Mortgage rates climbed for the fifth consecutive week Thursday, following recent jobs and inflation reports that surged past forecasts and set expectations that decades-high interest rates could stay higher for longer.
The persistently higher mortgage rates are putting added strain on today’s would-be homebuyers who are also confronting elevated home prices due to a lack of inventory of homes for sale.
The 30-year fixed-rate mortgage averaged 7.57% in the week ending October 12, up from 7.49% the week before, according to data from Freddie Mac. A year ago, the 30-year fixed-rate was 6.92%. The last time rates were this high was in December 2000.
“The good news is that the economy and incomes continue to grow at a solid pace,” said Sam Khater, Freddie Mac’s chief economist. “But the housing market remains fraught with significant affordability constraints. As a result, purchase demand remains at a three-decade low.”
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
Mortgage rates have spiked during the Federal Reserve’s historic inflation-curbing campaign — and while a good deal of progress has been made, it is not yet as low as the Fed would like.
The Fed’s preferred inflation measure, the core Personal Consumption Expenditures index, is currently 3.9%, which is nearly double the Fed’s target of 2%. But it is the lowest annual increase that index has seen in two years and is a positive step toward the Fed’s target.
Rates ‘higher for longer’
“Last week’s jobs report exceeded investor expectations, with 336,000 net new jobs, resulting in a late-week surge in the 10-year Treasury yield and a bump in mortgage rates,” said Hannah Jones, senior economic research analyst at Realtor.com.
But the incursion by Hamas into Israel this weekend created geopolitical uncertainty that brought mortgage rates lower: Investors sought out the safety of the bond market, sending the yield on the 10-year Treasury note falling earlier this week.
Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow. While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them.
“Though the weekly movement settled from last week’s surge, rates remain near two-decade highs and more than 4 [percentage] points higher than two years ago,” said Jones.
“The Fed’s ‘higher-for-longer’ monetary policy keeps upward pressure on rates, making a descent unlikely until new data suggests that inflation is moving in the right direction.”
More applications for adjustable-rate mortgages
Even as rates were climbing last week, applications for mortgages ticked up slightly, mostly because of an increase in applications for adjustable-rate mortgages, or ARMs, according to the Mortgage Bankers Association.
“Mortgage applications increased for the first time in three weeks, pushed higher by a 15% jump in ARM applications,” said Bob Broeksmit, CEO of MBA. “With mortgage rates well above 7%, some prospective homebuyers are turning to ARMs to lower their monthly payment in the short term amidst these high mortgage rates.”
MBA’s average rate for a fixed-rate 30-year mortgage last week moved up to 7.67%, while the average rate for a 5/1 ARM, which has a fixed rate for the first five years and resets once per year after that, dropped to 6.33% from 6.49%. (Freddie Mac does not track average rates for adjustable-rate mortgages.)
Adjustable-rate mortgages accounted for 9.2% of all mortgages last week, according to MBA. That’s the highest share since November 2022, when rates on 30-year fixed rate loans also were over 7%.
Prospective buyers have had to get creative to prepare financially for homeownership, said Jones.
“Though buyers have shown signs of adjusting to the higher-rate environment, limited inventory has kept home prices elevated, cutting further into the buying power of shoppers hoping to find a suitable home,” she said.
While many repeat buyers can leverage their existing home equity in today’s expensive market, she said, younger homebuyers often have a harder time coming up with the money for a home purchase.
At today’s mortgage rate, a household typically needs an annual income of at least $120,000 to purchase a median-price US home, assuming a 20% down payment, Jones said.
Northwestern Mutual Study Finds Gen Z Wants to Talk About Family Finances Far Earlier than Previous Generations Gen Z trusts family members and advisors – and not “FinTok” influencers – for financial advice Millennials want to talk to parents about wills, life insurance, inheritance and long-term care plans a full decade earlier than Boomers+ MILWAUKEE, … [Read more…]
2023 has been a difficult year for prospective homebuyers, who have faced soaring mortgage rates, expensive home prices and low housing inventory. But last week, several important mortgage rates began sliding downward in what could be an about-face in long-term highs. There was a marked improvement in 15-year fixed and 30-year fixed mortgage rates, and the 5/1 adjustable-rate mortgage also decreased.
Since early 2022, when the Federal Reserve kicked off aggressive interest rate hikes to combat inflation, mortgage rates have increased steadily from their historic pandemic-era lows. Mortgage rates are now at their highest peak in more than two decades. Home affordability is at the worst level in nearly four decades, and home loan applications have made new cyclical lows, according to the housing authority Fannie Mae.
While the central bank does not directly set mortgage rates, they’re affected by the Fed’s rate decisions. During its Nov. 1 policy meeting, the Fed held its key interest rate steady at a range of 5.25% to 5.5%. Historically, when the Fed stops hiking rates, mortgage rates tend to cool, according to Logan Mohtashami, lead analyst at HousingWire. However, inflation is still too high, and there’s a chance the Fed may carry out one more rate hike in December.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Fluctuations in the mortgage and housing markets are always going to happen. That’s why experts say it’s a good idea for homebuyers to focus on what they can control: getting the best rate for their financial situation.
Mortgage rate trends
With average mortgage rates around 8%, the question is what the rest of the year has in store for prospective homebuyers. Experts say mortgage rates will remain near their current levels in the coming weeks. Fannie Mae expects the average 30-year fixed mortgage rate to close out the year at 7.3%.
Moreover, wage growth hasn’t kept up with inflation, and household income hasn’t outpaced increased housing costs. According to a recent report by the real estate firm Redfin, homebuyers need an income of $114,627 in order to afford a median-priced house. That’s $40,000 more than what the typical US household earns.
“As long as prices stay elevated, the way to help ease housing affordability is for wages to grow and mortgage rates to fall,” Mohtashami said.
Over the long term, progress on inflation and other key economic indicators could potentially ease some of the upward pressure on mortgage rates. But even when the Fed stops hiking interest rates, it generally takes 12 months before mortgage rates see substantial declines, according to Niladri Mukherjee, chief investment officer at TIAA Wealth Management.
“Until mortgage rates drift back down to a reasonable level, let’s say 5.5% or 6%, I don’t think mortgage applications are going to pick back up again,” Mukherjee told CNET.
