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Credit Card Debt Relief: 6 Strategies – MintLife Blog

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$1 trillion in credit card debt, there must be a sustainable option to lessen the stress of carrying large debts month over month, year over year. Credit card debt relief is a way to not only get out of seemingly endless debt but also to perhaps bring about a little bit of mental—and ultimately, financial—peace.

Rather than just assuming you can entirely write your debt off with little impact otherwise, it’s important to know the various credit card debt relief options that are available and the different impacts each approach will have on your credit and financial health over the long term.

Keep reading to learn six credit card debt relief strategies, or use the links below to navigate the article.

How to Pursue Credit Card Debt Relief

Seeking credit card debt relief can be an ideal option for those experiencing hardship from life’s unexpected happenings, whether that’s medical bills, a sudden loss of income, or debt that has become excessively difficult to manage. Before deciding on a course of action, it’s important to know the differences between each approach.

Here are six strategies to consider for credit card debt relief:

1. Do-It-Yourself

Credit card debt relief may be able to be reached through a resolute commitment to aggressively paying down debts as quickly as possible. Do-it-yourself options to credit card debt relief require discipline and may not offer the degree of immediate debt relief desired.

If you have a particularly good credit score, you may be able to negotiate a lower interest rate on your cards through individual credit card companies to lessen the burden of debt.

While you’re not necessarily entitled to a lower interest rate, explaining your hardship and mentioning the length of time you’ve been with the credit card company could help secure a better deal, making debt repayment more manageable.

You might also consider taking a new approach to paying down debt by:

  1. The debt snowball approach — paying off the credit card with the smallest interest rate first while making minimum payments on other debts.
  2. The debt avalanche method, which allows for accelerated debt repayment as you put extra money towards the debt with the highest interest rate, while paying the minimum on all other outstanding debts.

The snowball method costs more but can boost confidence in being able to fully tackle paying off one card before moving onto the next.

2. Consolidation

Consolidating debt means combining all outstanding debts you owe to different lenders into a new loan.

Credit card consolidation, while not a method that outright eliminates debt, can be a strategy to help you pay down debt faster. With this option, you’ll only be making one payment a month instead of several— potentially making it easier to keep track of what you owe.

By taking out a low-interest rate loan through a lending institution, you may be able to pay off the majority, if not all, of your high-interest credit card debt.

Another option for consolidation is to do a balance transfer from a high-interest credit card to a credit card with a lower or no interest rate to lessen the burden of interest charges. It’s important to note that this option may come with a fee and doesn’t simply get rid of debt, but it could make the credit card debt relatively easier to pay down.

3. Credit Counseling

Seeking credit counseling, which is usually a free service provided through nonprofit organizations and independent financial agencies, may help lead you in the right direction to achieve credit card debt relief.

  • How it works

Trained counselors can guide you through repayment planning by reviewing your budget, analyzing your debt, and offering recommendations to help find a sustainable debt relief solution.

Counselors simply offer suggestions, making the service free unless you opt to use their help in pursuing a course of action, such as enrolling in a debt management program.

4. Debt Management Program

If you decide to sign up for a debt management program (DMP) through a credit counseling agency, you’ll make a single monthly payment to the agency, and the agency will in turn pay your creditors. With this option, you’ll likely be able to pay off your debts within three to five years, as outlined in your specific debt management plan.

  • Considerations

By enrolling in a debt management plan, you won’t be able to obtain new credit until your debts are paid off. In fact, the credit counseling agency will close your active credit accounts while you complete the plan.

Closing your credit card accounts could negatively impact your credit score in the short-term, but by making regular monthly payments (that you can actually afford), debt management programs may help you find credit card debt relief over time.

5. Debt Settlement

Debt settlement means negotiating with your creditors to pay less on your debt than the amount you actually owe. This agreement is typically arranged by a third party—a debt settlement company—that acts as an intermediary between you and your credit card companies.

  • How it works

In this scenario, you cease making payments directly to the credit card companies and instead pay the debt settlement company, which in turn offers a lump sum payment to appease the creditors.

  • Considerations

This avenue is typically a poor choice for credit card debt relief because as you stop making payments to your creditors, your credit score will not only deteriorate, but credit card companies can also come after you with penalty fees and even legal action for failing to make payments. There could also be tax implications if a large amount of debt is forgiven, because the IRS may consider cancelled or forgiven debt as taxable income.

6. Bankruptcy

Bankruptcy should be reserved as a last resort in extreme cases of credit card debt hardship, as it has serious implications on your credit score.

  • The two most common types of bankruptcy are:
  1. Chapter 7 which forgives your debts on the condition that you liquidate some of your assets to pay creditors.
  2. Chapter 13 in which you enter into a court-arranged debt repayment plan that lasts three to five years, after which your debts are dismissed.

Chapter 7 bankruptcy is the only true way to avoid paying your debts, as it essentially wipes out outstanding debt entirely and offers a clean slate. Creditors still receive some means of repayment, whether in assets or through the repayment plan, and bankruptcy can offer a way out of otherwise inescapable debt.

Effects of Credit Debt Relief on Your Credit

Depending on which approach you pursue to achieve credit card debt relief, effects on your credit could range from nonexistent to severe damage. Since credit utilization (the amount of outstanding balances you have compared to your credit limit) makes up 30 percent of your credit score, carrying high credit card debt month after month is likely to have a damaging effect on your score.

The self-managed approach to reducing debt may not necessarily hurt your credit, so long as you continue to make regular payments. Credit card consolidation may help you tackle debt faster, possibly leading to a better score in the long run. Credit counseling won’t have a direct impact on your credit unless you decide to act on the advice given, such as signing up for a debt management plan. Depending on the parameters of the specific debt management program you sign up for, DMPs could have either a positive or negative effect on your credit.

On the more extreme end, opting for debt settlement through a third-party has the potential to hurt your credit when you stop making regular payments to credit card companies. Similarly, filing for bankruptcy could critically weaken your creditworthiness and should only be a last resort option, as a Chapter 7 filing stays on your credit report for ten years, while a Chapter 13 will remain for seven years.

The Bottom Line

The best approach to credit card debt relief depends entirely on the individual level of hardship you have in paying back credit card debts. It’s essential to consider the different options to reducing the strain of credit card debt that will work for your lifestyle. Whether you opt to take the do-it-yourself route or find yourself filing for bankruptcy, taking a committed approach to minimizing your debt could lend itself to better financial health in the long run.

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Tips to help turn those homebuying dreams into reality.

From outstanding credit card debt to massive student loans, financial difficulties are barring more and more millennials from becoming homeowners. While the vision of buying a first home may seem hopelessly far away for many, there are strategies and tools like Mint’s home affordability calculator that are available to make it happen. These expert tips can help turn those dreams into reality.

Tips for Saving Money

Consider replacing plastic with cash

One excellent strategy for saving money is to spend two weeks (or a month, if you’re feeling ambitious) paying for everything in cash. It’s easier to rack up debt when using credit cards because the deductions are all digital. When handing over cash, you physically see and feel the money leaving your wallet. Using cash can help train your brain to associate your spending habits with actual money being spent, and it’ll inspire you to start holding onto it.

Consolidate debt

Multiple debts can feel paralyzing. The trick is to start attacking the smallest balance first. Paying more than your minimum required payment and making more frequent payments can save on interest for that balance and offer some stress relief. Once you’ve decimated that debt, start applying the same strategy towards the next smallest balance. Rinse and repeat.

Make budgeting a game

One way to make budgeting more tolerable is to turn it into a game. Challenge yourself to only spend a certain amount each week on, for example, takeout. The key is to try to hold yourself accountable for every dollar you spend.

Watch automatic deductions

Many conveniences are automatically deducted from bank accounts annually and monthly, especially for millennials. Services like Netflix, Amazon Prime, gym memberships, and phone bills can drain your bank account — but they don’t have to. First, make a list of all your automatic deductions. It might be shocking to see all of them all added up. Next, decide how many of them are necessary or benefit you. Cutting even one service out can start to make a difference.

Tips for Saving on Homeowners Insurance

Add security features

A great way to cut down on your homeowner’s insurance premium is to install an alarm system or other security features in your home, There are plenty of affordable systems on the market these days, including custom design options available from SimpliSafe. Decreasing the risk of burglary will give you peace of mind and a noticeable break on your insurance bill, too.

Share your space (and rent)

Being a homeowner doesn’t have to mean paying for an entire house by yourself. Besides buying a two-bedroom apartment, other options exist for sharing a home and cutting down on costs. Planning to rent out a room in your home is an easy way to throw extra money at your premium each month. Some new homeowners also choose to split a duplex with another tenant, rather than buying a single-family home.

Buy new

Newer homes may come with bigger price tags, but they also have the advantage of cheaper insurance. New buildings pose less risk for insurance companies, so premiums are lower. Although that 1972, recently renovated house looks charming and like-new, be sure to weigh the cost over time versus a more recent build. Things like plumbing and a new roof may have been overlooked during the renovation and both of these can come with big price tags.

