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Image of a relaxing lake -- perfect for an early retirement

For as long as I can remember, I have known that I wasn’t fit for the corporate world.

Like J.D. Roth, the founder of Get Rich Slowly, I am an introvert, not a fan of authority and even less of structure. So even before I graduated college, I had my mind on one big goal: leave the corporate world as soon as possible. I was working for a big IT multinational in business school; those were not the happiest times, but that job allowed me to graduate debt free, with a small nest egg that I immediately invested to buy my first rental property in cash.

I believe real estate is one of the best way to build wealth and make money, since you generate an almost passive income, but it was far from enough to cover my basic living expenses. I started playing with those online savings calculators to see where my savings would take me in 5, 10 or 20 years. It was a revelation.

Do you know that if you make $2,000 and invest 10 percent of your salary at 6 percent for the next 40 years, you will have $400,289 for only $96,000 invested? At a 4 percent withdrawal rate, your nest egg will produce a monthly income of $1,334. Less than the $2,000 you are making today, or the $1,800 you are living on since you are investing 10 percent of your salary, but no small change.

The thing is, I didn’t want to wait for 40 years. Playing with the calculator some more, I found out that if you can live on 25 percent of your salary, to cover your expenses in retirement, you only need to save for 7 years! Living on 25 percent of my salary was a bit of a stretch, so I looked for ways to make more money. I bought a three-bedroom apartment and took in two roommates. I took odd jobs on top of my day job; I was making money tutoring at night and writing for several travel websites on the weekends, catering at weddings and freelancing as a translator. The plan was to retire around age 40, but I was so determined to quit my last job that I considered an alternative: how about leaving the U.K., where I worked, and relocating abroad?

At the time, I was 29 and owned two rentals in France and the U.K. that would cover my expenses in a cheaper country. I had a few investments that could cover the mortgage on the second rental (the first one was paid for) in case of a vacancy. And my freelance income was more than what I made at my day job. It came from half a dozen sources, and the probability of them all drying up at once was slim. I quit my job and took a one way flight to Morocco.

I lived in Casablanca for a year, and started a life of semi-retirement. I would cycle along the oceanfront, study Arabic, spend hours shopping for fresh produce or eating grilled camel at the market, and travel for weeks at a time to get pictures and posts for my travel writing gigs. I loved my time in Morocco but kept thinking about a country I loved even more, Guatemala. I had lived there for three years after business school, and after traveling to 80 countries, it was still one of my favorite. After a short trip there, I knew it would be my next destination. I found a piece of land by a beautiful lake in the northern area of the country, complete with a lovely little house that could become a guest house someday (one of my dreams). I bought it with cash along with with a 90-acre piece of land that I am turning into a residential development.

I have been living there with my boyfriend for almost a year, and after putting quite a bit of cash into house renovations and building a detached room and panoramic terrace, we are living happily on less than $1,000 a month, or $500 each.

Related Content: How to live on less

Here is our budget:

Housing: $0 We bought our property with cash. You can rent a lovely furnished one- or two-bedroom house in Antigua Guatemala or Lake Atitlán, the two favorite retirement spots in the country, for $500 to $700 a month, generally including utilities. For a bigger colonial home, you will have to spend $1,000 to $1,500 per month.

Food: $200 This is pretty high, almost the minimum wage in Guatemala but we like to eat and that includes some imported products we enjoy (like cheese!) and some alcohol. We seldom go out.

Car: $100 We have two old cars that we bought with cash and put about $100 per month in gas.

Electricity: $80 With the house renovations there were drills and tools plugged all day, we occasionally use air conditioning, and pump our water from the lake to cook and shower with an electric pump.

Natural gas: $12 for a 25 lb. container that lasts about a month.

Staff: $300 We have a full time handyman/gardener around the house, who alternates with his girlfriend who comes to clean the house. This is a great perk to living in Guatemala.

Animals: $20 We have a rooster and 10 hens, some turkeys, ducks and roosters. They eat a $20 bag of feed per month, we eat $40 worth of delicious free-range eggs each month. Win-win!

Internet: $80 We spend $40 each. He pays for a data plan on his iPhone, and I pay for a wireless USB modem. It’s expensive, but we are in the middle of nowhere!

Property taxes: $30

Accountant: $20 We own the house and land as an LLC so we need an accountant.

Random: $150 Once in a while we go out, buy something for the house or go over the grocery budget, but that never comes to $150 though, but if something breaks it could. It is quite complicated to get car parts or any parts around here.

That’s a total of $992 or $496 per person.

On top of that, I spend about $3,000 per year or $250 per month on travel. I fly back to France for a month but stay with my family so apart from a $1,000 ticket I don’t spend a lot, my last trip cost about $2,000 so I still have $1,000 to travel somewhere else, maybe the U.S., by the end of the year.

You may have noticed that I don’t mention healthcare. When I go back to France I get my physical from my doctor, and I do not have health insurance here, just a travel insurance included in my credit card that will repatriate me if something serious happened. This year, I only got a root canal in Guatemala that cost $200.

With the cost of a rental, healthcare and travel back to the U.S. once or twice a year, you could live well here on less than $1,000 per person. Go the extreme early retirement route, and you can live on rice and beans for less than $300, housing included.

But is retiring abroad worth it? I wrote a post recently to compare the costs of early and normal retirement in the U.S. versus abroad, where I concluded that you could either live better than you do for the same price, have a bigger home, some staff, a lovely piece of land with a view for the price of a 500-square-foot condo, or be able to retire years earlier by moving to a cheaper country and living by local standards.

For me, Guatemala meets all my requirement. The weather is mild all year long (they call it the land of eternal spring), people are nice and relaxed, the cost of living is very low and you can find most things you may want or need, from imported tech gadgets to U.S. trained doctors, albeit at a cost. I enjoy my month-long European holiday to visit my family and friends. Since I have been living abroad for the past 10 years anyway, I am used to emailing and Skyping the rest of the year. They visit me occasionally, as well. I could live in France on a similar or slightly higher budget but would not get the same quality of life.

Related Content: Retirement strategies

Where you will spend your retirement is a very personal choice, and for many, being near your family will be on the top of your list. Although if your kids are on the West coast and you are on the East coast, you are just as far away as if you had retired under the Guatemalan sun.

Source: getrichslowly.org

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Reverse Point-of-Sale, Marketing and PR, TPO Products; Random TPO News; Ugly Insurance and Water News

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Reverse Point-of-Sale, Marketing and PR, TPO Products; Random TPO News; Ugly Insurance and Water News

By:
Rob Chrisman

4 Hours, 10 Min ago

While lenders are grappling with steadily increasing Agency repurchase requests, it’s National Donut Day! Someone had better offer those folks at State Farm Insurance a donut… maybe they’ll change their mind about cutting off insuring properties in California. Three thousand miles away, I wonder if Florida home owners should be happy of even having insurance despite it being four times cost of the national average. And good luck insuring anything built near the coast prior to 1992’s Hurricane Andrew. While we’re on the topic of Mother Nature and economics, it’s fine for the Biden Administration, or any politician, to call for more affordable housing, but what about where’s there’s no land or a community limiting development due to running out of water like in Phoenix!? (Today’s podcast can be found here and this week’s is sponsored by Lenders One, one of the largest mortgage co-ops in the country with a diverse mix of 250+ member companies and providers of an end-to-end solution independent mortgage professionals trust to drive profitability and growth. Listen to an interview with nCino’s Ali Maquet and Brett Dooies on why experience-driven automation should matter to financial institutions.)

Lender and Broker Products, Software, and Services

It’s time to schedule your firm’s 2023 MERS Annual Review and e-Annual Report with TENA! Every MERS member is required to complete a MERS Annual Review. If on March 31, 2023, your firm’s count of active MINs was 1,000 or more, then the 2023 MERS Annual Review for your firm must be completed by an independent third party, with the results submitted to MERS not later than December 31st. For significant savings, sign up early for a MERS Annual Review and provide TENA with all of the necessary documentation by August 31st. Avoid the last-minute rush! To ensure that your firm is in compliance, contact TENA today to initiate your firm’s 2023 MERS Annual Review. TENA also offers a full range of MERS reviews, including MERS Data Reconciliation and MERS Document Reviews. TENA Companies, Inc. has been the mortgage industry’s trusted source for Mortgage Quality Control Audit Services and Software since 1982.

