Today we’ll review a Midwest-based depository bank that is big on home loans, “Central Bank,” which also operates an online lending division known as “Online Central.”
They’re perhaps best described as a neighborhood bank that has embraced the latest mortgage technology to allow for an up-to-date, digital home loan experience.
So if you’re looking for a banking institution that has been around for a while, which operates the old-fashioned way with regard to values and personal service, they could be a good option.
You’ll also get access to the latest technology too, and perhaps a low rate as well since they say they offer “very competitive” interest rates.
Let’s learn more about them.
Central Bank Fast Facts
Direct-to-consumer retail mortgage lender backed by a depository bank
Offers home purchase loans, refinances, and home equity products
Founded in 1902, headquartered in Jefferson City, Missouri
Backed by Central Bancompany, a $16-billion bank holding company
Licensed to do business in all 50 states and the District of Columbia
Also operates an online lending division called “Online Central”
The Central Bank is a direct-to-consumer retail mortgage lender, meaning they offer home loans both online and in-person via their 140 physical bank branches.
You can get a home purchase loan, a mortgage refinance, or a home equity product such as a HELOC.
Their parent company Central Bancompany was founded more than 100 years ago, and is headquartered in Jefferson City, Missouri.
Those bank branches I mentioned are located throughout the Midwest, from as far west as Colorado all the way east to North Carolina.
Central Bank is a direct seller to Fannie Mae and Freddie Mac, and have fully delegated authority to originate government-backed solutions such as VA and FHA loans.
This means they can make lending decisions quickly in-house, and ideally process your loan faster than their competitors.
How to Apply for a Home Loan with Central Bank
You can call, visit a branch, or simply apply directly online
They offer a digital mortgage application powered by Blend
Allows you to complete most tasks electronically like eSigning and document upload
Track your loan progress 24/7 via their online borrower portal
You’ve got several options when it comes to getting a mortgage with Central Bank.
Those who live in the Midwest can visit a physical branch if they choose, and those who prefer to work remotely can either call them up directly or simply visit their website to get the ball rolling.
Regardless of how you make contact, they offer a digital mortgage application powered by fintech company Blend that lets you perform most tasks electronically.
This includes linking your financial accounts, eSigning disclosures, and scanning/uploading any necessary documentation.
Once your loan is submitted, you’ll be able to manage everything online via the borrower portal to ensure you stay in the know.
If you’re purchasing a home, you can also get a pre-approval letter generated to show the listing agent and home sellers that you mean business.
All in all, they make it easy to apply for a mortgage, and pride themselves on employing the most experienced loan officers out there.
Home Loan Programs Offered by Central Bank
Home purchase loans
Refinance loans: rate and term, streamline, cash out
Conventional loans backed by Fannie Mae and Freddie Mac
Jumbo loans
FHA loans
USDA loans
VA loans
Fixed-rate mortgages: 15-, 20-, and 30-year loan terms available
Adjustable-rate mortgages: 5/1 and 7/1 ARMs
HELOCs and home equity loans
One perk to using Central Bank is their wide array of available loan programs. Like other lenders, they offer home purchase financing and refinance loans.
But unlike many others, you can also get a home equity loan or home equity line of credit (HELOC), along with anything from a conforming loan backed by Fannie/Freddie to a USDA loan or jumbo home loan.
They lend on all major residential property types, including single-family homes, condos/townhomes, vacation homes, investment properties, and 1-4 unit properties.
Both fixed-rate and adjustable-rate mortgages are available in a variety of different loan terms to suit all needs.
Central Bank Mortgage Rates
While they don’t publicize their mortgage rates on their website for one reason or another, you can often find them on third-party mortgage comparison sites like Zillow or Bankrate.
From what I came across recently, they had some of the lowest mortgage rates listed, perhaps only bettered by one or two other lenders, and just slightly.
In other words, you should be able to land a low rate if you choose to go with Central Bank or Online Central Mortgage.
Additionally, they say they offer home loans without lender fees, so you shouldn’t have to worry about paying a loan origination fee, or additional fees for things like underwriting and processing.
Because they offer the latest mortgage technology, they’re able to pass along the savings from a streamlined process onto you.
But as always, be sure to put in the time to shop around to ensure there isn’t a better deal out there from a competing bank or lender.
Central Bank Mortgage Reviews
On Zillow, Central Trust has a perfect 5-star rating out of a possible 5 from more than 400 customer reviews.
I can’t recall seeing a perfect score for any lender on Zillow before, so that’s certainly an achievement, especially since they’ve got so many reviews.
You can also see individual loan officer reviews via Zillow, which are worth checking out if you want to get paired with someone really highly-rated.
Over at Bankrate, they also have a perfect 5-star rating from 50 customer reviews, with 100% of reviews saying they’d recommend this lender.
And on Google, they’ve got a similarly strong 4.7-star rating from 33 customer reviews.
Lastly, while the company itself isn’t Better Business Bureau accredited, they do currently hold an ‘A’ rating based on customer complaint history.
In summary, Central Bank and Online Central (their online division) both come highly-rated and offer the latest mortgage technology to make getting a home loan easy.
Additionally, they appear to offer competitive mortgage rates without lender fees, and employ seasoned loan officers who seem to know what they’re doing.
As such, they could be a suitable choice for both new home buyers and existing homeowners looking to refinance to a lower rate or tap into their equity.
Central Bank Pros and Cons
The Good
Offer a digital mortgage experience powered by Blend
Can also apply in-person at a local branch if you prefer
More than 140 physical branch locations nationwide
Say they offer competitive mortgage rates with no lender fees
Lots of loan programs to choose from including HELOCs
Excellent customer reviews from past customers
Free mortgage calculators and home buyer guides online
Thanks to the recent decline in mortgage rates, which have since inched up some, the so-called “refinanceable population” has swelled 30% to 6.7 million homeowners.
These are the folks that Black Knight Financial Services singled out as standing to benefit from a refinance based on the related costs and savings.