Shop smart

Working with an experienced independent insurance agent is the best way to save money on homeowners insurance. An agent knows how to shop the market and find the best deals for you, as well as tricks to lower your premium even further. They can also hook you up with a policy that meets your unique needs.

Save more, spend smarter, and make your money go further

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Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom Mint.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). 

Each year as you await your tax refund, you face the same question – what to do with that money once it arrives? For some, the money immediately goes to cover basic needs, but for others, the money goes to far less-essential items. 

According to a 2020 survey by Self Financial, 44% of respondents said not getting a tax refund this year would completely derail their budget for the rest of the year. 

So how do you use your tax refund to plan ahead, build your wealth, financial health, and ultimately, your credit? 

Here are 5 ways to put your tax refund to work to build your credit. 

But first…

Why use your tax refund for credit-building?  

Maybe you’re itching to spend your tax refund to treat yourself. While there’s nothing wrong with using a bit of that money for fun, tax refunds are a great opportunity to get ahead with your finances too. 

But why, of all things, focus on your credit? 

First, bad credit could cost you thousands of dollars more over your lifetime, since you often get charged higher interest rates (if you can get approved at all). Your credit can also impact your ability to rent an apartment, qualify for certain jobs, or even get a cell phone. 

Good credit, however, creates a financial safety net to fall back on if you need it. If you have good credit, you may have an easier time qualifying for personal loans, credit cards, or other credit products if you need to borrow money, often at a lower rate. 

If you don’t have an emergency savings fund, credit may be your only other option to lean on if you face job loss, an unexpected medical emergency, etc. 

You have to build credit before you need it though. Otherwise, you might not be able to access it when you actually do need it.   

5 ways to build credit using your tax refund

Once you have your tax refund in hand, here are some ways you can put it to work to help your financial health. 

1. Pay down debt

While paying down your mortgage or other personal loans may help your credit score, it may be a good idea to focus on higher-interest, more expensive consumer debt (like credit card debt) first. 

Not only could paying down this higher-interest debt save you the most money in the long run, but it could also have a bigger impact on your credit score. That’s because credit usage, or how much of your available credit you use at any given time, counts for 30% of your FICO® credit score.  

While installment loan usage (like personal loans, car loans, or home loans) does count somewhat towards this factor in your credit score, revolving account balances (like credit cards or HELOCs) count more, according to credit bureau expert Barry Paperno.   

That doesn’t mean you have to pay your credit card debt off completely to see benefits to your credit score. Even paying your balance down 5-10% may have a positive impact.  

According to credit scoring agency FICO, people with the highest credit scores tend to have credit utilization between 6-10% on their revolving credit accounts. While that’s a great goal to aim for, start with paying down what you can, no matter how small that amount may seem at first. Small wins can add up to big ones over time. 

Aside from credit utilization, the only other factor that impacts your credit score more is your payment history. Which brings me to my next point…

2. Get your current accounts in good standing 

If you have late payments or missed payments on your current credit accounts, make up those payments if you can. While many lenders report a late payment to the credit bureaus if it’s more than 15 days late, how late your payments are can impact your credit score in different ways. A payment that is 30 days late affects your score differently than one that is 90 days late. 

For example, according to one FICO score simulation, if you have a 793 credit score and miss a payment by 30 days, your score could drop 60-80 points. In that same situation, if you missed a payment by 90 days, your score could drop 100 points or more. 

So the sooner you catch up on a late payment, the better. Besides, making those payments could keep more late fees from adding up.  

While catching up on payments may not undo the damage of a late or missed payment on your credit (it can take years for just one late payment to fall off your credit report), it could prevent any more damage from being done.  

If the late payments were on property, or loans that were secured by property, like a home loan or car loan, catching up on payments could also prevent you from losing your home or car.  

3. Open a Credit Builder Account 

This next one is for people who either have no credit history, a limited credit history, or need to rebuild credit after financial hardship such as bankruptcy, foreclosure, or identity theft, to name a few examples. 

Unlike a traditional personal loan, credit builder loans don’t give you the money upfront.  

Instead, the lender holds the loan amount in a bank account. Each month, you pay into this account and the lender reports your payment history to the credit bureaus, which helps you build credit history.  

Once you pay off the loan amount, the money inside the account comes back to you, minus the interest charged on the loan. In other words, these loans give you the opportunity to put some money away for savings while you build your credit. 

If you have trouble gaining access to other credit products or want to build credit while you build some savings, a Credit Builder Account could be the right option for you. 

4. Use it as a deposit on a secured card 

For many, a secured credit card may be a good entry point for accessing credit cards. A secured card works just like a regular credit card, except you put down a security deposit that is usually equal to your credit limit. 

For example, you may have a secured card with a $100 credit limit and a $100 security deposit. Like a deposit for utilities, a secured card deposit is used to cover your bill if you don’t pay back what you owe. 

Some companies (like Self Financial) provide an option for you to build your way slowly towards a secured card through a Credit Builder Account, no extra deposit or hard inquiry needed. Bonus: Self doesn’t deny you if you have a history of bankruptcy or foreclosure, unlike some other credit card issuers.   

There are many different secured credit cards to choose from, so shop around to decide which one is right for you. 

5. Work with a credit counselor

Not sure where to start when it comes to your credit? Or what product might work best for you? You may want to use some of your tax refund to hire a qualified professional to help you come up with a credit action plan.    

Here are a few reputable places to start searching for a credit or financial counselor: 

  • National Foundation for Credit Counseling (NFCC). This nonprofit provides financial counseling services through their member organizations across the US. Visit their website to connect with free or low-cost help in your area. 
  • Association for Financial Counseling and Planning Education (AFCPE). AFCPE has over 3,200 certified financial counselors, planners, educators, and researchers around the world. You can find local or virtual financial counseling through their online tool. 
  • Operation Hope. Operation Hope is a national nonprofit that provides financial coaches to help people “develop customized action plans around building their own businesses, raising their credit scores, buying homes, or simply making better decisions with the money they have.” Their website also has tons of free resources about financial basics.  

These organizations provide access to qualified financial counselors who can help you create plans that align with your financial goals, whether that means building your credit, paying down debt, budgeting, or working towards buying a house, to name a few examples.  

Depending on your current income and situation, you may also qualify for no-cost or low-cost help, since many financial counselors offer a sliding scale based on financial need.  

Be careful when browsing for professional help with your credit though, especially if you search for credit repair. While there are some good players in the space, you have to be really careful to pick the right one. The Federal Trade Commission provides some guidelines to help you find legitimate credit repair help, which you can view here. 

Bonus: Build an emergency savings 

Okay, so this one isn’t exactly credit-specific, but having an emergency savings fund could help reduce the amount you need to borrow if you ever did need to lean on credit during times of financial hardship.  

Research from SaverLife shows that even just $100-$200 in savings could mean the difference between keeping your housing during hard times or having your utilities cut off. 

According to the IRS, the average tax refund in 2020 was $2,741, which for people who make about $30,000 is roughly one month’s salary – a pretty healthy cushion if you lose your job and need time to find something new.  

The good news is, there are tools that could help you build both your credit and some savings at the same time. 

Bottom line

While credit may not usually be top-of-mind when you get a sudden rush of cash, it’s a key building block for your financial health, and can help open doors to your future. 

So if you have a little extra money, whether it’s thanks to a tax refund, stimulus check, bonus, raise, inheritance, or even just finding $20 in an old pair of pants, put that money to work for your future self.

Save more, spend smarter, and make your money go further

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Interested in a career as a cosmetologist? Enrolling in an accredited beauty school is a smart first step to take.

One important consideration is how much cosmetology school costs. Tuition can run several thousands of dollars per year and will likely be one of your biggest expenses. But there are other costs to consider as well. Keep reading to learn about the cost of cosmetology school and ways you can help lower your financial burden.

How Much Does Cosmetology School Cost on Average?

Beauty school students can expect to spend anywhere from $5,000 to $20,000 for tuition and fees. The cost of cosmetology school can vary based on location. Schools in major cities tend to charge more than those in smaller communities. To get a full list of expected tuition and expenses, contact the school’s admissions office.

How Much Do Books and Materials Cost?

In addition to tuition and fees, you’ll also want to budget for the cost of books and materials. Textbooks alone can range from $2,000 to $3,000 or more, depending on your instructor. Add to that the cost of any supplies and tools you’ll need to help you practice your craft. Think shampoos, conditioners, styling products, scissors, electric clippers, mannequins, and more. Your cosmetology school may provide some of these materials, but others you’ll need to buy.

How Can You Reduce the Cost of Cosmetology School?

Though cosmetology school typically takes less time to complete than a four-year college, the costs of those few semesters can add up quickly. The good news is, there are different ways you can help lower your financial burden.

