..
Alternative second home financing
While a second home mortgage is a popular method of financing, it’s not the only option. If you’re a first-time buyer of a second home, or you have significant equity in your primary residence, consider the following alternatives.
Cash-out refinance
A cash-out refinance involves replacing your existing primary mortgage with a new one, while also borrowing more than you currently owe. This extra cash, released from the equity you’ve built up in your primary home, can then be used towards your second home. However, this will increase your overall mortgage balance and potentially result in higher monthly payments.
Check your cash-out refinance options. Start here
Furthermore, refinancing usually resets the payoff timeline for your mortgage. If you opt for a new 30-year home loan, this could extend the period it takes to pay off your original mortgage.
Home equity loan
These are loans against the equity you’ve built up in your primary residence. Home equity loans can provide a lump sum of money that can be used for the down payment or even to cover the full cost of the second home. However, they typically come with higher interest rates than first mortgages. Keep in mind, your lender will use your first home as collateral. So you risk foreclosure of your home, should you be unable to repay the second mortgage.
HELOC
A home equity line of credit (HELOC) provides a flexible financing option to borrow against the equity of your primary residence. It functions similarly to a credit card; you have a specified credit limit and can borrow up to this amount. As you repay the borrowed sum, your credit line is replenished. HELOCs offer a useful way to generate funds for your second home but come with risks, as they are secured against your primary residence.
FAQ: Second home mortgage requirements
Compare second home mortgage quotes from multiple lenders. Start here
What is a second home mortgage?
A second home mortgage is a specific type of loan you obtain when buying a second home, whether it’s a vacation or a secondary residence. These mortgages differ from those for primary homes or investment properties, mainly due to lenders’ risk assessments.
What are the requirements for a second home mortgage?
To be eligible for a second home mortgage, the property must be a single-unit dwelling fit for year-round use that you have exclusive rights to. Typically, the property should also be located a certain distance away from your primary residence.
Can I use rental income to pay for my second home mortgage?
Generally, you can’t count anticipated rental income to meet eligibility criteria when buying a second home mortgage. However, if you decide to rent the property out, you can use this income to indirectly cover your monthly mortgage payments, keeping in mind that rental duration is often limited to maintain the property’s status as a second home.
How does a second home mortgage differ from an investment property mortgage?
The main distinctions lie in the property’s intended use and the loan conditions. A second home is mainly for personal use, while an investment property is geared towards generating income or capital gains. Investment property mortgages usually have higher interest rates and more stringent qualifications.
Can I refinance my primary residence to fund a second home?
Yes, when buying a second home, you have the option to leverage the equity in your primary residence through either a cash-out refinance or a Home Equity Line of Credit (HELOC). However, these methods come with their own sets of risks and rules, so it’s advisable to consult with a mortgage expert.
What are today’s second home mortgage rates?
Borrowers will pay slightly higher rates to finance a second home than they will for a primary residence. To make home buying even more affordable, shop around for rates with at least three mortgage lenders. You probably wouldn’t buy the first vacation home your real estate agent showed you. Loan shopping should work the same way.
Make sure your loan officer knows you’d like to finance your purchase as a vacation home and not an investment property. Get a quote for your vacation home purchase and be sure to shop around to get your best rate.
Don’t think you can qualify to buy a second home? You might be surprised.
Time to make a move? Let us find the right mortgage for you
In the era of remote work, having a functional and inspiring home office has become more important than ever. However, not everyone has the luxury of a spacious room to dedicate solely to work.
Designing a home office in a small space can be challenging, but with the right strategies, it’s entirely possible to create an efficient and comfortable workspace, whether that’s in your apartment in Orlando, your rental home in New York, or your home in San Francisco. Here are some tips, tricks, and ideas to help you maximize your small space and design a home office that boosts productivity and enhances well-being.
Create the perfect home office in a small space
“Make small changes at a time, test it to see what works, and adjust accordingly. Start small and build up, and keep a wishlist of desired products or features that you can iterate towards, little by little,” states Jose Munoz. “It’s important to remember that the setup will never be perfect or finished. No matter how much you improve it, you will see someone else’s setup and think, ‘Oh, I wish I had that.’ Enjoy the process, make it unique, and work for you.”
1. Choose the right spot
The first step in designing a small home office is finding the right spot. This could be a corner in your living room, a nook under the stairs, or even a closet. The key is to choose a location that minimizes distractions, offers enough privacy for focused work, and inspires you and your work.
“To me, the most important thing about a home office is to make it inviting, bright, and inspiring!” Katie Gardner with The Occassio Collective shares. “Pick the room with the most windows for plenty of daylight.”