The company looked at this population two months ago and found that a refinance would prove advantageous for just 5.2 million homeowners based on their broad-based eligibility criteria.
That number was also on the decline and expected to dip quite a bit after the Fed raised rates for the first time since 2006. But then the stock market plummeted and with it the 10-year yield, which pushed mortgage rates back toward record lows.
As a result, the population of refinanceable borrowers surged, and with it the amount those borrowers could potentially save.
Let’s All Save $20 Billion Together, Shall We?
In total, Black Knight estimates that if all these 6.7 million homeowners refinance, we’ll save a collective $20 billion annually on mortgage payments.
The total monthly savings have increased from around $1.28 billion per month to somewhere near $1.68 billion, with the average borrower saving $3,000 annually.
Some one million or so borrowers could save over $400 per month if they refinanced, and 3.3 million homeowners could save $200 or more each month. Of course, we know not everyone will refinance, even if they’re able to do so.
There are plenty of folks that simply aren’t interested, others who don’t want to put in the work, and probably more that don’t want to reset the clock or risk being declined for some reason. I’m sure many also don’t think their homes are worth enough to refinance.
Amazingly, a mere 15-basis-point additional reduction in 30-year fixed mortgage rates that would push them down to 3.5% would add another 2.1 million borrowers into the refinanceable population.
If that were to happen, the 8.8 million population of ripe refinance candidates would be the highest since 2012-2013, at a time when mortgage rates were at all-time lows.
We’ll see if that happens – rates are currently on an upward swing, though plenty of market bears see the current uptrend as a short-lived interruption in an economy that is decidedly ugly and questionable at current valuations.
Only 5% of Homeowners Think Rates Will Go Down
It might seem strange that a lot of these homeowners aren’t refinancing, and probably never will since Americans largely believe mortgage rates have nowhere to go but up.
The latest Fannie Mae Housing Survey (February 2016) revealed that just five percent of respondents believe mortgage rates will go down over the next 12 months. At the same time, 55% expect them to go up during that time.
In other words, no one really thinks rates are going to get much more attractive, so why aren’t they refinancing now?
It could be for reasons I already discussed, or just some sort of numbness after enjoying year after year of low rates, and wrong forecast after wrong forecast about them finally rising.
There’s also the thought that homeowners don’t want to give up their cozy fixed mortgages for a lower rate that one could find in a hybrid ARM, despite the fact that many of these homeowners will likely move in the next five years.
A Good Time to Buy?
Fannie also found that fewer homeowners expect home prices to rise from current levels. The share of respondents who felt home prices would rise over the next 12 months slipped from 45% to 44% last month. Meanwhile, the share that expected them to drop increased from 8% to 11%.
Despite this, a larger share of respondents felt it was a good time to buy a home, with a 63% share (up from 61%) reported in February. The share who felt it was a bad time also dropped from 30% to 28%.
At first glance, it is kind of strange that more Americans think it’s a good time to buy when home prices appear to be topping, but I suppose that could just have to do with the recent improvement in mortgage rates.
As you can see from the chart above, “good time to buy” has been trending lower and lower over the past two years as home prices have increased.
And “bad time to buy” is on the rise for the same reason, limited upside and expensive home prices. There just seems to be a blip related to the pullback in interest rates.
When we decided that we were going to start investing more in 2013, I didn’t know where we would find the money in our budget. My personality embraces risk… as long as all our other savings goals are met and our bills are paid. So, because I wanted to have fun investing (and not lose sleep at night), I knew I could not cut our retirement contributions or our savings deposits. What I hoped was that I would find “invisible” money in our budget; money that we spent mindlessly that would now have an investing job.
Our spending record showed me the money
I have recorded our spending for brief periods of time, especially when money was very tight, but I had never done it for a year. I knew it was a good thing to do, but it’s a pain. In 2012, however, I created a spreadsheet and faithfully entered every dollar that we made or were given. I tallied every purchase made by check, debit or credit card and most of the ones made with cash.
I’ll spare you most of the gory details, but we weren’t as smart with our money as we thought we were. Granted, there were things out of our control: Our septic system needed to be replaced, and we had some unexpected medical bills. Most things, though, were in our control, including the ridiculous $36.75 I spent at the vending machine. Even though that’s not a lot of money, it’s more than I thought I spent on Wild Cherry Pepsi.
The numbers didn’t lie. When I said, “We don’t eat out much,” it said, Oh yeah? Well, why don’t you take a look at this little category called “food”? Trim a little from this category and you might trim a lot from your waistline AND have leftovers to invest.
Every minute staring at that spreadsheet was worth it. Just by spending consciously, I can afford to invest $50 each month. I do have some invisible money. So that’s my first tip to you. Keep a record of all the money coming in and all the money going out.
Cut expenses
I still have a landline. Actually, while I’m confessing, I may as well tell you that I still have a rotary phone with something called a cord. It doubles as entertainment for the kids who visit. Can anyone tell me why I am still paying for a phone I don’t answer? Yeah, I don’t know either. Canceling that service leaves me $30 a month to invest. And that’s my second tip. Stop spending money on something that isn’t necessary or isn’t important to you.
Extra money
When I tried to find extra money to invest, I didn’t want to tap my income from my two side gigs, my husband’s side gigs, or either one of our day jobs. We may be able to use those income sources in the future, but 2013 is bringing big changes to our family income and expenses. I’m waiting to see what happens there before we make any investing decisions with that money.
Because that income was safe from this new investing venture, I focused on other income. It was easy to find because, as I said, I kept track of every dime that came into our house. Our random bits of income included things like:
monetary gifts (my Grandparents give us money as our Christmas present)
cash back credit card rewards
cash back rewards from Ebates
mileage reimbursement from work
rebate checks
proceeds from selling stuff
a bonus for opening a new ING checking account
interest on our savings accounts
I never considered the significance of this source of income, because I assumed it was so small.