Apply for Scholarships and Grants

Scholarships may be based on merit or financial need and generally don’t need to be paid back. Cosmetology schools can point you toward scholarship opportunities, or you can do an online scholarship search to find out what’s available to you.

Grants are typically based on financial need and are offered by the federal government, state government, private companies, and nonprofits. They’re generally awarded in a federal financial aid package. Like most scholarships, grants don’t have to be paid back.

Consider Student Loans

Student loans can help you cover the cost of attending cosmetology school. In general, it’s a good idea to exhaust all possible federal student loan options first before applying for private student loans. Federal student loans have a fixed interest rate that’s usually lower than private loans and also provide certain safety nets like forbearance or deferment.

Recommended: The Differences Between Grants, Scholarships, and Loans

Fill Out the Free Application for Federal Student Aid (FAFSA)

Filling out the FAFSA application is how students can find out how much federal financial aid they’re eligible for, including loans, grants, and scholarships. The FAFSA applies to a single academic year, which means you’ll need to submit a new form each year. To maximize your potential aid, aim to turn in the FAFSA before the annual deadline.

Recommended: FAFSA Tips and Mistakes to Avoid

Save on Textbooks

Cosmetology school textbooks can be pricey. To help lower costs, look into renting textbooks or buying them used. If you do purchase textbooks, consider selling them once the semester ends and putting that cash towards the next set of books.

Rent Supplies

You may be able to rent certain supplies or supplies instead of purchasing them. This is especially helpful for equipment you won’t need after graduation, like practice mannequins.

Live at Home

If possible, move in with family or friends while you’re in school to save on housing and living expenses. If that’s not an option, look into renting a place with roommates and splitting the costs.

Find a Part-Time Job

Getting a part-time job can help you cover some of the cost of cosmetology school — and maybe even take out less in student loans. Look for gigs with flexible hours that allow you to more easily balance work and class. Consider working in an on-campus student salon, if one is offered at your school. Besides the additional practice, you could also make some extra money.

The Takeaway

The cost of cosmetology school can be significant. Tuition runs anywhere from $5,000 to $20,000, and textbooks, supplies and living expenses can add to your financial burden. But there are ways to cover costs, including scholarships, grants, a part-time job, and student loans.

3 Student Loan Tips

Here are our top three tips to help you understand and navigate student loans.

Complete the FAFSA

Even if you don’t think you qualify for financial aid, you should still fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

Understand Your Borrowing Options

Would-be borrowers will want to understand the different types of student loans peppering the landscape: private student loans, federal Direct subsidized and unsubsidized loans, Direct PLUS loans, and more.

Consider Federal Aid First

It’s a good idea to exhaust all available federal aid options before exploring private student loans.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How much is one year of tuition at an accredited cosmetology school?

Beauty school students can expect to spend anywhere from $5,000 to $20,000 for tuition and fees. But the amount you’ll pay may vary depending on where your school is located.

How long is cosmetology school?

It depends on your program. The national average for a full cosmetology program is between 1,400 to 1,600 hours, according to the American Association of Cosmetology Schools. Full-time students typically finish that program in less than two years. But certain programs are shorter and can be completed in six months or so. For instance, the national average for nail technology is 300 hours; for electrologists is 500 hours; and for esthetics is 650 hours.

Is a high school diploma required to attend cosmetology school?

Some states require a high school diploma or G.E.D., but others do not. You may also need to be a certain age to apply for beauty school. Check the rules in your state to find out if you’re eligible.

Photo credit: iStock/Kemal Yildirim

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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Inside: Are you thinking about moving out? This guide will help you figure out how much money you need to save and where to find affordable housing. Will $5k be enough to move out?

Moving out for the first time is a huge milestone. It’s a chance to start fresh, create your own space, and live on your own terms.

But it can also be a daunting prospect, especially when you’re trying to figure out how much it will cost.

You want to know if $5,000 is enough to move out?

But there are a lot of factors to consider before making the decision to move out, and we’ve laid them all out for you in this ultimate guide.

So whether you’re just starting to think about moving out, or you’re ready to start packing your boxes, read on for everything you need to know about making the big move.

How much money do I need to move out?

Experts recommend having at least $6,000 to $12,000 saved up before moving out.

However, it’s possible to move out with as little as $5,000 if you focus on knowing how to live cheap and have a stable source of income.

However, if you don’t have a job before moving out, the need for a huge savings account is huge.

How much money should I have if I want to move out?

The minimum amount of money required to move out will depend on where you plan to live and your living expenses.

Shortly you will learn factors to include initial moving costs, rental deposit, and ongoing costs like rent, utilities, and food.

If you are looking to move out in an HCOL area, then you will need more than an LCOL city. At this point in your life, it is important to understand HCOL vs LCOL and how it affects your finances.

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.

What are the expenses you should consider when moving out?

Moving out on your own can be a daunting and expensive task.

There are many expenses to consider when budgeting for your new place especially when you are learning how to move out at 18.

This guide will help you estimate the cost of moving out and provide tips on how to save money.

1. Rent/Utilities

The cost of rent varies depending on the location and size of the apartment or home, with the median rental cost in the US being around $1700 per month.

Along with rent, utilities like electricity, gas, water, and internet can cost around $400 per month.

To save money on rent and utilities, consider finding roommates to split costs or negotiating with landlords for a lower rent.

Rent is your biggest expense when figuring out the ideal household budget percentages.

2. Rent Deposit

When renting an apartment, you will typically need to provide a rent deposit. This deposit is a sum of money paid upfront to the landlord to cover any damages or unpaid rent at the end of the lease.

The cost of a rent deposit can vary depending on the location and the landlord’s requirements, but it can range from $1,000 to $5,000 or one to three months of rent.

To save money on a rent deposit, consider looking for apartments with lower deposit requirements or negotiating with your landlord for a lower amount. A clean rental history will help you with this.

3. Moving Expenses

Moving out can be an expensive process, but with some planning and budgeting, you can keep costs under control.

When considering moving expenses, be sure to factor in the costs of moving truck, packing supplies, such as boxes and tape, as well as the cost of hiring movers

To save money on these expenses, try finding free packing materials on Buy Nothing groups or ask friends and family to help you move. You can also minimize your possessions and have less to move.

4. Renter’s Insurance

When moving out and renting a home or apartment, it’s important to consider getting a renter’s insurance policy to protect you from unforeseen events.

Home insurance, also known as renter’s insurance, is a special type of insurance policy that protects your property against losses or damage stemming from covered perils, including fires, storms, or theft. It can give you peace of mind and help you repair or replace your possessions in the event of unforeseen situations.

Insurance premiums are based on various factors, including where you live, how much you choose to insure, and your deductible. Your credit score and history may also affect your insurance rates.

5. Furniture and Appliances

When moving into a new home, it’s important to consider all the necessary expenses for furnishing the space. This includes appliances like a refrigerator, stove, oven, and microwave, as well as daily living items such as a mattress, table, and couches.

I remember when I moved into my first apartment by myself and there wasn’t a washer or dryer in the apartment. Just hookups. I had one of two choices: 1) rent from the management company for $35 a month or 2) buy new appliances with 0% interest for $35 a month. I choose option #2 and it saved me money in the long term.

To save money, consider buying used furniture from thrift stores or online marketplaces like Facebook Marketplace. You can also find plenty of free furniture if you are not picky.

By being thrifty and smart with your purchases, you can furnish your new home without breaking the bank.

6. Housewares

When moving out on a budget, it’s important to consider the essential housewares you’ll need to make your new place feel like home. Here’s a list of must-haves and their estimated costs:

By prioritizing these essential housewares, you can make your new place feel like home without breaking the bank.

Don’t forget to check out thrift stores and Facebook Marketplace for gently used furniture and household items. With a little creativity and resourcefulness, you can furnish your new home on a budget.

7. Internet and Phone Bills

The average cost of internet and phone plans varies depending on the provider and the plan you choose. However, you can expect to pay around $50 to $100 per month for internet and $40 to $80 per month for a mobile phone plan. In addition, there may be additional fees, such as equipment costs or activation fees, which can add up quickly.

To minimize these expenses, consider bundling services with one provider. Many companies offer discounts for bundling internet, phone, and cable services.

8. Credit Card Payments

If you thinking about moving out and are currently swaddled in debt, then you probably don’t have enough money to move out. If you have high-interest credit card debt, prioritize paying it off before moving out.

Automating savings on essential bills using Truebill can also help you manage your credit card payments while covering the costs of moving out.

Additionally, ensure that you have an emergency fund and enough money to stay a year to handle unexpected expenses.

Things may get harder if you have to pay for college without help from parents.

How to calculate your moving out budget

Moving out on your own requires careful planning and budgeting.

  1. To calculate your moving-out budget, start by determining your monthly expenses once you move out. Make sure to include the factors discussed above.
  2. Then, decide on your target move out date.
  3. Now, figure out how many months you have to save.