“Experience for yourself what NexBank’s Wholesale, Non-Delegated Correspondent, and Delegated Correspondent clients have to say: ‘Everyone from AE to Underwriter and in between is amazing to work with all around.” and “I have been doing this a long time and have done a ton of loans and I finally feel like I found a team that cares about my clients as much as I do.’ NexBank’s goal is to make our TPO clients successful as we continue to roll out new, competitive products –> Announcing NEW pricing improvements on low loan balances to further promote affordable homeownership (< $275K) by introducing a Loan Balance Adjuster on Agency Conforming 30- & 25-year products, with certain restrictions. Plus, Escrow Holdbacks are now Eligible with Conforming Conventional, Mortgage Connect Full Doc and Non-QM, allowing our clients to close more loans in a timely manner. Contact us today. Member FDIC, Equal Housing Lender, NMLS 672886.”

Looking for Marketing and PR Assistance? The Seroka team has you covered! Seroka Brand Development, the mortgage industry’s leading marketing and PR firm, is here to provide the extra resources you need. With over 30 years of industry experience and strong media relationships, Seroka offers a complete turnkey solution to support your marketing and PR efforts. Whether you need project work, a new campaign, or to outsource your whole marketing department, Seroka can help. Seroka’s specialties include content marketing, digital marketing, social media, strategic planning, public relations, and campaign measurement. Its goals are to optimize your marketing spending and drive the best ROI. Seroka excels in boosting SEO, improving engagement, and generating more leads from your target audiences. If you’re stretched thin and need to achieve more with fewer resources, let Seroka Brand Development assist. Contact Seroka today to schedule a call and explore how their team can help you!

“Lenderful Solutions is excited to announce our latest release, with the support of Joe Rinner at Watermark Capital Reverse, a POS Solution specifically to guide borrowers interested in a Reverse Mortgage. This solution gives convenience and control to borrowers interested. A borrower can learn about their options, shop displayed calculate benefits based on their situation, determine their preferred payment options, and apply for a reverse mortgage in minutes. Data is delivered to lenders reverse mortgage LOS systems. Lenderful Solutions adding to our ability to digitize the process, so Loan Officers can continue to humanize the experience. Use automation tools like AVM, VOE, VOA, VOI, and Credit Pull to offer borrowers insurance for Home or Auto… without ever leaving your website. Our strong lineup of solutions including Mortgage with PreQual Express, Home Equity/HELOC, HE Turbo, Construction, Commercial, Consumer and more… clicking here or contacting us at (313) 910-3070.”

Wholesale and TPO News

Sometimes news from third party investors falls into neat categories, like conventional conforming changes, or government (FHA &VA & USDA) updates. Sometimes the news doesn’t, so with that in mind, let’s see who is doing what regarding policy and procedure changes.

United Wholesale Mortgage (UWM) announced PA+, a service that offers an additional level of loan processing support when needed. When an LO or processor orders PA+, they’ll get a dedicated UWM Loan Coordinator who will work with them and their borrower to help ease some of the most time-consuming parts of the loan process, from import to closing. UWM also announced UWM Portal, a bi-directional API that lets independent mortgage brokers who work with UWM seamlessly link their Loan Origination System (LOS) platform to UWM’s EASE system, further helping to streamline the entire loan process. This will allow brokers to sync their data to their LOS and eliminate the need to manually reconcile information during the loan.

On 5/25/2023, with Amendment No. 3 to DR-4699, FEMA granted individual assistance to Butte County impacted by California flooding.

After a thorough review of the most common reasons for the IRS rejection of the new Form 4506-C, AmeriHome provides some best practices and tips for successfully executing the new IRS Form 4506-C as another resource for its Sellers. See AmeriHome Product Announcement 20230503-CL for details.

Brokers, Kind Lending has extended CalHFA loan options to California homebuyers. Kind Lending offers CalHFA Conventional, Government and MyHome Assistance.

Rocket Pro TPO Partners have its new Home Equity Loan1 (HEL) product, helping clients achieve their financial goals. Clients can tap into their home equity without adjusting their first mortgage structure. Compare a Home Equity Loan to a cash-out refi with our HEL vs Cash-Out Calculators on PathfinderSM by Rocket.

Leverage another great tool from Rocket Pro TPO to win more business and potentially save clients thousands on their mortgage. Credit Upgrade, Rocket Pro’s free rapid rescore program, really works. In the first quarter of 2023, Credit Upgrade saved clients over $4 million on mortgage payments.

United Wholesale Mortgage (UWM) announced the roll out of Six Fixed-Rate Jumbo Products. Brokers now have access to more competitive jumbo pricing, along with transparent investor guidelines and loan qualifications. Additionally, UWM expanded its Conventional 1 percent Down product to 80 percent AMI. UWM supports independent mortgage brokers with industry-leading training, technology, and service.

Pennymac Correspondent Group posted three new announcements: Announcement 23-37: Navigating Form 4506-C: Insights and Tips for Completing, and Announcement 23-38: Fannie Mae SEL 2023-02 Required Use of Condo Project Manager.

Citi Correspondent Lending implemented changes to the CRA Schedule, effective for Best Effort locks completed on/after Tuesday, May 23, 2023. Two changes are being made related to MSA 35004 – Nassau. Agency LMICT premium is increasing to 1.50 from 1.00. MSA 35004 is being added to the Non-Agency Best Efforts grid.

Capital Markets

We had a massive amount of data for markets to digest yesterday, which, along with news that the House and Senate passed the bill to raise the debt ceiling, pushed investor sentiment and ultimately price movement toward the third consecutive day of gains (rates down) in the bond markets. That comes as a welcomed relief considering that mortgage rates jumped again last week to hit new year-to-date highs, according to the latest Primary Mortgage Market Survey from Freddie Mac.

In terms of economic data, the May ISM Manufacturing Index fell further into contractionary territory, the seventh consecutive month of general contraction in manufacturing activity. The Production Index climbed back into expansionary territory, giving some hope for an improvement in the coming months. The ADP Employment Change Report for May showed an estimated 278k jobs were added to private-sector payrolls, well above 160k expectations on the heels of a downwardly revised 291k in April. Job growth is still strong, but pay growth is slowing. The weekly initial jobless and continuing claims report both corroborated the ongoing strength in the labor market as businesses overall remain reluctant to cut staff size in large numbers, leaving the level of initial jobless claims well below what is typically seen in a recession environment.

The Revised Q1 Productivity and Unit Labor Cost report showed productivity was weak in the first quarter (declining 2.1 percent, better than expected), and unit labor costs were up 4.2 percent versus the advance estimate of up 6.3 percent. Total construction spending increased 1.2 percent month-over-month in April, better than expected after increasing 0.3 percent in March. Continued weakness in new single-family construction was overshadowed by strength in private and public nonresidential spending. On a year-over-year basis, total construction spending was up 7.2 percent.

We are 50 percent through the Signature and Silicon Valley Bank portfolio liquidations, at least in specified pools, and according to BofA’s Bill Bekery, by nearly every metric these have been “a resounding success in terms of execution, clearing level, and both dealer and customer participation. Given the performance and execution of the last ‘reverse inquiry’ auction, we would expect that an announcement is imminent for round two of reverse inquiry, which will further bring us closer to the end date of this sell program. 20-year pools have stood out to us as a standout performer, with payups outperforming. There has been strong customer demand for pools such as 100 percent Florida, Texas, and low FICO pools.

However, many other specified sectors are trading less well: REIT demand generally has underwhelmed as of late, and $200-275k balance pools as well as FICO/LTV/investor have struggled to find footing in production coupons. Loan balance 6.5 percent pools remain somewhat of a no-mans-land sector. 70 percent of Agency MBS outstanding is held by the Fed and banks, both of which are net selling. That continues to be an area of concern for mortgages, as does impatience by monetary policymakers regarding the lagged effects of 500 basis points of rate hikes and/or a resumption of the banking crisis resulting in additional bank portfolio liquidations.”

Today brings the all-important May jobs report. Nonfarm Payrolls increased by 339k versus expectations of +230k, up from the prior month of +253k, while the unemployment rate jumped from 3.4 to 3.7 percent when it was seen ticking up to 3.5 percent. Hourly earnings were +.3 percent, as expected, year over year +4.3 percent. There are no other economic releases of note scheduled for today. Despite yesterday’s rally to open June, the 2-year U.S. Treasury yield increased by 33 basis points over the month of May and the 10-year yield increased by 19 basis points. After the solid employment data we begin the day with Agency MBS prices worse about .125, the 10-year yielding 3.64 after closing yesterday at 3.61 percent, and the 2-year up at 4.40.

