Chat
Loans By Phone: (800) 404-0254

Book Review: The Total Money Makeover by Dave Ramsey

book review

Dave Ramsey is a best selling author of many popular self-help books about getting your finances together. He’s inspired many with his simple, no-hassle philosophies on how to manage money. He also has a radio talk show called the Dave Ramsey Show, that you can listen to anywhere you listen to podcasts. He even started his own company built on his financial philosophies called Financial Peace University. Dave Ramsey and his colleagues have loads of resources you can find helpful in your own personal money management journey. Whether you are managing a household or a small business, Dave Ramsey has the financial advice you need to be successful and smart with your funds.

Today we’re going to take a focused look into one of Dave Ramsey’s most prolific publications, The Total Money Makeover: A Proven Plan for Financial Fitness. You’ve heard of fitness journeys and makeovers that change your style into something fresh and new, but Dave Ramsey takes all that and puts a financial spin onto it. With Dave Ramsey’s baby step plan you can exercise your financial abilities in ways you never thought possible and finally get into shape where your wallet is concerned.

What Kind of Book is The Total Money Makeover?

book cover

The Total Money Makeover is written as a self-help book. It’s even been compared to popular self-help books like, Your Best Life Now and 7 Habits of Highly Effective People because of the reader-friendly way it is written. It’s an engaging book with lots of real-world examples and stories from real people who have actually gone through Dave Ramsey’s baby steps and seen results. These short anecdotal stories throughout the book help all of Dave Ramsey’s concepts make clear common sense.

The book also includes a lot of motivational help along with the tips and advice. One of the biggest factors that holds people back from taking full control over their finances is the proper motivation and encouragement to make necessary changes to their lifestyle. Dave Ramsey helps with that too, giving you the fresh outlook you need to understand your goal and the rewards you can gain.

Dave Ramsey is also a Christian, so his books often have a religious undertone. So you may find him referencing Bible verses every so often in this book, and tackling religious views and practices with regard to money as well.

What’s in the Book?

The Total Money Makeover is essentially a step-by-step guide for how to go about your own personal money makeover journey. These steps are based on Dave Ramsey’s key money philosophies. Dave Ramsey has strict beliefs about not ever using debt, loans, or credit cards. He believes that our society today is too dependent on credit and that true financial freedom only comes when you live a completely debt free life. So the first steps in his plan are all about helping you get out of debt, and then setting you up to never get into debt again.

Simple and straightforward advice.

Dave Ramsey’s book became so popular probably because of how easy it is to follow his clearly set plan. Each step is specific enough to leave no doubts about what exactly you need to do, making his plan one that anyone can follow and find success. It also helps that he is never vague about his advice, but rather he is extremely straightforward, open, and honest.

Dave Ramsey has no get-rich-quick schemes. He’s more about using honest work, responsibility, and common sense to reach your goals. So you won’t find any crazy secrets to financial stability and success in his book, you’ll just finally learn to implement the basics in a way that really works.

A change in perspective.

Another reason people enjoy Dave Ramsey’s teachings is because he doesn’t pretend that money is what brings happiness. He’s realistic and believes that money is a tool to create stability and contentment in our lives, not the secret solution to all our problems.

He eloquently tackles many mental barriers and misconceptions many of us have about money, and works to not only change your behavior with money, but your perspective about money as well. One thing he talks about a lot is getting over the need to “keep up with the Joneses.” Often in life we compare ourselves to others in unhealthy ways, and sometimes those comparisons can lead us to make poor financial decisions for superficial reasons. So, when you read the Total Money Makeover be prepared to gain a whole new outlook on the purpose of money, and break free from comparing yourself to others.

The Money Makeover Baby Steps:

The main event of this self-help read are the baby steps the reader can take to reach financial peace and freedom. You can read a more detailed article about each of the 7 baby steps that Dave Ramsey will go through in this book, but we’ll go over a quick outline of those steps here too.

Emergency Fund

The first step in Dave Ramsey’s 7 step plan is to basically get your financial life in order. The road to stability starts by setting up your finance in a certain way. This begins with setting up an emergency fund. You can start with at least $1,000 in your emergency fund but eventually you’ll want to work your way toward having at least 6 months’ worth of expenses in your emergency fund at all times.

Debts

Once you start getting your emergency fund in place, it’s time to focus all other monetary efforts toward annihilating all your debts. He goes into more detail about this in the book. For example, he suggests you start with your smallest debts first and work your way up to your larger ones. He also recommends you save paying off your mortgage for last. But eventually the idea is to throw everything you can at your debts until they are all completely wiped out.