For example, if your target move out date is in 6 months and you need to save $5,000 to cover your expenses, you’ll need to save about $833 per month.

Additionally, create an emergency fund to cover unexpected expenses such as medical bills or car repairs. Aim to save at least 3-6 months’ worth of expenses in your emergency fund.

By creating a detailed monthly budget and sticking to it, you can ensure that you can afford to live on your own and achieve your goal of moving out.

Tips and tricks on how to move out

So, you’re finally ready to move out and start your life as an independent adult.

But before you can start your new life, there are a few things you need to take care of first – like, you know, finding a place to live and figuring out how to pay for it.

Learn the lessons from those who did not move out with enough cash – like me.

Tip #1: Create a Budget and Stay Within Limits

Moving out with only $5000 can be challenging, but creating a budget and sticking to it can make the process much easier.

To start, subtract your monthly bills from your monthly income to determine your basic budget.

  • For instance, if you make $2500 per month and pay $1500 for rent and bills, you have $1000 left for living expenses.
  • Allocate $400 for groceries and other necessities, $200 for transportation, and $100 for utilities.
  • This leaves you with $300 for entertainment and other non-essential expenses.

To stay within your budget, consider using a budget binder to track your income and expenses.

Be mindful of living within your means and avoid overspending by resisting the temptation to spend your first paycheck on new household items or entertainment. Instead, opt for more affordable options such as walking around your new neighborhood or having a picnic in the park.

Tip #2: Reduce Expenses Where Possible

One of the hottest topics is becoming frugal green. To save money and the environment at the same time.

When it comes to furniture, try buying used or refurbished items or borrowing from friends and family. Additionally, cutting back on unnecessary expenses such as dining out and entertainment can free up more money.

By being resourceful and creative, it is possible to move out on a budget without sacrificing quality or comfort.

Remember to allocate 50% of your monthly pay towards necessary expenses, 30% towards things you want, and 20% for debt repayment and long-term savings.

Tip #3: Look for Low-Cost Rentals

Finding low-cost rentals can be a challenge, but there are several options available to those who are willing to be flexible and creative.

  • Renting a basement suite or studio apartment can be a more affordable option.
  • Consider couch surfing, subletting, or home-sharing arrangements.
  • Home-sharing can be particularly attractive as it allows you to pair up with an elderly homeowner who needs a little extra help in exchange for low rent.
  • Find a tiny home rental.
  • If you don’t mind sharing the space, you can also consider getting a roommate or looking into pod shares. Pod shares are co-living spaces where individuals rent a bed in a shared room, with access to other community spaces like a bathroom and kitchen.
  • Become a housesitter and be paid to move out. Learn more with Trusted Housesitters.

With a little bit of research and creativity, it is possible to find low-cost rentals that fit your budget and lifestyle. Remember to determine exactly how much you can spend on rent and be open to alternative housing solutions to help keep your costs at a minimum.

Tip #4: Look Into Getting Renters Insurance

When renting you are more than likely going to live closer to others, which means more things can go wrong. Don’t skip out on renter’s insurance, as it can provide the peace of mind and protection you need as a first-time renter.

Without renter’s insurance, unexpected disasters such as fires, storms, or theft can leave you with thousands of dollars in damages that you would have to pay out of pocket.

Renter’s insurance typically costs around $20 per month and can save you a lot of money in the long run. Some affordable options for renter’s insurance include Lemonade, State Farm, and Allstate.

It’s important to shop around and compare policies to find the best one for your needs and budget.

Tip #5: Plan for Emergencies and Unexpected Expenses

It is crucial to plan for emergencies and unexpected expenses.

Start by setting aside a minimum of $1000 for an emergency fund.

Ideally, you should aim to save at least three to six months of living expenses in a rainy day fund. Remember, having a contingency plan and emergency fund can provide peace of mind and protect you from financial hardship.

Tip #6: Start Saving for a Security Deposit

Remember to prioritize saving for a security deposit by setting a specific savings goal and putting aside a portion of your income each month before you move out!

With dedication and discipline, you can reach your goal and move out with confidence.

More than likely, if you are a good tenant, you should get your full security deposit back after your lease is over.

Tip #7: Start a Side Hustle

Starting a side hustle can be a great way to earn extra money while still maintaining your full-time job. You can earn extra income through various side hustles depending on your skills and interests.

The most common side hustles are online jobs, such as transcription, virtual assistance, proofreading, blogging, freelance writing, data entry, graphic design, and web design. These jobs are flexible and eliminate the need for driving anywhere, requiring only a laptop or computer and a good internet connection.

In fact, learning how to make money online for beginners is a trending topic.

As you start your side hustle, put in as much time as you have available to maximize your earnings. Remember that a side hustle is unlikely to replace the need for a real job, but it can provide a great way to earn extra money and pursue your passions.

Tip #8: Plan Ahead and Create a Timeline

When planning to move out on a budget, it’s important to create a realistic timeline.

Start by mapping out all the expenses you’ll need to cover, such as rent, utilities, food, and transportation. Along with how much money you have already saved for unknown expenses.

Stay organized by keeping a checklist of everything you need to do and when it needs to be done. Don’t rush the process – take your time and make sure you have everything in order before making the big move.

Remember the millionaire quote, failing to plan is planning to fail, so take the time to plan ahead and create a realistic timeline.

Is 10000 a good amount to move out with?

According to various sources, $10,000 is generally considered enough to cover moving out expenses and leave room for emergencies.

However, the actual cost of moving out can vary depending on location, rent prices, and cost of living.

Learn how to save 10000 in a year!

FAQ

There are a couple of different ways to save more money including:

  • Cut back on frivolous expenses like eating out and buying new clothes.
  • Sell anything you have that you don’t want or need on websites like Craigslist, Facebook Marketplace, Depop, or eBay.
  • Consider getting an extra part-time job or side hustle to increase your income.
  • When it comes to furnishings, be thrifty by asking friends and family if they have anything extra they’re getting rid of or checking out second-hand or discount stores.

Set saving goals and track your expenses using a spreadsheet. That will give you a clear picture of what is and is not possible.

Renter’s insurance is highly recommended, and in some cases, required by leases. It provides protection against unforeseen disasters such as fires, storms, or theft that can damage or destroy your possessions.

While it may seem like an unnecessary expense, it is usually affordable and can save you a lot of money compared to paying out of pocket for damages.

Not having renters insurance can leave you vulnerable to unexpected expenses and potential financial ruin.

You should not spend more on your rent payments than you are comfortable.

Just like with getting a mortgage, you should spend no more than 30% of your take-home pay on rent payments.

You don’t want to be stressed about finances, so you should set a realistic budget for rent that allows you to comfortably cover all of your expenses while still having some money left over for savings.

So, is 5000 enough to move out?

It really depends on your situation.

  • If you’re moving to a cheaper area and don’t have many expenses, you might be able to make it work.
  • However, if you’re moving to a more expensive city or have a lot of bills, you might need to save up more money.

When determining how much money is needed to move out, there are several factors to consider, which we covered above. These include where you plan to live, your living expenses, initial moving costs, ongoing costs, and emergency funds.

It’s essential to have a budget and do the math to determine the minimum amount required for a smooth transition to independent living on a tight budget.

Ultimately, it’s important to do your research and figure out what’s best for you.

Know someone else that needs this, too? Then, please share!!

Source: moneybliss.org

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How to Save for a House in 8 Steps

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down payment. Find out how much you should budget using a home loan affordability calculator and figure out how to save the amount you need. After all, the best way to save for a house is to formulate a budget that helps you work towards your house saving goals step by step. Soon enough, you’ll be turning the key and stepping into a home you love.

Step 1: Calculate Your Down Payment and Timeline

When figuring out how to save for a house, you may already have a savings goal and deadline in mind. For instance, you may want to save 20 percent of your home loan cost by the end of the year. If you haven’t given this much thought, sit down and crunch the numbers. Ask yourself the following questions:

  • What is your ideal home cost?
  • What percentage would you like to contribute as a down payment?
  • What are your ideal monthly payments?
  • When would you like to purchase your home?
  • How long would you like your term mortgage to be?

Asking yourself these questions will reveal a realistic budget, timeline, and savings goal to work towards. For instance, say you want to buy a $250,000 house with a 20 percent down payment at a 30-year loan term length. You would need to save $50,000 as a down payment; at a 3.5 percent interest rate, your monthly payments would come out to be $898.