And each check or deposit was small. But when I added them up at the end of the year, the sum felt greater than its parts. The $10 rebate check, the $45 from Ebates and all the other little checks added up to over $1,200. If you dedicate the tiny income streams in your budget to investing, you’ll probably find more money than you expected, too.
Using money we already have
Our accounts, both our savings and our mortgage, were the last place I looked. Did I have extra money sitting somewhere, money that was not fulfilling a purpose?
Each month, I round up and pay an extra $82 on our mortgage. Given our low interest rate and that we’re ahead on our payments, I could make our minimum payment and invest the $82 instead. I’m still thinking about that.
As you know, my dislike of car loans inspires a $300 monthly contribution to our replacement car savings account. Many of you supported financing a car, because the rates are low and it frees up cash. Stopping that contribution would free up another $300 a month to invest. I’m not ready for this, either. Not yet.
But I am ready to invest money from another account. I opened a Sharebuilder account almost three years ago when I did a little bit of mindless investing which didn’t work out so well. I still wanted to invest, but – unsure how to do it – I set up an automatic $25 contribution to the account. And the money sat there. By now, the account balance is $800. Nothing huge, but it illustrates the effects of small change + time = more money than you imagined. And that’s my last tip. Even if you can’t save/invest as much as you think you should, still do something.
By trimming our budget, practicing conscious spending and keeping track of the little bits of income, I can access $205 a month for investing. I could increase that because it doesn’t even include the $82 extra mortgage payment per month. Or the $800 currently in the Sharebuilder account. Or our regular income and side jobs. At the minimum, it’s about $175 more than I expected.
Even though it is more than I expected, the amount is – no question – small. I am limited with my investment options.
But this exercise had indirect benefits, too. I used to practice conscious spending, but after we paid off our non-mortgage debt, I got a little lazy. Now I have a focus. I could spend this money on x. Or I could invest it. I may find, depending on how this goes, that I have even more to invest.
What do you do with random bits of income? How do you find money to invest?
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Do you want to create a personal financial statement, but aren’t sure where to start?
According to Mint.com, over 65% of people have no clue how they spent money last month. So, you can probably be pretty sure even less know how their personal finance situation.
With rising costs for essentials like housing and education due to inflation, there is no better time to get an accurate picture of your current situation today.
If you’re wondering how your finances measure up, a Personal Financial Statement can be an invaluable tool in helping you understand where you stand financially and prepare for changes ahead.
This article will walk through creating a sample personal financial statement template with examples of what this document might look like based on your situation.
A personal financial statement isn’t just for your loan applications anymore, it’s an opportunity for transparency in your finances too!
What is a personal financial statement?
A personal financial statement is a document that summarizes your assets, liabilities, and net worth. A PFS can help you understand your financial health so you can make informed decisions about your money.
A personal financial statement template will typically include three sections:
Assets: This section will list all of the money and property you own.
Liabilities: This section will list all of the money you owe.
Net Worth: This section will calculate your net worth by subtracting your total liabilities from your total assets.
Your personal financial statement should be updated on a regular basis, typically once a year. This will help you track your progress and make sure you’re on track to reach your financial goals.
What are the benefits of creating a personal financial statement?
There are many great benefits of a personal financial statement.
By creating a personal financial statement, you can see at a glance how much money you have coming in, going out, and what your net worth is. This information can be extremely helpful in making financial decisions and setting goals.
Benefit #1 – Understand Your Financial Situation
This is why you must spend the extra couple of minutes to create a personal financial statement form.
Most importantly, you get a better understanding of your financial situation. This includes seeing where your money is going each month and how much debt you have.
What we call around here at Money Bliss – the 1000-foot look from above. The outsider’s perspective of what is going on with your finances.
Benefit #2 – Helps you track your progress
When it comes to personal finance, one of the best things you can do is keep track of your progress.
Tracking your progress should be important to you! By seeing everything laid out in front of you, it becomes much easier to make informed financial decisions that will help improve your overall financial picture.
Benefit # 3- Find some areas of improvement
Since a personal financial statement is a document that summarizes your income, expenses, assets, and liabilities in one place it helps you see the financial big picture. Thus, spotting areas for improvement are easier.
For example, if you see that you are spending too much money on non-essential items, you can make changes to improve your financial health.
Benefit #4 – Useful Tool to Set Goals
Next, it can help you set goals. Once you see where you stand financially, you can set goals for paying off debt or saving more money each month.
This aids you to make better financial decisions by providing a clear picture of your financial situation.
Benefit #5 – Snapshot to help you stay motivated
Creating a personal financial statement can be incredibly helpful in staying motivated to save money and achieve your financial goals. Seeing your progress in black and white (or, more accurately, green and red) can be a strong motivator to keep going.
Using a personal finance statement is especially helpful if you’re working towards paying off debt or saving for a specific goal. It can be difficult to stay motivated when you’re not seeing progress, but seeing the numbers going down (or up) can give you the boost you need to keep going.
Benefit #6 – Monitor your financial health
Creating a personal financial statement can help you monitor your financial health and make informed decisions about your spending and saving habits.
If you see that your expenses are consistently exceeding your income, for example, you may need to make some changes to ensure that you are able to meet your long-term financial goals.
Easier to spot opportunities to save money or invest in assets that will grow in value over time.
Monitoring your financial health on a regular basis can help you avoid debt problems and keep track of your progress toward financial goals.
What are the types of personal financial statements?
A personal financial statement is a form or spreadsheet detailing a person’s overall financial health. This statement is typically used to apply for business loans or other forms of financing. There are two types of personal financial statements:
The first type is the balance sheet, which lists a person’s assets and liabilities.
The second type is the income statement, which details a person’s income and expenses.
The balance sheet provides an overview of a person’s financial situation at a particular point in time, while the income statement shows how much money a person has coming in and going out over a period of time.
Both types of statements are important in helping lenders evaluate a borrower’s ability to repay a loan. As well as for you to monitor your personal situation.
What are the components of a personal financial statement?
A personal financial statement is not just a document that shows how much money you have in your bank account. It also includes other important components to show a well-rounded picture.