Employment and Transitions

“Equity Resources is independent and family-owned mortgage banker that is very proudly celebrating our 30th anniversary this year! While many lenders are reducing staff and are uncertain about their future, we are creating opportunities for our award-winning loan officer team! We are actively seeking career-focused loan officers throughout our footprint states. Equity Resources is currently licensed in 19 states along the east coast and mid-west. We are an agency direct lender that offers an exceptional marketing platform for our loan officers, including a media and video production team. We offer a full suite of loan products and programs (including several specialty lending programs.) If you are frustrated with the direction of your mortgage banking career and not getting the support you deserve; or simply would like to have a conversation about “Why Equity Resources”, please contact Tom Piecenski, Executive Vice President of Sales and Development (614.327.5353).”

A Louisiana based full-service, independent mortgage banker averaging $1 billion in production annually is searching for a proven retail sales leader to run all business development initiatives. The Sales, Recruiting, and Marketing departments will report directly to this head of business development role, and the role will report directly to the CEO. The ideal candidate will have a demonstrated track record of hiring and managing multiple production offices across several states. The IMB is well capitalized, has agency direct approvals, offers niche products, significant technology advancements and a world-class operations team with experienced, tenured sales and fulfillment employees. For confidential consideration, please email confidential resume to Chrisman LLC’s Anjelica Nixt.

The Loan Store, Inc. announced that Phil Shoemaker has assumed the role of chief executive officer. Shoemaker was named incoming CEO on April 7 when it was announced that The Loan Store had entered into a definitive agreement to acquire certain assets of Homepoint’s wholesale originations channel. Mark Lefanowicz, who has served as The Loan Store’s president and CEO since 2019, will continue as chairman of the board.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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With a name like “NJ Lenders Corp.,” there’s no question who they’re focused on; folks in the Garden State!

What’s more interesting is the fact that something like 70% of their mortgage loans are derived from previous customer referrals.

In other words, they constantly get recommended by friends and neighbors, instead of having to rely solely upon advertising.

And when you focus so heavily on one geographical area, you definitely want to get it right.

So far, they seem to be accomplishing their goals, as evidenced by their thousands of 5-star reviews. Read on to learn more.

NJ Lenders Corp. Fast Facts

  • Retail, direct-to-consumer mortgage lender
  • Offers home purchase loans and refinances
  • Founded in 1991, headquartered in Little Falls, NJ
  • Funded roughly $5.5 billion in home loans last year
  • More than 80% of business done in home state of New Jersey
  • Also active in New York, Massachusetts, and Florida
  • Currently licensed in 14 states and the District of Columbia

NJ Lenders Corp. is a direct-to-consumer mortgage lender with branches in three states, mostly located in New Jersey.

They got their start way back in 1991, which if you’re not keeping track is more than 30 years ago.

Since that time, they’ve grown from a modest single office into a multi-billion-dollar mortgage originator.

They’ve closed more than 100,000 mortgage loans, with loan volume exceeding $40 billion.

Last year, they funded a solid $5.5 billion in home loans, which was probably their biggest annual production on record.

Business was split nearly equally between purchase loans and mortgage refinances.

At the moment, they’re licensed in 16 states, including Colorado, Connecticut, Delaware, Florida, Georgia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, along with Washington D.C.

As noted, they are laser-focused on New Jersey, with the state accounting for more than 80% of overall volume.

But they’re also active in the states of New York, Massachusetts, and Florida, and originate home loans across much of the East Coast.

They were the fifth largest mortgage lender in the state of New Jersey, only topped by Rocket Mortgage, Wells Fargo, Chase, and loanDepot.

How to Apply for a Mortgage with NJ Lenders Corp.

While they have physical branches in New Jersey, New York, and Pennsylvania, there’s a good chance you’ll work remotely with a loan officer.

The good news is they have a solid website and loan application process, which is mostly paperless.

In fact, you can download their free smartphone app and complete much of the process from the palm of your hand.

Their digital app is powered by SimpleNexus, one of the leaders in the fintech space.

It allows you to complete the application digitally from any device, eSign documents, upload paperwork, and snag same-day pre-approvals.

Once your loan is submitted, you’ll gain access to secure, real-time updates as your loan progresses forward.

NJ Lenders Corp. said they built a better operations platform by keeping 95% of their files in-house.

This allows them to control the entire underwriting and loan closing process, improving both efficiencies and speed.

If you’re a home buyer, you can take advantage of their “Home Buyer’s Edge” program, which goes beyond a basic mortgage pre-qualification.

It provides a full credit approval that involves a complete review of your income, assets, and credit by a loan underwriter.

This gives home sellers peace of mind your offer can actually close in the event of a bidding war.

All in all, they appear to offer the latest tech and a solid operations setup to keep loans moving quickly to the closing table.

To get started, simply head over to their website and click on “get a rate quote” or “find a loan officer.”

Home Loan Programs Offered by NJ Lenders Corp.

  • Home purchase loans
  • Refinance loans: rate and term, cash out, streamline
  • Home renovation loans
  • Conforming loans
  • Jumbo loans
  • FHA loans
  • VA loans
  • USDA loans
  • First-time home buyer loans
  • Non-warrantable condo financing
  • Reverse mortgages
  • Interest only home loans

NJ Lenders Corp. offers an excellent selection of loan programs, including harder-to-find options like interest-only home loans and non-warrantable condo financing.

You can get a home purchase loan, renovation loan, or refinance loan, including a cash out refinance.

They offer the full suite of government loans (FHA/USDA/VA), along with both conforming loans and jumbos.

And they’ve got first-time home buyer loans with low down payment requirements, as well as reverse mortgages for seniors.

You can get a home loan on all major property types, from single-family homes to condos/townhomes and investment properties.

NJ Lenders Corp. Rates

The only area where more information would be helpful is pricing.

They don’t publicize their mortgage rates online, nor is there a lender fee section on their site.

This means you’ll need to fill the mortgage rate quote request form on their website, or simply call in to get connected with a loan officer.

Generally, it’s best to get pricing and check eligibility before completing a loan application anyway.

NJ Lenders Corp. does say their goal has always been to offer competitive mortgage rates and fees, and they wrote “best mortgage rates” on their website homepage.

So as an independent mortgage banker there’s a good chance they offer low rates. But always take the time to shop around, and compare offers.

Also inquire about any fees charged, such as a loan origination fee or separate costs for underwriting and processing, if applicable.

NJ Lenders Corp. Reviews

On Experience.com, NJ Lenders Corp. has an excellent 4.88-star rating out of a possible 5 from more than 20,000 customer reviews.

You can filter by loan officer on that site if you want to fine-tune your search.

Over at Zillow, it’s a superior 4.98-star rating from 3,300+ reviews, pretty much as close to perfection as you can get.

Many of those reviews indicate that the interest rate and/or fees and closing costs were lower than expected.

They’ve also got a 4.8-star rating on Google from more than 600 reviews.

Lastly, while not accredited with the Better Business Bureau (BBB), they do hold an ‘A+’ rating based on complaint history.

To summarize, NJ Lenders Corp. has thousands of excellent customer reviews, uses the latest tech, and has tons of loan programs to choose from.

The only real question mark relates to loan pricing. If it’s also good, they could be an excellent choice for either a home purchase or a refinance.

NJ Lenders Corp. Pros and Cons

The Good

  • Can apply for a home loan online or via smartphone
  • Many physical branches in the state of New Jersey
  • Offer a digital loan process powered by SimpleNexus
  • Lots of loan programs including interest-only, reverse, etc.
  • Offer fully underwritten credit approvals to give home buyers an edge
  • Thousands of excellent customer reviews across ratings websites
  • A+ BBB rating
  • Free smartphone app
  • Free mortgage calculators, guides, and glossary online

The Maybe Not

  • Only licensed in 16 states (primarily East Coast)
  • Do not publicize mortgage rates or lender fees

(photo: Bobby Hidy)

Source: thetruthaboutmortgage.com

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Chelsea Dehner

  • Published Oct 8, 2019
    – [Updated Apr 26, 2021]
  • 1 min read

  • Sources

  • The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is “as is” and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service.

    • When we think of things that will save the environment we think of taking the bus to work or buying local food — both expensive actions. Yet going green doesn’t have to cost you a ton of time or money. In fact, many of the eco-smart habits also help you save money by reducing excess and getting more use out of old things.