Build Wealth

Now it’s time to build wealth and continue saving. Since Dave Ramsey argues you should pay for everything in cash, continually building up your financial stores is an important aspect of the Dave Ramsey lifestyle. You have to have enough in savings to cover all your costs completely with cash.

In the book Dave Ramsey goes into more detail about what savings you should prioritize. He advises that you first complete your 6 months’ worth emergency fund if you haven’t gotten there already. Then he suggests you work toward saving for retirement and (if you have kids or plan on having kids) your children’s college funds.

Things You Can Do Differently:

Dave Ramsey’s primary goal in all of this is to help people get out of crippling debt and stay out of it. But there are modifications you can make to his more rigorous financial plan.

You can choose how much you want in your emergency fund.

If you’re a college student then putting aside even $1,000 may be more difficult for you. But that’s ok! Just put aside what you can. Even just adding $5 to $10 a month into an emergency fund is better than having no emergency fund at all.

Likewise, if you’re more settled in life it might be easier for you to put even more than $1,000 aside into an emergency fund. It really doesn’t matter how you do it, what matters most is that you start accumulating that safety fund in order to be more prepared for surprise expenses in the future.

You can still use credit cards and loans.

Dave Ramsey may believe in using only cash to pay for things but there are advantages to using credit cards and installment loans. When used responsibly using credit can help boost your credit score and get you the things you need to have a comfortable life. Credit cards can also provide lots of perks outside of boosting credit scores. Some credit cards come with special points that can go toward paying for things like groceries and traveling. So long as you understand your limits and include loans and credit payments in your carefully calculated budget and financial plans, you’ll be just fine.

Should I Read This Book?

You may now be wondering whether you should give this book a read or not. You should definitely read this book if . . .

  • you are in debt
  • you have trouble managing your money or realizing where your money goes
  • you have trouble making a budget

If you are looking for a book with more specific details about financial topics (like investing, or small businesses) then you should check out Dave Ramsey’s other books that go more in depth on complex financial topics. The Total Money Makeover doesn’t expound upon these topics too much since it was written more as a beginners guide to Dave Ramsey’s financial baby steps.

 

READ MORE

Check out some other helpful reviews about Dave Ramsey’s book, the Total Money Makeover:

Review: The Total Money Makeover

The Total Money Makeover Review

Goodreads


The Best Books by Dave Ramsey

dave ramsey books

Table of Contents:

Dave Ramsey is a New York Times bestselling author, and a radio show host on the The Dave Ramsey Show. You can find his books wherever you buy books and you can listen to his radio show wherever you listen to podcasts or the radio. All of his books are also on Amazon, where you can find the kindle versions for your e-reader, or audiobook versions so you can learn all about finances on the go.

When getting into Dave Ramsey’s books people often wonder which book they should start with? If you want to read Dave Ramsey’s books in order there are a couple routes you can go. You can read them in the order he wrote them, or read them in order of the things you learn in each book.

Dave Ramsey’s Books in Chronological Order:

If you want to read all of Dave Ramsey’s books in order, you can follow this master list of all his books so far.

1992 – Financial Peace

1993 – Dumping Debt: Breaking the Chains of Debt

1998 – The Financial Peace Planner

1998 – More Than Enough

1999 – More Than Enough: The Ten Keys to Changing Your Financial Destiny

2000 – How to Have More Than Enough: A Step-by-Step Guide to Creating Abundance

2002 – Cash Flow Planning: The Nuts and Bolts of Budgeting

2002 – Financial Peace for the Next Generation

2003 – The Total Money Makeover

2003 – The Great Misunderstanding: Unleashing the Power of Generous Giving

2004 – The Money Answer Book

2008 – Relating with Money: Nerds and Free Spirits Unite!

2011 – Dave Ramsey’s Complete Guide to Money

2011 – Dave Ramsey’s High Performance Achievement: Accomplishing the Extraordinary

2011 – EntreLeadership: 20 Years of Practical Business Wisdom from the Trenches

2014 – Smart Money Smart Kids

2014 – The Legacy Journey: A Radical View of Biblical Wealth and Generosity

Dave Ramsey Kid Books: Life Lessons with Junior

kid books

4.38 stars on Goodreads

Life Lessons with Junior is a series of children’s books written by Dave Ramsey. In them he goes over all the most basic concepts of money management. Following Junior’s adventures can teach your kids all about monetary responsibility in clear simpler terms they’ll understand. He goes over everything from spending, debt, saving, work, giving, contentment, and integrity. Don’t miss out on gracing your household shelves with these great childhood reads with life lessons your kids will keep with them all their lives.