Most people know that a personal finance statement includes income, assets, and liabilities. But did you know there are actually four main components of a personal financial statement?
A personal financial statement varies from a traditional balance sheet that is used for a company.
Income
Your income is everything you earn in a year from all sources, including your job, investments, alimony, and more.
You should list all of your sources of income on your personal financial statement so you have a clear picture of what you’re bringing in each month.
Include all sources of income, even if they are irregular or one-time payments.
List after-tax income.
If you are married or have a partner, include their income as well.
Update your income regularly to reflect any changes (e.g., new job, raise, bonus).
This will help you make informed decisions about your spending and saving.
Expenses
This is the money you spend each month on things like your mortgage or rent, car payments, groceries, and other necessary expenses.
Here are over 100 personal budget categories for various expenses.
Assets
Assets are everything you own like your home equity or the value of your car and can use to pay your debts. This includes cash, savings, investments, property, and possessions.
Calculate your total assets by adding up the value of all your cash, savings, investments, property, and possessions.
So, is a car an asset? Well it depends if there is a loan against it.
Liabilities
Your liabilities are everything you owe money on. This includes, but is not limited to:
Mortgage
Car loan
Student loans
Credit card debt
Any other personal loans
Your liabilities also include any money you may owe in taxes.
How to create a personal financial statement – Part 1
There are a few key things you need to know in order to create a personal financial statement.
The first part includes what is needed for your net worth – assets and liabilities. The second part includes your current income, expenditures, and savings.
We will show you next how to collect all of this information, then you can start to work on creating a personal financial statement.
Step #1 – Determine your current assets and business profit
The first is your current assets. Your assets are everything you own and can use to pay your debts. This includes your savings, your home equity, and any investments you have. You will need to know the value of all of these things in order to create an accurate personal finance statement.
To determine the value of your assets, start by looking at your savings. This can be any money you have in the bank, including checking, savings, and money market accounts. Add up the total balance of all these accounts to get your total savings.
Next, determine the value of your home equity. This is the difference between what your home is worth and how much you still owe on it. To calculate this, look up the current value of your home and subtract any outstanding mortgage or other loan balances from it. This will give you an estimate of how much equity you have in your home.
Finally, add up the values of any investments you have. These can include stocks, bonds, mutual funds, and other types of investment accounts. Once you have all these values totaled up, this will give you an estimate of your current assets.
Step #2 – Determine your current liabilities
Your current liabilities are all of the debts and financial obligations that you currently have.
This can include things like credit card debt, car loans, student loans, and any other type of loan that you are currently paying off.
To get an accurate picture of your current liabilities, you will need to gather up all of your bills and statements so that you can see exactly how much you owe.
Step #3 – Determine your net worth
Your net worth is your assets – your savings, your home equity, and your stocks and investments – minus your liabilities. To calculate it, simply subtract your total liabilities from your total assets. This will give you your net worth.
Your net worth is a good indicator of your financial health.
It can help you make decisions about saving and investing, and it can also be a useful tool for budgeting. If you want to improve your financial health, focus on increasing your net worth by saving more money and investing in assets that will grow in value over time.
Your goal is to double your liquid net worth quickly.
How to create a personal financial statement – Part 2
Now, you have developed your next worth statement. The next step in creating a personal financial statement is to determine your monthly cash flow of money or annual cash flow.
This second part includes your current income, expenditures, and savings.
Step #1 – Determine your monthly income
Firstly, you will need your income flow section. This could come from your pay stubs, or if you are self-employed, your profit and loss statements.
Your monthly income includes all money that you earn in a month, including salary, wages, tips, commissions, child support, alimony, and any other regular payments that you receive.
Step #2 – Determine your monthly expenses
The next piece is to determine your monthly expenses. This includes things like your mortgage or rent, car payments, credit card bills, and any other regular expenses. You’ll also want to factor in occasional expenses, like doctor’s appointments or annual membership fees.
Your expenses can be divided into two categories: fixed and variable.
Fixed expenses are those that remain the same each month, such as rent or mortgage payments, car insurance, and minimum credit card payments. Variable expenses change from month to month and can include items such as groceries, utility bills, entertainment, and clothing.
Step #3 – Determine your monthly savings
Typically, most advice will leave out monthly savings. However, this. is a critical piece to learning how to FI – financial independence.
Once you have both your income and expense information, you can begin to calculate your monthly savings. To do this, simply take your total income and subtract your total expenses. The remaining amount is what you have available to save each month.
Maybe you just calculated this and realize you have a negative number (meaning you spend more than you earn each month), then you will need to make some changes in order to improve your financial situation.
It is important to note that a personal financial statement is not static.
Your income and expenses can change from month-to-month, so it is important to recalculate your statement on a regular basis. Additionally, as you begin to save more money each month, the amount available for savings will increase as well.
How to use a personal finance statement template
A personal financial statement is a snapshot of your financial health at a given point in time. It lists your assets, liabilities, and net worth so you can see the big picture of your finances.
You can use a personal finance statement template to track your progress over time and make changes to improve your financial health.
Here’s how to use a personal finance statement template:
Enter your information into the template. This includes details about your income, expenses, debts, and assets.
Review your numbers and calculate your net worth. This is the difference between your total assets and total liabilities.
Watch for comparisons. Compare your net worth from one period to another to track your progress over time.
Make tweaks. Make changes in areas where you want to improve, such as increasing savings or paying down debt.
Repeat steps 1-4 periodically. Then you can see how well you’re doing and make necessary changes
How to interpret a personal finance statement
A personal financial statement is a document that shows your current financial health. It lists your assets and liabilities, giving you a clear picture of your net worth.
Positive net worth means you have more assets than debt.
Negative net worth means you have more debt than assets.
Your personal financial statement will help you to set financial goals and track your progress over time. For example, if you want to become debt-free within five years, you can use your statement to create a budget and track your progress each year.