Average mortgage interest rates today
We use data collected by Bankrate to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the country:
Loan type
Interest rate
A week ago
Change
30-year fixed rate
7.79%
8.05%
-0.26
15-year fixed rate
7.15%
7.19%
-0.04
30-year jumbo mortgage rate
7.75%
8.02%
-0.27
30-year mortgage refinance rate
7.92%
8.15%
-0.23
Rates as of Nov. 6, 2023.
What homebuyers should know about mortgage rates
High mortgage rates discourage prospective homebuyers and potential sellers alike. Most homeowners have an interest rate well below 6% and aren’t willing to move because it would mean giving up their low mortgage rate, said Jason Walter, real estate agent at Realty One Group Complete. “That’s one of the main reasons why existing housing inventory remains 40% below pre-COVID levels,” he said.
While today’s housing market is especially intimidating for first-time homebuyers, it doesn’t mean it’s unrealistic to buy. That all depends on your financial situation and long-term goals.
The most important thing is to make a budget and try to stay within your means. Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right for you.
What is a good loan term?
When picking a mortgage, remember to consider the loan term, or payment schedule. The most common mortgage terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages can either be fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are set for the duration of the loan. The interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the current interest rate in the market.
When choosing between a fixed-rate and adjustable-rate mortgage, consider the length of time you plan to live in your home. If you plan on living long-term in a new house, a fixed-rate mortgage may be the better option. Fixed-rate mortgages offer more stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. As a result, a growing share of homebuyers are leaning toward ARMs.
30-year fixed-rate mortgages
The average 30-year fixed mortgage interest rate is 7.79%, which is a decline of 26 basis points from one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed mortgage, the most common loan term, is a good option if you’re looking to minimize your monthly payment. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one, but often a higher interest rate.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 7.15%, which is a decrease of 4 basis points from seven days ago. Though you’ll have a bigger monthly payment compared to a 30-year fixed mortgage, a 15-year loan will usually be the better deal if you can afford the monthly payments. You’ll usually be able to get a lower interest rate, pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 7.08%, a slide of 4 basis points compared to last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. But you could end up paying more after that time, depending on how the rate adjusts with the market rate. For borrowers who plan to sell or refinance their house before the rate changes, an ARM could be a good option. If not, changes in the market may significantly increase your interest rate.
How to find personalized mortgage rates
You can get a personalized mortgage rate by contacting your local mortgage broker or using an online calculator. To find the best home mortgage, take into account your goals and current finances. Be sure to look at the annual percentage rate, or APR, which reflects the mortgage interest rate plus other borrowing charges. By comparing the total cost of borrowing from multiple lenders, you can make a more accurate apples-to-apples comparison.
Your specific mortgage rate will vary based on factors including your down payment, credit score, debt-to-income ratio and loan-to-value ratio. Having a higher down payment, a good credit score, a low DTI and LTV or any combination of those factors can help you get a lower interest rate.
The interest rate isn’t the only factor that affects the cost of your home. Be sure to also consider fees, closing costs, taxes and discount points. You should shop around and talk to several different lenders from local and national banks, credit unions and online lenders to find the best mortgage for you.
Stubbornly elevated mortgage rates created more affordability pressures for homebuyers in October, according to ICE Mortgage Technology’s November Mortgage Monitor report.
In October, the monthly payment needed to purchase a median-priced home exceeded the $2,500 threshold for the first time ever. It now takes 40.6% of the median household income to afford monthly mortgage payments, making housing the least affordable it’s been since 1984.
“For all but a single day, interest rates spent the entire month of October above 7.5%, topping out at 7.80% on Oct. 25,” ICE Vice President of Enterprise Research Andy Walden said in a statement. “Mortgage rates haven’t been that high in 23 years, which continues to hammer affordability.”
However, the lack of housing inventory is also another driver of the high home prices.
With a one-two punch of higher mortgage rates and fewer homes on the market, consumer demand fell in October. The number of purchase mortgage applications declined 47% below pre-pandemic levels for the week of Oct. 26.
Meanwhile, the refinance market remained almost “non-existent,” with the exception of equity-driven, cash-out refinance transactions, ICE reported.
“In fact, the refinance market in general is but a shadow of what it once was,” Walden said. “There are pockets of cash-out lending occurring among a particular set of borrowers, but even that has been a niche market.”
Rising home prices are boosting home equity
The good news is that U.S. mortgage holders are sitting on some $16.4 trillion of home equity, out of which $10.6 trillion is considered “tappable equity.”
“Unfortunately, with borrower retention at a 17-year low, lenders are losing customers seeking to tap equity via cash-outs,” Walden said. “What’s notable is that they are losing this business not due to their rate offerings, but rather an inability to identify and market to those borrowers likely to transact in today’s market.”
Overall, the coastal areas, primarily in California and Florida, remain the least affordable. New York City, Nashville, Las Vegas, Seattle and Salt Lake City round out the list of the most expensive markets.
In 75% of the U.S. markets studied, borrowers need to earn 10 percentage points more than the local market’s income to afford the median-priced home.
Declining housing affordability pressuring Millennials Data from the BofA shows Millennials have experienced a near 20% increase in mortgage debt since the fourth quarter of 2021 compared to Gen X and Baby Boomers. With the rise of inflation, the Federal Reserve has hiked interest rates 11 times since March 2022 in an effort to balance … [Read more…]
If you’re like most Americans, you love your plastic and swiping or tapping through your day. In fact, about 84% of Americans have at least one credit card, with the average wallet holding three.
The national love affair with credit cards is built on their convenience, how they provide a line of credit to enable buying things we can’t quite afford to pay for with cash, and those enticing rewards that are often offered.
But the picture is not altogether rosy: As a nation, US citizens have more than $1 trillion in credit card debt. And with interest rates averaging over 20%, that debt can be hard to chip away at.
To help you better understand how credit cards work, how much credit card debt people typically have, and what are smart strategies for paying down credit card debt, keep reading. You’ll learn interesting facts as well as helpful hints.
10 Facts About Credit Card Debt
Ready to learn more about credit card debt, a form of revolving debt? These 10 credit card facts will help you better understand who has how much debt and where difficulties paying the balance typically crop up.
1. More Than Half of Americans Have Outstanding Credit Card Debt
A majority of active credit card accounts carry a balance, according to the American Bankers Association. The specific figure is 56%. This indicates that carrying a balance is a common situation for many Americans, even with the eye-wateringly high interest that’s charged.
