Most of the time, there’s not a lot of difference in what you get between New Zealand’s main banks.
Home loan rates are a good example. It doesn’t matter which bank you’re with – the rates you’ll get are the same, or near enough, across the board.
But actually, right now, that’s not the case.
Two of our big five banks have really stuck their necks out in the home loan market.
At one end, there’s ASB. After bumping its rates up twice in the last few weeks, ASB is now charging customers 7.45% on the popular one-year fixed term mortgage rate.
And meanwhile, at the other, there’s Kiwibank – charging 6.99% for the same term.
To put that range into context, the 0.46% difference between Kiwibank and ASB would cost you $2,300 more each year on a $500,000 mortgage. Not exactly chump change.
The rest of the pack (ANZ, BNZ and Westpac) are running somewhere in the middle, between 7.19% and 7.25%.
When ASB last hiked its home loan rates a couple of weeks ago, it took the unusual step of justifying the move.
It cited changes in the OCR, wholesale interest rates, customer term deposit rates and the cost of overseas funding – noting that all had increased significantly in the last two and a half years.
In reality, however, both the OCR and wholesale interest rates have remained flat since May, and the cost of overseas funding has actually fallen since the start of 2022. For example, the wholesale markets spread the Australian banks borrow at has fallen from about 0.60% during 2022 to 0.45% now (data sourced from Bloomberg), which is at odds with recent comments by some banks.
So why the difference in rates then? Well, in short, it all comes down to profit.
One bank is prepared to sacrifice market share to earn higher short-term profits. The other is prepared to forgo higher short-term profits to grow market share, and therefore ensure stronger profits in the longer term.
If anyone wanted proof of where ASB’s thinking is at, in my view you need look no further than recent comments made by Matt Comyn, CEO of Commonwealth Bank – ASB’s parent company in Australia. He caused a bit of a kerfuffle when he came out bemoaning the poor returns on mortgage lending in New Zealand right now.
To me, what’s so disingenuous about Comyn’s take on the issue is the fact that banks don’t just make their money on mortgages. Their profits are actually largely determined by the difference between the interest rate they pay to savers and the interest rate they charge borrowers.
So, let’s zoom out for a second, and look at that bigger picture with ASB.
The below graph uses Reserve Bank data to track the average rates ASB has paid, and charged, over the last five years – and therefore gives us an idea of the interest spread it’s making (the line in orange).
Over the last 12 months, ASB’s margin has been higher than at any other time in the last five years. Not a bad place to be when the rest of the country is in a cost-of-living crisis.
Where to from here?
I’ve got a sneaking suspicion we could see ASB lower its home loan interest rates soon, at least to a level that’s back in line with the other Australian-owned banks. Its market share is being hit hard and the short-term profit from higher margins will be at the expense of longer-term profits.
For Kiwi who have a mortgage with ASB rolling over soon – or anyone considering a mortgage with ASB – it would be wise to shop around or ask them to match the best deal you can find.
Chances are good you could get a cheaper rate, and potentially a cashback of up to 1% if you change banks. Even on a $500,000 mortgage, that could leave you thousands better off.
*David Cunningham is CEO of Squirrel, a mortgage broker that also offers peer-to-peer lending and savings and investment products and services.
The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. Squirrel shall not be liable or responsible for any information, omissions, or errors present. Any commentary provided are the personal views of the author and are not necessarily representative of the views and opinions of Squirrel. Squirrel recommends seeking professional investment and/or mortgage advice before taking any action.
To view Squirrel’s disclosure statements and other legal information, please visit its legal agreements page here.
Whether you attend a public or private college—in your home state or another—costs are higher than they’ve ever been. In fact, college tuition costs have nearly tripled over the last 40 years, according to Bankrate.
“The cost of college has gotten completely out of control,” agrees Maggie Germano, a financial coach. And it’s not only tuition. “The cost of room and board, books, and other necessary expenses have been going up, too. This can end up putting students and graduates in lots of debt that may make it difficult for them to get ahead in life.”
That’s why earning money as a student in college can be so beneficial to your financial health, both for today and tomorrow. Not only is the money helpful, but it also gives you a chance to build a budget and manage your own finances—critical skills for being financially secure throughout life.
So, how to make money as a college student? The reality is that it can be difficult for students to earn money while keeping up with their studies. But by taking advantage of scholarship opportunities and choosing part-time jobs for students that fit with their schedule, undergrads can enter the next stage of life with a more stable fiscal foundation.
How can students help pay for college?
It’s never too early to begin planning for the cost of college. Even if your parents started a 529 college savings plan for you when you were young, you can look for additional opportunities to lighten the financial load.
The two most common ways to do that, Germano says, are scholarships and financial aid.
Scholarships and grants
“Students should take steps to apply for as many scholarships and grants as they can even before the start of their senior year of high school,” Germano says. “This will help lower the cost burden for them once they begin school.”
Students should speak with their high school guidance counselor to learn about available local, state, and national scholarship programs. Germano also suggests they take the initiative to research online, as new programs are constantly being created.
Financial aid and loans
Many colleges offer financial aid programs for students from lower socioeconomic backgrounds. While it’s important to speak to your university’s financial aid office directly, students should also consider filling out the FAFSA form, as many schools rely on it to assess eligibility for assistance. FAFSA stands for Free Application for Federal Student Aid, and by filling it out, students will learn which federal aid and loan programs they may qualify for.
Even with a scholarship and other types of aid, many students will still need to take out a student loan, Germano says.
Be cautious, though. “Most students take out student loans without understanding the terms or how much it will really cost over time,” she says. “Talk to your parents, guidance counselor, or other trusted adults about this process so that you’re going into it with as much understanding as possible.”
What bank accounts do students need?
Before applying for jobs, students should be sure they have a place to put their money. Germano suggests students open a checking account and a savings account so they can best manage their money in both the near and long term.
Rewards checking account
Opening a rewards checking account is a great place to start because it can provide cash-back benefits similar to credit cards—and offer the flexibility to make purchases online and with your debit card.
Earn cash back with your debit card
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Just make sure your checking account features overdraft protection in case you accidentally overdraw your account.
High-yield savings account
Many students find it difficult to keep up with their bills, let alone put money away for savings. It’s important to make an effort, however, since any money deposited in a high-yield savings account can earn compound interest, potentially leading to significant growth over time.
You can also use different high-yield savings accounts to save for multiple savings goals, such as buying a car, paying off student loans, and building an emergency fund.
How can you find the best part-time jobs for students?
If you’re wondering how to make money as a student, a smart first step is to see what part-time jobs are available. The right part-time job can provide you with a reliable income without having to sacrifice time for studying and socializing. Check out these ideas for both on-campus and off-campus part-time jobs for students:
On-campus jobs
Finding a job on campus is a convenient option for how to make money as a college student. You won’t have to worry about commuting, and the workplace is designed to accommodate your student schedule.
In addition to searching around your campus, Germano recommends finding out if you qualify for the federal work-study program at your school, based on your FAFSA application.
To get your wheels turning, Germano suggests these on-campus job ideas:
Resident assistant
Administrative assistant for a department office
Campus bookstore associate
Campus café barista
Tour guide
Tutor
IT assistant
Mail room assistant
Research assistant
Dining hall worker
Off-campus jobs
Consider applying for a job off campus. Restaurants, theaters, and stores near campus are often open to hiring students, though these jobs may not be as accommodating as those on campus.
Germano recommends asking upperclassmen what the best part-time jobs for students are. They may point you in the right direction and could even be willing to give you a referral.
You can also look into remote part-time jobs for students that you can do from your dorm room.
What is a good part-time job for students online?
If you’re wondering how to earn money online for students or how to make money from home for students, you can check job boards for part-time remote work.
Translation work, being a digital assistant, and tutoring are some potential online jobs for students to earn money.
If you speak two or more languages, then translation work could be one of the first places to turn when looking for online part-time jobs from home for students. These roles often involve translating videos, podcasts, or documents—and, if you have knowledge in the medical or legal sphere, it can be more lucrative.
Digital assistants can provide a range of services, from social media management to responding to email or scheduling appointments. These jobs may require a certain level of availability, so be certain to discuss the expectations of this job so you know if you can balance the role with your classes and social life.
If there’s one or more subjects where you really excel, online tutoring could be a good way to make extra money without leaving your dorm. It can also be rewarding to help your fellow students find success.
Can side hustles help with earning money as a student?
If you can’t consistently work at a part-time job, consider more convenient ways to make money as a student—like a side hustle.
There are plenty of side hustles to choose from, including driving for a ride-share app, house sitting, and pet sitting.
Many modern side hustles can be managed through an app, offering a lot of flexibility. It means you can adjust your work schedule based on when you’re available, for example pulling back during finals week so you have time to study. It’s how to make money as a college student without having to take on too big a commitment.
How can college students manage their time between work and school?
It’s important to make sure your money-making ventures don’t interfere with your studies.
“Some students need to work in order to live and support themselves in school, so those students will have to work as much as will support them,” Germano says. “But for those who have more flexibility, try to be realistic about how much work you can take on without sacrificing your schooling and other responsibilities.”
She recommends reducing your work hours if your grades are being negatively affected. One tip: Try designating specific blocks of time for your academic tasks. With your work and school time clearly defined, you can then enjoy any free time you have to the fullest, without stressing about how you’ll get everything done.
Germano says it’s also important to set realistic goals. If anything, plan for a little more time than you think you might actually need to write an essay or study for a test. Finishing early will be more motivating than failing to accomplish a task in time.
You can also try different time management and finance apps. There are plenty of free apps out there that can help you organize your time and money.
Get ready for a fun, financially secure college experience
While keeping your finances in line and building a strong foundation for the future is essential, you should be enjoying this time of your life.
“Many students who have to work to put themselves through school can have a difficult time balancing work and school in a healthy, sustainable way,” Germano says. Finding time for fun and relaxation is critical and should be top of mind to avoid burnout and maintain positive mental health.
With these tips, you can find the way to make money as a college student that works best for you. Once the cash starts coming in, be sure you know how to budget as a college student and how to save money as a student. Earning extra money is only one part of money management for students. You also want to know that every dollar is being spent wisely.