If you have a negative net worth, don’t panic! You can improve your financial health by paying off debts and building up your savings.
Creating a budget will help you make the most of your income and make headway on your financial goals.
How to use a personal financial statement to make financial decisions?
This is the important piece of becoming a millionaire.
A personal financial statement can help you see where your money is going each month and make changes to ensure that you are saving enough for your future goals.
Way #1 – Look at your current financial situation
Your personal financial statement is a record of your income and expenses over a period of time. This information can be used to make financial decisions, such as whether to save money or invest in a new business venture.
If you are looking to save money, you will want to compare your total income to your total expenses. If your expenses are greater than your income, you will need to find ways to reduce your spending. You may also want to consider investing in a savings account or retirement fund.
If you are looking to invest in a new business venture, you will want to assess your current financial situation. You will need to determine how much money you can afford to invest and whether or not the venture is likely to be successful.
Doing this analysis before making any decisions can help you avoid making costly mistakes.
Way #2 – Determine your financial goals
There are a few key things to keep in mind when you’re determining your financial goals.
First, you need to think about your short-term and long-term goals.
Your short-term goals might include things like saving up for a down payment on a house or car or paying off high-interest debt.
Your long-term goals might include things like saving for retirement or sending your kids to college.
Once you’ve determined your goals, you need to think about how much money you’ll need to reach them. This is where a personal financial statement can come in handy.
This information can help you figure out how much money you have available to put towards your financial goals.
Once you have an idea of how much money you need to reach your financial goals, the next step is to develop a plan for how you’re going to save that money. This might involve setting up a budget and sticking to it, investing in a specific savings account or investment account, or taking advantage of employer matching programs if they’re available.
Making smart financial decisions is important for achieving both your short-term and long-term goals. A personal financial statement can help you determine how much money you need to reach your goals, and develop a plan for saving that money.
Way #3 – Make a budget
Your personal financial statement can be a helpful tool when you’re trying to make a budget. This document lists your income and expenses and can give you a clear picture of your financial situation.
To use your personal financial statement to make a budget:
Look at your overall income and expenses. This will give you an idea of where your money is going each month.
What are Necessary Expenses? Determine which expenses are necessary and which ones you can cut back on.
Prioritize your List. Make a list of your monthly income and expenses, with the necessary expenses first. And drop the expenses at the bottom of the list.
How Much is Left? Determine how much money you have left over each month after paying for necessities. This is the money you can use for savings or other goals.
Adjust your budget as needed based on changes in your income or expenses.
Way #4 – Invest in yourself
There are a lot of things you can do to invest in yourself, but one of the smartest things you can do is to invest in your personal finance education.
In fact, one of the popular millionaire quotes from Warren Buffet is:
Invest in yourself as much as possible.
Warren Buffet
Investing in yourself is one of the smartest things you can do.
Way #5 – Stay disciplined
Making financial decisions can be difficult, but if you have a personal financial statement, it can help you stay disciplined.
A personal financial statement is a document that shows your income, expenses, and assets. It can help you track your spending and see where you can save money. That my friend is black and white information.
Making financial decisions can be difficult, but if you have a personal financial statement, it can help you stay disciplined and on track.
What are some common mistakes to avoid when creating a personal finance statement?
There are many common mistakes people make when creating a personal financial statement. This can lead to an inaccurate picture of your financial situation and make it difficult to make informed decisions about your finances.
Any of these common mistakes can also lead to problems down the road because you will be unable to meet your financial obligations.
Not including all sources of income
Not including all debts and expenses
Forgetting to track new sources of income
Overstating or understating expenses
Not properly categorizing expenses
Forgetting to update (or review) the statement regularly
Not tracking progress over time
Too scared to seek professional help if needed.
By avoiding these common mistakes, you can create a personal financial statement that accurately reflects your financial situation and helps you make better decisions about your money.
How often should a personal finance statement be updated?
You should update your personal finance statement at least once a year.
However, you may want to update it more frequently if you have significant changes in your income or expenses. For example, you may want to update your personal finance statement after you get a raise or buy a new car.
A Personal Financial Statement Template Example
A personal financial statement is a document that summarizes your financial health.
It includes information about your income, expenses, debts, and assets. This information can be used to make informed decisions about your finances.
There are many personal finance statement templates available online. Some banks and financial institutions offer their own templates. You can also find templates in our free resource library. Once you find a template you like, you can download it and fill it out with your own information.
When filling out a personal financial statement template, be sure to include accurate and up-to-date information.
This will give you the most accurate picture of your financial health. Review your statements regularly to track your progress and make changes as needed.
Time to Create A Sample Personal Financial Statement
When creating a personal financial statement, it is important to include all sources of income, not just your salary. This includes any freelance work, investments, or other forms of passive income. Additionally, make sure to include any government benefits or assistance you receive.
Excluding all sources of income will give you an inaccurate picture of your financial situation and make it difficult to create a realistic budget.
This is something you need to spend dedicated time doing to create a personal financial statement worksheet.
Over time, this wealth management tool will help you to become the next millionaire.
Know someone else that needs this, too? Then, please share!!
By Peter Anderson2 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited October 8, 2012.
Yesterday I talked about how we’ll be contributing to a Roth IRA first this year as part of our retirement plan. I believe that unless you have a company matching 401k contribution, a Roth IRA will usually have more investment options, have less restrictions, and because it’s done with post tax dollars, you’ll never have to pay taxes on the contributions or the earnings. There are a lot of great reasons to invest in a Roth IRA, but once we reach the $5000 contribution limit for our Roth IRA, we also wanted to diversify our tax situation and invest in my company 401k as well.
Today I thought I’d talk briefly about some of the 401k rules, regulations and contribution limits.
What Is The 401(k)?