Smart Money Smart Kids

smart money smart kids

4.26 stars on Goodreads

Smart Money Smart Kids is a book that Dave Ramsey wrote with his daughter, Rachel Cruze. It is a book that teaches parents all about how to teach their kids about money. Part of good parenting is preparing your kids to be responsible, independent adults someday and a big part of being an adult is knowing how to manage your money. In this book Dave Ramsey and his daughter will tell you all about how to raise kids who are smart about their money.

If you’re looking for something from Dave Ramsey that can specifically help your teens, check out his article, “A Teenager’s Guide to Building Wealth.”

Dave Ramsey also has a great recommendation for a college 101 bundle that includes Debt-Free Degree by Anthony O’Neal and The Graduate Survival Guide by Anthony O’Neal and Rachel Cruze.

Financial Peace

financial peace

4.31 on Goodreads

Financial Peace is one of Dave Ramsey’s first books, but he has since revisted the book, renaming it, Financial Peace Revisited: New Chapters on Marriage, Singles, Kids, and Families. This newer edition of his first book now includes more information for married couples, singles, children, and families. This book is also where he introduces the KISS rule, which stands for “Keep It Simple, Stupid.” It’s about getting out of debt and staying out of debt and the idea that you should use contentment to make your financial decisions. It also goes over how to manage money flow and investing.

One of the primary keys to understanding your finances and being able to take control of them is to manage the flow of your money. A lot of people just let money flow as it does, not really thinking too much about where it’s coming from and where it disappears. But if you learn to take full control of where all your funds are going then the problem of disappearing funds won’t happen to you and you can find financial peace.

The Total Money Makeover: A Proven Plan for Financial Fitness

total money makeover

4.28 stars on Goodreads

A large part of what makes makeovers so fun is the joy of reaching your goals and having a different life and a different you at the end of your journey. But have you ever thought about going on a similar makeover journey with your finances? Dave Ramsey will show you how.

The Total Money Makeover may be one of Dave Ramsey’s most popular books. He talks about some of his most famous money tips all while debunking myths about money. He brings a simpler, more straight forward approach to money management that anyone can understand and utilize in their life, no matter their financial situation. Dave Ramsey says that this book can work every time, all you have to do is follow his steps.

Complete Guide to Money

complete guide to money

4.44 stars on Goodreads

In this comprehensive guide Dave Ramsey goes over all his basic financial tips and lessons—How to Budget with Dave Ramsey, how to save, how to get out of debt, how to invest, mortgages, insurance, marketing, bargain hunting, and giving. Anything you want to know when it comes to money, you can find in this master guidebook.

The Money Answer Book

money answer book

3.82 stars on Goodreads

The Money Answer Book is a quick read with questions and answers to more than 100 common money questions! It’s a fast guide that goes over budget planning, retirement planning, shopping tips, saving for college, giving to charity, and so much more. If you need something you can quickly leaf through to find the answers you’re looking for.

How to Have More than Enough: A Step-By-Step Guide to Creating Abundance

more than enough

4.11 stars on Goodreads

How to Have More than Enough is the newest version of Dave Ramsey’s earlier book, More than Enough. Once you have gotten out of debt, he has more down to earth advice about building wealth. Dave Ramsey’s perspective is unique because he doesn’t just talk about monetary wealth, he talks about having a wealth of happiness. He takes it a step further by talking about finding wealth in relationships and in your family. In this book he goes through 10 traits you need to be prosperous in life beyond your financial situations.

EntreLeardership

entreleadership

4.21 stars on Goodreads

In EntreLeadership Dave Ramsey talks about how he built his company, and how to be a strong leader. He talks about how to grow as a leader and the questions you should ask yourself in order to develop yourself. This book has doable, step-by-step guidance to follow to become a better leader and watch your business grow as you do.

He talks about inspiring and unifying your team, handling your business finances, and reaching your business goals. If you are making your own business and you need some pro tips about leadership, this book is what you want. But you can find great insights in this book no matter what you are doing with your life right now. If you are a parent you can use it with your family or at work you can use it with your coworkers! This is because leadership is really all about functioning efficiently as a team and reaching your goals together.