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Deciding whether to transform your current house into your ideal home or start over with a fresh new space requires careful thought and consideration. There are two options to consider — stay and renovate or move to find something more suitable for your needs. This choice may make some people feel like they are at a crossroads.
Here are some steps you can take to help guide this important decision.
Get an Idea of How Much You Can Afford
If you’re considering moving, it’s important to understand how much of a mortgage you’ll qualify for and how much you can afford to spend on your new home. Connecting with a lender like Pennymac is a great first step. Our Home Connect resource can help set you up for success if and when you’re ready to begin your home search. Explore mortgage options, get BuyerReady Certified and receive advice from trusted real estate professionals.
Get a Comparative Home Analysis
Ask a realtor to provide you with a comparative home analysis to estimate the value of your current home. Determine if your home’s features align with your desires and needs. For example, do you need an extra bedroom to accommodate a new member of the household or your new work-from-home plans?
Understand Your Location Limits
Do you love where you live right now? Suppose you adore your neighborhood or town, but your house just isn’t appropriately sized for you and your loved ones. In that case, consider adding on to your house, whether that’s another bathroom or a second story.
On the other hand, If you have children, you may weigh the desire for a new school district with better academic programs. Or maybe you want to move closer to work. It really boils down to what your main priorities are.
If you’re looking to move to a larger home, keep in mind that a bigger house in your preferred area will likely have higher taxes, utility bills, homeowners insurance premiums and maintenance upkeep costs. On the flip side, if a move means you’ll have a shorter commute, you will save time and transportation costs. Prioritizing your location needs and determining what you are willing to spend or sacrifice to achieve your goals will help influence your decision.
Renovation Reality Check
Choosing whether to remodel or move depends on a lot of factors. Can you be creative with your existing rooms and make relatively easy and straightforward renovations, or are your requirements complex, expensive and challenging to complete?
Hire an architect or contractor to help pinpoint issues with your current house and decide what you need from your home. Want to add a second story? Get estimates on how long that might take and how much it might cost, and determine if you’re okay with living through such a major renovation.
Understanding Your Time Commitment Matters
Buying and selling at the same time can be a lengthy process. Organizing your home and putting it on the market can take months, plus there can be some financial and emotional uncertainty when buying and selling. It may take time to get the sale price you want and to find your ideal next home.
If you decide to move forward with buying and selling your home simultaneously, you’ll want to work with a real estate agent and have a plan for how you’ll manage the process. Timing everything right is essential since you don’t want to be paying two mortgages at once if you’re still waiting to sell your current home.
You’ll also want a savings buffer to help financially manage any complications or slowdowns. For example, you may need to temporarily stay in a hotel or put your furniture in storage.
Contingency Acceptance
A contingency clause in real estate is part of a purchase agreement that outlines specific conditions that must be met in order for the contract to be valid and binding. In some markets, home sale contingency offers are allowed, which means your bid for a house is contingent on the sale of your former abode.
In other markets, home buyer-feeding frenzies can prohibit contingent offers. When you put your house on the market, you have to decide if you’ll buy a new house first or make a contingent offer. If contingent offers are out of the question, you may require a temporary rental after escrow closes on your old home and you’re still looking for your next one.
Closing Costs
In addition to your down payment, you’ll have to pay closing costs, just like you did when you purchased your existing home. After figuring in closing costs, commission, title insurance and additional transaction costs involved in your home sale and purchase, it may be much less expensive to stay in your house and renovate. So don’t forget to calculate closing costs when deciding whether or not to move, but don’t hesitate to negotiate any of those costs either.
Current vs. Past Mortgage Rate, Cash-Out Refinance and Second Mortgage Considerations
A cash-out refinance is when a homeowner refinances their existing mortgage, taking out a new loan for more money than they currently owe. The difference between the new loan amount and the old mortgage balance is given to the homeowner in cash. This allows the homeowner to tap into their home’s equity and use the money for various purposes, including home renovations.
If you have a higher interest rate than the current market, compare keeping your mortgage — and perhaps refinancing at a lower rate and taking cash out to make upgrades — to getting a new house with a new mortgage at a lower rate.
Either way, a lower-rate market can prove to be very favorable whether you stay and renovate or go and start fresh.
However, if your current rate is lower than the current market, it may be in your best interest to explore a second mortgage option that allows you to access the equity in your home while maintaining your low rate on the first.
Evaluate Your Motivators to Move
Many individuals who decide to sell have outgrown their current house and don’t want to build an addition or are too busy to manage an extensive renovation project. There are also those homeowners who have too small a lot to work with, need to move closer to work or are not that vested in remaining in the neighborhood.
Aside from the desire to upsize your home, some other motivators for selling can be:
The need for a less expensive home
Readiness to downsize
The ability to pay cash for the next home
The want or need to relocate for a job, school district, family situation, better climate, etc.
Favorable market conditions
Identifying the primary motivators for your move can help you decide if you should sell your house now or wait.
Ready to Downsize?
Those in a life stage where they are often uniquely ready to leave behind the maintenance of their current home. Trading in the three-bedroom house for a low-up keep city condo provides more opportunities for enjoying the retirement years.
Here are some signs downsizing may be right for you:
Housing expenses have increased and you want to cut costs
There are unused rooms in your home
You desire a more low-maintenance lifestyle
You want a change, such as being closer to family, relocating to a different climate or moving into an amenity-filled active community.
So, What Is the Bottom Line? Should I Sell My House Now?
Making a final decision as to whether or not you should sell your house is as personal and individual as the home you’re thinking about giving up or buying. But with the right calculations and information, you’re closer to finding a long-term solution that will work best for you. Ready to sell your home and begin looking for your new one? Chat with a Pennymac Loan Expert, or use one of our mortgage calculators and start your home buying journey today.
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When decorating your space, you don’t have to sacrifice convenience for style. Machine-washable rugs are here to prove just that.
With various materials, patterns and sizes to choose from, you can easily find one that suits your taste, fits your room and is life-proof. Whether you need a rug for a bustling living room or a cozy bedroom, these rugs add a touch of flair and save you the hassle of difficult cleaning.
Image source: Amazon
A great living room decorating tip is selecting a statement piece to decorate around. This can be any piece of furniture, a rug or canvas art that breaks apart the neutrality of other decor pieces while bringing out your unique style.
The VK Living Vintage Rug will not only make your living room vibrant but is sure to withstand the wear and tear of kids, pets and accidental messes. Available in other colors and sizes, this rug perfectly balances durability with style options for your personal taste.
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In minimalist design, each element in the space must be meticulously considered for its individual merit and its relation to the whole design. When it comes to breaking up the monotony, geometric patterns are a must to incorporate in the space.
This washable rug from nuLOOM is neutral while visually interesting. No need to worry about pet stains: You can throw this rug into a regular cold wash cycle to return it back to its original, polished state.
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Cooking is a labor of love. Some dishes take longer than others and some are messier than others. In these instances, it’s helpful to have a comfy rug to stand on that can handle a few splatters of food.
The solution for your kitchen is LEEVAN’s Washable Kitchen Rugs. Available in five stylish colors, this rug is the perfect partner for your kitchen when it comes to practicality and finesse.
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Barbiecore has taken over the design world following the release and reception of the Barbie movie. Incorporating pink into your decor can feel overwhelming since pink is a vibrant statement color. A great place to start is smaller pieces like placemats and art canvases to ease your way into the pink color scheme.
Try the Wonnitar Modern Ombre Small Rug as a bath placemat or small bedside runner. This washable pink accent rug is sure to withstand wear while turning your room or bathroom into a Barbie-themed haven.
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Whether you’re channeling your inner coastal grandmother or actually living shoreside, decorating with the beach in mind is enjoyable. In your decor search, it’s important to consider a rug that can withstand the temperament and changes in the weather alongside life’s everyday messes as well.
The Tritard Coastal Sea Turtles Area Rug is sure to keep relaxation at the forefront of your mind with its combination of durability and cuteness. Also available in other beachy patterns and sizes, this stain-resistant rug is perfect indoors or outdoors.
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Loving the pets in your life is easy, it’s the clean-up that’s hard. The messes of a pet are unpredictable and it’s important, as a pet owner, to buy pieces that can withstand the wear and tear caused by our beloved animals.
The Ophanie Machine Washable Rug is not only soft and comfy but is machine washable, perfect for unpredictable but inevitable accidents. Additionally, this rug comes in six color options and is slip-resistant, adding to its durability and pet-friendly repertoire.
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There are some rooms that don’t have a specific shape or purpose, leaving the window of creativity wide open. A unique room, like a sunroom, sitting room or office even, calls for a unique rug.
This HEBE Boho Round Area Rug is the perfect addition to your undefined room. Whether you’re reading a book or working on a project, this washable rug under your feet is sure to provide comfort and happiness through its distinctive bohemian flair.
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The one room that requires the most color and vibrancy is arguably the kiddo’s room. This space should inspire creativity, enhance moods and reflect a child-like fun feel through decor. What makes decorating a kid’s space difficult is making sure the furniture and finishings are stain-resistant or easily washable.
The child-proof Lahome Pink Carpet is perfect for brightening up a room while offering peace of mind. The washable rug is available in other colors and is a parent’s functional favorite.
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An often-forgotten decor item is a runner rug. Runner rugs lay in slimmer aisleways and hallways, standing as a focal point where other furniture may not fit. These runners, while slender, tend to be attention-grabbing.
This stunning YOUFORTONG Runner Rug is perfect for your doorway. It’s guaranteed to leave a lasting impression on guests as they enter the home and as they say their goodbyes. While it’s sure to collect quite a bit of tread due to its placement, it’s machine washable and durable.
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Spooky season is upon us and for those who love to lean into the festive spirit, themed decorations are an absolute must. Since holidays like Halloween come once a year, it’s important the decorations are washable after sitting in storage until their time to shine rolls around.
This funky Estmy Spider Web Halloween Rug is the perfect festive piece to get into the spooky spirit. Also nonslip, this rug is sure to stay put through Halloween stories and fireside tales.