So what exactly is a 401(k)? It is a retirement savings account type. From Wikipedia:
A 401(k) is a type of retirement savings account in the United States, which takes its name from subsection 401(k) of the Internal Revenue Code. 401(k)s were first widely adopted as retirement plans for American workers, beginning in the 1980s. The 401(k) emerged as an alternative to the traditional retirement pension, which was paid by employers. Employer contributions with the 401(k) can vary, but in general the 401(k) had the effect of shifting the burden for retirement savings to workers themselves. In 2011, about 60% of American households nearing retirement age have 401(k)-type accounts.
401(k) Contribution Limits
The 401(k) account type has contribution limits associated with it. The 401k contribution limits have remain unchanged from 2010 to 2011. Here is a table showing the maximum yearly contribution for the 401k account type every year since 2007.
Year
401k Contribution Limit
2007
$15,500
2008
$15,500
2009
$16,500
2010
$16,500
2011
$16,500
2012
$17,000
2013
$17,500
2014
$17,500
2015
$18,000
2016
$18,000
2017
$18,000
2018
$18,500
2019
$19,000
2020
$19,500
2021
$19,500
2022
$20,500
2023
$22,500
As you can see it has been increased by $1000 over the past 5 years. No significant changes are expected for 2012, but we’ll have to wait til the end of the year to find out for sure.
401(k) Employer Contribution Limits
Many employers will also offer a contribution to employee’s 401(k) accounts. Currently the employer can contribute to an employee’s 401(k), only subject to the maximum contribution of $49,000 (for 2011) for the employee.
Highly compensated employees may be subject to other restrictions put in place by an employer’s plan.
401k Catch-Up Contribution Limits
For workers who will be 50 years or older by the end of the 2011 tax year, you will also be eligible to make catch-up contributions to your 401k. It should be noted that not all employer sponsored plans allow this, so you’ll need to check with your company’s plan to make sure it is allowed. Here is a table with the current year’s 401k catch-up contribution limits.
Year
401k Catch-Up Contribution Limit
2007-2008
$5000
2009-2014
$5500
2015-2019
$6000
2020-2022
$6500
2023
$7500
Do Employer Matching Contributions Affect Your Limit?
A lot of employers will offer contributions or match your contributions to your 401(k), up to a certain percentage. The question is – do those contributions affect the employee’s contribution limit, or is it a separate limit? Thankfully it is a separate limit.
Example: If someone makes $100,000 in pre-tax compensation, and they and their employer both contribute the maximum, they could have $16,500 contributed by the employee, and $6,000 by the employer for a total of $22,500. If they’re over 50 they could also make catch up contributions for a total of $28,000.
Other Things To Consider
There are other things you may need to consider with your company’s 401(k) plan. For example, if you’re a highly compensated individual at your company you may be subject to separate contribution limits. Some plans may allow you to make post tax contributions to your account. Currently the max you can contribute to a401(k) plan is $49,000 or 100% of your compensation, whichever is less.
Are you currently contributing to a 401(k) plan through your work? Are you contributing to the maximum? Do you get a company match? Tell us what you think about the limits, and if you’ll be able to reach them.
Save more, spend smarter, and make your money go further
Refinancing your mortgage is a great way to save money. As both a real estate investor and homeowner, I’ve refinanced mortgages about ten times in the last ten years. My wife and I are in the process of refinancing our mortgage on our primary residence now, for the second time in 12 months.
Through this process, including one failed attempt at a refi, I’ve learned a lot about how the process works. I’ve learned that it’s easy to mess up a home refinance. So, with that in mind, here are seven ways to wreck your next mortgage refinance.
Failing to Shop Around for the Best Rates
While home mortgage rates typically fall within a tight range from one bank to the next, they can and do vary. Even a small variance of 25 basis points can have a significant financial impact over the course of a 15 or 30-year mortgage. It’s important to compare mortgage rates before locking in a loan.
Failing to Consider Fees
Costs are a critical component in determining whether it makes sense to refinance a mortgage. In some cases, banks will attempt to make their rates look very attractive by adding in significant costs to the loan. As a result, make sure you keep a close eye on the fees charged for the loan. Fortunately, costs for different loans are easy to compare because banks are required to provide you with a “Good Faith Estimate” that itemizes all of the costs of the loan.
Neglecting Your Credit Score
Your FICO credit score plays a significant role in determining the interest rate you can get. As a general rule, a FICO score in the mid to high 700’s will secure the lowest mortgage rates available, so long as you otherwise qualify for the loan. As your credit score goes down, however, the interest rates can rise significantly. If your credit is less than stellar, you should considering improving your FICO score before refinancing your mortgage if at all possible.
Acquiring More Credit During the Refinance
I learned this one the hard way. During our current refinance, we applied for and obtained a new credit card. While this did not scuttle our loan application, it required significant documentation about the new card and any balances on the card. In some cases, new credit or debt obtained after you have been approved for the loan could wreck the refinance. Avoid new credit if at all possible, and at a minimum, discuss the issue with your bank or mortgage broker before applying.
Ignoring Your Savings Account
I was surprised by how much money we need to have available for closing. While the fees for our loan are minimal, we are required to bring enough cash for prepaid items (insurance and taxes), as well as interest on the loan from the date of closing to the end of the month. These items can easily add up to several thousand dollars and banks are required to document where you obtained the cash for closing. In our case, they required a copy of our most recent bank statement along with an explanation of the source of any large deposit. As a result, it’s important to maintain sufficient savings to handle the closing costs.
Changing Jobs During the Refinance
Sometimes we have no choice but to change jobs and in some cases, an opportunity comes along that’s too good to pass up. If you are in the middle of a refinance, keep in mind that a new job will, at a minimum, add a lot of documentation requirements to your loan. If you can hold off until closing, that’s ideal. Otherwise, like taking on new credit, speak to your mortgage broker about the situation.
Yo-yo Refinancing
This is my term for those that refinance their house repeatedly. Having refinanced our house twice in 12 months, one could easily accuse us of committing this sin (a 30-year fixed rate south of 4% was too hard to pass up!). The key to remember, however, is that refinancing back into a 30-year mortgage adds a lot of time and interest to your mortgage. Before you know it, you’ll find yourself at the doorstep of retirement with a hefty mortgage still remaining on your home. One alternative is to refinance into a 15 or 20-year mortgage if you can handle the payments. You can compare the differences between a 15 and 30-year mortgage here.