What Books Does Dave Ramsey Recommend?

We’ve talked all about books that were written by Dave Ramsey, but what about books that Dave Ramsey recommends? There are many other great financial reads you can find on Dave Ramsey’s website. You can also read more about Dave Ramsey’s steps to reach financial steps by reading, “Dave Ramsey’s 7 Baby Steps.” Here are just a few book suggestions from Dave Ramsey:

Dave Ramsey’s Book Club

If you’re interested in really tackling your finances with Dave Ramsey’s sage wisdom you can actually join Dave Ramsey’s official book club! All you have to do is create an account on his website and then join the book club (fees may apply). Then, at the beginning of each month you’ll receive Dave Ramsey’s book club book of the month in the mail. You’ll also get an email with details about when the live book discussion will happen on the private book club Facebook page along with a study guide to use as you read.

For more answers to any questions you may have about the Dave Ramsey book club, just visit the book club’s FAQs Page.

 
Dave Ramsey along with his many inspiring books have helped a lot of people get back on their feet financially. You can take on his financial fitness challenge too and manage your money like never before.

Another way you can get some needed financial help is to take out an Installment Loan at Check City! Installment loans can help you stay on top of your bill payments and avoid late fees, which can really hurt your long-term financial goals.


Dave Ramsey’s 7 Baby Steps

dave ramsey baby steps

Are you trying to get out of debt? Do you want more financial stability and freedom? Are your finances one of the bigger stresses in your life right now? If any of these sentiments apply to you then Dave Ramsey’s 7 baby steps might be just what you need to cure your money blues.

Table of Contents

Step 1: Start an Emergency Fund
Step 2: Focus on Debts
Step 3: Complete Your Emergency Fund
Step 4: Save for Retirement
Step 5: Start a College Fund
Step 6: Pay Off Your House
Step 7: Build Wealth

Dave Ramsey is a guy who, through personal experience, was able to get out of debt and find financial peace of mind. He is now a financial expert with courses and books to help the everyday person get in control of their finances.

The best place to start when trying to regain control over your finances and achieve a full “money makeover” is to start with his 7 step plan. This plan has 7 baby steps that you follow to reach more financial stability and get to the point where you can start building wealth.

Step 1: Start an Emergency Fund

car maintenance

The first step in Dave Ramsey’s 7 step plan is, “Save $1,000 for Your Starter Emergency Fund.”

One of the main reasons people struggle with money is because necessary emergency expenses (like medical bills, car bills, or home repairs) come out of nowhere and drag you deeper and deeper into debt. But if you are preemptively prepared for these surprise expenses then they won’t take you off guard again.

So the very first thing you should do when getting your money in line is to get an emergency fund started. Save up an emergency fund in a separate bank account, until you have at least $1,000 in the account. This will be the start of the emergency fund that will keep sudden necessary expenses from plunging you into deep debts because you weren’t prepared.

Step 2: Focus on Debts

debts

The second step in Dave Ramsey’s plan is to “Pay Off All Debt (Except the House) Using the Debt Snowball.”

The snowball method that Dave Ramsey refers to here means that you start by paying off small debts first, and work your way up to the bigger debts. Debts can include paying off your car, credit card debts, and student loans.

First, make a giant list of all your debts, every single one, except for your mortgage if you have a house. Then, put your list of debts in order from the smallest debt amount to the largest. Then you go through knocking out each debt by eliminating the smallest debts first and working your way up to the largest debt last.

Step 3: Complete Your Emergency Fund

medical bills

The third step is to “Save 3 to 6 Months of Expenses in a Fully Funded Emergency Fund.”

Now that you’ve gotten all your debts out of the way, it’s time to finish your emergency fund. You can use the same money you were using to pay off debts each month and put it toward your emergency fund until it has enough to cover 3 to 6 months’ worth of expenses and bills. Then you’ll really be prepared for anything.

Reasons to Have an Emergency Fund

  1. If you lose your job.
  2. You won’t have to worry because you’ll have enough to last you 6 months. This will give you the time you’ll need to find a new job.

  3. If your car breaks down.
  4. You’ll be able to pay for the necessary repairs, the tow truck, or even for a new car in some cases.

  5. Medical bills.
  6. Don’t let your health and necessary medical bills keep you from staying afloat financially.

  7. Home repairs.
  8. If something happens to your home you’ll be able to fix the problem rather than living with it.

Having an emergency fund is THE key to keeping you out of debt in the future. After getting yourself out of debt, an emergency fund is what will keep you from getting back into debt in the future.