    We all know the phrase: Reduce, Reuse, Recycle. However straightforward it may sound, it can still be hard to incorporate environmentally friendly actions into your everyday. Becoming familiar with the sustainability of every company and brand you support can be time-consuming and difficult. It can be confusing to determine which kinds of plastic can be recycled and which can’t.

    Thankfully, there’s technology out there that can make helping the environment a bit easier — all while saving money. There’s apps that help us monitor our energy and water usage to help us make smarter choices, and apps that make it easy to upcycle old clothes and electronics.

    Check out the infographic below for a full list:

    Chelsea Dehner
    Chelsea Dehner

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    Highlights and Takeaways

    • The average millennial is 35 years old, earns $54,000 per year, and has a net worth (including any home equity) of around $130,000
    • 45% of millennials have student loan debt, with an average balance of $40,600
    • 52% of millennials are homeowners, with a majority of those home purchases occurring over the past 5 years
    • 55% of millennials have children, with a total U.S. birthrate in 2021 of 1.66 children per woman (it takes 2.00 children per woman for the population to replace itself, so we might be in trouble there…)
    • There are simple steps you can take to become better-than-average financially, including focusing on increased income, measuring your monthly cashflows, using tax-advantages investing vehicles, and more.

    The Stats

    I’m a Millennial. Many of you reading this are too. Millennials – also called Gen Y – are people born between 1981 and 1996. The average millennial is currently 35 years old.

    Let’s walk through some vital financial statistics for American millennials. Then we’ll talk about how we can improve our own financial life to become above average.

    Using income data and net worth data from the website DQYDJ, we can see that the average 35-year-old earns $55,000 per year and has a net worth (including home equity) of $130,000.

    If we add in data from this Business Insider article, we also learn:

    • Just under half of American millennials have student loan debt. Roughly 45% of millennials have loans, with an average remaining balance of $40,600.
      • I’m sure this data skews younger. The oldest millennials are 42 years old, while the youngest are 27. Not only have college costs continued to rise in the past 20 years (affecting younger Millennials more than older), but there’s also the plain fact that older millennials have had more time to pay their loans off.
    • According to a RentCafe study, 52% of millennials own a home.
      • 18.2 million Millennials now own, or share ownership in, a home, vs. 17.2 million millennial renters (note: this data looks at the 110 largest American metro areas, thus does not include all millennials)
      • Again, this data likely has an age skew. The chart below shows how millennial homeownership first increased in the early 2000s – when the youngest millennials were still in elementary school. The oldest millennials have had a long time to buy.
      • That said, 7.1 million millennials became homeowners in the past 5 years (including yours truly). More and more younger millennials are looking to purchase homes.
      • An important caveat…home ownership might be the so-called “American Dream,” but it’s not mathematically optimal for all people, nor a great investment in general. I’m a huge proponent that your primary home is “a home first, an investment second.” You need a place to raise a family. You don’t need a 7% real return on investment.
    • According to an older (2019) Pew Research study, fewer millennials are starting families than previous generations. Pew found that 55% of millennial women had had a live birth, compared to 62% of Gen X women and 64% of Baby Boomer women in the same age range.
      • What does this have to do with personal finance?
      • First, kids are expensive. Having kids is financially challenging. And not having kids can be a symptom of an already-challenging financial life e.g. “I’m not having kids because I couldn’t afford to give them a good life,” or, “My goddamn student loans were so high we delayed having kids by 5 years.”
      • Second, birthrates drive economies. Children grow into adults – who work, consume, and oil the economic machine. Personal finance is tied to that economy.

    How to Be a Better-Than-Average Millennial…At Least Financially

    What can you do to rise above the average?

    First, adopt a stoic mindset. If you’re “worse” than average, you’re not a bad person. And whatever happened in the past – those events that brought you to this moment – is immutable. You can’t change it. All you can do is forge on and blaze a better trail ahead.

    So let’s blaze that trail.

    Salary and net worth are easy-to-measure metrics, so let’s start there.

    Improving Your Salary

    One of the worst pieces of financial advice I see all too often is, “Did you consider increasing your income?” …as if there are raises hiding in your office cabinets if only you’d look for them!

    The better advice, instead, is encouragement that you can increase your income. You just need the right approaches and tactics. What are some examples?

    • Talk to your manager. Is there a path for increased pay in your role or at your company? Ask them: what does that path look like? Get them to agree that if you follow the path, a pay raise will follow.
    • More education. Maybe there isn’t a positive path at your current job. It’s a dead end. You need to find ways to get on a better path, and further education is highly effective. BUT! You need start with the end in mind. Get a degree or certification that will truly further your career and your income. Computer science? Yes. Underwater basketweaving? Not so much.
    • Look outside your current role, too. One of the fastest ways to higher pay is by switching jobs. Or using a potential job switch to negotiate a raise.
    • Side hustles can work. But choose carefully. I know too many Uber drivers who, if they ran the numbers, would realize their side hustle barely pays them minimum wage.
    Getting some inflation-adjusted raises would help, too…

    Increasing Your Net Worth

    Salary is a one-trick pony. All it measures is incoming cashflow in. Net worth is far more comprehensive, as it’s a function of:

    • inbound cashflow
    • outbound cashflow
    • changes in asset values (e.g. investment growth)

    There are many ways to increase your net worth, most of which are within your control today (unlike increasing your salary, which might take years to successfully execute).

    • Learn from the #1 lesson I’ve found from the various financial experts I’ve interviewed on my podcast:
    • Measure your cashflow – a.k.a. budgeting. You can’t manage what you don’t measure. The only way you’ll ever decrease your spending is if you measure your spending. You need a budget – it can be detailed, or simple. But you can’t not have a budget.
    • Follow the financial order of operations. Learn how to prioritize your financial to-do list.
    • Put in more “work” to combat financial disorder. You’ll need to read this article for context.
    • Remove the negatives. Personal finance is a “negative art.” Increasing your net worth is more about avoiding mistakes than taking huge steps forward.
    • Bucket your money, then put it to work. Determine the timeline for the various expenditures in your life, then invest the money you don’t need in the short term.
    • Take advantage of tax advantages and “free money,” like 401(k) or Roth IRA accounts.

    Housing and Kids

    How can you be “better-than-average” in terms of housing and children?

    If you’re thinking, “Homeowner plus 3 kids is better than renter with zero kids,” I think you’re doing it wrong. Instead, consider the financial (and more importantly, non-financial) acumen that goes into making those decisions.

    For example, I think rent vs. buy calculators – like this one from Nerdwallet – are fantastic tools. If the math points you toward renting, then rent. There’s no race to be a homeowner, nor do I think homeownership is intrinsically good. “Better than average” doesn’t apply here.

    But I think it’s more important to look yourself in the mirror and be honest with answers like:

    • How many years do I plan on living here?
    • Do I love this house? This neighborhood? This school district?
    • If this home never appreciates in value, am I ok with that?
    • Or the alternative: Since rent doesn’t build equity, am I ok “throwing my money away” in exchange for flexibility and less responsibility?

    Children are even more personal and less financial. The only major financial question, in my opinion, is: do we have the financial means to provide for this child? Every other important question is personal.

    Again, there’s no such thing as “better than average.” Instead, I see child-rearing in a binary way: are you giving your children a good home? Or not?

    If you are, then you’re doing it right. Whether you have 10 kids or 1, you need to give them a good home. What’s a “good home” vs. a “bad home?” Everyone’s opinion will differ. But you know it when you see it.

    Millennials are getting their financial life in order. It’s a wonderful thing. And through smart, patient personal finance decisions, you can carry on to become a “better-than-average” financial millennial. Investing in knowledge is a great place to start.

    Thank you for reading! If you enjoyed this article, join 6000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.

    -Jesse

    Want to learn more about The Best Interest’s back story? Read here.

    If you prefer to listen, check out The Best Interest Podcast.

    Source: bestinterest.blog

    Apache is functioning normally

    Table of Contents
    show

    Highlights and Takeaways

    • The average millennial is 35 years old, earns $54,000 per year, and has a net worth (including any home equity) of around $130,000
    • 45% of millennials have student loan debt, with an average balance of $40,600
    • 52% of millennials are homeowners, with a majority of those home purchases occurring over the past 5 years
    • 55% of millennials have children, with a total U.S. birthrate in 2021 of 1.66 children per woman (it takes 2.00 children per woman for the population to replace itself, so we might be in trouble there…)
    • There are simple steps you can take to become better-than-average financially, including focusing on increased income, measuring your monthly cashflows, using tax-advantages investing vehicles, and more.