We stuck with a 30-year mortgage, but my wife has informed me that it’s the last time she is agreeing to a refinance. I sure hope rates don’t go below 3 percent!
This article comes from Rob Berger, the founder of the popular personal finance blog, the Dough Roller, and credit card comparison site, Credit Card Offers IQ.
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The first batch of pension contributors who applied for mortgage loans through Stanbic IBTC Bank has been processed, and the funds disbursed to them to enable them to achieve their dreams of being homeowners.
Recall that recently, the National Pension Commission (PenCom) released guidelines that allow contributors to use up to 25 per cent of their contributions as equity to purchase a home in their preferred location.
The Central Bank of Nigeria (CBN) then advised financial institutions to support this initiative, and Stanbic IBTC Bank keyed into it and processed the specialised mortgage loans for pension contributors.
Having commenced the validation process for RSA holders that had shown interest in home loans, Stanbic IBTC made the first payout to Mr Kunle Oyetola and helped him achieve his lifelong dream of becoming a property owner in a short time, confirming its strategic emphasis on enhancing the quality of life for Nigerians and aiding contributors in receiving greater value from their contributions prior to retirement.
“Our efforts to ease the housing problem for individuals and families in Nigeria have just begun with this initial step. Housing is an essential human necessity, and our prompt action in taking advantage of the opportunity created by PenCom to close the accessibility gap demonstrates our dedication to providing value to Nigeriansm” the chief executive of Stanbic IBTC Holdings Plc, the parent company of the lenders, Mr Demola Sogunle, said.
“Recognising that purchasing a house is a substantial investment for our customers, this program is customized to address each client’s distinct financial requirements and assists them in promptly realizing their aspirations of owning a home,” he added.
He stated that, “As one of the pioneer disbursers of this specialized mortgage solution, we are confident that we will provide the best possible value to our esteemed customers.
“The mortgage scheme is equipped with several characteristics, such as customizable terms, competitive interest rates, low financial entry barriers, and flexible repayment options.
“We also have a group of experienced mortgage specialists dedicated to guiding our clients through the process seamlessly and efficiently.”
The pioneer recipient of the equity contribution for a residential mortgage processed through Stanbic IBTC Bank, Mr Kunle Oyetola, expressed his enthusiasm and gratitude to Stanbic IBTC Bank.
“I was very excited to learn about the release of the guidelines by PenCom for accessing a portion of my pension for property equity. I quickly got in touch with Stanbic IBTC, and their team was very helpful and put me through the processes required.
“I was very impressed by the professionalism and industry knowledge displayed by their Personal Wealth team and their Home Loans team. They put me at ease and were able to work with me to overcome all the obstacles encountered, being the first time this method was utilized.
“I am very happy to have my equity via my Retirement Savings Account (RSA) disbursed, and I am glad I chose to go with Stanbic IBTC Bank,” he enthused.
One popular way people pay off debt is to use the equity in their homes. Home equity loans and home equity lines of credit (HELOCs) let borrowers use their homes as collateral in exchange for financing. Just be sure to factor in the risks if you’re considering this option. The lender can seize your home if you can’t make the payments.
Who this is best for: Borrowers who have built up equity in their homes.
Who this is not good for: Those unsure of their ability to maintain the monthly payments.
Home equity loan versus debt consolidation loan: Home equity loans and HELOCs may offer lower rates than debt consolidation loans, though they come with more risks, since your home is used as collateral.
Debt relief services
Debt relief services, including debt settlement companies, offer another way to deal with your debt if you can’t qualify for a consolidation loan. These companies reach out to creditors and debt collectors on your behalf and try to settle the debt for a lesser amount.
If you decide to pursue debt relief services (perhaps as an alternative to bankruptcy), be aware that the fees these companies charge can be steep. Take your time to fully research fees, reviews and other details before applying. It’s also wise to compare multiple debt relief companies before you commit.
Who this is best for: Borrowers who are experiencing financial hardship and cannot pay their debt.
Who this is not good for: Those with a thin credit history or less-than-stellar credit score.
Debt relief services versus debt consolidation loan: Unlike debt consolidation loans, debt relief services aim to eliminate some of your debt without you having to pay it. With that said, pursuing debt relief is a risky move, and it can damage your credit score.
Credit counseling
Another option that can help you get debt under control is credit counseling. Credit counseling companies are often (though not always) nonprofit organizations. In addition to debt counseling, these companies may offer a service known as a debt management plan, or DMP.
With a DMP, you make a single payment to a credit counseling company, which then divides that payment among your creditors. The company negotiates lower interest rates and fees on your behalf to lower your monthly debt obligation and help you pay the debts off faster.
DMPs are rarely free, though, even if they’re done by a nonprofit credit counseling service. You may have to pay a setup fee of $30 to $50, plus a monthly fee (often $20 to $75) to the credit counseling company for managing your DMP over a three- to five-year term.
Who this is best for: Borrowers who need help structuring their debt payments.
Who this is not good for: Those with little wiggle room in the budget.
Credit counseling versus debt consolidation loan:With a debt consolidation loan, you’re in control of your payoff plan, and you can often apply with few fees. With credit counseling, a third party manages your payments while charging setup fees.
Balance transfer credit card
With a balance transfer card, you shift your credit card debt to a new credit card with a 0 percent introductory rate. The goal with a balance transfer card is to pay off the balance before the introductory rate expires so that you save money on interest. When you calculate potential savings, make sure you factor in balance transfer fees.
Keep in mind that paying off existing credit card debt with a balance transfer to another credit card isn’t likely to lower your credit utilization ratio like a debt consolidation loan would.
A debt consolidation loan is also going to offer higher borrowing limits, enabling you to pay off more debt, as well as fixed monthly payments, which make it easier to budget and stay disciplined with paying off debt.