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Maximalism happily lives on the opposite end of the design spectrum from minimalism. In all its colorful and fun-pattered glory, maximalism leans into taking things to the max. Mix-matched patterns and vibrant color schemes fill the rooms of those brave enough to tread into the funky design territory.
Revival Rugs Gambit rug is eclectic and sure to bring spice to any maximalist room. Washable and cushioned means comfort and durability among the carefully curated maximalism madness.
Live smarter, not harder
Washable rugs are a blessing among the chaos that comes with everyday life. Between pet stains, kid wear and accidents, it’s nice to know a quick toss in the wash can return your beloved statement piece back to its original state. Make an investment that’s sure to keep you and your wallet happy.
Wesley is a Charlotte-based writer with a degree in Mass Communication from the University of South Carolina. Her background includes 6 years in non-profit communication and 4 years in editorial writing. She’s passionate about traveling, volunteering, cooking and drinking her morning iced coffee. When she’s not writing, you can find her relaxing with family or exploring Charlotte with her friends.
Inside: Looking to celebrate Christmas on a budget? This guide has you covered with creative and affordable ways to do just that.
Are you stressed out about how to afford a fabulous Christmas on your budget? Worry not.
This festive season isn’t about how much cash you fork out, it’s about creating lasting memories and spreading joy.
Why let financial woes dampen the joyous yuletide spirit when you can celebrate a charming Christmas on a budget?
Remember, it’s your money, your decisions, and your rules – no guilt trips or social pressures should force you into spending Christmas in debt.
Today you will learn:
Determine your Christmas budget: Figure out what’s a comfortable amount for you to spend and stick to it religiously.
Be creative with gift giving: Homemade presents or heartfelt letters can be more valuable than pricey items.
Find simple ways to save money: Use these money saving tips to enjoy a festive holiday season.
This holiday season, celebrate responsibly, within your means, for a Christmas that’s merry, bright, and totally guilt-free!
Why Celebrate Christmas on a Budget?
Embracing a budget-friendly Christmas can prove to be not only a smart choice but one filled with warmth, delight, and genuine joy.
Enjoy valuable family bonding time with exciting games and shared activities. Volunteer work, a day of holiday baking, or a simple drive-through Christmas lights sightseeing trip can leave a lasting impression. Look through this Christmas bucket list.
Opt for economical, yet thoughtful gifts or stick to fun gift exchange rules, such as the “four gift rule” for your kids. Remember, it’s the sentiment behind the gift that matters the most.
In essence, an economical holiday season needn’t be a dull affair, rather it’s an opportunity to make it more heartfelt and unforgettable.
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 to buy for Christmas on a tight budget?
Yes, friend, you can buy meaningful Christmas gifts while sticking to a budget.
In fact, the thought behind a gift is often what makes it special, not the price tag.
A few ideas include homemade gifts, gift cards, subscriptions, and second-hand items. With a little creativity, you can find the perfect present for everyone on your list without spending a fortune.
Below you will find plenty of great gift guides for Christmas that won’t break the bank.
Benefits of a Budget Christmas
1. Allows you to plan ahead and stay on track 2. Prevents overspending 3. Buy gifts that are within your budget 4. Focus on quality over quantity 5. Ensures that everyone gets a gift 6. Helps you avoid debt during the holidays 7. Prevents you from feeling stressed out about money during the holidays 8. Be creative and come up with unique gifts 9. Save for next year’s holiday budget 10. Stay connected to the spirit of the holidays
Savings with Christmas on a Budget
From homemade Christmas decorations to unique gift ideas, it’s possible to create magical moments that’ll last a lifetime without a hefty price tag.
Embrace the true spirit of Christmas – love, family, and togetherness, rather than commercialism, and read on to discover how.
Learn the simple ways to celebrate the festive season without breaking the bank with our creative and budget-friendly Christmas ideas.
1. Think about a No Gift Christmas
Having a No Gift Christmas is a creative and budget-saving alternative to traditional holiday festivities, especially suitable if funds are tight. Why not consider it?
Here are some benefits:
You can alleviate the holiday stress often associated with spending on gifts.
It fosters the idea of Christmas as a season of togetherness, not just gift-giving.
It offers the potential for unique and memorable experiences, like volunteering or creating fun traditions with your loved ones.
Remember, having a memorable Christmas doesn’t have to cost much, or anything at all Learn more about a no gift Christmas.
2. Make Your Own Gifts
DIY Christmas gifts are your perfect solution. They not only save pennies but are laced with your love and creativity.
Start by exploring plenty of creative gift ideas available for free online. Need help? Look for “homemade gifts for Christmas” and you’ll be surprised.
Compile a list of possible gifts from homemade candles to personalized coupon books, keeping the recipient’s likes in mind.
Remember, your efforts will reflect in your gift. So, unleash your creativity and let the magic begin.
3. Borrow Instead of Buy
Borrowing instead of buying is a clever way to have a festive holiday while keeping things budget-friendly. This concept is simple: swap decorations, games, or even gifts with friends, neighbors, or family
Discuss your idea with your circle and organize swapping parties to exchange items.
The key is to creatively engage and make it a fun, budget-conscious activity. After all, Christmas is about sharing and caring!
Remember, return borrowed items in their original condition to maintain trust.
4. Attend Free Events
The Christmas season doesn’t have to be a strain on your wallet. Attending free community events can provide fun and festive celebrations:
To find these events, check your local newspaper or community websites. Be sure to:
Take advantage of free refreshments, but also bring your own to share.
Consider hosting a potluck dinner before or after community events.
Attending free events supports your local community.
Remember, Christmas is about togetherness, not extravagant spending.
5. Make Your Own Decorations
To create a festive atmosphere this season, you could repurpose items around your house or make your own decorations.
Choose a color theme and gather items in those shades, then place them together on a mantel or coffee table to create a coordinated layout.
For a natural touch, clip pine needles, branches, or herbs from your garden, and enhance them with glitter.
Additional budget-friendly options include taking advantage of sales and discounts at thrift stores or crafting handmade decorations such as ribbons from fabric strips or Christmas cookie ornaments.
6. Keep Track of Your Christmas Expenses
Just like throughout the year, budgeting is critical to your financial success.
Nothing changes with Christmas, it is crucial to track and budget your holiday expenses. Jot down every potential cost – from the Christmas tree, and food, to holiday décor.
Be thoughtful about what you really need and opt for items you can use for years.
This is one of the cash envelope categories I recommend saving for. To effectively manage your expenses, assign specific dollar amounts to each item on the list, ensuring you stay within your budget.
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Start Your Free Trial.
7. Share the Spirit
Embracing frugality during the holiday season can not only help you save money, but can also create memorable experiences and meaningful connections.
Small gestures, such as sending heartwarming physical letters to loved ones instead of emails, can still convey thoughtfulness and spur the holiday spirit.
By centering your holidays around family activities and endeavors, like homemade ornaments or a scavenger hunt with small gifts, the focus shifts from materialism to fellowship and unity.
Find more frugal Christmas ideas.
8. Check Out Bargain Stores
Bargain stores provide the perfect solution for savvy holiday shoppers looking to save money without compromising on quality or variety. Not only can you find unique, quirky gifts, but you can also keep a lid on your spending while doing so.
Stores like consignment shops or websites such as Craigslist often have high-quality used toys that are nearly new if you’re willing to look carefully.
Another option is to look at discount retailers like TJMaxx as they often host sales during the holiday season, making it even easier for you to save money while hunting for the perfect gifts.
9. Save Money Throughout the Year
Automating your savings for the Christmas season can be a practical and efficient strategy. The 100 envelope challenge is perfect for this!
By setting aside just $50 each month, you could accumulate up to $600 by December, providing a decent budget for your holiday expenses. This method can ease the financial stress during the holiday season, letting you enjoy the festivities without worrying about overspending.
Consider setting up automatic transfers to a high-interest savings account. This ensures your Christmas funds grow without your intervention.
Lastly, try a no-spend month where you only cover essential bills, giving your savings a significant boost.
10. Start a Side Hustle for More Money to Spend
Engaging in side hustles throughout the year can help you significantly cover your holiday expenses.
By delivering food, completing microtasks, selling gently used items, or shoveling snow, you create extra earnings that can go directly into your Christmas fund.
For instance, extra income from a seasonal retail job could help finance gift-purchasing without straining your usual budget.
This strategy not only prevents potential post-holiday debt but also allows you to enjoy the season without financial stress.
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11. Shop Online Instead of Going to the Mall
Shopping online for your Christmas gifts can seriously ease your holiday stress, and potentially save you money.
Let’s explore why skipping the mall and clicking your way to a merry Christmas might be your best bet this year:
No dealing with holiday crowds or cranky shoppers.
Enjoy sales and deals without leaving your home.
Track prices over time to grab the best deals.
Use Rakuten to save even more money on purchases.
For smart online shopping, prepare a list of gifts before diving in. Take advantage of the “wish list” option on platforms to curate items of choice and make sure you first glance over deal sites before making purchases.
12. Have a Christmas Potluck
Host a festive potluck! Invite friends and family, asking each to bring their favorite dish.
Here are some tips for a successful event:
Get organized and ask guests to bring specific types of food. This prevents duplicate dishes and ensures a balanced meal.
Introduce a fun element. Try a cookie swap or a silly game like “Guess the Cookie.”
Keep decor simple. A large vase filled with greenery and baubles can effectively replace a pricey Christmas tree.
Remember simplicity is key in food and decor. Costly ingredients and complicated recipes aren’t prerequisites for a memorable Christmas.
Remember, the holiday is about togetherness, not extravagance!
13. Make Your Own Cookies
There’s a unique pleasure derived from making your own cookies during the holiday season instead of buying them. More so, the cookies you’ve invested your time and creativity into can double as thoughtful, homemade gifts, adding another level of sentiment.
Apart from being a cost-effective option, it brings an opportunity to bond with friends and family during cookie exchange or decorating gatherings.
Making your personally crafted cookies also gives you control over ingredients catering to specific dietary needs or preference
Indeed, making your own cookies adds value that surpasses the mere cost savings, it infuses the holiday season with warmth, joy, and a sense of shared experience.