Recommended: Tips for Using a Credit Card Responsibly
2. Households with Credit Card Debt Owe an Average of Almost $8,000
American families had an average credit card balance of $7,951, according to calculations using Federal Reserve Bank of New York and US Census Bureau data. In 2013, that figure was $5,508.
Just because this is the norm, it doesn’t mean that it’s ideal: The best-case scenario is to only charge as much as you can afford to pay off in full every month. 💡 Quick Tip: A SoFi Credit Card provides access to a line of credit. It’s essentially a short-term loan that you repay each month.
3. It Can Take More Than a Decade to Pay Off $7,951 in Debt
Racking up credit card debt takes much less time than getting rid of it. Let’s assume that like the average American, you have $7,951 in credit card debt, as noted above.
At the current average interest rate of 21.19% on existing accounts, with a $150 monthly payment, it would take you 158 months — or 13 years and two months — to pay that off. And you would pay $15,606.40 in interest, or almost twice the original amount you charged!
But the more you can pay each month, the faster you’ll extinguish the debt. In this example, if you increase your monthly payment to $500, you’d pay off the debt in just a year and seven months and only spend $1,465.06 in interest. These scenarios are, however, assuming that you are not accruing new debt and therefore paying off larger credit card bills.
4. Gen Xers Have the Most Credit Card Debt
Ready for more credit card facts? Here is how age and debt intersect. Gen Xers, the generation that includes people born between 1965 and 1980, have the highest average credit card balance: $9,589. Next in line are Baby Boomers, born between 1946 and 1964, who have somewhat less debt — $8,192 on average — than Gen Xers.
5. Alaskans Have the Highest Credit Card Debt
In a state by state analysis of credit card debt, Alaska residents led the pack with $7,324 per person. Those who live in Wisconsin were found to have the lowest at $4,987.
6. 42% of College Students Have Credit Card Debt
The habit of carrying credit card debt unfortunately starts early, with more than four out of 10 college students carrying a balance on their credit cards. Of these, 28% say their debt exceeds $2,000. They say they accumulated that amount due to nonessential purchases, such as impulse buys, Uber rides, or fancy coffees. 💡 Quick Tip: To avoid paying interest, pay off your credit card bill in full and on time each month. Only making the minimum payment each month can lead to paying a lot in interest over time.
7. One in Three Americans Owes More On Credit Cards Than They Have Saved
This may be a scary fact about debt, but one in three US adults owes more on their credit card than they have saved. In fact, 36% say this is the case, versus just 22% a year earlier. That shows a two-sided problem: too much spending and too little saving.
Recommended: Paying Off $10,000 in Credit Card Debt
8. Richer People Have Credit Card Debt Longer
More interesting credit card debt facts: People who earn more than $100K a year are more than two times as likely as lower earners to have credit card debt for five years or longer. Among six-figure earners, 72% say they have had debt for at least a year vs. 53% of those who earn less than $50,000 per year. When considering those who’ve held credit card debt for five years or more, you’ll find that 27% of the high earners vs. 13% of the lower earners are in that situation.
Perhaps this statistic suggests that high-earners feel they have the means to handle debt and therefore don’t rush to repay it.
9. Men Have More Debt Than Women
Men have an average of $6,357 in credit card debt, while women have an average of $6,232. Perhaps not a huge difference, but so much for the myth of women shopaholics using credit cards to fill an overflowing closet with shoes.
There are many potential reasons for this difference, but some studies have found that women are less comfortable with debt.
10. There’s a Good Chance You’ll Die With Credit Card Debt
Here’s the last of these debt facts, and it can be a grim one: Nearly three-fourths of Americans are in debt when they die, according to one benchmark study.
And 68% die with credit credit card balances — more than the share who have mortgage debt (37%) or car loans (25%) when they pass away. That’s not exactly a desirable legacy. Although family members don’t generally become responsible for the debt, it may be taken out of the deceased person’s estate.
Why Is Credit Card Debt So Common?
There are many reasons that Americans have so much credit card debt, from rising healthcare and educational costs to lack of emergency savings to a cultural consumerism that encourages people to live beyond their means.
Regarding that last point, you may hear about the phenomenon referred to as Fear of Missing Out or FOMO spending, which is a modern version of “keeping up with the Joneses.” In other words, because your friends, coworkers, or influencers you follow on social media are buying something, you feel you should as well.
Or perhaps part of the problem can be explained by what is known as lifestyle creep. This situation occurs when you earn more money but your spending rises too, so your wealth doesn’t grow. For example, if you took a new, higher-paying job and decided to lease a luxury car or take a couple of lavish vacations, your wealth wouldn’t increase, though your credit card balance might.
Tips on Avoiding Credit Card Debt
Perhaps these facts about debt will motivate you to work on avoiding a credit card balance. If so, the following strategies could help.
• Review different budgeting methods, and find one that works for you. Many people use the popular 50/30/20 budget rule, for example. Also, see if your bank offers tracking and budgeting tools to help you rein in spending.
• Gamify savings. You might try sleeping on it rather than making impulse buys to see if the urge to spend passes; it often does. Or go on a spending freeze for a specific period of time or for a certain kind of purchase (say, no dining out in March; no clothing purchases in April).
• Try buying with cash or your debit card vs. plastic. That will help prevent your debt from snowballing.
• Consider trying a balance transfer card, which typically gives you a period of zero interest during which time you can pay down what you owe.
• In terms of a debt payoff strategy, you might investigate getting a personal loan with a lower rate than what your card charges. That could allow you to pay off the plastic debt and then have more manageable monthly payments.
• Seek help if you are really struggling to get your debt under control. Nonprofit organizations can help you accomplish this.
Opening a Credit Card With SoFi
Now that you know some facts about credit card debt and ways to pay it off, you may be looking for a new card that better suits your financial and personal goals. Shopping around to compare features, such as interest rates and rewards, can be a wise move.
Looking for a new credit card? Consider a rewards card that can make your money work for you. With the SoFi Credit Card, you earn cash-back rewards on all eligible purchases. You can then use those rewards for travel or to invest, save, or pay down eligible SoFi debt.
The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1
Take advantage of this offer by applying for a SoFi credit card today.
FAQ
What are the main causes of credit card debt?
Credit card debt can crop up in a variety of ways. Sometimes it’s because expenses get pricier, whether due to lifestyle creep or inflation. Other times, it’s not being mindful about daily spending and making impulse buys. Given how many Americans have more credit card debt than money saved, it’s a common but challenging issue.
How much does the average person have in credit card debt?