Step 2: Budget for the Extra Expenses

Just like a new rental, your home will have fees, taxes, and utilities that need to be budgeted for. Homeowners insurance, closing costs, and property taxes are a few examples of cash expenses. Not to mention, the cost of utilities, repairs, renovation work, and furniture. Here are a few more expenses you may have to save for:

  • Appraisal costs: Appraisals assess the home’s value and are usually ordered by your mortgage lender. They can cost anywhere from $312 to $405 for a single-family home.
  • Home inspection: A home inspection typically costs $279 to $399 for a single-family home. Prices vary depending on what you need inspected and how thorough you want the report to be. For instance, if you want an expert to look at your foundation, there will likely be an additional cost.
  • Realtor fees: In some states, the realtor fee is 5.45 percent of the home’s purchase price. Depending on the market, the seller might pay for your realtor fee. In other places, it might be more common to contract a lawyer to look over your purchase agreement, which is usually cheaper than a realtor.
  • Appraisal and closing costs: Appraisals assess the home’s value and are usually ordered by your mortgage lender. They can cost anywhere between $300 and $400 for a single-family home.

Step 3: Maximize Your Savings Contributions

Saving for a new home is easier said than done. To stay on track, first create a savings account that has a high yield if possible. Then, check in on your monthly savings goal to set up automatic contributions. By setting up automatic savings payments, you may treat this payment as a regular monthly expense.

In addition to saving more, spend less. Evaluate your budget to see what areas you could cut down or live without. For instance, creating your own workout studio at home could save you $200 a month on a gym class membership.

Step 4: Work Hard for a Raise

One of the best ways to boost your savings is to increase your earnings. If you already have a job you love, put in the extra time and effort to earn a raise. Learning new skills by attending in-person or virtual training seminars or learning a new language could increase your earning potential. Not only could you land a raise, but you could add these skills to your resume.

Sometimes, putting in the extra effort doesn’t always land you a raise, and that’s okay! When getting a raise is out of the question, consider looking at other opportunities. Figure out which industry suits you and your skillset and start applying. You may end up finding your dream job, along with your desired pay.

Step 5: Create More Streams of Income

Establishing different income streams could help your house savings budget. If one source of income unexpectedly goes dry, having other sources to cut the slack is helpful. You won’t have to worry about the sudden income change when paying your monthly mortgage.

For example, creating an online course as a passive income project may earn you only $5 this month. As traffic picks up, your monthly earnings could surpass your monthly income. To create an abundant financial portfolio, there are a few different ways to do so:

  • Create an online course: Write about something you’re passionate about and share your skills online. Sell your digital products on Etsy or Shopify to earn supplemental income.
  • Grow a YouTube channel: Start a YouTube channel and share your skills to help others within your industry of expertise. For instance, “How to start a YouTube channel” could be its own hit.
  • Invest in low-risk investments: From CD’s to money market funds, there are a few types of investments that could grow your cash with low risk.

Step 6: Pay Off Your Biggest Debts

Before taking on more debt like a mortgage, it’s important to free up your credit usage. Credit utilization is the percentage of available credit you have open compared to what you have used. If you have $200 in debt, but $1,000 available on your credit card, you’re only using 20 percent of your credit utilization. A higher credit utilization could potentially hinder your credit score over time. Not only can paying off debts feel satisfying, but it could also increase your credit score and prepare you for this next big purchase.

To pay off your debts, create an action plan. Write out all your debt accounts, how much you still owe, and their payment due dates. From there, start increasing your payments on your smallest debt. Once you pay off your smallest debt in full, you may feel more motivated to pay off your next debt account. Keep up with these good habits as you take on your mortgage account.

Step 7: Don’t Be Afraid to Ask For Help

Whether your touring homes or want help adjusting your budget, don’t hesitate to ask for help. If you’re trying to figure out what your budget should look like, research budgeting apps like Mint to build a successful financial plan.

If you’re curious about additional mortgage expenses, your budget, or investment opportunities, reach out to a trusted professional or utilize government resources. Not only are they able to help you prepare for your next big step, but they could also help you and your finances in the long term.

Step 8: Store Your Savings in a High Yield Saving Account

While you may have a perfect budget and a home savings goal, it’s time to make every dollar count. Before you add to your account, research different savings accounts and their monthly yields. The higher the yield, the more your savings could grow as long as your account is open.

In September of 2020, the national average interest rate on savings accounts was capped at 0.8 percent. If you were to deposit only $100 into a high yield savings account with an APY of 0.8 percent, you could earn $80 off your investment over the year. This helps you save extra money by just putting your money into a savings account.

In Summary

  • First, set a savings goal to match your estimated down payment and mortgage monthly payments. Then add your contributions to a high yield savings account to grow your money overtime.
  • Don’t forget to budget for extra mortgage expenses like appraisal costs, home inspections, realtor fees, or closing costs. Keep in mind, your monthly utilities and fees may also be more expensive than your current living situation.
  • Prepare for the additional costs by increasing your earning potential and optimizing additional income stream opportunities.
  • Free up your credit utilization by paying off as much debt as possible before buying a house. Keep up these good habits throughout the length of your mortgage term.

When you purchase a home, you’re building a piggy bank for your future. Every month you pay your mortgage, you pay part of it to yourself because you own the home. Instead of paying rent to someone else, you reap your own investment when you sell. Most importantly, though, you’ll have a place that’s truly your own.

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Last Updated on March 29, 2023 by Mark Ferguson

A cash-out refinance is one of the best tools an investor can use to take money out of their rental properties. A refinance is when you replace the current loan on your home with a new loan, and when you complete a cash-out refinance, you get cash back after getting the loan. One of the biggest roadblocks an investor runs into is finding the cash for down payments on new rental properties. A cash-out refinance is a great way to get cash to buy more properties. When I purchased my first long-term rental, I was able to buy the property from proceeds that came from a cash-out refinance on my personal residence. I was able to take out $40,000 in equity from my personal house, only one year after I bought the home. I have also refinanced multiple rental properties, which has allowed to buy more rentals and I now have 16 rental properties total.

How can you take a cash-out refinance?

Most people get loans on their homes when they buy them. At some point, you may want to consider refinancing that loan for a number of reasons:

Interest rates

If interest rates are much lower now than when you got the loan it may make sense to refinance your current loan into a mortgage with a lower interest rate.

Cash-out

There are many cases where you can get cashback after refinancing. A house could go up in value, you could get a different type of loan, you could make repairs, or make an improvement to a house to increase its value.

The video below goes over a refinance I did on one of my rentals.

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How much does a refinance cost?

The downside to refinancing your home is it costs money. You are getting a brand new loan that will cost about as much as the first loan you got on the home. That can be from 2% to 3% of the loan amount. You have to pay for an appraisal, origination fee, processing fees, flood certificate, and some other fees as well. The good news is that you will most likely skip a mortgage payment after the refinance, but don’t think you are getting an amazing deal because of that as the interest is still charged to you, just upfront in those loan costs.

How can houses increase in value?

Values are going up across the country, and that has created an opportunity for homeowners to do a cash-out refinance. Most banks are using stricter guidelines for qualifications and lower loan to value ratios than before the crash. However, if you bought your home at a great price or have owned it for a while, you still may be able to get cash out.

I do not like to depend on prices to go up. I buy all my properties below market value. I try to buy all my properties at least 20% below what they are currently worth. If they need work, I buy them for much less than 20% below market value. The BRRRR method is a great way to refinance properties and get cash back out by getting great deals and repairing them.

How much money can you take out?

Many banks will require an 80% or lower loan to value ratio when refinancing a rental property and they will use an appraisal to determine that value. It is imperative that you have a lot of equity in your property if you want to complete a cash-out refinance with an investment property. If you are refinancing an owner-occupied home, you may be able to refinance up to 95 percent or more of the value of the home. You must live in the house for a year after refinancing in most cases to get an owner-occupied loan.

What are the risks?

A cash-out refinance will increase the amount of the loan you have on your rental property. For some people who are averse to risk, paying off their home is a great option and they may not want more debt. However, I am not averse to risk and I want to maximize my returns. Debt can be a very bad thing if it is used for the wrong things, but if you use debt to buy cash producing investments it can be a great thing!

In my market, I can get a cash on cash return of 15 percent or higher on rental properties, while interest rates are below 5 percent. It makes more sense to me to refinance for 5 percent and use that money to buy properties that will give me over a 15 percent cash on cash return! That 15 percent return does not even include possible appreciation, tax benefits or mortgage pay down.

Yes, it is possible that values could go down and a cash-out refinance would reduce the equity in your home. If you don’t need to sell your home, then it will not matter how much equity you have in your home. However, if you are pushing how much you can afford with a monthly payment it may not be wise to refinance if it increases your payment. If you have a lot of cash flow and are comfortable with a higher payment, use that money to make more money.

If you increase your debt with a refinance, then you may be decreasing the amount you can qualify for on future homes. If you max out the amount of money a lender will loan to you with a refinance, then you won’t be able to get a loan on a new rental property. Before you refinance, make sure you know how much you will be able to qualify for.

How does a refi work on a rental property?