14. Cross Off Activities from your Christmas Bucket List
Having a joyful Christmas doesn’t necessarily mean overspending. In fact, integrating cost-effective activities into your holiday routine can make the season more meaningful and fun.
This Christmas Bucket list post offers an extensive and diverse list of creative ideas for budget-friendly Christmas shopping, gifting, and celebrating.
Additionally, downloading the free printables and a Christmas Budget Template will make the process even more manageable and fun.
15. Have a No-Gift Party
A no-gift Christmas party is an affordable and fun holiday celebration where attendees do not exchange gifts. It’s a great option for those looking to save money and still enjoy the festive season.
Here are steps to make it happen:
Step 1: Decide on the party type, either a simple gathering or a potluck dinner.
Step 2: Inform guests about the no-gift policy in advance.
Step 3: Organize exciting, cost-effective activities such as a game night.
Step 4: Engage guests with games for a joyful event.
Expert Tip: Conversation and laughter are your best tools.
16. Make a Christmas Memory Book
Creating a Christmas memory book is an affordable and engaging way to celebrate the holiday season, especially when you’re on a tight budget.
To start, you can utilize items already at your disposal in your house such as old photos, greeting cards, and crafts.
Spend some time penning down heartfelt messages and your favorite holiday memories associated with each picture or craft. Embellish the pages with affordable decorating materials like glitter, stickers, or color pens.
Not only does this create a personalized touch, but it also serves as a nostalgic keepsake that can be cherished for years to come.
Tip: Digitize your memory book by creating an electronic version. This can also help preserve the original items.
17. Spend Time With Loved Ones
Celebrating Christmas on a budget doesn’t mean skipping on the fun.
It’s about cherishing time spent with loved ones, harnessing creativity, and making priceless memories that last a lifetime.
Here are some cost-effective activities you can embrace this festive season:
Share stories of memorable Christmas experiences.
Organize virtual celebrations with extended family and friends.
Create your own family-themed board game.
Bake Christmas cookies or make a popcorn Christmas tree.
Stream a Christmas church service.
If snow is around, engage in snow play.
Dance to classic Christmas music.
Put together an annual family calendar.
Participate in one of these Christmas Challenges!
Remember, it’s not about what’s under the tree that matters, but rather, who’s around it.
18. Stash Christmas presents all year
Do what I do! Begin addressing the issue of holiday budgeting by stashing Christmas presents all year round.
This is a smart and stress-reducing move!
Find deals throughout the year rather than spending lavishly in December. Hang on to items like discounted gifts in your secret gift closet!
As you build an inventory of diverse items, you will be ready for birthdays or sudden party invites – you’re always prepared!
Just be careful to stop shopping when your list is fulfilled to avoid overspending.
19. Write a Christmas Gift List
Creating a Christmas gift list can be an effective way to manage your holiday spending. This helps you understand the overall picture of your holiday expenditure.
Start by writing down the names of every person for whom you consider buying a gift.
Then, determine how much you’re willing and able to spend on each individual. This helps you understand the overall picture of your holiday expenditure.
Take time to brainstorm potential gift ideas within your decided budget for each person. This process can be even easier and more informative if you’re able to reference a gift list from previous years.
Ultimately, the goal is to ensure that your total intended spending is reasonable and manageable for your personal financial situation.
Remember, you may not need to buy gifts for everyone on your list – some individuals might appreciate homemade or free gifts just as much.
20. Choose Great holiday things to do for less
Set aside the societal notion of linking the joy of holidays to copious spending, and welcome small, inexpensive, yet heartfelt gestures.
Adopting a mindset that finds value in low-cost or even free activities, especially during the holiday season, can not only alleviate financial pressure but also create cherished memories.
Instead of focusing on extravagance and materialistic desires, turning attention to experiences and emotional bonding can revolutionize the celebration!
You can always find things to do on Christmas Day.
21. Think Outside the Box With Gifts
Finding affordable gifts doesn’t mean you have to sacrifice quality or thoughtfulness.
By utilizing a gift guide such as the 4 gift rule – something they want, need, to wear, or read – you can ensure a well-rounded and meaningful set of gifts for each child.
Alternately, consulting lists of inexpensive yet creative suggestions like those curated by Money Bliss can help you find unique presents that won’t break the bank. These affordable finds range from books, gadgets, to personal care items, and home accessories.
Regardless of budget, the key to successful gift-giving lies in understanding the recipient’s needs and interests.
22. Consider Re-Gifting
Re-gifting is a practical, budget-friendly, and environmentally-friendly way to celebrate Christmas. It allows unused or unwanted items another chance to be appreciated and might save you some cash too.
Here are some regifting tips:
Ensure the gift is in good condition, unwanted but quality, and not linked back to its original giver.
Consider the preferences of the new recipient, ensuring the gift suits them.
Completely re-wrap the gift to give it a fresh appearance.
Some may debate the etiquette of re-gifting but remember, it’s more about the thought and less about where the gift originated.
Making smart choices can ensure a successful and fun re-gifting experience this festive season.
23. Use Gift Cards or Cash App to Stay on Budget
Purchase a prepaid gift card from your favorite store to ensure you’re limiting your spending to a specific amount and preventing the temptation of overspending.
If you’re planning to shop from a range of places, opt for a Mastercard of Visa prepaid card. While there may be an activation fee, it’s ultimately going to be less than what you’d potentially overspend.
Another great option is using the Cash App card and learn where you can load your Cash App card.
Also, you can use budget tracker apps like YNAB or Simplifi. These can help you meticulously keep track of your spending and stay within your budget.
Remember, the key is to stick to a budget and avoid falling prey to impulsive purchases. Using gift cards or these budgeting apps makes it easier to limit and monitor your expenses.
24. Use Money Gift Ideas Wisely
Money gift ideas can be an excellent alternative to traditional presents, especially when budgeting is a critical aspect.
Too many times, money gift ideas are overlooked as impersonal, but a money gift box or money cake will definitely surprise the recipient.
This will guarantee you will stay within your target budget by using money gift ideas.
For larger families, a gift exchange with a set price limit can keep costs manageable.
25. Donate to Charity Or Volunteer
Volunteering at a charity is a meaningful way to give back during the holiday season that doesn’t put a strain on your budget.
Instead of buying more items a person may not need, you’re investing time, money, and energy in causes they care about. Although this doesn’t require a financial commitment, it’s a generous gift full of sentiments.
Furthermore, donating money to a charity in someone’s name is a thoughtful and effective way to honor someone who already has everything they need. It allows the recipient to feel the joy of giving, yet remains a budget-friendly option for the giver.
If you’re keen on frugal yet meaningful ways to celebrate Christmas, how about considering charitable donations? It’s a splendid alternative to traditional gift-giving – not hard on your wallet, plus it makes a difference!
Most people know it is hard enough to buy gifts for the woman you who has everything or kids who have everything.
How to Make a Christmas Budget
A lot of joy and goodwill is associated with the holiday season; however, it also brings with it the challenge of managing finances meticulously to avoid slipping deep into credit card debt.
One of the effective ways to keep your finances under control during this festive time is by creating an efficient Christmas budget.
In the following sections, we will delve in detail into the simple process of creating a feasible Christmas budget that you can adhere to.
Step 1: Decide What You Want to Spend on Christmas
Determining how much to spend at Christmas depends on your individual budget and financial situation.
On a general basis, most people will overspend at Christmas in order they don’t look broke or not generous.
However, that thought process is backward if you are trying to reach your financial goals. You need to decide on how much you want to spend at Christmas time.
That is why these consumable gifts tend to be popular.
Expert Tip: Avoid surpassing your Christmas budget to prevent feeling the pinch of holiday debt later on. Stick to your allocations and plan things out in advance.
Step 2: Make a List of Christmas Gifts
Creating a list is essential for budget-friendly and stress-free Christmas shopping.
This prevents you from forgetting someone important by intuitively documenting all the people you intend to get gifts for. Also, allows for the clear allocation of your total Christmas budget, preventing overspending on some individuals and under-spending on others.
If you aim to economize, consider the 4-gift rule: something they want, something they need, something to wear, and something to read. This method provides thoughtful gifts for children while maintaining a manageable budget.
More importantly, a well-planned list significantly reduces the time spent shopping and aids in buying gifts early before the holiday rush begins.
Expert Tip: Don’t forget to consider items like stocking stuffers, last-minute gifts, or teacher’s gifts, and the cost of extra food for holiday gatherings.
Step 3: Prioritize Your Spending
Prioritizing where to spend money relative to your financial goals is crucial to achieving long-term financial stability and health. It ensures that your money is allocated effectively, giving priority to necessities and matters that directly support your objectives.
This practice can also prevent unnecessary expenditures and helps in averting serious overspending, especially during high-spending periods like the Christmas season.
Thus, you will need to prioritize your Christmas budget before the festive season. It helps prevent overspending and keeps you debt-free.
Step 4: Limit Your Christmas Spending
First, it is important to abandon the notion of a “perfect Christmas” and focus on enjoying the holiday within your budget.
You can even educate your family members about the concept of holiday budgeting and involve them in your planning process.
Consider proposing less expensive alternatives to traditional gift-giving within your extended family such as handmade or recycled gifts, or conducting a white elephant exchange with budget-friendly novelty items.
Don’t overlook smaller gifting costs that can accumulate, like Christmas stockings – instead fill them with practical, affordable items that your family needs.
Save money on wrapping supplies by using items readily available at home like newspaper or butcher paper and involve the kids in a fun, cost-saving activity by having them create homemade gift tags.
Remember, sticking to your budget doesn’t mean letting go of the Christmas spirit. It’s about celebrating responsibly and starting the New Year without financial stress.
Step 5: Ignore Sales and Keep it Simple
Sales, sales, sales – the deal is too good to pass up!
Here are key ways to overcome this common dilemma.
Resist impulsive purchases compelled by sales, and stick strictly to your shopping list.
Pause before purchasing an item not on your list, consider the necessity.
Keep emotions in check, they run our shopping decisions.
Conquer emotional spending, stay true to your budget.