Credit card debt facts reveal different angles on this number. The average American household has $7,951 in credit card debt. Some studies put the individual figure at $,5,573.
How serious is credit card debt?
Credit card debt can be very serious. It’s high-interest debt, and it can be difficult to pay off. It can make it hard for individuals to save for their future and can negatively impact their debt to income ratio, which can be an issue when applying for loans.
The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
1Members earn 2 rewards points for every dollar spent on purchases. No points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points as cash deposited into your SoFi Checking and Savings account, as a statement credit to a SoFi Credit Card account, as fractional shares into your SoFi Invest account, or as a payment toward your SoFi Personal Loan or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
1See Rewards Details at SoFi.com/card/rewards.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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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Did you know that for the median sale price in Spokane on a 30-year fixed-rate loan will cost buyers more than one million dollars?
SPOKANE, Wash. — Interest rates, home prices, and a lack of inventory are some of the reasons lenders said are why fewer people are applying for home loans in the last year. This means, for the median sale price in Spokane on a 30-year fixed-rate loan will cost buyers more than one million dollars.
A new snapshot report from the Spokane Association of Realtors shows inventory of homes on the market was up 2% in the month of September, despite the small increase, there is still not enough supply.
“There’s not enough homes on the market right now, to be able to drive down the prices,” said Troy Clute, Senior Vice President of Numerica’s Home Loan Center.
Clute said climbing interest rates are causing a trickle down effect, potential sellers who don’t want to let go of their low rates and buyers waiting for more options to open up.
“So a lot of people are on the sidelines, and they’re just going to wait until rates start to come down before they put their house on the market. So that continues to keep inventory at a low,” Clute said.
If interest rates are causing sellers and buyers to holdout, the question is, are rates today really out of the ordinary? Rocket Mortgage has tracked interest rates since the early 70’s.
You may be surprised to learn rates in the past have been much higher.
In the early 80’s interest rates nearly reached 13%, then through the early 2000’s interest rates actually hovered between 8-9%.
It wasn’t until the 2010’s when interest rates drop to 5% and then to, as low as 3% in the early 2020’s.
We have a whole generation now of people that that’s all they know, because it’s been a couple of decades. And these people entering the market right now are not conditioned to, to those types of rates. And neither is the market,” said Jennifer Hentges, SNAP Housing Counseling Program Manager.
It’s this shock, Hentges hears from people coming into SNAP for help buying a home.
“We have a lot of people coming in to the home buyer education courses, and they’re all enthusiastic. And when they start learning what it’s going to take, they get discouraged.”
The U.S. Census Bureau reports the average household income in Spokane is about $64,000.
For those looking to buy a home with that income Hentges said people will not be approved for the median home price.
“That income will buy you probably somewhere between 250 and maybe not even $300,000 house,” Hentges said.
This is the challenge for home buyers, the Spokane Association of Realtors report the median home price as of September was $409,000.
“The house payment for that amount at today’s rates is about $3,335, which is a huge payment,” Hentges said.
Hentges said this means a household needs to make about $115,000 to afford a home. However, it’s not just the monthly payment, over the life of the loan people will pay a lot more in interest.
The median home price in Spokane in September of 2020 was $315,000. The interest rate then was 2.93% for a 30-year fixed-rate loan.
This means over the life of the loan someone would pay about $474,000 with a monthly payment of about $1,300.
Today the median home price in Spokane is about $410,000. The interest rate is about 8.6% for a 30-year fixed-rate loan. A large portion is interest and the monthly payment more than doubled from 3 years ago, now more than $3,000 per month.
This is the number that may surprise you, at today’s interest rates you’ll pay more than one million dollars over the life of the loan.
“That’s not to say they can’t refinance. But it does make a very big difference in what they can expect to pay over the life of the loan,” Hentges said.
Lenders say you shouldn’t bank on it, and expect to pay the rate you receive for a while. The good news, homes in this market continue to appreciate in value.
“So I think getting in right now and buying a home. Even with a higher interest rate, you have the option of refinancing later,” Clute suggested.
SNAP offers home buyer education courses to help people navigate the process and connect them to down payment assistance programs.
“It’s amazing to watch people get a home when they didn’t think they were going to have a home, save their home from foreclosure when they thought there was no hope,” Hentges said.
Lenders said the days of 3% interest are behind us, it could be a while before we see rates like that again, if ever.
Their best advice to home buyers, ask for help from a loan counselor and make the move when the numbers make sense for your budget.
Watch the full interview with Troy Clute, Senior VP of Numerica Home Loan Center
Known as the hidden treasure of the Midwest, North Dakota is full of natural beauty, historic allure and modern conveniences. As more people discover the benefits of residing in the Peace Garden State, pinpointing the best places to live in North Dakota becomes increasingly essential. From cities steeped in history and picturesque towns beside expansive lakes to thriving economic centers, this state presents a ton of pristine living options.
Population: 126,748
Average age: 31.4
Median household income: $60,243
Average commute time: 15.0 minutes
One-bedroom average rent: $976
Two-bedroom average rent: $1,044
Often heralded as one of the best places to live in North Dakota, Fargo strikes an impressive balance between traditional midwestern charm and a forward-thinking atmosphere. With North Dakota State University fueling the city’s innovative spirit, the city simultaneously retains its historic heart, showcased in the well-preserved downtown architecture and the timeless appeal of the Red River Valley Fair.
There’s never a dull moment in Fargo, thanks to its eclectic mix of theaters, art galleries and events that rival much larger cities. The winters, though cold, come alive with community-led ice skating and snowboarding, while the warmer months are replete with lively street fairs and farmers markets. Foodies, too, find solace in Fargo’s evolving culinary scene, where traditional American fares comfortably coexist with international delicacies.
Population: 74,138
Average age: 37.4
Median household income: $75,715
Average commute time: 18.3 minutes
One-bedroom average rent: $995
Two-bedroom average rent: $1,030
As the state’s capital, Bismarck is the hub of political activity and offers residents the opportunity to engage closely with the state’s governance. The iconic Art Deco state capitol building, often referred to as the “Skyscraper on the Prairie,” stands as a testament to the city’s deep-rooted political legacy while overlooking the picturesque Missouri River.
The city’s parks and trails offer endless exploration possibilities throughout the changing seasons. A ton of local eateries serve everything from hearty North Dakotan classics to contemporary dishes, while local theaters and events keep the community spirit alive and buzzing. Hoping to get away for a weekend? The Bismarck Airport gives you access to the rest of the country in mere hours.