I recently did a cash-out refinance on one of my rental properties and I was able to pull out about $26,000 with my payment only increasing $136 a month. The terms are usually more restrictive and it can be difficult to refinance if you have more than four mortgaged properties. I was able to do a cash-out refinance with more than four mortgages because I used a portfolio lender. They are a local bank and are much more flexible than big banks.

When I did a cash out refinance on my investment property, the max they would lend was 75 percent of the value of the home. I also could only do a 5 or 7 year ARM or a 15 year fixed loan. I chose the 7 year ARM because I plan to pay off my homes quicker than the 7 year fixed term and the rates and payments are lower than the 15-year loan.

On the property, I paid $92,000 and put about $18,000 into it for repairs. I was able to turn it into a 5 bed, 2 bath and rented it for $1,100 (low because it is rented to my brother-in-law). I had to wait a year to do a cash-out refinance and the current value was determined by an appraisal. The appraisal came in at $140,000 which I thought was low, but I had to go with it. After all the lender fees, interest and miscellaneous costs of the cash out refinance, I was able to cash out over $26,000. My payment went up, but I am still able to cash flow every month and I took out more than enough money for a down payment on another rental property.

What about seasoning periods?

One restriction to completing a cash-out refinance is the seasoning period. Most banks, will not complete a cash-out refi right after you buy the home. They will complete a refinance but loan the lower of the appraised value or what you paid for the home in the last year or 6 months. If you bought the home for $100,000 three months ago, and it appraised for $150,000 last week, the bank will still only lend on the $100,000 purchase price if they have a seasoning period longer than three months.

If they will lend 75% of the value, that means they will only lend $75,00 on the home. Some banks have 6 month seasoning periods, some a year, and some will have none. Make sure you know what your bank will do before you make plans.

Is a HELOC better?

A HELOC (home equity line of credit) is much different from a refinance, because you may not have to pay off your current loan. If you have a $100,000 loan on your house, but your home is worth $200,000 you may be able to get an $80,000 line of credit and keep the $100,000 loan in place. When you take out a line of credit you do not have to use the money right away or ever. You can use as much of the money as you want and pay it back when you like. You can borrow the money again after you pay back the line. A refinance is a mortgage where once you pay off the loan or pay extra money into it, you cannot borrow it again.

A HELOC will have closing costs like a cash-out refinance, but many times they will be less. Depending on if you are getting a line on an investment property or a personal residence the terms and fees will differ. The term of the HELOC could be two years, five years or longer, but not 30 years like a refinance could be. The rates on a HELOC are also usually higher and can go up or down as interest rates go up or down.

It may be tough to get a line of credit on a rental as most banks only want to give lines of credit on primary residences.

Do you pay taxes?

One of the best things about a refinance is you do not pay taxes on it. You can buy a house for $100,000, and refinance it for $150,000 a few months later and the money you take out is almost always tax-free. You are not making any money, you are borrowing it so there is no income tax.

Conclusion

The more properties you can buy, the more cash flow builds up and the more wealth you can create. A cash-out refinance can help you purchase more properties and increase your wealth. Make sure the houses you purchase are bought below market value, and it will make a future cash-out refinance much easier. Make sure your payments are not so much that you are no longer seeing positive cash flow every month.

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Source: investfourmore.com

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Last Updated on February 25, 2022 by Mark Ferguson

I have flipped over 210 homes in the last 17 years and although it is not easy to flip houses, it is a lot of fun. You can make a lot of money flipping once you have developed a system and learned the business. I average about $30,000 in profit on each flip I do and I flip 20-30 houses a year. I love flipping houses, but fix and flipping is only part of my real estate business. I also have 186k sqft of long-term rentals, I own my own brokerage, and I created this blog. While you can make a lot of money flipping homes, it takes hard work, and help. The television shows can make flipping look easy, but they leave out many of the most important parts of the business.

How much can you make on one flip?

How much money you make on a fix and flip varies with each deal and how much the house is worth. I have lost $10,000 on a flip and have made up to $180,000 on a flip. My goal on each fix and flip is to make at least $25,000 in profit. I have hit some home runs and had some huge mishaps when flipping. There are many risks involved when you fix and flip a home. If I do not have at least $25,000 in profit potential, I usually will not make the deal. The more expensive a house is, the more money I hope to make because of the increased risk and cost.

I also base how much profit I need in regards to the work that is needed. On houses that need massive remodels I want to make more than $30,000 in profit because there is so much that can go wrong. On houses that only need paint and carpet, I am willing to accept a smaller margin because the work is simple and fast.

I had 19 flips going as of the writing of this article.

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Do you need to make more on expensive houses?

The more the houses cost, the more you should make on each fix and flip because all of the costs increase. The more expensive a house, the more interest you must pay, the more repairs you must make, the more holding costs you have, and the more commissions you pay. Because of the increased risk of a more expensive house, you need to be rewarded with a larger profit. It can also take longer to sell a more expensive house because there are fewer buyers. If prices are to decrease in the future, the more expensive homes are also more volatile with their prices.

It also takes more capital to buy and repair a more expensive house. I want to make at least $25,000 if I am flipping a $100,000 house. If I am flipping a $200,000 house, I will want to make at least $35,000 because I have more money tied up. Since I am buying a more expensive house at $200,000 and I am using more cash for down payments and repairs and I will not be able to buy as many properties. Since I am buying fewer properties, I want to make sure that the houses I am buying will make more money.

Here is a review I did on the Rehab Valuator, a great tool for figuring the costs and profits on flips.

How much have I made flipping houses?

In 2017 I made over $600,000 flipping houses. I sold 26 flips in 2017, 18 in 2016, 8 flips in 2015, 12 in 2014, and 10 in 2013. I will have a few flips that will profit from $20,000 to $30,000, and I will have a few that will profit around $50,000. Twice in the ten years, I have made close to $100,000 on a single flip. For me, the big money in fix and flipping is volume, not in one extremely profitable property.

How do you calculate the profits?

When I am talking about profit, I mean the money I make after paying for repairs, carrying costs, financing, and selling costs. The shows on HGTV do not include many of these costs, which can make the business look much more glamorous than it really is. Here are what the costs could look like on a flip I hold for 6 months:

  • Purchase price $100,000 with a private money loan
  • $5,000 in financing costs
  • $2,000 in closing costs
  • $2,000 for utilities and maintenance while owning the property
  • $2,000 for taxes and insurance while owning the property
  • $7,000 for selling costs (agent commissions, etc)

The costs to own and sell this flip are over $18,000 and we did not even consider the repairs yet. I also have a project manager who helps with my flips and other team members that help with my business. I do not count the money I pay them against the profits because they are also real estate agents, and help the business in other ways. I also do not take income taxes out as some suggest I should since everyone pays taxes and that is part of life!

The 70 percent rule is one way to calculate how much you should buy a flip for.

Can you average $30,000 on each flip?

Like much of the country our market is hot, which makes it difficult to find deals. However, I am still finding deals and I have 20 flips being repaired or for sale right now (middle of 2018). You can flip in any market if you know the numbers, and if you know how to find a great deal. I am a real estate agent, which gives me a huge advantage when it comes to finding deals. I also buy primarily off MLS, which means I save commissions and I am able to write offers quickly. Making $30,000 on a flip all comes down to the numbers. While it is not easy to find deals that make that much money, it is possible. I also buy flips through auctions, wholesalers, and direct marketing.

Is there money in just doing one?

I would love to make $100,000 on each flip, but that is not possible for me. I do not always know which homes will work out great as flips and which will not. I have had unforeseen circumstances that caused me to hold a property for a year before I could sell it. That killed my profits and was one of the homes I lost money on. I have accepted that some flips will be great and others will not. If I continue to purchase great deals, the averages will be in my favor. My strategy is to buy as many flips as I can that meet my criteria and continue to average about $30,000 in profit on each property. If you are looking for that one house that will make $100,000, you may be looking for a long time.

How to get financing

One of the most difficult aspects of flipping homes is being able to find the money to buy the properties. Most lenders do not like to lend on flips because the loan is short-term and the lender will not make much money on it. In most cases, in order to get a short-term loan, you must use hard money, a portfolio lender, or private money. Hard money is very expensive with rates from eight to sixteen percent and origination fees from two to five percent. Portfolio lenders will have much less expensive money, but you will have to have an established relationship with them (I use portfolio lenders for most of my flips). Private money is a great option if you have family, friends, or other people with extra money to invest.

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How to avoid losing money

Here are a few tips on how to avoid losing money on flips:

  • Be very careful at foreclosure auctions. I used to buy 90 percent of my properties at the foreclosure auction. You have to pay cash without a title policy and sometimes you cannot see the interior of the home. If you buy at the foreclosure sale, make sure you have a lot of money for repairs, title issues, and possible evictions.
  • Always estimate more for repairs then you think. Repairs always cost more and more repairs always show up when fixing a house. I always assume there will be 20 percent more in costs than I calculate on each deal.
  • Account for financing and selling costs. When you sell a fix and flip, you have to pay a real estate commission, title insurance, financing interest, insurance, taxes, utilities, and more.
  • Be conservative when you estimate value; price the home right!  Some of the biggest losses for fix and flippers are due to overpricing homes and then not lowering the price quickly to get them sold.