Discourage additional spending once your list is fulfilled and the budget exhausted.
Remember that it’s better to focus on affordable presents rather than seeking the perfect, but expensive, gift.
Step 6: Shop for Christmas Gifts Early
Start early. Begin watching for sales on items from your Christmas gift list way before the season’s rush.
Begin monitoring for sales early, especially during holidays that precede Christmas, to stretch your budget further.
Make use of Black Friday and Cyber Monday. They provide excellent opportunities to snag deals on your gifts.
Expert Tip: Remember to stick to your list. If it isn’t on your list, pass it up. It’s challenging but keeps your budget in check.
Step 7: Reuse and Recycle Holiday Decorations
Start by taking stock of items in your house. Don’t limit yourself to traditional decorations—choose a color theme and scan your home for items that fit and can be repurposed.
Use the resources outdoors. Pine branches, pine cones, mistletoe, and holly can be fashioned into decorations from nature’s catalog.
Even consider trading decorations with friends or family. This can bring a new look to your home without the need for new purchases.
Get creative with items from dollar stores that can be combined to appear high-end and save costs.
How to buy gifts for Christmas on a budget?
Maintaining a budget doesn’t mean you can’t enjoy giving gifts this Christmas.
Use these gift guides to help you out:
Remember, the joy is in the giving, not in the cost of the gift.
Time to Create Your Holiday Budget and Make it Memorable
Regardless of your financial situation and the extent of your holiday plans, this guide will help you maintain financial stability while fully embracing the Christmas spirit.
By setting aside a prescribed sum for your holiday expenses, you’re able to enjoy the season without the stress of unexpected expenditures or financial shocks after the holiday haze has cleared.
Celebrating Christmas on a budget doesn’t mean skipping the fun or the warmth.
With just a dash of creativity and thoughtful planning, you can make the yuletide season enjoyable and meaningful without breaking the bank.
Use the festive tips provided and start planning your budget-friendly Christmas now. Remember, the true essence of Christmas isn’t in extravagant spending—it’s about love, joy, and spending quality time with those who really matter to you.
Don’t forget to access a free printable worksheet for your customized holiday budget.
Know someone else that needs this, too? Then, please share!!
With the typical cost of a home in Los Angeles soon topping $1 million, and the state’s median rent approaching $3,000, there’s a sense of doom around how unaffordable California has become. We clearly need more housing density to meet the current needs. But we don’t have to sacrifice the lifestyle to which Californians have grown accustomed.
Los Angeles is geographically vast — nearly twice the size of Chicago and significantly larger than New York City, with much lower population density than those two cities. Jobs are nearly as dispersed here as homes, and none of our transportation options work that well: We are too sparse for trains and we have under-prioritized bus service, which most Angelenos don’t use because it’s rarely the fastest option. L.A. is built around cars, yet it’s also now too dense for vehicle traffic to move efficiently.
But this kind of sprawl can be put to good use. In contrast to Chicago and New York, whose commercial centers dwarf job prospects elsewhere in each city, Greater Los Angeles has numerous clusters of job-rich areas. The Westside and Irvine rival downtown L.A., and employment centers in Glendale, the West Valley, Long Beach, Anaheim and the Inland Empire each contains roughly half as many jobs as there are downtown.
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We can reframe our planning for housing around these medium-density urban hubs, which are scattered throughout the region. This approach has been a successful and flexible model, especially outside the U.S. Consider the densely populated suburbs of Tokyo, which offer varied housing types and transportation options, or the suburbs of many major European cities built around lower density townhomes, row houses or smaller apartment buildings and duplexes. Often those developments are close to a commuter rail station that can take residents into the central city in less than 45 minutes.
Maximizing our multiple job centers requires that we shift course from our single-family-dominated residential landscape to hit a sweet spot that works for Californians: more density, but not so dense that Angelenos will have to sacrifice the space we’re used to. We should focus on increasing smaller multifamily housing (i.e. two to eight units) while still making it possible for people to live close enough to employment centers.
To do this, we have to reform our land use — including laws that discourage building for density — to provide alternatives to sprawling single-family neighborhoods. This does not necessarily mean obliterating the urban forms and communities that have been built in the past century. But without some densification, we’ll keep pushing people and development into the Inland Empire and other outlying areas (which is already happening). The result is predictable: more punishing commutes and, in all likelihood, still expensive housing.
I live in a single-family home on L.A.’s Westside, and I see firsthand how laws that favor my type of home hold the neighborhood back. Although I live next door to multifamily housing, those apartments and townhomes are the exception in my neighborhood. Restrictions on building anything but a single-family home or an accessory dwelling unit stretch a mile from my house to the nearest stop on the Metro E (formerly known as Expo) Line. Restrictions on building apartments apply to most land plots in a one-mile radius around that Metro stop.
These zoning limitations make no sense: They mean too few people can live close enough to generate the ridership necessary to justify the immense investment it took to build the E Line. Further, the neighborhood’s single-family housing is so astronomically expensive — a million dollars will get you … nothing — that the people most likely to rely on the E Line cannot afford to live there. There are several reasons why ridership is down on L.A. Metro’s trains and buses, and too little density near transit is a major reason.
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Remote work has also opened up new possibilities for housing in Southern California. A key factor that continues to drive up real estate in central cities is the increased tendency for higher-income households to live closer to highly urbanized areas. Remote work can help ease these rent pressures by making some central neighborhoods less appealing for higher-income office workers who no longer have to go into a downtown office.
Neighborhoods such as Echo Park and Boyle Heights might see some relief from constantly rising rents and displacement pressures. More strategic planning around transit-rich neighborhoods would further relax rent increases in these neighborhoods. If we can allow for greater density in more neighborhoods, particularly in zones close to dispersed job centers such as Santa Monica, Pasadena and Burbank, then the areas most at risk of gentrification should see some relief.
This approach would also allow greater flexibility in the type of development needed to meet state housing mandates. Under state guidelines, Southern California has to add 1.3 million housing units by 2029. If we have, by a conservative estimate, at least 12 major job centers, each hub should be zoned to serve 100,000 units of housing within commuting distance to reach the 2029 goal.
With remote work and less than daily commutes, the potential commuting distance many workers are willing to accept will be greater. In turn, this significantly expands the land area where we can build units to serve an employment hub, providing workers with many more potential housing possibilities. But only if we allow them to be built.
Los Angeles has a unique urban landscape. Because of our many dispersed employment-rich centers and broad geography, we don’t have to mimic East Coast cities to increase housing density. We don’t need to build condo towers or skyscraper apartment buildings to house everyone. The path to a more livable and equitable future is clear: Allow more housing in a diversity of well-connected neighborhoods, and L.A. can still remain L.A.
Michael Lens is a professor of urban planning and public policy, and associate faculty director of the Lewis Center for Regional Policy Studies at UCLA.
The Debt Ceiling Bill signed into law in June 2023 finally brought an end to the federal student loan payment pause, with payments resuming on October 1, 2023 (and interest accrual resuming a month earlier). The result is that millions of federal student loan borrowers — at least, those not taking advantage of the student loan “on-ramp” — will need to begin making minimum payments again as of October 1. However, some borrowers may opt to make more than the student loan minimum payment so that they can expedite the repayment process on their loan.
What Is the Minimum Payment on Student Loans?
The minimum payment on student loans is the lowest amount of money a borrower can pay each month. The actual student loan minimum payment amount owed each month might be determined by factors including the loan type, interest rate, and the repayment plan. Generally, the minimum monthly payment includes the principal (the original amount borrowed), interest, and fees.
For federal student loans, the minimum monthly payment depends on the repayment plan a borrower is on, as follows:
Standard Repayment Plan: On this plan, your payments are a fixed minimum amount of at least $50 a month, and your loans are paid off within 10 years.
Saving on a Valuable Education (SAVE) Plan: With SAVE, a new income-driven repayment (IDR) plan introduced by President Biden in late June 2023, borrowers with undergraduate federal student loans will get the lowest monthly payments of any IDR plan. For those who are single and make $32,800 a year or less and for families of four who make $67,000 or less annually, the minimum monthly payment is $0 (meaning they owe no loan payment). Those who earn more than those amounts will save at least $1,000 a year on the SAVE plan compared to current IDR plans.
Pay As You Earn (PAYE) Plan: Under the PAYE plan, borrowers’ payments are 10% of their discretionary income and are also based on their family size. With PAYE, their payment could be as low as $0 per month, and they won’t owe more monthly than they would have on the Standard Repayment Plan.
Income-Based Repayment Plan: Borrowers on this plan need to have a high debt-to-income ratio in order to be eligible. Their monthly payments will be 10% to 15% of their discretionary income, and could be as low as $0. Borrowers won’t owe more monthly than they would have paid on the Standard Plan.
Income-Contingent Repayment Plan: Borrowers with Direct loans who are eligible for this plan will have monthly payments that are the lesser of 20 percent of their discretionary income or the amount they would pay on a fixed repayment plan over 12 years, adjusted for their income. Their payments may be as low as $0 a month.
Graduated Repayment Plan: With this plan, a borrower’s monthly payments are lower at first and then increase, usually every two years. The monthly amounts they will pay will be enough to repay their loans within 10 years.
Extended Repayment Plan: For those on the Extended plan, their payments may be fixed or graduated, and the amount they pay each month will be enough to ensure their loans are paid off in 25 years. Their payments will be lower on this plan than they would be on the Standard or Graduated plans.
You can use the Federal Student Aid’s Loan Simulator to help calculate how much you’ll owe and find the best repayment plan option for your situation.
Can I Pay More Than The Minimum on Student Loans?
It’s possible to make more than the minimum payment on student loans without being charged for any prepayment penalty fees. Both federal student loans and private student loans are required to allow borrowers to make extra payments and pay off their loan early without charging any additional fees.
Making extra payments can help decrease the interest paid and help reduce the overall cost of the loan. Typically, you can contact your lender to specify that the extra payment be applied to your highest interest loan and be applied to the principal value of the loan.