Population: 58,781
Average age: 29.4
Median household income: $53,611
Average commute time: 13.1 minutes
One-bedroom average rent: $925
Two-bedroom average rent: $1,125
Celebrated as one of the best places to live in North Dakota, Grand Forks masterfully combines a strong academic focus with a touch of classic Midwestern charm. Home to the University of North Dakota, the city enjoys the youthful energy and innovation associated with a collegiate atmosphere, resulting in a thriving local arts scene, cutting-edge research initiatives and an influx of diverse perspectives.
The Red River, which gracefully meanders through the city, provides a scenic backdrop for a range of recreational activities, from serene riverside picnics to invigorating water sports. Downtown Grand Forks is a delightful blend of historic buildings, contemporary shops and quaint restaurants that offer everything from traditional comfort foods to more avant-garde culinary experiments. Seasonal events, like the Greenway Takeover Festival, have solidified Grand Forks’ reputation as a community that knows how to come together and celebrate.
Population: 47,789
Average age: 32.1
Median household income: $68,543
Average commute time: 18.4 minutes
One-bedroom average rent: $935
Two-bedroom average rent: $1,015
Minot has a captivating mix of military significance, due to its proximity to Minot Air Force Base, and the warmth of small-town living. Dubbed “Magic City” because of its meteoric growth during the railroad era, Minot remains a beacon of rapid development and dynamism, giving residents an environment of opportunities and progress.
Scandinavian Heritage Park stands as a unique testament to the city’s rich ancestral ties, displaying enchanting replicas and monuments from Nordic countries, a nod to the region’s strong Scandinavian influence. Meanwhile, the annual North Dakota State Fair in Minot is an event like no other, drawing crowds from all across the region.
Population: 27,332
Average age: 30.9
Median household income: $75,061
Average commute time: 14.6 minutes
One-bedroom average rent: $825
Two-bedroom average rent: $995
Williston serves as a crucial nexus of the state’s thriving energy industry due to its position within the Bakken oil fields, making it attractive for young people looking for employment opportunities and relatively low home prices. This energy hub is not just about industry; it presents an intriguing blend of historical significance and a pulse of modern growth. The city has experienced waves of expansion and opportunity, all while maintaining a communal atmosphere that welcomes longtime residents and newcomers alike.
The city’s location near the confluence of the Yellowstone and Missouri Rivers provides a scenic landscape for various outdoor activities, from fishing trips to tranquil riverside contemplations. Moreover, local events, like the Band Day Festival, showcase the city’s commitment to community engagement and celebration.
Population: 25,167
Average age: 32.6
Median household income: $70,391
Average commute time: 15.2 minutes
One-bedroom average rent: $900
Two-bedroom average rent: $1,000
Consistently acknowledged as one of the best places to live in North Dakota, Dickinson is a gem situated at the gateway to the ruggedly beautiful Theodore Roosevelt National Park. The city seamlessly intertwines its rich past as a historic railway stop with its present-day significance in the energy industry, primarily due to its location within the Bakken oil formation. This combination ensures a dynamic local economy while preserving the charm of its heritage.
Outdoor enthusiasts consider Dickinson a true haven, given its proximity to the Badlands, which offers a striking landscape for hiking, horseback riding and wildlife spotting. Within the city limits, the Dickinson Museum Center showcases impressive prehistoric finds, a nod to the region’s fascinating geologic history.
Population: 24,447
Average age: 35.6
Median household income: $74,341
Average commute time: 17.7 minutes
One-bedroom average rent: $925
Two-bedroom average rent: $1,100
Mandan possesses a distinctive allure rooted in its rich history and scenic landscapes. As the seat of Morton County, this town has deep historical ties, especially with the indigenous tribes of the area, and remnants of this legacy can be found in places like Fort Abraham Lincoln State Park, once the home of the 7th Cavalry.
The city’s picturesque setting along the banks of the Missouri River presents countless opportunities to enjoy the great outdoors, from boating to fishing, ensuring residents are never short of nature-infused activities. Downtown Mandan offers a delightful selection of shops, restaurants and events, bringing the community together in celebration and camaraderie.
Population: 15,750
Average age: 37.9
Median household income: $49,038
Average commute time: 12.2 minutes
One-bedroom average rent: $790
Two-bedroom average rent: $780
Affectionately known as “Buffalo City,” Jamestown earned its moniker thanks to the presence of the National Buffalo Museum. This connection is made even more tangible by the presence of a live herd, including the famous rare white bison, residing on the edge of the city.
But the bison isn’t Jamestown’s only claim to fame. The city is adorned with the Jamestown Reservoir and its series of lakes, giving residents and visitors ample space for boating, fishing and kicking back under the North Dakota sun. Meanwhile, the historical 1883 Stutsman County Courthouse provides a glimpse into the area’s past, reflecting the city’s enduring commitment to preservation.
Population: 6,559
Average age: 39.7
Median household income: $54,629
Average commute time: 15.4 minutes
One-bedroom average rent: $470
Two-bedroom average rent: $590
Recognized as one of the best places to live in North Dakota, Valley City carries the charming title of “City of Bridges” with pride. This nickname comes from the many historic bridges that span the Sheyenne River, each with its unique design and story, creating picturesque vistas throughout the town. These bridges not only serve as functional connectors but also as a symbol of the city’s commitment to preserving its architectural legacy while fostering connections among its residents.
Surrounded by the scenic beauty of the Sheyenne River Valley, the city provides a tranquil environment complemented by resources for fishing, hiking and more. Valley City State University adds to the town’s dynamic energy, infusing it with academic prowess and events.
Population: 7,182
Average age: 40.7
Median household income: $40,037
Average commute time: 14.3 minutes
One-bedroom average rent: $565
Two-bedroom average rent: $645
Devils Lake holds a magnetic appeal with its beautiful lake and the plentiful outdoor adventures it offers. The town is enveloped by the stunning beauty of the Devils Lake Basin, which not only provides a haven for anglers, boaters and nature enthusiasts but also reflects the town’s resilient spirit in adapting to the lake’s fluctuating water levels.
The community in Devils Lake is closely knit, with residents taking pride in their hometown, enthusiastically supporting local businesses and coming together for numerous annual events. The town’s historic downtown area, coupled with its many shops and restaurants, provides a serene setting for leisure and socializing. Education is given prominence, with the local college serving as a hub for learning and community events.