    The Stats

    I’m a Millennial. Many of you reading this are too. Millennials – also called Gen Y – are people born between 1981 and 1996. The average millennial is currently 35 years old.

    Let’s walk through some vital financial statistics for American millennials. Then we’ll talk about how we can improve our own financial life to become above average.

    Using income data and net worth data from the website DQYDJ, we can see that the average 35-year-old earns $55,000 per year and has a net worth (including home equity) of $130,000.

    If we add in data from this Business Insider article, we also learn:

    • Just under half of American millennials have student loan debt. Roughly 45% of millennials have loans, with an average remaining balance of $40,600.
      • I’m sure this data skews younger. The oldest millennials are 42 years old, while the youngest are 27. Not only have college costs continued to rise in the past 20 years (affecting younger Millennials more than older), but there’s also the plain fact that older millennials have had more time to pay their loans off.
    • According to a RentCafe study, 52% of millennials own a home.
      • 18.2 million Millennials now own, or share ownership in, a home, vs. 17.2 million millennial renters (note: this data looks at the 110 largest American metro areas, thus does not include all millennials)
      • Again, this data likely has an age skew. The chart below shows how millennial homeownership first increased in the early 2000s – when the youngest millennials were still in elementary school. The oldest millennials have had a long time to buy.
      • That said, 7.1 million millennials became homeowners in the past 5 years (including yours truly). More and more younger millennials are looking to purchase homes.
      • An important caveat…home ownership might be the so-called “American Dream,” but it’s not mathematically optimal for all people, nor a great investment in general. I’m a huge proponent that your primary home is “a home first, an investment second.” You need a place to raise a family. You don’t need a 7% real return on investment.
    • According to an older (2019) Pew Research study, fewer millennials are starting families than previous generations. Pew found that 55% of millennial women had had a live birth, compared to 62% of Gen X women and 64% of Baby Boomer women in the same age range.
      • What does this have to do with personal finance?
      • First, kids are expensive. Having kids is financially challenging. And not having kids can be a symptom of an already-challenging financial life e.g. “I’m not having kids because I couldn’t afford to give them a good life,” or, “My goddamn student loans were so high we delayed having kids by 5 years.”
      • Second, birthrates drive economies. Children grow into adults – who work, consume, and oil the economic machine. Personal finance is tied to that economy.

    How to Be a Better-Than-Average Millennial…At Least Financially

    What can you do to rise above the average?

    First, adopt a stoic mindset. If you’re “worse” than average, you’re not a bad person. And whatever happened in the past – those events that brought you to this moment – is immutable. You can’t change it. All you can do is forge on and blaze a better trail ahead.

    So let’s blaze that trail.

    Salary and net worth are easy-to-measure metrics, so let’s start there.

    Improving Your Salary

    One of the worst pieces of financial advice I see all too often is, “Did you consider increasing your income?” …as if there are raises hiding in your office cabinets if only you’d look for them!

    The better advice, instead, is encouragement that you can increase your income. You just need the right approaches and tactics. What are some examples?

    • Talk to your manager. Is there a path for increased pay in your role or at your company? Ask them: what does that path look like? Get them to agree that if you follow the path, a pay raise will follow.
    • More education. Maybe there isn’t a positive path at your current job. It’s a dead end. You need to find ways to get on a better path, and further education is highly effective. BUT! You need start with the end in mind. Get a degree or certification that will truly further your career and your income. Computer science? Yes. Underwater basketweaving? Not so much.
    • Look outside your current role, too. One of the fastest ways to higher pay is by switching jobs. Or using a potential job switch to negotiate a raise.
    • Side hustles can work. But choose carefully. I know too many Uber drivers who, if they ran the numbers, would realize their side hustle barely pays them minimum wage.
    Getting some inflation-adjusted raises would help, too…

    Increasing Your Net Worth

    Salary is a one-trick pony. All it measures is incoming cashflow in. Net worth is far more comprehensive, as it’s a function of:

    • inbound cashflow
    • outbound cashflow
    • changes in asset values (e.g. investment growth)

    There are many ways to increase your net worth, most of which are within your control today (unlike increasing your salary, which might take years to successfully execute).

    • Learn from the #1 lesson I’ve found from the various financial experts I’ve interviewed on my podcast:
    • Measure your cashflow – a.k.a. budgeting. You can’t manage what you don’t measure. The only way you’ll ever decrease your spending is if you measure your spending. You need a budget – it can be detailed, or simple. But you can’t not have a budget.
    • Follow the financial order of operations. Learn how to prioritize your financial to-do list.
    • Put in more “work” to combat financial disorder. You’ll need to read this article for context.
    • Remove the negatives. Personal finance is a “negative art.” Increasing your net worth is more about avoiding mistakes than taking huge steps forward.
    • Bucket your money, then put it to work. Determine the timeline for the various expenditures in your life, then invest the money you don’t need in the short term.
    • Take advantage of tax advantages and “free money,” like 401(k) or Roth IRA accounts.

    Housing and Kids

    How can you be “better-than-average” in terms of housing and children?

    If you’re thinking, “Homeowner plus 3 kids is better than renter with zero kids,” I think you’re doing it wrong. Instead, consider the financial (and more importantly, non-financial) acumen that goes into making those decisions.

    For example, I think rent vs. buy calculators – like this one from Nerdwallet – are fantastic tools. If the math points you toward renting, then rent. There’s no race to be a homeowner, nor do I think homeownership is intrinsically good. “Better than average” doesn’t apply here.

    But I think it’s more important to look yourself in the mirror and be honest with answers like:

    • How many years do I plan on living here?
    • Do I love this house? This neighborhood? This school district?
    • If this home never appreciates in value, am I ok with that?
    • Or the alternative: Since rent doesn’t build equity, am I ok “throwing my money away” in exchange for flexibility and less responsibility?

    Children are even more personal and less financial. The only major financial question, in my opinion, is: do we have the financial means to provide for this child? Every other important question is personal.

    Again, there’s no such thing as “better than average.” Instead, I see child-rearing in a binary way: are you giving your children a good home? Or not?

    If you are, then you’re doing it right. Whether you have 10 kids or 1, you need to give them a good home. What’s a “good home” vs. a “bad home?” Everyone’s opinion will differ. But you know it when you see it.

    Millennials are getting their financial life in order. It’s a wonderful thing. And through smart, patient personal finance decisions, you can carry on to become a “better-than-average” financial millennial. Investing in knowledge is a great place to start.

    Thank you for reading! If you enjoyed this article, join 6000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.

    -Jesse

    Want to learn more about The Best Interest’s back story? Read here.

    If you prefer to listen, check out The Best Interest Podcast.

    Source: bestinterest.blog

    Apache is functioning normally

    By Mike Piper 8 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 January 10, 2014.

    People often ask me to point them to a decent online retirement planning calculator. I never do.

    You see, I don’t trust such calculators.

    It’s not that their math is wrong. (At least, not usually.) The problem is that their calculations are often based on shoddy assumptions and unknowable variables.

    You Know What They Say about Assuming…

    For example, what rate of return does the calculator assume for your portfolio? Is it reasonable? Or, perhaps, was the calculator programmed to assume that future returns will equal past returns (thereby ignoring the possibility that the U.S. economy won’t have the same explosive growth over the next century that it did over the last)?

    And what assumptions does the calculator make about future tax rates? From what I’ve seen, most calculators assume that either:

    1. All income will be taxed at a flat rate (usually 25% or 28%), or
    2. Tax brackets will continue to look the same as the 2013 tax brackets all the way into the future.

    While I certainly don’t know what tax rates will look like three decades from now, I doubt that either of one of those assumptions will turn out to be correct.

    And does the calculator account for sequence of returns risk? A portfolio averaging a 5% annual return is very different from earning a 5% return every year. If the calculator doesn’t account for that fact, it’s going to significantly underestimate the amount of money you’ll need to retire safely.

    What’s Better than an Online Calculator?

    If you’ve taken the time to educate yourself about investing, then you probably don’t need an online calculator. A simple excel spreadsheet will function at least as well. (And you get to choose your own assumptions!)

    Alternatively, if you haven’t taken the time to learn about investing, there’s no way for you to judge whether the assumptions that went into the calculator’s projections are reasonable.

    In other words, there are two routes you can take:

    1. If you want to be a do-it-yourself investor, super. But rather than rely on online calculators, you’ll need a deeper level of understanding if you want to be successful.
    2. If you don’t want to go it alone, that’s fine too. But in that case, an online calculator isn’t what you need. What you need is a qualified financial advisor.