Making payments directly to the principal value of the loan can help speed up repayment. And, because most student loan interest is charged per day, making additional payments on the principal value of the loan can help reduce the amount you pay in interest over the life of the loan. 💡 Quick Tip: Refinancing student loans is a way to lower your monthly payments by either getting a lower interest rate and/or extending the loan term. Please note: If you refinance a federal loan, you will no longer have access to federal protections and benefits.
Why Would You Pay off Your Student Debt Sooner?
As with any debt, a primary motive for paying off student debt early is to more quickly remove debt that’s racking up interest. Prioritizing debt repayment could help lower your debt to income ratio and could help you reduce the amount of money you owe in interest over the life of the loan. Here are a few reasons you may want to pay off your student loans sooner rather than later.
Interest. Interest. Interest.
Interest continues to accrue for the life of most student loans. (Note: The timetable of when interest starts to accrue on your student loans depends on the type of student loans you’ve been awarded. Contact your lender for all the details.) The sooner you pay off your loans, the sooner you stop interest from accruing.
Student loan interest does qualify for a tax deduction. But only $2,500 of the interest can be deducted each year — less if your modified adjusted gross income is greater than $70,000 a year.
Your Debt-to-Income Ratio May Be Lowered
When borrowing a mortgage or a car loan, the lender will usually consider the applicant’s debt-to-income ratio. And the lower it is, the better it looks from a financial perspective. Do you need a new car? Want to buy a house? Start a family? The sooner you get your student loan debt paid off, the more money you will likely have to put toward those dreams being realized.
Your Credit Score Could Strengthen
Your FICO® credit score is a powerful component of your total financial picture; tend it like a garden, and it could grow. There’s something to be said for the fact that if you’re managing an open debt responsibly by making on-time payments, that may have a positive impact on your credit score. And a higher FICO® score can help you get a better interest rate on a loan you might need for a home or car.
It’s Easier to Save Money When You’re Not Paying Down Debt
The conventional wisdom is the less debt you have, the more money you likely have to save. Think of successfully managing and paying off debt as a necessary exercise routine, like working your core. As your financial “core” gets stronger, you’re likely to become better able to balance your finances and save more money.
When you’ve repaid your student loans, the money you were spending each month on loan payments can instead be used to help you reach financial goals like starting an emergency fund, saving for a down payment on a house, or more. 💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.
How to Accelerate Your Student Loan Payments
You may be able to pay off your student loan debt more quickly by setting reasonable goals, including payments larger than the student loan repayment minimum required. As mentioned, both federal and private student loans generally allow for penalty-free prepayment but be sure to contact your loan provider before doing so to ensure your prepayments are being applied in the way that you want them to be. Here is a checklist that may help you eliminate your student loan debt sooner.
Calculating Your Costs
Make a list or spreadsheet of all your student loans. You can use a student loan calculator to help determine how much you ultimately owe (including interest) and when, ideally, you’d like to complete your student loan payments.
Making a Budget
Track your spending and make a realistic budget of your monthly and annual expenses. And leave some wiggle room for unexpected expenditures. Be honest with yourself. If you feel you’re spending too much on unnecessary expenses, maybe it’s time to skip your next urge to splurge.
Setting Manageable Goals
Now that you know how much money you have coming in and where it’s going, it might be time to make some uncomfortable, but fair, spending decisions with the intention of eliminating your student loans by your goal date. That means you may want to sacrifice some unnecessary expenses. Cutting back on non-necessities isn’t fun, but it may make it easier for you to save.
Paying Beyond the Minimum Required
As we mentioned, you can accelerate your loan payoff by paying more than the minimum student loan payment required by your loan provider. It’s okay to start small — even an extra $25 a month can start to add up. Paying more each month can also save you money on interest. You can ask your loan provider to put that extra cash toward the principal.
Avoiding Late Fees
An easy way to help ensure you pay at the same time every month is to set up an auto-draft from your checking or savings account. Some lenders may even offer a rate discount to student loan borrowers who enroll in automatic payments.
Maximizing “Surprise” Money
Are you doing so well at work that you got a raise or bonus? Rather than splurging on something new, lighten the burden of your current reality by putting that money toward your student loan debt.
Finding Extra Work
Every little bit of extra income can help. A part-time job could get you closer to your goal more quickly. If fitting in an extra 15 or 20 scheduled hours a week isn’t feasible, try finding a side hustle where you can make your own hours. You can work as a dog walker, become a rideshare driver, or even recharge electric scooters — all through an app.
Recommended: What is the Average Student Loan Debt After College?
Refinancing Your Student Loans
Refinancing your student loans might offer yet another step closer to your goal. Student loan refinancing is when you borrow a new loan (which is used to pay off your original loans) at a new interest rate and/or a new loan term.
One potential benefit of refinancing is the possibility of securing a lower interest rate. You could also potentially shorten your loan repayment term. But opting to shorten your loan term generally means paying more each month.
If you have a combination of private and federal loans, it’s possible to roll them into a single refinanced loan, which means having one monthly payment instead of multiple payments to multiple lenders. This is what is known as loan consolidation.
However, it’s very important to understand that by refinancing your federal loans, you lose federal student loan protections such as deferment and forbearance, and access to income-driven repayment programs. Take this into very careful consideration before moving forward with student loan refinancing with a private lender.
The Takeaway
Making more than the minimum student loan payments each month can help borrowers speed up their loan repayment and spend less in interest over the life of their loan. Lenders generally do not charge any fees for prepayment. To make the most of your extra payments, contact your lender to be sure they are being made to the principal value of the loan.
Refinancing could be another option for some borrowers to consider if they are interested in securing a lower interest rate on their loan — and provided that they don’t need access to federal programs or protections.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
What happens if I only pay the minimum on my student loans?
Making the minimum monthly payments on your student loan will generally result in your loan being paid off according to the original terms of the loan.
Is it worth paying off student loans early?
Paying off student loans ahead of schedule can make borrowing less expensive, because the borrower will likely spend less in interest over the life of the loan. Repaying student loans early could also have benefits like improving an individual’s debt-to-income ratio. Without the burden of student loans, borrowers might also be able to focus on other financial goals.
What is the average minimum student loan payment?
A borrower’s average monthly minimum federal student loan payment depends on factors including the total amount they owe, their interest rate, and the type of payment plan they’re enrolled in. For instance, on the Standard Repayment Plan, your payments are a fixed minimum amount of at least $50 a month.
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SoFi Student Loan Refinance NOTICE: The debt ceiling legislation passed on June 2, 2023, codifies into law that federal student loan borrowers will be reentering repayment. The US Department of Education or your student loan servicer, or lender if you have FFEL loans, will notify you directly when your payments will resume For more information, please go to https://docs.house.gov/billsthisweek/20230529/BILLS-118hrPIH-fiscalresponsibility.pdf https://studentaid.gov/announcements-events/covid-19
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income based repayment plans or extended repayment plans.
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Since the repeal of Don’t Ask, Don’t Tell, LGBT troops transitioning back into civilian life can access critical housing assistance benefits granted by the federal government to all of our country’s veterans.
As these service members transition out of military housing and into the civilian housing market, they should be equipped with the full understanding of what is available to them as part of their service to our country, particularly since the Federal Reserve’s 2019 Survey of Household Economics and Decisionmaking found that LGBT veterans were over four times more likely than non-LGBT veterans to report finding it difficult to get by financially.
One of the most important benefits available to LGBT veterans is the VA Home Loan program, which provides veterans with low-interest mortgages with no down payment required. This program can be a lifeline for LGBT veterans who may be struggling to save for a down payment or qualify for a traditional mortgage due to discrimination in the workplace or other factors.
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Unfortunately, many LGBT veterans may not be aware of this program or may face additional hurdles in accessing it. They may be hesitant to disclose their sexual orientation or gender identity to VA officials, out of fear of discrimination or harassment. They may also be unaware of the specific documentation and paperwork required to qualify for the VA Home Loan program, or may face challenges in finding a lender who is knowledgeable about the program and sensitive to their needs.
To address these challenges, we must do more to educate LGBT veterans about their rights and benefits. VA officials and mortgage lenders should be trained to provide culturally competent services and resources, such as LGBT-affirming housing counselors and financial advisors.
We must also work to address the underlying causes of the “rainbow gap” in homeownership. This includes advocating for policies and laws that protect LGBT individuals from discrimination in the workplace, housing market, and other areas of life, and that ensure that all individuals have access to the resources and opportunities they need to thrive.
Honoring the service and sacrifice of our LGBT veterans requires more than just words. It requires concrete action to ensure that these brave individuals have the support and resources they need to succeed in civilian life, including the ability to achieve the dream of homeownership.
Joseph Smith, U.S. Air Force veteran, and senior vice president of lending, CrossCountry Mortgage, Boston Shimmy Braun, senior loan officer, CrossCountry Mortgage.
Pass law to help ease shortage of mental health professionals
Thank you to Gerald “Jud”DeLoss for his recent op-ed urging our leaders to address the worsening shortage of mental health professionals by investing in bringing more people into the psychiatric professions.
As DeLoss points out, the shrinking pool of psychiatrists will spell serious trouble for cities and states trying to open free mental health clinics for the poor or uninsured. There simply aren’t enough doctors available to hire when the demand for psychiatric services is mounting. The current pool of 40,000 psychiatrists nationwide is expected to fall 27% by 2030, creating a shortfall of as many as 21,000 psychiatrists by that year.
As the former president of a Chicago chapter of the Depression and Bipolar Support Alliance, I can testify that members have had enormous difficulties finding well-qualified, affordable psychiatrists in a reasonable amount of time. Waiting periods stretched into months. Many doctors weren’t taking new patients. Other psychiatrists, disillusioned with reimbursements from insurance companies, were operating cash-only practices and refusing any insurance.
One implication was clear: The reopening of Chicago’s shuttered mental health clinics was more vital than ever.
What can government do to beef up the ranks of new doctors entering the pipeline, allowing cities to tap new talent for municipal clinics? For starters, Congress can pass the Resident Physician Shortage Reduction Act of 2023. This bipartisan measure would expand the number of Medicare-supported residency positions at teaching hospitals and medical schools nationwide. The result would be an expansion of young doctors, including psychiatrists, just when they’re needed the most.