Conclusion

Fix and flipping is not easy. It takes patience to find properties, money to fix them up, and market knowledge to sell them. If you can master fix and flipping, it can create an awesome income and be a lot of fun as well. Becoming a successful fix and flipper does not happen overnight.

Build a Rental Property Empire

Categories Fix and Flips

Source: investfourmore.com

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[UPDATED, 2021]

Pay Private Mortgage Insurance (PMI) or play the wait-and-save game? That’s the dilemma for a majority of would-be homebuyers. It’s rarely an easy (or fun) choice.

The Dilemma

Coming up with a 20% down payment can take years. With home prices increasing 5-10% annually, the home of your dreams is sure to cost quite a bit more in 2026. Rather than save, some homebuyers opt to pay PMI instead. Most future homeowners don’t know what PMI is and how much it may cost them.

What’s the Purpose of PMI?

Usually you purchase insurance to protect yourself. PMI works differently: basically you pay to protect the mortgage lender in the event you can’t pay the mortgage. It’s basically a mortgage lender’s insurance to protect themselves if a borrower stops making payments.

In general, mortgage lenders consider buyers who put at least 20% down to have enough skin in the game that they’re low risk. That makes everyone that puts down less than 20% a riskier investment, so they require them to pay PMI.

The Upside of PMI

The good news about PMI is that it’s not too expensive and you don’t pay it forever. Your lender typically requires you to pay PMI until you get to a Loan-to-Value (LTV) ratio of 80% loan to 20% equity. Once you do, you can request your PMI be cancelled, unless you’ve taken out a FHA loan (PMI never falls off when you choose this loan type). PMI also doesn’t cost too much, although the amount you pay can vary. Below are a few ways to lower your payment.

Commonly Asked PMI Questions

How much will I pay in PMI?

Homebuyers required to pay PMI typically pay around 0.5% annually of the total amount borrowed, with the cost split across all 12 months. Here’s some examples:

  • $180,000 loan ($200,000 with 10% down), PMI $75/mo
  • $285,000 loan ($300,000 loan with 5% down), PMI $125/mo

When will I be done paying PMI?

This depends on what type of loan you take out. Here’s a quick guide:

  • FHA: If you take out an FHA loan, mortgage insurance continues for the life of the loan. Ouch. You’d have to refinance your loan to get rid of it.
  • Conventional: On a conventional loan you only pay PMI until your equity reaches 20%.

How can I avoid paying PMI entirely?

Your house is probably your biggest expense, and the thought of spending extra money each month is as appealing as week-old sushi. Do you have to pay PMI? No, not if you do any of the following:

  • Put 20% down. Call the parents, check in with Grandma, collect every debt from your former roommates. When you put 20% down, you don’t pay PMI at all.
  • Opt for an 80-20 piggyback loan. 80-20 mortgage is paid through two loans, a first and a second mortgage. The 80 first mortgage covers the home loan; the 20 second mortgage is the down payment. The second loan in a piggyback loan usually has a higher interest rate.
  • Look for owner financing. In some situations, owner financing works like rent-to-own, in which case you probably won’t be required to pay 20% down or PMI.
  • Shop for homes at a lower price point. Consider the difference in down payment for a $250,000 home versus a $300,000 home: (we’ll save you the math: it’s $10,000). Lower price homes may fit your savings account better—and you can trade up or add on later.
  • Check out Homie Loans™. Homie Loans™ can look at your personal financial situation and tell how you can lower your PMI. Homie Loans™ may be able to help you with a new loan.

To Pay or Not to Pay? The Decision is Yours

No one wants to pay extra each month for their home, but if paying PMI means you can buy a $300,000 home now vs. waiting five years while you save, paying a few thousand in PMI over that same period can make a lot of financial sense. Plus, the $300,000 home you purchase now starts building equity ASAP and will likely increase in value each year you live there.

We’re Here to Help

There’s a lot to consider when choosing to pay PMI vs. wait and save for a 20% down payment, but we hope we’ve given some helpful tips to guide you in the right direction. If you have any additional questions, or would like to begin the home buying process, click here to learn more about how to get started. We’d be happy to help you start your search for your dream home!

Source: homie.com

Apache is functioning normally

Have you heard about Fetch Rewards? My Fetch Rewards Review will show you how to earn free gift cards by simply snapping a picture of your receipts with your phone. That’s it – Fetch is really that easy!

Fetch Rewards is a cash back and gift card cell phone app that rewards you for purchases that you’ve already made.

With this app, you can scan your grocery receipts (from any grocery store or wholesale club, any time) and earn free gift cards.

Plus, Fetch Rewards is free. You don’t have to pay money to sign up or to use the app.

I will explain more in my Fetch rewards app review, but with Fetch, you earn points when you submit your receipts to the Fetch Rewards app from any grocery store, clothing store, restaurant, gas station, and more. Yes, ANY!

Then, you redeem your points for gift cards (to places such as Target, Amazon, or Apple) and other rewards.

All you have to do is take a picture of your receipt with your cell phone and easily earn points.

Here’s how Fetch Rewards works:

  1. Shop like you normally would
  2. Scan your receipt after you’re done
  3. Earn points on Fetch Rewards

You can sign up for Fetch Rewards here. 

Content related to my Fetch Rewards review:

Fetch Rewards Review

 

What is Fetch Rewards?

I want to start my Fetch Rewards review with some basic information about the company and app. Fetch Rewards is based out of Madison, Wisconsin, and this shopping app has helped millions of people save money with the tap of a button as you simply scan physical and digital receipts.

Every month, over 11,000,000 people use Fetch Rewards. It is super easy to use Fetch and receive free gift cards.

I keep saying it’s simple because it really is! Every time you shop or dine out, you can scan your receipt into the Fetch Rewards app.

You can scan receipts from any grocery store, clothing store, pet store, home improvement store, club store, restaurant, gas station, and more. Basically, anywhere you shop, you can snap a picture of the receipt and scan it into Fetch.

You can even use your digital receipts from online purchases such as Amazon, Target, Instacart, and more by connecting your online accounts.

If you have a receipt, then you can scan it!

You earn points when you submit your receipts, and Fetch pays you in points that you can redeem for gift cards. 

There are many redemption options. Here are some of the places you can receive gift cards from:

  • Starbucks
  • Dunkin Donuts
  • Amazon
  • Target
  • Visa gift cards
  • Airbnb
  • Old Navy
  • Ulta
  • Barnes & Noble
  • Bass Pro Shops
  • Instacart
  • Sam’s
  • BJ’s
  • Best Buy
  • Lowe’s

And so many more!

You can also decide to put your points towards charitable organizations, such as The Red Cross or the Clean Water Fund. You can even use your points to enter sweepstakes in the Fetch app.

Don’t worry, I’ll explain more about how to redeem your points further down in my Fetch Rewards review.

 

How does Fetch Rewards work?

Here’s how Fetch Rewards works:

  1. Sign up and download Fetch Rewards by creating an account or connecting a Google or Facebook account account, and then make a password for your account.
  2. Go shopping like you normally do.
  3. Scan your first receipt and earn points. To do this, you simply go to your Fetch Rewards app and click on the orange circle at the bottom of your screen that says “Snap.” You then take a picture of your receipt. If you have a digital receipt, you can just tap on the blue circle instead.
  4. Redeem your points for gift cards, make charitable donations, enter sweepstakes, and more.

I have personally used Fetch to prepare for my Fetch Rewards review, and I can promise you it’s just that simple!

 

How much can you earn with Fetch Rewards?

The amount you can earn on Fetch Rewards really depends on your spending, whether you are completing the Fetch Special Offers, and so on.

Because I am writing this Fetch Rewards review, I wanted to use the app for a while to give you the best review possible, and I was able to earn around $56 in free gift cards in 2-3 months by simply spending how I normally do. I didn’t put any additional effort in the app other than just scanning my shopping receipts.

As you can see, Fetch Rewards clearly won’t make you rich, but you can easily make a little extra money shopping like you normally do.

I also don’t think that I spent more than 20 minutes total in the Fetch app. It’s easy to use and only takes like 10 seconds to scan a receipt. You don’t have to do anything else.

 

What stores can I use for Fetch Rewards?

The great thing about Fetch Rewards is that you can use any retailer or store where you buy groceries, from big box stores, to mom and pop stores, to drug stores, convenience stores, hardware stores, liquor stores, gas stations, club stores (such as Costco), and more.

With any receipt I get, I scan it into the Fetch Rewards app. It takes less than a minute, and you earn points with every scan – so easy!