    In my opinion, such calculators are only useful for young investors who are so far away from retirement that none of the relevant variables are known yet. In other words, a completely blind guess from a calculator is almost as good as one from an advisor.

    About the Author: Mike Piper writes at Oblivious Investor, where he provides plain-English explanations of topics like Roth IRA rules and 401k rollovers.

    Related Posts

    Source: biblemoneymatters.com

    Apache is functioning normally

    Originally founded as Social Finance in 2011 to help borrowers manage student loan debt, SoFi started offering mortgages in 2014. Today, the company has funded more than $50 billion in loans, which include everything from wedding loans to auto loan refinancing. The company offers a wide range of services including investing, credit cards and checking accounts for more than 4 million members. Those interested in and eligible for a mortgage can prequalify online in less than two minutes. The lender typically issues conditional approvals in one to two business days, with closings on purchases currently averaging 30 days.

    Breakdown of SoFi overall score

    • Affordability: As an online lender, SoFi’s mortgage rates are very competitive. Notably, you’ll pay a flat lender fee instead of a percentage-based fee. Depending on the price of your home, this might mean you save some money.
    • Availability: SoFi lends to borrowers in the majority of states in the U.S. It has limited mortgage options, however, and requires a higher down payment (unless you’re a first-time homebuyer).
    • Borrower experience: SoFi is a membership-driven company that does business primarily online, so you can expect convenience when working with this lender. You’ll need to become a member to take full advantage of some of its perks, however.

    Affordability: 5/5

    SoFi updates its 10-year, 15-year, 20-year and 30-year APRs daily on its website. All publicly advertised rates assume you’re making a 20 percent down payment, however. To get loan offers tailored to your situation, you’ll need to provide some contact information and other details via an online form.

    SoFi charges a $1,495 administration fee, according to a company spokesperson, but SoFi members get $500 off this cost. (Membership is free.)

    Note: You can lock in your rate with SoFi for 90 days at the time you’re preapproved. However, if you don’t enter into a purchase agreement by day 60 of the 90-day window, you’ll be subject to a $250 fee. This’ll be refunded at closing. On the plus side, if you do sign a purchase agreement by day 30 of the 90-day period, you’ll get a 0.125 percent further discount on your rate.

    Availability: 5/5

    While SoFi is licensed to lend mortgages in most states, it only offers conforming and non-conforming (jumbo) conventional loans; it doesn’t offer government-backed products like FHA loans. To qualify, you’ll need a credit score of at least 620 and a debt-to-income (DTI) ratio of no more than 50 percent. If you’re an eligible first-time homebuyer, you can get a conventional loan for as little as 3 percent down. If it’s not your first home, however, you’ll need to put down 5 percent, at minimum.

    Borrower experience: 4.7/5

    SoFi has been providing mortgages since 2014, originating more than $6 billion in loan volume on that front to date. While the company isn’t accredited by the Better Business Bureau, it does have an A+ rating from the organization, along with “Great” reviews from Trustpilot.

    SoFi is a digitally-focused company, and its mobile app is in the top 100 finance apps in the Apple App Store. You can complete the entire application for a mortgage online; there’s also a Home Loan Help Center with calculators, insights into local housing markets and other information to help with the home-buying process. If you need help with your loan at any point, you can call 833-408-7634 Monday through Friday from 8 a.m. to 8 p.m. CT, or Saturday, 10 a.m. to 2 p.m. CT.

    Refinancing with SoFi

    You can refinance your current mortgage with SoFi. With a traditional refinance, you only need to have 5 percent equity in the home. For a cash-out refinance, you’ll need at least 20 percent equity.

    The company also offers student loan cash-out refinances, which allow you to pay off your student debt and refinance your mortgage at the same time. You’ll need to do the math to determine if that move would actually save you money in the long run. Existing SoFi members can save $500 on refinancing costs.

    Alternatives to SoFi

    Methodology

    Bankrate’s expert editorial team collects lender information through a variety of methods. We contact lenders directly, and we also turn to regulatory filings and to assessments by third parties. Our research takes into account three main factors – affordability, availability and borrower experience.

    Bankrate’s reporters and editors have decades of experience covering the mortgage industry. They’re skilled at gathering information through interviews and by scouring regulatory filings. Bankrate evaluates more than 85 lenders for factors relating to affordability, availability and customer experience, assigning each a Bankrate Score out of five stars. Here’s how we assess each of the categories:

    • Affordability. Loan cost is a deciding factor for many borrowers. We look at two metrics: 1) a lender’s lowest advertised annual percentage rate (APR) based on Bankrate’s sample scenario, which assumes a 740 or higher credit score and a 20 percent down payment, among other factors and 2) established-customer discounts or incentive pricing, when applicable.
    • Availability. Another factor is how quickly your loan application will be approved, and how many loan programs the lender offers. So we evaluate approval and closing timelines and diversity of loan products.
    • Customer experience. Finally, we delve into what it’s like to deal with the lender as a consumer. We look at the lender’s application process and availability of customer service support. We also consider the results of J.D. Power’s 2022 Mortgage Origination Satisfaction Survey.

    Bankrate’s editorial team confirms the accuracy of data at the time of publication. Our team is dedicated to maintaining the timeliness of information – the mortgage industry is changing constantly, so we regularly revisit these reviews to update them.

    Bankrate’s methodology page spells out our rating process in greater detail.

    Source: thesimpledollar.com

    Apache is functioning normally

    How much do you need to retire? The usual suggestion provided by financial planners and retirement calculators is 75% to 85% (roughly 80%) of your pre-retirement income. But is that really enough money to retire with security? Does the 80% rule-of-thumb work under all circumstances, or is it merely a rough approximation to simplify the retirement planning process? Let’s examine these issues more closely…

    Is 80% Of Pre-Retirement Spending A Realistic Budget?

    The basis for the 80% spending rule is that your living expenses are expected to decline once you retire thus your spending should decrease without forcing you to lower your lifestyle. For example, you’ll no longer need to purchase expensive professional clothing and your transportation costs will drop without a daily commute to work. Additionally, your children will probably be grown and out of the house, and you will no longer have to fund your retirement savings. You may even have your home paid in full thus eliminating your mortgage payment and you may be in a lower tax bracket. All these factors indicate your spending should drop during retirement.

    Unfortunately, the issue is not as clear as it might appear on the surface. The analysis above assumes certain types of spending will decrease while all other spending remains the same. That is not realistic. For example, many new retirees like to hit the open road and see the world thus increasing their travel budgets. Similarly, it is the rare retiree who does not face rising health care costs.

    In short, the 80% rule of thumb is a generalization designed to simplify the retirement planning process at the expense of accuracy. It makes many assumptions about your future that may not be true for you. It is no substitute for making a real budget based on your actual plans for retirement, and it could actually jeopardize your financial security. To make this point clear we will examine five reasons why your expenses may actually increase during retirement instead of decrease…

    Longer And More Active Retirements

    People are living longer and more active retirement lifestyles than ever before. Increasing longevity has made 60 the new 40. If you plan an early retirement so you can sail around the world or take frequent wine-tasting trips to France and Italy, the cost of those leisure activities and travel can easily offset any decrease in work-related expenses. Alternatively, if you are planning an early retirement it will mean you need more money to support a longer life of leisure. A longer retirement means you can’t spend as much investment principal each month, and a more active retirement means you need more savings and income to support a more expensive lifestyle.

    Health Care In Retirement

    Health care costs have risen steadily and there is every reason to believe that trend will continue. Additionally, your chances of serious illness or need for expensive medications increases with age. A single medical event can be devastating to your retirement savings if you are not prepared, and if you don’t have long term care insurance then assisted living or nursing home expenses can deplete your retirement savings.

    Other Ways Expenses Could Rise

    Maybe you haven’t paid off your house, or possibly you took out a home equity loan to remodel. The 80% rule-of-thumb assumes you no longer support dependents, but you may still be paying a child’s college expenses. Alternatively, you might be caring for an aging parent who is living in your home. These expenses certainly won’t go away just because you retire.

    Lower Taxes May Be Wrong

    The assumption that your taxes will drop during retirement could be totally incorrect. After all, if your retirement income level is similar to pre-retirement income then where will the tax relief come from? In addition, growing budget deficits at all levels of government combined with entitlement program problems indicates a greater likelihood of rising tax rates rather than falling tax rates. In short, the idea that your tax rate will decrease during retirement may turn out to be just the opposite.