Who this is best for: Borrowers who can pay off existing debt quickly.
Who this is not good for: People with a young credit history or a less-than-average score.
Balance transfer credit card versus debt consolidation loan: Balance transfer cards are often the best choice for borrowers who have the means to pay off their debt within 18 months, which is a standard 0 percent APR period. If you need longer to pay off your debt, or if you have a lot of debt, a debt consolidation loan is a better choice.
Save more, spend smarter, and make your money go further
Credit cards can do a variety of things: Buy items, facilitate auto-billing, earning rewards, and more. Some might even call them the Swiss Army Knife of the financial world.
But, can credit cards be used to help build a retirement nest egg? The answer is, yes.
There is a small handful of credit cards with rewards programs structured to allow you to deposit cash rewards into retirement accounts. These rewards are in lieu of cash back, airline miles, or points.
These cards, while relatively unknown, are very attractive products because they offer what no other rewards program offers: Wealth building capabilities.
Unfortunately, the number of cards that offer retirement rewards is very small. In fact, I was only able to find five of them. The cards offer rates and terms comparable with garden-variety rewards cards and some offer slightly higher credit limits than their non-reward peers.
American Express and Fidelity Brokerage Services
American Express has a partnership with Fidelity Brokerage Services and backs three such investment credit cards.
These cards allows the holder to convert the rewards points earned into cash deposited into a brokerage account, a 529 college savings plan or other retirement accounts, like an IRA. They also pay 2% cash back for your retirement account compared to only 1% for traditional cash back rewards programs.
Visa Signature
If you frequent merchants that don’t take the American Express card, then no worries. Visa partnered with Fidelity to offer an investment rewards card, Visa Signature credit card.
This card is more like a traditional cash back card and pays 1.5 points for every dollar you spend up to $15,000 and then 2 points after. This Visa card can be used to fund brokerage accounts, 529 accounts and IRAs.
And, my favorite thing about these American Express cards and the Visa card? No annual fees.
Upromise, Barclays Bank and MasterCard
For those of you who live and love Upromise, you’ve got an option too. Barclays Bank issues a Upromise branded MasterCard with tiered cash back rewards, depending on where and how you use the card.
The cash back can be deposited into a Upromise 529 college savings plan, into a high yield savings account or can be credited toward a Sallie Mae serviced student loan.
Credit Card and Retirement Savings Rules Still Apply
When choosing whether or not to use any credit card, including the aforementioned investment reward cards, be aware that the card issuer will go through their normal underwriting and approval process. These rewards cards tend to be reserved for people who have strong credit reports and credit scores.
When using the cards you’ll want to try your best to spend responsibly. If you revolve a balance, then you’ll start paying interest. When you pay interest on a rewards credit card you’re essentially funding your own rewards program with the interest fees.
Finally, these investment rewards cards are great for supplemental retirement efforts. They are not designed to be your only means of retirement funds.
Fifty dollars here, fifty dollars there will add up over a long period of time but it’s not enough to be your nest egg. And, while these investments can grow over time, they can also lose value because you’re going to be choosing what stocks or funds to buy with the value deposited into an IRA or a brokerage account.
If you’re not comfortable with risk or red numbers then stick to standard cash back credit cards.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter.
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If you thought the refinance party was over, it’s not. It just seems to keep on going, which is a great thing for lenders that specialize in offering refis.
It has been surprising how long it’s gone on given the fact that most Americans already refinanced over the past few years. And interest rates aren’t as low as they once were in recent history, despite being pretty darn low.
Still, borrowers were able to cut their rate by more than a full percentage point during the fourth quarter, this according to the February 2016 Insight & Outlook report from Freddie Mac.
Refi Rate Is 110 Basis Points Lower
In fact, borrowers on average cut their mortgage rate by 110 basis points during the last three months of 2015, a whopping 23% rate reduction.
For example, someone who previously had a rate of 5.125% on their 30-year fixed was able to lower it to 4% when they refinanced.
That’s a pretty compelling reason to refinance, and above the historical norm in terms of rate reduction.
On average, the typical rate reduction is just 13% during refinance, per Freddie Mac, so homeowners who refinanced in the fourth quarter were nearly doubling their benefit.
[The Refinance Rule of Thumb]
It Got Even Better in 2016
Amazingly, rates marched even lower at the start of 2016, and now sit about 40 basis points below levels seen in the fourth quarter.
So that same borrower with the 5.125% rate can now get a rate closer to 3.625% on the 30-year fixed today.
That represents about a 30% discount in rate to the homeowner. On a $300,000 loan, the monthly payment drops from $1,633.46 to $1,368.15, roughly $300 lower per month.
I’m sure that $3,600 in annual savings will come in handy. A lower rate means more of the payment will go toward principal as well, allowing the borrower to gain equity faster.
Higher Refinance Share Projected in 2016
Speaking of equity, Freddie also noted that increases in home equity coupled with low rates should incent more borrowers to refinance.
As a result, the 2016 refinance share of originations has been boosted to 40%. It currently runs around ~60%, per the Mortgage Bankers Association, but purchases are expected to ramp up as home buying season gets in full swing.
Borrowers are also tapping their equity at a higher clip, with 43% of borrowers increasing their loan balance by at least five percent when refinancing (their minimum definition of cash out). That’s up four percentage points from the earlier period.
For the record, fixed-rate mortgages remain king, with more than 95% opting to go with a fixed loan, regardless of what they had prior.
And 83% of borrowers with a hybrid ARM chose a fixed loan in the fourth quarter, with just 17% choosing to jump into another ARM.
I actually mentioned the benefit of an ARM the other day if you’re planning in move in the next five years. You can get a lower rate and not worry about the rate adjustment, knowing the loan will be paid off before it ever adjusts.
Of course, I can see where folks just go with a fixed mortgage seeing how cheap they are at the moment.
Freddie expects the 30-year fixed to average 4.1% in 2016 and 4.8% in 2017, so the refis should continue to roll on in.