Robert Kazel, Niles
Words do matter
Columnist Neil Steinberg showed his true colors recently by allying himself with FOP chief John Catanzara and a reporter over the use of the term “mob action” in describing the youth who allegedly looted a 7-Eleven.
The term was chosen to incite feelings against the Black teens who were charged as well as to bait Mayor Brandon Johnson. Steinberg can lecture while quoting the conservative Daily Mail and trying to squeeze some middle ground for himself, but he finally came down in support of the reporter and Catanzara’s use of a racially charged, if not outright racist, term.
Steinberg’s lame response to Black teens having nothing to do is to cite the stock answer: “everything — education, jobs, family, community. And law enforcement.” Law enforcement receives overwhelming funding while the other priorities are woefully underfunded and many times nonexistent.
Johnson is trying to correct this underfunding. He is right in saying we should not vilify these teens and need to provide constructive avenues for and with them.
Meanwhile, I wonder why very little was said about the youth at Lollapalooza.
When scouting out the best places to live in Virginia, it quickly becomes clear that not all locales are created equal. Some possess an elusive charm while others offer a more traditional dependability. The topography of the state boasts a range of ecosystems, from the coastal regions of the Chesapeake Bay to the majestic peaks of the Blue Ridge Mountains, each town below echoes the diversity and unique appeal of the state as a whole.
Below, we’ll explore seven of the most desirable places to live in Virginia for everyone from recent graduates to newly-minted retirees. Regardless of what you’re looking for, the cities featured below stand head and shoulders above the rest as the top places in the state to call home.
Population: 235,000
Average age: 34.4
Median household income: $120,000
Average commute time: 27 minutes
Walk score: 70
Studio average rent: $2,067
One-bedroom average rent: $2,495
Two-bedroom average rent: $3,479
Emerging as an undisputed champion among the best places to live in Virginia, Arlington’s allure comes not only from its location but also from a blend of cultural, recreational and economic excellence, an undeniably appealing trifecta of attractive attributes for anyone looking to settle down in Virginia.
Take a moment to consider Arlington’s unbeatable proximity to the nation’s capital. Just across the Potomac from Washington, D.C., Arlington acts as a bridge connecting the serene beauty of Virginia with the pulsating heart of American politics and culture. The easy commute to D.C. is a big draw for the legions of professionals employed in the capital.
The spirit of exploration and adventure is imbued into Arlington’s landscape. With the Potomac River, the Appalachian Trail and more than a few parks in its vicinity, Arlington caters to the casual stroller and the determined trekker, a testament to the universal allure of nature that lies at the core of the human experience.
Arlington’s economy, resilient and diverse, ensures a stable platform for its residents. The tech industry is particularly strong here, and several federal agencies provide a wide array of employment opportunities for high-achieving individuals across a number of different sectors.
An undeniably appealing feature of Arlington is its educational prowess. Schools here are truly second to none. These highly rated public and private institutions consistently prepare students to tackle the challenges of the modern world and forge their own path to professional success.
In the grand scheme, Arlington stands as a prime example of how a place can offer the opportunities of a large metropolis and the community spirit of a small town. Life here is an enticing blend of challenge and reward, culture and nature, tradition and innovation. With all that in mind, it’s no wonder why Arlington ranks among the best places to live in Virginia.
Population: 160,000
Average age: 36
Median household income: $96,000
Average commute time: 30 minutes
Walk score: 60
Studio average rent: $1,769
One-bedroom average rent: $2,137
Two-bedroom average rent: $2,523
In the palette of American diversity, Alexandria paints a vibrant masterpiece, effortlessly blending tradition and innovation to compose one of the best places to live in Virginia. This historic city has a rugged charm, yet within its limits, one finds an eclectic mix of modern amenities and old-world sensibilities.
Imagine living in a place where history doesn’t merely linger in books and museums, but breathes in every brick, every cobblestone street and every stately colonial facade. Alexandria invites its dwellers to step into yesteryear while navigating through their daily lives, tracing a path of American history as easily as one would trace their fingertips along the city’s red brick roads.
But history isn’t the city’s only selling point. Straddling the line between urban sophistication and the great outdoors, Alexandria offers an inviting balance. Nestled on the banks of the Potomac River, residents enjoy a medley of water-based activities, from boating to fishing and so much more, connecting them with nature without straying far from the convenience of the city.
Speaking of city conveniences, Alexandria is home to a cornucopia of boutiques, craft eateries and entertainment venues. Its thriving arts scene, centered around the Torpedo Factory Art Center, gives artsy types a chance to engage with local professionals. The city’s culinary landscape serves as a melting pot of international cuisines, punctuated with fresh, locally-sourced offerings, often invoking the spirit of a time-tested recipe while adding a modern spin.
Education, a cornerstone of any community, shines in Alexandria, with top-tier public and private schools and access to numerous higher education institutions. The city is home to a community of lifelong learners, embodying a culture that values education and its role in shaping the future leaders of the country.
In terms of safety, Alexandria continues to be lauded for its lower crime rates compared to national averages, making it a place where families can feel secure. This sense of community and safety fosters a tight-knit environment, where neighbors are more than just faces behind the front doors, they’re friends and people that you can always rely on.
In essence, Alexandria serves as a crucible of the past, present and future, where the rhythm of modern living melds seamlessly with echoes of historical grandeur. Whether you’re an outdoor enthusiast, a history buff, a foodie or an artist on the rise, this city promises a life that’s as rich as the Virginia landscape itself. It’s not just a good place to live in Virginia – it’s undeniably one of the best.
Population: 47,000
Average age: 30
Median household income: $54,000
Average commute time: 18
Walk score: 58
Studio average rent: $2,108
One-bedroom average rent: $1,625
Two-bedroom average rent: $1,762
Nestled in the heart of Virginia’s picturesque Shenandoah Valley, Charlottesville is a hidden gem just waiting to be discovered. Often overlooked in favor of bustling urban hubs or serene coastal retreats, this remarkable enclave has a unique blend of attributes that puts it on the map as one of the best places to live in Virginia.
The first thing to note is the natural beauty that encompasses Charlottesville. Surrounded by the Blue Ridge Mountains, it’s a veritable playground for outdoor enthusiasts. Thick forests, sparkling streams and rolling hills paint a landscape that has to be experienced to be fully understood. To put it simply, there’s an irresistible call to the wild here, an echo from the land that beckons one to explore, understand and connect with the people and places around them.
Yet, there’s no need to sacrifice culture for the sake of nature. Charlottesville is home to the University of Virginia, a beacon of intellectualism and innovation. The historic institution’s influence is felt throughout the city, from lively debates at local coffee shops to world-class performances at cultural venues. As a hotbed for innovation, Charlottesville has cultivated a vibrant tech scene, drawing in a diverse and educated population while fostering an environment of creativity and collaboration.
The city’s culinary scene is another standout. The abundance of nearby farms translates to an unparalleled farm-to-table ethos, with eateries boasting seasonal menus full of fresh, locally sourced ingredients. As if that weren’t enough, the surrounding area is Virginia’s most prolific wine region, producing acclaimed vintages that have put it on the map as a New World wine destination.
In Charlottesville, you don’t simply exist, you root yourself in the landscape, the community and the culture. You live, truly live, in all the best ways possible. This is what makes it one of the best places to live in Virginia. An exceptional blend of outdoor adventure, intellectual vibrancy, gastronomical delights, rich history and friendly community — all wrapped up in the stunning panorama of Virginia’s beautiful Blue Ridge Mountains.
Population: 230,000
Average age: 33
Median household income: $45,000
Average commute time: 21 minutes
Walk score:52
Studio average rent: $1,258
One-bedroom average rent: $1,497
Two-bedroom average rent: $1,786
The city of Richmond isn’t just one of the oldest American cities but also firmly holds its place as one of the best places to live in Virginia. Richmond’s strengths are multifaceted and its true appeal is only revealed after you get to know the town in all its uniquely charming glory.
Richmond’s vibrant culture must be acknowledged. Street art splashes color across the city while a plethora of galleries, including the Virginia Museum of Fine Arts, hold an impressive collection of world-renowned artwork. Art is not just confined within museum walls here. The Richmond Street Art Festival converts the cityscape into a sprawling urban canvas, encapsulating the dynamism of the city.
Nature lovers will find themselves right at home in Richmond, thanks to the James River Park System, with its abundant wildlife and recreational opportunities. Whether your interests lie in birdwatching or whitewater rafting, this park system caters to all. The flourishing green spaces in and around the city ensure that a brush with the outdoors is never far away.
In Richmond, the ethos of community is strong. Neighborhoods are diverse, each with a unique character, contributing to the city’s overarching charm. It’s a place where strangers are friendly and neighbors are part of the family.
Richmond’s ability to blend tradition with innovation and bustling urban life with serene natural beauty, positions it as a premier choice among the best places to live in Virginia. It’s a city that not only respects its past but also embraces the future, creating a living environment that’s dynamic, enriching and welcoming.
Population: 450,000
Average age: 36
Median household income: $71,000
Average commute time: 24 minutes
Walk score: 32
Studio average rent: $1,567
One-bedroom average rent: $1,447
Two-bedroom average rent: $1,611
Cast your eyes on Virginia Beach, an undeniable jewel among the best places to live in Virginia. This city is an outdoor lover’s dream, yet it offers all the modern amenities anyone could need. From the natural charm of the Atlantic coast to the urban allure of its bustling downtown, Virginia Beach presents a harmonious blend of wilderness peace and city life.
Picture the ocean breeze on your face, salt in the air and the rhythmic pulse of the Atlantic as it beats upon the sandy shore. This is a place where the waters teem with an incredible variety of aquatic life, offering ample opportunities for fishing or simply enjoying the majesty of the ocean. Add to that, the Back Bay National Wildlife Refuge, a testament to Virginia Beach’s commitment to wildlife preservation, is a haven for migrating birds and home to a unique assortment of species.