Your new North Dakota apartment awaits
North Dakota stands out as a state that seamlessly merges gorgeous vistas with dynamic communities. For those seeking a mix of nature, history and modern attractions, North Dakota is a top contender.
The best places to live in North Dakota beautifully capture the state’s unique appeal, making every resident feel right at home. Whether you’re captivated by the historic bridges of Valley City or the fishing paradise of Devils Lake, there’s no question that there’s an apartment in North Dakota that’s perfect for you.
Want to learn how to get a free cell phone and even a free monthly phone plan? Cell phones can be expensive, so I get it. From buying the actual phone to paying for the monthly service plan, it can all add up so quickly. Learning how to get free stuff can really help you…
Want to learn how to get a free cell phone and even a free monthly phone plan?
Cell phones can be expensive, so I get it. From buying the actual phone to paying for the monthly service plan, it can all add up so quickly.
Learning how to get free stuff can really help you to save a lot of money.
Luckily, there are ways to get a free cell phone, and there are even affordable cell phone plans for those who need it.
Some of these programs are through the government, while others are given by wireless carriers competing for your business. Government-sponsored programs like the Lifeline program help low-income families stay connected by giving them free cell phones and discounted wireless plans. On the other hand, wireless carriers also give away free things occasionally to try and get new customers to switch to them.
Below, I will be talking about how to get a free cell phone from the government, how to sign up for free monthly cell phone plans, and how to get a phone and service if you don’t qualify for one from the government. Even if you don’t qualify, there are ways to get a cell phone or service for free.
Recommended reading:
Why Are There Free Cell Phones And Plans?
Free phones exist for a few different reasons. Below, I will be talking about free government cell phones specifically. In a further section, I will tell you how you can get a free cell phone if you don’t qualify for a free government cell phone.
Free government phone program
There are free cell phones offered by the U.S. government through two programs – Lifeline and the Affordable Connectivity Program (ACP).
These programs help low-income individuals stay connected, as phone service is important for daily tasks such as finding a job, allowing U.S. residents to call emergency services, and staying in touch with friends and family.
Lifeline and ACP give subsidies to the phone companies, which, in turn, provide free phones and service to eligible customers.
Overall, free government cell phones support the goal of changing lives positively by making sure that even those who don’t have enough money can still have access to a phone.
How to qualify for a free government cell phone
To qualify for a free government cell phone, you need to meet specific eligibility requirements. You may be eligible if:
Your income is at or below 135% of the federal poverty guidelines for Lifeline and 200% for ACP.
You participate in a qualifying federal assistance program such as:
Medicaid
Supplemental Nutrition Assistance Program (SNAP)
Supplemental Security Income (SSI)
Women, Infants, and Children (WIC)
Federal Public Housing Assistance (FPHA)
Veterans Pension and Survivors Benefit
There are also tribal assistance programs. If you live on Tribal lands, you can get Lifeline if your household income is at or below 135% or if you participate in any of the programs listed above, as well as Bureau of Indian Affairs General Assistance, Tribal Head Start, Tribal Temporary Assistance for Needy Families (Tribal TANF), or Food Distribution Program on Indian Reservations Assistance.
Only one ACP or Lifeline benefit is allowed per household (not per person).
Please visit the Lifeline Support website and ACP website to determine your eligibility and apply for the programs. You can also learn more about this on the Federal Communications Commission’s (FCC) website.
What kind of free government cell phone do you get?
If you are eligible for the ACP benefit or the Lifeline program, you may receive a one-time free cell phone from one of the phone companies partnered with the government.
The specific models of phones that you can get may vary, but they are usually basic smartphones and you won’t know the specific device until it is shipped to you in the mail.
Please note that the government doesn’t offer free iPhones as part of either program (but you may be able to get a free iPhone from one of the carriers below for switching to them).
Free government cell phone plans
If you are looking for a free wireless plan or a monthly service discount, there are many options for you.
When looking for a free government cell phone plan, it’s important to consider the options that are available to you. Different providers have their services through government programs like Lifeline and the Affordable Connectivity Program.
When comparing plans, think about factors such as:
Unlimited talk and text
Data allowances and the amount of high speed internet you get
5G or 4G LTE coverage
The specific plans and devices will vary depending on the provider and your location.
Step-by-step to getting a free government cell phone and service
Eligibility – First, you must figure out if your household is eligible for a free government cell phone plan. This usually depends on your household income, and the National Verifier uses data from different databases to determine if you are eligible or you may be required to show documents for proof.
Application – If you qualify, the next step is to apply for a plan. You can usually do this through the phone provider’s website or in person at a local office or retail location, and you will want to make sure you have documentation proving your household income when you apply.
Device selection – Based on availability, you’ll be able to choose your device, such as an Android smartphone or a Samsung Galaxy device. Some plans may offer iPhones or tablets as well, but it’s not as common.
Activate and use your new phone – Once you receive your device, follow the instructions for activating your new phone, and enjoy your new free government cell phone plan and service.
As you can see, getting a free government cell phone plan is a pretty easy process that can save you money.
Best Places To Get A Free Cell Phone And Plan
In this guide, you will learn about the best places to find a free cell phone. Here are the best places that give free phones:
1. Life Wireless
Life Wireless, a participant in the federal Lifeline program, gives free mobile phones and monthly service plans to eligible low-income households.
You can get free unlimited data, talk, text, and even hotspot if you qualify.
To see if you qualify, visit their website and check their eligibility criteria. Once approved, Life Wireless will provide you with a free phone and service plan that suits your needs.
2. TruConnect
TruConnect is another provider that participates in the Lifeline program. They give free smartphones and monthly service plans to qualifying customers.
TruConnect specifically gives out new Android smartphones. Their wireless plans include unlimited talk and text, unlimited monthly data, and unlimited international calling.
To apply, visit the TruConnect website and check if you’re eligible for their services. After verifying your eligibility, you’ll receive a free cell phone along with a monthly plan.
3. Assurance Wireless
Assurance Wireless is an ACP program participant that gives free phones and monthly plans to qualified low-income customers.
You can get free unlimited talk/text as well as 25 GB of high speed data plus 2.5 GB of mobile hotspot data each month on the T-Mobile network.
You can visit the Assurance Wireless website and check if you meet their eligibility criteria. Once approved, they will provide you with a free Android smartphone and a monthly service plan.