    Spending Statistics Misrepresent Real Spending

    Many research studies have been conducted on the spending patterns of the elderly. One of the more famous studies comes from Ty Bernicke in the Journal of Financial Planning where he cites numbers from the U.S. Department of Labor’s Consumer Expenditure Survey indicating that retirees spend less as they age. A typical 75-year-old spends about half as much as the average 45-to-54-year-old. Overall, spending declines about 25% each decade from age 55 to 75.

    This appears to be conclusive evidence that spending does in fact decline with age during retirement; however, there are a couple of major flaws in the research. The first problem results from these figures failing to include long term care costs. You can solve that problem with insurance but there is no solution to the next problem…

    Bernicke’s analysis was based on a snapshot in time thus it only compares nominal dollar spending and does not adjust for inflation. In other words, it compares the spending habits of a 75 year old today to the spending habits of a 45 year old on the same day. It does not track a 45 year old over a period of 30 years to determine if their spending decreases with time as the study would imply. Instead, it compares the two different groups at a single point in time.

    The problem with this approach is it fails to adjust spending for inflation. A mere 3% inflation will double spending in just 25 years which will more than offset the expected reduction claimed by Bernicke’s research. In fact, it could potentially cause an increase in spending – contrary to what his research would imply.

    A More Accurate Approach For Determining How Much Money You Need To Retire

    In summary, you would be wise to forget the oversimplified rules of thumb when trying to figure out how much money to retire. Your financial security is at stake and you deserve better. Instead, it is far more prudent to develop a realistic budget for your retirement spending based on your actual retirement plans. You don’t have to make it perfect because nobody can predict the future, but you do want to make it as accurate as you can.

    A personal budget for retirement is necessary because your life situation is unique. Only you know the financial situation facing your maturing children and aging parents that might affect your budget. Only you know about your globetrotting plans to travel the world for a decade or two before slowing down. That means you will need to add that expense into your budget for a decade or two before removing it. If you have long term care insurance then add the premiums as an expense into your budget, and if you don’t then build a cushion into your savings for self-insurance. In short, develop a plan for retirement and then develop a budget to reflect your plan.

    When you complete the budgeting process you may be happily surprised to learn you only need 60% of pre-retirement income making you better off than expected – or your dreams could require 140% of pre-retirement income causing a challenge. This is key to your financial security because the difference between these two numbers can either break the back of your retirement savings or make a meager nest egg look plentiful. Because the range of outcomes is so wide and the stakes are so high, the only realistic solution is to replace the rule of thumb with a carefully developed retirement budget based on your unique needs to figure out how much you really need for retirement.

    It is the only prudent thing to do.

    About The Author

    Todd R. Tresidder is a financial coach who blogs about retirement planning, wealth building and investment strategy. He wrote the book How Much Money Do I Need To Retire teaching you how to overcome the hidden problems behind retirement calculators that threaten your financial security.

    Source: goodfinancialcents.com

    Apache is functioning normally

    For those looking to build their dream home, purchasing land is usually the first big step.

    While building a house is far from easy, there are ways for first-time homeowners to make their dreams achievable. Land loans are a great resource, often used in conjunction with a traditional loan. Anyone choosing to build a house is likely to at least consider applying for a land loan.

    A land or lot loan is a great financing option for those who have always dreamed of buying land and building their own home.

    11 Best Banks for Land Loans

    Because land loans typically carry higher interest rates than traditional mortgage loans, it pays to carefully consider the pros and cons of several lenders.

    Below we’ve compiled a detailed list of the banks and credit unions offering the best land loans available today. Whatever lender you choose, be sure to check beforehand that they are fully licensed to provide mortgage loans.

    The Nationwide Mortgage Licensing System (NMLS) is a centralized database of licensed lenders which you can use as a reference.

    1. Atlantic Union Bank

    Atlantic Union Bank offers land loans for both residential lots and undeveloped land. The bank is based in Virginia.

    There are also separate construction loans available for those interested in financing the construction of a residence. Bear in mind that while Atlantic Union has a strong reputation as lenders, having been in business since 1902, they don’t have services like loan calculators, interest rate guidelines, or down payment information on their website.

    For more information on a land loan with Atlantic, you’ll need to call them or visit a local branch to speak about a land loan.

    2. Old National Bank

    Old National Bank is headquartered in Indiana, and has been in operation since 1834. They offer lending products and services to residents of Indiana, Minnesota, Wisconsin, Michigan, and Kentucky. Old National has two different types of financing for land on offer, depending on the size of the property you’re interested in:

    • Lot Loans are designed to finance land purchases of no more than 5 acres, requiring a 20% down payment.
    • Land Loans are for larger property, designed to finance land purchases between 5 and 25 acres. These loans come with a minimum down payment of 35%.

    Both land and lot loans with Old National will carry various interest rates and repayment terms. You can get either of these loan types for both improved and unimproved land, and there is no obligation to immediately begin building once a loan is secured.

    Old National Bank also has around 250 brick-and-mortar locations since merging with First Midwest Bank. If visiting a local branch to speak with a loan officer is your preference, you shouldn’t have to travel too far.

    On the other hand, you also have the option of using Old National’s online loan calculator and online loan application service, if visiting a local branch isn’t convenient.

    3. Mountain America Credit Union

    Mountain America Credit Union is a federally chartered credit union regulated by the National Credit Union Administration (NCUA) and headquartered in Sandy, Utah. They locations across Arizona, Idaho, Utah, Montana, Nevada, and New Mexico.

    Mountain America’s lot loans are available with 85% financing on approved credit, fully amortizing fixed-rate and balloon options, and an easy online application process. The loans are designed to be easily converted to a construction loan, ensuring that you can move forward with your home building plans when you’re ready.

    4. WaFd Bank

    WaFd, or Washington Federal, offers bank loans for improved land up to the value of $700,000, without any immediate obligations to build.

    You can use their online loan calculator to receive an estimate of the interest rates you can expect for a land loan. These estimates are based on your credit score, development plans and the specifications of your desired property.

    The minimum down payments and interest rates will vary depending on your ideal loan term, as well as all the other details of your application.

    You can apply directly for loans through their online portal, as well as in person at a bank branch. Land loans are available from WaFd Bank only in the following states: Washington, Idaho, Nevada, New Mexico, Oregon, Texas and Utah.

    5. Banner Bank

    Banner Bank is active in the states of Idaho, Washington, Oregon, and California. They offer financing for purchasing both improved and unimproved land. Banner allows customers to borrow up to 75% of a property’s purchase price, and they also claim to bring competitive interest rates and fees.

    All loans with Banner Bank are approved in-house, which means a streamlined credit score check and loan approval process.

    If you do apply for a loan with Banner Bank, you also have the option of locking in a fixed interest rate or a flexible rate. Banner also offers financing for construction and personal loans.

    6. California Bank & Trust

    Customers with California Bank and Trust can potentially avail of both a land loan and a construction loan in one. The bank offers financing for up to 60% of the lot purchase value, along with several loan options.

    The option to choose either a single or dual-purpose loan, which can cover both land purchase and construction of a home, makes California Bank & Trust an attractive lender. This is a great option for those looking to save both time and money.

    You can apply for a loan online, over the phone, or in person at a local branch.

    7. Randolph-Brooks Federal Credit Union

    Randolph-Brooks Federal Credit Union is not your typical financial institution. As a financial cooperative, its sole mission is to help members save time, save money, and earn money. Over the years, the credit union has expanded its reach to over 1 million members in Texas and beyond, with a strong presence in Austin, Corpus Christi, Dallas-Fort Worth, and San Antonio.

    With over 60 branches dedicated to serving members and the community, RBFCU offers a range of land loan benefits and features, including term options up to 15 years, free 60-day rate lock, and up to 90% financing.

    And the best part? There are no building requirements from the lender, so you can have the freedom to build your dream home the way you want. Set up automatic payments and let RBFCU help you make your land ownership dreams a reality.

    8. Citizens Bank & Trust

    Citizens Bank & Trust is a North Alabama-based institution that’s committed to providing a hassle-free lending experience. What’s more, you can roll your loan into a permanent one, saving you on closing costs.

    With local decision-making and processing, you’ll get the personalized attention you deserve, while a streamlined application process ensures you get your funds when you need them. You can experience a stress-free borrowing experience when you choose Citizens Bank & Trust for your land loan needs.

    9. Alpine Bank

    Alpine Bank is active in Colorado, offering financial services including land loans. Specifically, they offer loans for both lot and new constructions, with a maximum loan to value amount of 75% for land classified as improved.