2. Optimize vertical space
When floor space is limited, look up. Marcy with The Unpopular Mom recommends taking advantage of vertical space to in turn save space. “Create a space that will help to increase your productivity, your focus, and your drive,” Marcy shares. “Floating shelves can help save space and give more options when selecting your workspace.” By using vertical space, you can choose corners for office spaces. “Build a desk into the nook in the corner of the room, as little work nooks can be a very productive area,” Marcy explains.
3. Multifunctional furniture
In small spaces, furniture needs to be multifunctional. “Create a dual-purpose room to carve out an office space in your home,” Dawn Stewart with Crafidly recommends. “Any room can pull double duty without looking overstuffed with the right furniture and storage. A fold-out desk and a chic sideboard cabinet for storage may be all you need to add an office nook to your family room or bedroom.”
Multifunctional furniture is important for saving space too. “For a small home office, especially when working remotely, choose furniture that saves space and serves multiple purposes,” echoes Nguyen Le, marketing lead for Esevel Marketing. “Pick a small desk with built-in storage to keep your items organized. Consider a wall-mounted desk to free up floor space and make the room feel bigger. Use a foldable chair that you can store away when not in use. Add wall shelves to keep your workspace tidy and efficient. These tips help you stay organized and productive in a small space.”
4. Declutter, organize, and keep it simple
It’s especially important to not overcrowd the space, especially when crafting a small home office. “After working from home for the last six years, the biggest workspace realization I’ve had is that simplicity creates productivity,” Abby Flynn notes. “If you’re anything like me, you’ve been tempted to walk down the office supply aisle and purchase every little knick-knack and organizer for your home office. (It’s tax-deductible, right?!) But at the end of the day, a clean, simplistic home office with a few key pieces that inspire you will actually help you to do your best work,” Flynn explains.
In the same vein, a clutter-free workspace is essential for productivity. “In a small space, less is more,” Brittney Gaddis notes. “We find that clutter makes it difficult to think creatively. Stick with a clean space without a lot of knickknacks. If you are one to like lots of things, find organized ways to house them, such as on shelving around your office space that get them out of the way.”
Nikki Cox echoes this sentiment sharing that intentionality behind your office design assists in keeping your space clutter-free. “In my opinion, the most important thing you can do when decorating a small office space is to declutter what you are planning on putting in there,” Cox explains. “Intentionally choosing items that will add value to your workspace and omitting those that don’t. This alone will significantly reduce the need for lots of elaborate storage solutions and allow you to focus on creating systems for the things that truly matter.”
5. Tech-savvy solutions
Incorporate technology that saves space and improves efficiency. Wireless devices, such as a keyboard and mouse, can reduce cable clutter. A compact printer or an all-in-one device can save valuable desk space as well.
6. Creative storage solutions
Think outside the box when it comes to storage. “If your home office is short on square footage, think of your wall space as the backdrop to a storage haven,” The Working Stay at Home Mom recommends. “There are hundreds of clever wall storage solutions available that can help keep your workspace looking organized and stylish. However, keep in mind that the area in your peripheral vision should be free of clutter when looking at your screen. Too much visual stimulation can lead to a loss of focus and ultimately trample on your productivity.”
7. Flexible layouts
Flexibility is key in a small home office. Opt for furniture on wheels or lightweight pieces that can be easily rearranged. This allows you to adapt your workspace as your needs change.
“Working in a smaller space like an RV has taught me the value of optimizing every inch,” shares Tina Goyzueta. “I set up an outdoor tent equipped with a comfortable chair and table, creating a perfect workspace in nature’s embrace. Additionally, I rely on a versatile lap desk that allows me to work from virtually anywhere, be it inside the RV or while enjoying the great outdoors,” Goyzueta notes. “This flexibility not only boosts my productivity but also ensures I have a refreshing change of scenery whenever I need it.”
8. Don’t sacrifice style
There’s no reason you can’t make the most of a small office while keeping it a space tailored to you and your preferences. “Create a focal point with your desk space, allowing any adjacent zones to complement it in usability and design,” Jennifer with Our Blog Life shares. “Focus on functional items that double as decor, investing in items that solve an organizational problem while adding to your aesthetic. Add houseplants wherever you can — the benefits are endless.”
Crafting your perfect small-space home office
Designing a home office in a small space requires creativity and careful planning, but it’s entirely achievable. By using multifunctional furniture, keeping the area organized, and getting creative with storage solutions, you can create a workspace that is both functional and inspiring. With these expert tips, tricks, and ideas, you can transform even the smallest corner of your home into a thriving workspace.
Wesley Masters works on Redfin’s stellar Content Marketing team as a content writing specialist. She has been with Rent. since 2023 and her previous experiences include non-profit communications, graphic design, and content creation. Wesley lives in Atlanta, GA, and loves outdoor walks, hanging out with her loved ones, and finding new recipes to try on Pinterest. Her ideal home is a brownstone with contemporary interiors.