4. SafeLink Wireless
SafeLink Wireless, another Lifeline and ACP provider, gives a free cell phone and monthly service to eligible customers.
Their monthly plans come with unlimited data, unlimited talk/text, and 10 GB of hotspot data.
Simply head to the SafeLink Wireless website to determine your eligibility for their services. If you qualify, you’ll receive a free cell phone and a plan.
5. Q Link Wireless
Q Link Wireless is a Lifeline program participant that gives free cell phones and monthly plans to eligible individuals.
Their monthly plans come with unlimited data, unlimited talk/text, and sometimes even a free tablet (ACP subscribers under their network must pay a one-time $10.01 co-pay).
Visit the Q Link website, verify your eligibility, and apply for their service. Once approved, you’ll receive a free smartphone and a monthly service plan.
6. Craigslist
Craigslist is a popular site for buying, selling, and trading items, including cell phones. You might find people giving away free phones or trading them for other items.
I recommend looking at your local Craigslist “Free Stuff” section to see if there are any free phones near you that you can get.
7. Buy Nothing groups
Buy Nothing groups are local groups that give free items and services to their members. People like you and me give away, lend, or share items in these groups all the time.
I have personally given away many items in Buy Nothing groups, and it is such a great resource.
You can look for a local Buy Nothing group on Facebook and ask to join – you can start by searching for “Your town name + Buy Nothing group” on Facebook. Then, look for posts in the group, or post a new thread asking to see if anyone has a free cell phone to give away.
Companies That Give A Free Phone When You Switch Providers
One of the most common ways to get free cell phones is directly from the phone companies themselves. These companies give free phones or device discounts as part of their service contracts.
The cost of the phone is usually built into the monthly payment for the contract many times (and makes the monthly cost much more expensive). Most companies have a wide range of phones, from the latest iPhone to the newest Android device. It’s important to know, however, that these are typically tied to long-term contracts, which could last for up to two years or more and also may have high monthly plan costs.
To get a free phone, some of the companies may require you to trade in your old phone, while others give the free phone to new customers as a way to get you to switch from your current company.
If you’re thinking about switching cell phone providers, it’s helpful to know which companies give free phones as a bonus. Below, we look at four major cell service companies and their free phone deals for customers who make the switch.
Note: You won’t get a free monthly plan with the below providers.
8. AT&T
AT&T usually has promotions for new customers that include free phones. The devices that they give away can vary, but it’s usually for the most popular phone choices, such as Apple, Samsung, and Google Pixel.
In the past, I have personally received a free cell phone for signing up for a new plan with AT&T, so I know it’s real!
9. Verizon
Verizon is another company known for giving free phones to customers who switch to them. They usually have deals on smartphones like the latest iPhone, Samsung Galaxy, and Google Pixel devices.
10. T-Mobile
T-Mobile also has free phone deals for customers who make the switch to them. These deals usually include cell phones like Apple and Android.
11. Cricket Wireless
Cricket Wireless gives free phone deals to customers who switch from another carrier. The devices available as part of these deals often include budget-friendly options from major phone companies.
Before making any decisions, it’s important to compare these free phone offers with your current mobile plan and provider. Think about factors like phone coverage (will the new service plan have coverage where you live?), the amount of data you get, and contract length when deciding which deal is right for you.
Places To Get Cheap Cell Phone Service
If you don’t qualify for free cell phone service, then you may be interested in learning how you can save money with your monthly cell phone bill. Below are the best places to get a cheap monthly cell phone service.
Google Fi Wireless
Google Fi has affordable wireless plans depending on your needs, and it is what I have used for several years.
Their Flexible plan starts at just $20 per month, per line. This is a great option if you are looking for a plan that doesn’t break the bank and still has reliable service.
Mint Mobile
Mint Mobile is known for its very budget-friendly cell phone plans that start at just $15 a month for 5 GB. An unlimited plan is just $30 a month.
Mint Mobile runs on a reliable network, making it a great choice for someone who is trying to save money but still wants to be able to have service that they can count on.
Boost Infinite (formerly Republic Wireless)
Republic Wireless has affordable phone plans with a focus on simplicity and user flexibility. Their no-contract plans start at $15 per month for unlimited talk and text with the option to add data as needed.
I have several family members who were on Republic Wireless for years, and they liked how budget-friendly the service was.
Tello
Tello has plans that start at just $10 per month for 1 GB with unlimited minutes and free text messaging. Their Unlimited everything is only $29 per month.
They also provide a no-contract flexible option, allowing you to change your plan anytime to adjust to your needs.
FreedomPop
FreedomPop is a company that has both free and very cheap cell phone plans. Through the Affordable Connectivity Program, you can get unlimited wireless service (10 GB at 5G speeds) for just $0 a month.
If you don’t qualify for the government cell phone assistance program, they also have a free plan which looks to be a really good deal. You pay a one-time fee of $10 for the SIM card kit and the free plan includes 10 minutes of voice calling, 10 text messages, and 25 MB of high speed data each month. Yes, it’s not much data each month, but they also have plans for $30 a month that include unlimited texting and 10 GB of data.
Frequently Asked Questions About How To Get A Free Cell Phone
Below are answers to common questions about how to get a free cell phone and plan.
What programs give free phones to low-income individuals?
The Lifeline program is a government benefit that gives free or discounted phone services to qualifying low-income customers, including a free cell phone in some cases.
What are the top free phone plans in the US?
There are many popular free phone plans in the U.S. where you can get free cell service. Some popular options include the Lifeline Assistance program, which gives free or discounted cell phone service to eligible low-income consumers. Plus, carriers like Life Wireless have free monthly unlimited data, talk, and text through Lifeline and the Affordable Connectivity Program.
Who has the best free government phones? Which free government phone company is the best? What Lifeline provider sends the best free phones?
There are many different companies that participate in the free government phone program such as Life Wireless, Assurance Wireless, SafeLink, and Q Link Wireless. Each company is a little different, and you should choose the best one for you based on their coverage map, plan options (how much data do you need?), and phone device.
How do I qualify for a government assisted phone? Who is eligible for a free cell phone from the government?
To get a free government-assisted phone, you will have to meet certain income requirements or participate in a government assistance program such as the Supplemental Nutrition Assistance Program (SNAP), Medicaid, or Veterans Pension program.
Which carriers give free cell phones to seniors?