Plus, you don’t have to jump through any hoops to get points. You don’t need to pre-select the offers in the Fetch Rewards app or scan barcodes, plus there are no surveys or ads. Simply go shopping at your favorite retailers just like usual.

You simply scan your receipt after you are done shopping and earn points.

 

How many receipts can I scan on Fetch a day?

Fetch Rewards allows you to submit 35 receipts within a 7-day period. Electronic receipts that are processed on your account do not count toward the 35 receipt limit.

Other things to know about using Fetch Rewards:

  • Fetch Rewards works for stores located in the United States and Puerto Rico.
  • You have 14 days to scan your receipts to earn points.
  • When you scan your receipts, your receipt must include the store name, the items that you bought, the date of your purchase, the store’s address, and the total amount that you spent. All of that information is included on your receipt.
  • If you scan a receipt with a participating item from the Special Offers tab, then you will get bonus points.
  • If you have a long receipt, you simply just snap more pictures to make sure that your whole receipt is included.
  • You should never make fake receipts or scan the same receipt twice in order to try and get more points. This violates Fetch’s terms of service. Always be honest!

 

Does Fetch Rewards take gas receipts?

Yes, you can scan your gas receipts with Fetch Rewards.

If you’re looking to earn even more from your gas station purchases, then I recommend Upside.

Upside is an app that helps you find gas stations, groceries, and restaurants where you can earn cash back. You simply sign up for a free account, and then look at the Upside app to find places near you.

You can earn up to $0.25/gallon cash back at gas stations, up to 30% back on grocery purchases, and up to 45% back at restaurants.

You can check out Upside here to learn more.

Fetch Rewards Special Offers

What receipts give you the most points on Fetch?

There are several main ways that you can earn points on Fetch Rewards, such as:

  1. Scanning receipts. When you purchase something, whether it be online or in-person, you can take a picture of your receipt with your cell phone and earn points. Every time you scan a receipt in the app, you will receive a minimum of 25 points.
  2. Complete special offers. When you are logged into your Fetch Rewards account, you can see what products will give you the most points. As you can see in the image above, you simply just go to the Fetch Rewards App and go to the Discover tab. There, you will see what items will earn you the most points and extra points. Special offers can give you anywhere from 250 points to even over 5,000 points. New special offers are added almost every day too, so even if you don’t see something today, there may be something that interests you tomorrow. Now, you don’t have to look at the Discover page if you don’t want to – it’s simply just another way to earn more points. You can just use Fetch Rewards and scan your receipts without ever doing anything else in the Fetch Rewards app.
  3. Refer friends and family. Sometimes, you can receive around 2,000 to 4,000 points by referring a new user. You can simply head to the Refer A Friend tab in the Fetch Rewards app to find your referral code.
  4. Joining the Huggies Rewards+ Club. If you use Huggies diapers, you can earn up to 50,000 points by simply purchasing certain Huggies items, such as Huggies Diapers or Huggies Little Movers. Plus, you can get Huggies special offers points as well which are quite high as well.
  5. Save on prescriptions. With Fetch, you can also save on your prescriptions. GoodRx is a free prescription price comparison tool that anyone can use. Simply head to your “Me” tab and click on GoodRx. You can then show this card when paying for prescriptions. You’ll get 10,000 points on your first prescription purchase, and then 1,500 points for future purchases and refills.

For me, I mainly just scan my receipts and refer others to Fetch Rewards. But if I wanted to earn more, there are several other great ways to increase the amount of rewards points that I can earn.

 

How many points equal a dollar on Fetch?

On average, 1,000 points equals $1 in rewards.

10,000 points is equivalent to around $10.

 

How do I redeem a free gift card from Fetch Rewards?

To redeem a Fetch reward, you will simply go to your Fetch account, and look at the bottom of the app. Look for the Rewards tab and tap on that.

Here, you will see what you can use your points on, such as:

  • Gift cards up to $50
  • Sweepstakes entries
  • Charitable organizations
  • Fetch merchandise, such as t-shirts

Then, you click on the button that shows how many points you want to use.

Next, you click on the orange button that says “Get My Reward” at the bottom.

You will then be asked to confirm that this is what you would like to do. It typically takes around three days to process your redemption request.

Once your reward is ready, you will get a notification. You can then go to your Rewards tab, then click on “My Rewards” to find your reward. Here, you will see your gift card code so that you can redeem your gift card at the company that you have chosen.

What’s the Fetch bonus code?

Fetch Rewards does not currently have an active bonus code. But, once they do, I will update this and let you know.

 

What is the catch with Fetch Rewards? How does Fetch Rewards make money? What does Fetch Rewards do with your receipts?

These are all great questions, and they are definitely things I want to cover in this Fetch Rewards review.

Fetch Rewards is so easy to use, but what’s in it for them? Why do they give out rewards and free gift cards just for scanning your receipts?

Fetch Rewards is paying you for the data they get from your receipt. They don’t see your name or other private or personal information. Instead, they are observing trends in shopper behavior. They then use this information to help their partners better understand their customer’s shopping habits.

Fetch Rewards also makes money by finding good deals for those who are signed up for Fetch Rewards. The Special Offers section in the Fetch Rewards app is an area where companies pay to be featured in this list, sort of like an advertisement. Companies know that they can get a lot of people looking at their company in the Fetch Rewards app, so they pay Fetch Rewards for this advertisement.

 

Is Fetch Rewards safe?

Yes, Fetch Rewards is safe to use.

They go through many steps to protect your personal information, and all of the data that they collect is anonymized and aggregated with everyone else’s, so your personal information is never shown.

Also, your receipts only show the last five digits of your credit card number, so you don’t have to worry about that being shared either because Fetch can’t see it.

 

Do my Fetch Rewards points expire?

If your Fetch Rewards account is not used for 90 days, then your points will expire. Your account will receive inactive status if you haven’t submitted any receipts or redeemed any rewards in a 90-day period.

This means that you just simply need to scan a receipt or redeem your Fetch points so your points never expire. If you get in the habit of scanning your receipts every time you shop, you shouldn’t have a problem with expiring points.

It’s very easy to stay active as pretty much everyone spends money in a 90-day period.

 

Is Ibotta or Fetch better?

Fetch Rewards and Ibotta are very similar.

Fetch Rewards is a little easier to use than Ibotta because all you need to do is scan your receipt into the Fetch Rewards app, and then you are done. With Ibotta, it’s more like clipping coupons and takes a little more time, but you may be able to earn a little more with Ibotta.

The great thing is that you can use the same exact grocery receipt for both Fetch and Ibotta. So if you have the time, you can try using both to earn even more rewards and free gift cards. This will allow you to increase your earnings by doing very little extra work.

Here’s how Ibotta works:

With Ibotta, you simply create an Ibotta account, unlock rebates and rewards, go shopping, verify your purchases, and then get cash.

You can redeem rebates from over hundreds of stores, such as Walmart, Target, Kroger, Publix, Walgreens, Home Depot, Old Navy, Chewy, and more.

You can also earn cash back online and in-store with Ibotta.

Ibotta is one of the easiest money making apps because you’re making money shopping like you normally do. They pay in cash or gift cards to Amazon, Starbucks, and other stores.

 

Is Fetch legit? – Fetch Rewards Reviews

Yes, Fetch Rewards is legitimate.

I looked through other online Fetch app reviews and found it’s rated 4.8/5 in the App Store with over 2,600,000 ratings.

In the Google Play store, the average Fetch app review is 4.6/5 stars with over 475,000 reviews on Fetch rewards and over 10,000,000 downloads.

You can see even more Fetch Rewards reviews on Trustpilot.

 

How do I contact Fetch Rewards?

If you have any questions or concerns with Fetch Rewards, you can contact them at [email protected].

You can also go to your app, click on the “Me” tab on the bottom, then click on “Help Center,” then “Contact Us.”

Here’s a screenshot of my Fetch Rewards Account. In 2 months, I have earned 55,566 points, which is equal to a little over $50 in free gift cards.

My Fetch Rewards Review

I hope you enjoyed my Fetch Rewards review. I have been using it for several months now and it is very easy to use.

Fetch Rewards rewards shoppers for shopping at their local supermarket and other popular retailers.

With Fetch Rewards, you can start earnings points by submitting both physical receipts and e-receipts so that you can turn your points into Amazon gift cards, Visa gift cards, and more. There’s no coupon clipping and it is very easy to use.

Simply just upload receipts that you have and earn Fetch Rewards points.

You can upload receipts from retailers such as Target, Walmart, Costco, Publix, Kroger, Walgreens, Home Depot, and more. Small stores, big stores, and everything in between.

This is a must-have shopping app that will help you to save more money, without spending a lot of extra time or effort on your end.

You can sign up for Fetch Rewards here.

Do you use Fetch Rewards? What other questions do you have for this Fetch Rewards review?

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Source: makingsenseofcents.com