    Alpine Bank doesn’t offer lending details on their website. You can use their website to connect with lending experts in your county. You can also reach out for more loan information online, over the phone, or in person at one of their local bank branches.

    10. First Bank & Trust

    If you’re looking to buy land or a lot and build your dream home, First Bank and Trust Company can help. Headquartered in southwest Virginia, with additional locations in Tennessee, North Carolina, and Virginia, the bank is committed to helping you realize your homeownership goals.

    With a range of lot and land loans, you can choose the financing option that’s right for you, while enjoying competitive rates and flexible terms. Whether you’re looking to build your dream home or invest in a piece of land, First Bank and Trust Company has the financing options you need to make it happen.

    11. First Hawaiian Bank

    First Hawaiian Bank offers land loan options designed for those who are ready to buy land but not quite ready to build. With 2- and 3-year terms available and no prepayment penalty, you can secure the land you want without worrying about costly fees. And with interim financing available to purchase a vacant lot at residential pricing, you can lock down the land you need to bring your vision to life.

    Best of all, your FHB land loan can be refinanced into a construction-to-permanent loan with reduced fees, making it easier than ever to get the financing you need to build your dream home.

    land for sale

    What are land loans?

    Land loans are loan products designed to help individuals and businesses purchase land for development. A bank, credit union, or online lender can offer specific loans for those interested in buying land. Land loans are also known as ‘lot loans’.

    Similar to a mortgage loan, land loans provide individuals and small businesses the opportunity to finance the purchase of land for many purposes, such as investment, agriculture, recreation, or development.

    However, because these types of loan are considered riskier for lenders, they typically come with a higher interest rate compared to a mortgage loan. In addition, the conditions of the loan will depend on the type of land being purchased, as well as what the land will be used for.

    Let’s take a closer look at the types of land that a land loan can help finance.

    Types of Land Classification

    Your chances of obtaining financing for land will depend partly on the type of land you want to purchase. In general, lenders who offer land loans will view developed land as less of a risk than undeveloped land.

    When it comes to land loans, there are three primary types of land considered for financing.

    Raw Land

    ‘Raw land’ is the first classification and refers to completely undeveloped, rural land. Think no buildings, electricity or drainage system. This is the most difficult land to obtain financing for because land loan lenders view it as the greatest risk of abandonment.

    As a result, if you plan to apply for a land loan for raw land, you’ll need to demonstrate that you’ve got a detailed plan for development. Showing lenders that you’re competent and dedicated to the project will help you navigate the lending market.

    Although the purchase price of raw land is often cheaper than land that is developed, a raw land loan will come with higher rates. You may also be required to put up a more substantial down payment.

    Unimproved Land

    ‘Unimproved land’ is a step up from raw land, and covers a broad variety of possibilities. Unimproved land will often be land that was once developed, or has seen failed attempts at development in the past. In some cases unimproved land will have some limited access to utilities and amenities, but will need significant repair and refurbishing.

    An unimproved land loan can also be difficult to get, even though it poses less risk compared to raw land. Again, having a detailed plan and being aware of the challenges at hand will be a huge help when negotiating with lenders. A large down payment and a strong credit score will also be helpful.

    While lenders tend to view unimproved land loans as less risky than raw land, it is still common for rates to be a fair bit higher compared to traditional mortgage rates, for example.

    Improved Land Loan

    ‘Improved land’ typically has decent or good access to utilities, roads and water. Because improved land is the most developed land type, it almost always comes with a higher price tag. On the other hand, this means that interest rates will be significantly lower compared to raw or unimproved land loans. You’ll also find more affordable down payments for developed lots.

    For most aspiring homeowners, purchasing land that is already developed with access to basic amenities is the ideal. This allows them to immediately get to work building a house, whereas having to develop land first could add at least another year to their construction project.

    How to Apply for a Land Loan

    If you want to buy land and build your dream home, you’ll probably want to apply for a land loan. Land loan applying isn’t complex, and land loans work the same as many other types of loan. Here are the steps involved:

    Find a Plot

    You should start by first identifying the plot of land you want to buy. It helps to have a few options chosen in advance. For example, in the event that you can’t afford to find a good lending option for your first choice, you can quickly move on to an alternative instead. 

    Draw up a Development Plan

    The next step is to make a development plan for each plot that you have on your shortlist. You may need or want to hire professional help to create a solid plan. Try to include as much detail as possible, without overextending yourself or wasting too much time and money.

    When it comes to development and construction plans, both an estimated timeframe and overall cost range are the most important details. A good plan will help you negotiate the best rates with a lender.

    Find a Lender

    Once your development plan is ready, it’s time to seek potential lenders. Depending on the type of development you’re proposing, as well as the type of land you want to buy, it may take some time to find willing lenders.

    Be prepared to also take some time to consider more than one loan offer. Ideally, you can compare multiple lenders, and use a pre-approved quote from at least one lender to negotiate against others.

    Complete the Application Process

    Once you’ve chosen a lender and been approved for your loan, you’ll be guided through the lender’s application process. The majority of lenders will require information such as your development plan, a credit check, and personal information.

    You might also need to provide details on things like zoning considerations, utilities access and land use restrictions, where relevant.

    Alternative Land Financing Options

    In addition to seeking a land or construction loan, there are several other types of loans and financing options available.

    USDA Loans

    If you’re looking to own land and build a home in a rural area, you may be eligible for a USDA loan. The U.S. Department of Agriculture offers loans that may assist low and moderate income families in finding a new home. USDA Section 523 loans are for wanting to purchase land to develop, and Section 524 loans are for financing new constructions by contractors.

    While it isn’t easy to qualify for a USDA loan, the benefit is they require no down payment and the interest rates are low. USDA loans must be settled within two years, however, so there are no long term options.

    FHA Loans

    Another government-funded product, FHA loans are tailored towards those wanting to buy land and quickly build a home. The Federal Housing Administration insures these loans, protecting FHA-approved lenders from risk.

    FHA loans are not available for land purchase alone, but for those intending to build a home on as well as land. FHA loans are sometimes granted in conjunction with construction loans, too. If you’re eligible for one of these loans, you’ll likely have a lower minimum down payment, but potentially higher interest rates.

    Home Equity Loans

    Home equity loans may be an appealing alternative to land loans for some homeowners. If you already own a property and have good credit standing, this kind of loan might be a good fit. A home equity loan acts as a second mortgage, and will essentially convert your equity into collateral for a new loan to fund your purchase.

    Cash-Out Refinancing

    Cash-out refinancing involves homeowners refinancing their homes to increase equity. This type of refinancing is essentially paying off your current mortgage to secure another mortgage, but with a lower interest rate and easier monthly payments.

    Once the remortgaging is made official, your bank or financial institution will issue you a check based on the equity in your property. You can then use this payment to fund your land purchase.

    SBA Loans

    The Small Business Administration (SBA) offers loans to small business owners from the 504 loan program.

    These loans are best suited to the purchase of real estate for business reasons, so they are not ideal for regular homeowners. However, if you’re looking for land to purchase to grow your business, you might want to consider an SBA loan.

    Generally, the Small Business Administration will cover 40% of the purchase value, with 10% from the borrower and another lender of choice providing the other half of the loan. The terms and rates on SBA loans vary depending on the lender you choose to fund 50% of the land purchase.

    Seller Financing

    If you’re lucky, you may be able to obtain financing directly from the landowner you want to buy from. Also known as land contracts, these types of loans involve the buyer essentially taking out a loan directly from the seller, often with a substantial down payment.

    Seller financing also tends to come with less than competitive interest rates. For those who struggle to qualify for a traditional mortgage or financing, seller financing can often be a great, but more costly, alternative.

    Frequently Asked Questions

    What is the best loan for buying land?

    The best loan option for buying land depends on your circumstances. While improved land loans may seem ideal, the reality is there are multiple loan options to choose from.

    Your credit score, debt-to-income ratio, and the condition of the land you wish to purchase are all factors that can influence which type of financing will suit you best.

    Is it difficult to get a loan for land?

    It’s true that obtaining loan financing for the purchase of land isn’t as easy as getting a regular personal loan. However, there are lenders out there with experience financing land purchases. As with any loan, the bottom line will be your credit score, as well as the size of your down payment. The nature of the land in question is also a primary factor.

    If you can’t qualify for traditional financing options, there are alternatives such as USDA loans, FHA loans and more to consider.

    Source: crediful.com