Some phone carriers have special deals and discounts for senior citizens, but I don’t know of any free phones that are targeted specifically for seniors. However, if you are a senior who qualifies for any of the government assistance programs mentioned earlier, you might be eligible for a free cell phone or a discounted service.
How do I apply for a free government phone?
Getting a free government phone is usually pretty simple and can be done on the phone company’s website directly. You can visit the website of a cell phone company that participates in the program, such as Life Wireless, and see if you qualify. They have easy instructions to follow, and you can find out if you are eligible for a free phone.
How To Get A Free Cell Phone – Summary
If you need a free cell phone or wireless service, there are many different options to look into.
Free cell phones can have a big impact on the lives of individuals and families. With these phones, they can:
Connect with potential employers
Call for emergency services
Stay up to date about news and important events
Both government-sponsored programs and wireless carriers have ways to get free phones.
The government programs are designed to provide free cell phones and service to eligible households, usually those who meet specific income or program participation requirements.
Telecommunication companies (like AT&T and Verizon) sometimes have deals to get potential customers to switch to them, such as free cell phone deals that are usually tied to specific contract terms (1 or 2 years long).
Do you want to know how to get a free phone? Did you know that you can get a free government cell phone?
How much wealth could you have by maxing out retirement accounts? We show you the numbers.
Everywhere you look, experts are telling you to contribute to your retirement accounts. Whether it’s advice from newspapers, blogs, financial planners, or friends, any advice that is worth taking must include planning for retirement. Why? Because it’s that important!
Over time, setting aside a small portion of your monthly income can mean the difference between living a comfortable retirement and not being able to retire at all. But how much should you put away?
One of the most common rules of thumb is to stick 10% of your income into a retirement account. If you have a work-sponsored plan, like a 401(k), you should always invest enough to at least meet your company match. But again, these numbers are a bare minimum for retirement savings. Why not save more if you can?
While the advice to save for your retirement is certainly sound, few people actually consider what saving more could mean for their future. Why stop at saving 10%? Why not save 15-20%? Heck, what would happen if you got really aggressive? How rich could you be if you actually maxed out your retirement accounts each year? Let’s take a look.
2024 IRS Contribution Limits for 401(k) Plans and IRAs
Every few years, the Internal Revenue Service adjusts the total amount of money that you are allowed to place into your retirement accounts. Contribution limits are going up in 2024, increasing to $23,000 for 401(k) and other workplace retirement plans and $7,000 for IRA and Roth IRA accounts. In addition, the IRS allows taxpayers who are 50 and older to make “catch-up” contributions. In 2024, these allow an additional $7,500 contribution for 401(k) plans and $1,000 for IRAs. We can expect these limits to increase in the future, although it is not certain when that will happen.
Our Assumptions
That being said, we need to make a few assumptions in order to calculate the amount of wealth we can build by maxing out our retirement plans. To begin, we’ll assume that we’re going to be making regular contributions only, so we will not be adding additional money for “catch-up” contributions.
Additionally, we’ll make all of our calculations based on the current contribution limits — $23,000 for 401(k) plans and $7,000 for IRAs. Again, if history repeats itself, those limits will be increased in the future. (We won’t account for that here, though.) Furthermore, we’ll assume that our investments will compound on an annual basis. And, finally, we’ll assume a very conservative growth rate of 5%.
Maxing Out Your 401(k)
Using a free compound interest calculator, let’s take a look at 401(k) plans. First, let’s assume that you are currently saving $4,000 a year in your plan and have been doing so since you were 25 years old. Based on our current set of assumptions, you would end up with just over $500,000 in your retirement account at age 65. Not bad, right?
And had you started saving this much at age 20, you would end up with $670,740 by the time 65 rolled around. Better yet, if you can stick it out for just 5 more years, you’ll end up with $879,261 over a 50-year time period. As you can see, compound interest plays a huge role, especially over the last few years.
Related: The Power of Compound Interest
But, what if you get really aggressive? What if you take a page out of the extreme early retirement book, cut your spending to the bone, and max out your 401(k) account? Here’s what you’ll save:
After 10 Years – $303,756
After 20 Years – $798,542
After 30 Years – $1,604,498
After 40 Years – $2,917,314
After 50 Years – $5,055,754
Amazing, right? By maxing out your 401(k), you could save about $300,000 more in 20 years than you would have saved in 40 with just a $4,000 a month contribution. You’ll have over $5 million more over a 50-year period.
Maxing Out Your IRA
Of course, maxing out a 401(k) plan can seem totally out of reach for most individuals. It’s much more feasible for someone to max out their IRA plan at $7,000 per year. If you did that, here’s an estimate of what you’d end up with:
After 10 Years – $92,447
After 20 Years – $243,034
After 30 Years – $488,325
After 40 Years – $887,878
After 50 Years – $1,538,707
Again, you’ll notice the compound interest coming in strong toward the end. Your savings almost doubled over just the last 10 years. So, the longer you can hang in there, the better off your finances will be.
Maxing Out Both Your 401(k) and IRA Plans
Now, let’s imagine that you have done extremely well for yourself and are able to max out both your 401(k) plan and your IRA. How much wealth can you build then?
After 10 Years – $396,203
After 20 Years – $1,041,577
After 30 Years – $2,092,823
After 40 Years – $3,805,192
After 50 Years – $6,594,461
Obviously, this type of money should provide you with a wonderfully comfortable retirement.
The Takeaway
Remember, these numbers are all for individual investors. Married couples can combine their retirement savings to increase their wealth-building power. So, while saving $23,000 a year by yourself may not be within reach, it could be achievable as a household.
Rather than deflate or discourage you, hopefully, these numbers will motivate you to save as much as you can for as long as you can do it. The power of compounding interest is real, and you can make it work to your advantage. The more you are able to save, the better off you’ll be in retirement.
More so than anything else, these numbers should be a reminder that putting money away for retirement is a long-term proposition. The earlier you start saving, the more success you’ll have. You have to play the long game with your focus firmly set on the future. If you ride the ups and downs of the market, save until it hurts, and remember to be patient, you could end up being extremely wealthy in the end.
Greg Johnson is a writer and entrepreneur who leveraged his online business to quit his 9-5 job, spend more time with his family, and travel the world. As a money nerd, he focuses most of his writing on topics that relate to budgeting, frugality, and investing. With his wife Holly, Greg co-owns two websites: Club Thrifty [http://clubthrifty.com] and Travel Blue Book [http://travelbluebook.com]. Find him on Pinterest and Twitter @ClubThrifty.