Let’s step away from the coastline to reveal an expansive and robust park system, inviting locals and visitors to discover forests and wetlands, the many hiking and biking trails, camping sites and picnicking spots. This caliber of natural attractions right in the city’s backyard is truly unique and one of the main factors in landing this oceanside city on the list.
The allure of Virginia Beach isn’t limited to its natural surroundings. The city’s economy stands tall, offering a wide array of industries, with a special focus on military and defense sectors, tourism, agribusiness and professional services. Excellent schools, high-quality healthcare facilities and a strong community spirit further make Virginia Beach one of the best places to live in Virginia.
In Virginia Beach, one finds a city that’s ready for adventure, yet at the same time, it’s a place to call home. A haven where the wilderness is in perfect harmony with urban development. As one of the best places to live in Virginia, Virginia Beach offers an unparalleled mix of outdoor recreation, economic opportunity and more.
Population: 24,000
Average age: 39
Median household income: $111,000
Average commute time: 30 minutes
Walk score: 54
Studio average rent: $1,887
One-bedroom average rent: $2,139
Two-bedroom average rent: $2,659
Nestled in the heart of Virginia, Fairfax is undeniably among the best places to live in Virginia. It’s a town that perfectly amalgamates the charm of the South with the dynamic nature of modern America. It is not just about urban convenience, but about the people, vibe and lifestyle that make it a place worth settling down.
From a perspective of access to amenities, Fairfax ticks all the right boxes. A splendid education system, top-rated healthcare facilities and well-structured public transportation are among the many comforts the residents of Fairfax enjoy. Fairfax schools consistently rank among the top in the state, with education being highly valued, fostering an atmosphere where brain power reigns supreme.
Yet, one of Fairfax’s most significant attributes is its commitment to the great outdoors. Streams and trails snake their way through lush greenery, providing residents with an ever-present opportunity to connect with Mother Nature. Fairfax, in essence, serves as a reminder that even in an urban environment, there’s something wild waiting to be enjoyed.
Jobs are also a drawing factor. Home to numerous companies and with proximity to Washington D.C., Fairfax presents an array of employment opportunities, making it not just a great place to live but also to build a career. At the end of the day, in Fairfax, you’ll find not just a place to live, but a whole new way of life.
Population: 44,090
Average age: 34.5
Median household income: $125,000
Average commute time: 32.5 minutes
Walk score: 37
Studio average rent: $3,574
One-bedroom average rent: $3,353
Two-bedroom average rent: $2,329
Located in the heart of Loudoun County, Ashburn mirrors the mightiness of our great nation and the heart of a hero returning home. Ashburn is easily one of the best places to live in Virginia, offering the sophistication of a modern and cosmopolitan lifestyle with the charm and tranquility of suburban life.
The school systems in Ashburn are an integral part of the community. Known for their exceptional quality, these institutions foster young minds and equip them with all the necessary tools for a promising future.
Ashburn’s economic vitality resembles a pristine, flowing river, teeming with diversity. It is home to numerous tech companies and startups, offering a wide range of employment opportunities. Tech professionals will find a rich and diverse field of opportunities, luring them with promising careers and the ability to maintain a comfortable lifestyle in this thriving corner of Virginia.
Yet, in Ashburn, the urban sprawl hasn’t overtaken the charm of nature. Green spaces are abundant, providing residents with an arena to enjoy outdoor activities. With well-maintained parks, biking trails and recreational facilities, the opportunities to engage with nature are plentiful.
In essence, Ashburn’s combination of high-quality education, booming economy, abundant nature, strong community life and strategic location gives it a unique allure that rivals the satisfaction of a successful day in the great outdoors. It is this blend of elements that crowns Ashburn as a champion among the best places to live in Virginia.
Find your place in Virginia
Whether you’re drawn to the vibrant city life or the serenity of the suburbs, there’s a place for everyone in the Old Dominion state. Each of the seven cities featured above exemplifies why Virginia is so unique. With a rich blend of history, culture and modern amenities, these are undeniably some of the best places to live in Virginia. As you ponder where to plant your roots or make your next move, these communities stand as shining examples of the abundant choices Virginia offers.
Curious about the best apartments in your favorite city above? Start your search here and lay down roots in the place of your dreams sooner than you thought possible. Virginia may be for lovers, but it’s also for renters. Find your new place with help from Rent. today.
Today’s low-volume, purchase-focused market is more competitive than ever, as mortgage lenders work to win more market share than their neighbor and aim to be as profitable as possible. Compressed margins make it crucial to work as quickly and efficiently as they can, taking every opportunity to reduce costs and maximize every basis point of margin. Selecting the right product and pricing engine (PPE) will help lenders achieve these goals.
Industry veteran Parvesh Sahi, chief revenue officer at Polly, has spent much of his career in the mortgage space, working with notable fintech vendors and facilitating powerful connections between compliance and loan origination softwares. During his decade-long tenure at ICE Mortgage Technology, Sahi learned the importance of bi-directional communication between software applications to achieve optimal workflow efficiencies, user experience and maximize profitability.
According to Sahi, there are three primary components that will help lenders succeed in today’s mortgage environment, and beyond: speed to market, margin management and loan officer experience and education.
“If you’re not focused on creating that connective tissue between the three, you’re missing an enormous opportunity,” Sahi explained.
Identifying the right PPE
With that said, what should lenders look for in their PPE?
First, the PPE should be architecturally designed to accommodate any lenders’ unique business strategy or use case. It should have native cloud capabilities and be web-based so the system can flex up and down with the market and enable speed of feature consumption and development. It should be purpose-built on the most advanced infrastructure to handle any amount of volume without having to sacrifice speed, performance or the user experience.
The ideal PPE is designed to evolve and scale, with the ability to add new features and functions at a lightning-fast pace. Lenders are no longer left waiting through long release cycles (historically upwards of 6-18 months on legacy solutions) for functionality or reliant on custom-built solutions to get the features and workflows they desire. PPE providers need to provide a commercially scalable platform that is agile and more competitive – today. It should also support users’ ability to deploy new loan products quickly as their strategies change.
Another thing to note when identifying the right PPE is the technology partner. The right tech partner will provide a PPE that enables you to accomplish all the above, and will also help position your organization for ongoing success via constant and consistent innovation that keeps the lender customer at the center of the equation.
Lenders also need to optimize their secondary market interaction in terms of selling loans and finding best execution pathways, Sahi said.
“[The PPE] does not sit alone, but rather within this origination and buy-side ecosystem,” he said. “If you do not have a system that was architected with uniform, normalized data across originations and secondary market trades, you may find yourself at a competitive disadvantage in terms of price optimization and best execution, both in the short term and even more so long term.”
In pioneering the new gold standard for PPEs, Polly purpose-built their engine in the cloud and for the cloud with a mobile capacity and API-adjacent product strategy in mind.
“Polly has revolutionized the mortgage capital markets space with process transformation we haven’t experienced in this industry segment for 20+ years,” Sahi said. “Polly is the new market entrant, and we have already surpassed every other PPE out there in terms of technology, functional depth and APIs that deliver speed and next-level flexibility.”
The company is committed to adding demonstrable value across the entire mortgage value chain, and continues to expand its network of third-party tech partners as well. Many best-in-class providers have proactively engaged Polly to join in their quest to solve industry pain and augment lender efficiencies.
How the right tech can help LOs and borrowers
The right PPE will help loan officers work more efficiently and effectively.
With a smaller amount of loans up for grabs, LOs need to ensure they are maximizing profitability per loan while solving price-conscious borrowers’ needs. Additionally, LOs need to be educated so they can educate their customers on additional options that may help solve their financial needs. The core limitations of legacy solutions make this impossible. What’s needed is a cloud-native, up-to-the-minute PPE that enables LOs to truly optimize margins and revenue on every loan both inside the PPE UI, as well as in other LO applications.
The right PPE will interoperate seamlessly with a lender’s front-end applications. Many LOs also work remotely via mobile technology and need the ability to log into a web-based user interface to price on the go.
“When you look at modern technology that was built with the perspective of APIs [being] an important part of this workflow, it’s not an afterthought,” Sahi explained. “The mobile interaction that LOs need in the field to better engage their borrower operates with speed and is already part of that solid foundation.”
Sahi also notes that while other legacy PPEs have circled back after the fact to make their applications work on the go, re-architecture is not a great execution path. A flip phone will make a call, but you cannot pull it apart, put it back together and expect it to be a smartphone.
Using the right PPE will also benefit the end borrower by making it easier for lenders to support affordable housing programs.
If a lender is working in a legacy PPE system that requires manual processes to make updates to affordable lending, it may be too difficult to roll out these types of products.
“They essentially give up on those loan programs, oftentimes due to the sheer complication of new product deployment in other systems. There may also be an underlying concern that even if they do make those specific changes, they could roll out in a non-profitable or non-competitive way and cause more damage than benefit,” Sahi said. “The unfortunate reality is that some lenders do miss out on those affordable loan opportunities because their PPE cannot adequately support or execute that rollout.”
On the flip side, when lenders adopt the most technologically advanced solutions, they are able to make updates on the fly with an infinite amount of flexibility around loan parameters and margins. They can confidently ship affordable loan products out to their borrowers much more easily.
Along came Polly
Since bringing the first and only truly cloud-native PPE to the industry in 2019, Polly has ushered in a new wave of innovation and functional depth that is enabling lenders nationwide to turn their secondary and capital markets function into a high-performing profit center.
Aside from the company’s robust configuration capabilities and cutting-edge infrastructure, Polly is known for their pace of innovation and product roadmap execution at a commercially scalable level. Another pillar to their success centers on the company’s hyper focus on customer success.
“At Polly, we view the relationship between vendor and lender from a different lens; the lender is our customer. Polly is the vendor to the customer, and we are going to do anything and everything to make that customer successful.”
This customer-centric paradigm shift drives behavior in a different way, not only in terms of how Polly engages with the lender on day one from a sales perspective, but more importantly – in terms of the ongoing support and value creation that Polly delivers.
“As a company, we are not standing still,” Sahi concluded. “This is only the beginning.”
To learn more about how Polly is revolutionizing mortgage capital markets, visit: https://hubs.la/Q01Yqz6Y0.