Step 4: Save for Retirement

retirement

The fourth step in the Dave Ramsey plan is to, “Invest 15% of Your Household Income in Retirement.”

After your debts are gone and your emergency fund is taken care of, it’s time to start seeing to other important savings like a 401K. Dave Ramsey recommends you take 15% of your gross monthly income and put it toward a retirement fund each month. To figure out how much you should be putting into your retirement fund each month, take your monthly income and multiply that number by 0.15.

Step 5: Start a College Fund

college funds

The fifth step to Dave Ramsey’s plan is to, “Save for Your Children’s College Fund.”

Avoiding student loan debts can be one of the biggest factors in staying out debt as a young adult. If you can pay for your kids college tuition then you’ll ensure their financial security in the future, as they’ll better be able to stay out debt. Dave Ramsey recommends using either a 529 college savings plans, or an education savings accounts (ESA). Talk to your bank or credit union about setting up these accounts for these specific purposes.

Step 6: Pay Off Your House

mortgage

The next to last step in this 7 step plan is to, “Pay Off Your Home Early.”

Put all the extra monthly income you have into your mortgage so you can finish paying it off early. After this step you will officially have no debts whatsoever! All of your earnings will go to you instead of getting drained away in large debts and payments.

Step 7: Build Wealth

wealth and legacy

Finally, it is time to, “Build Wealth and Give.”

Congratulations! Once you’ve reached the 7th step in Dave Ramsey’s Baby Steps, you can start focusing on building your wealth and leaving a legacy. Don’t forget to keep and maintain those financial safety nets like a healthy emergency fund, retirement account, savings account, and college funds.

Now you are officially in charge of your money rather than it being in charge of you.

Financial freedom is possible for you! Everyone can do it and Dave Ramsey’s 7 baby steps can help you get there. Dave Ramsey also has other resources that can help you implement this plan. You can participate in Dave Ramsey’s program, books, and podcasts.

You can take the actual course with Financial Peace University.

Dave Ramsey also has a free customized plan and assessment that you can do right now, in just 3 minutes!

Listen to the Dave Ramsey Show anywhere you listen to podcasts or radio.

 
Dave Ramsey’s 7 baby steps to financial freedom can help you with so many aspects of your life. They can help you decide when to buy a house or help you get situated for saving for a house. It’s a checklist program that can help you get rid of loans and debt (like student loans), or even help you get to where you can budget for a wedding.

Another way you can get some needed financial help is to take out an Installment Loan at Check City! Installment loans can help you stay on top of your bill payments and avoid late fees, which can really hurt your long-term financial goals.
 

READ MORE

Browse Dave Ramsey’s online store for more great financial resources to help you on your financial journey.

Read more helpful articles on the Dave Ramsey Blog

Learn more about the debt snowball, “How the Debt Snowball Method Works.”

Read Dave Ramsey’s full article on his 7 baby steps, “What Are the Baby Steps?

Stay out of debt through college by using these tips, “How to Stay Debt Free through Grad School.”


Budgeting in 4 Easy Steps

budget
No matter your financial situation in life, everyone needs a budget. With a budget you can plan for needed expenses and prepare for the things you want. In fact, the most simple budget only needs a couple lists, a calculator, and some goals. Below are the the main points our post will go over to help you set up your budget:
 

 
Budgets are an important tool in anyone’s financial arsenal. Budgets can help you organize your needed expenses, like rent and bills, prepare for emergencies and get ready for whatever your future might hold. By knowing how to budget you can learn to stop living paycheck to paycheck and start building up your savings. it can help you save up for big expenses or future life events like a wedding, starting a family, buying a car or a house or moving to a new state.

Budgeting can also help you save for retirement, something else that even younger people just starting out on their own sometimes forget to think about but should. But most of all a it can grant you financial power and freedom and help you provide for your wants and needs. But for those just starting out on their own especially, it can be hard to know where to begin.

There are several key elements you’ll need to include in your budget. You need to think about all your necessary expenses and plan them out accordingly so you are aware of how much of your monthly income you need to spend each month no matter what. Then you’ll have to think about unnecessary expenses. This is where you have the most freedom to plan out the numbers and make adjustments.
budget-template

How to Budget

There are many ways to budget and there is a lot of advice out there in the financial spheres about how to do it. You can also choose to plan for certain events by making a specific wedding budget, or for major purchases like car payments. But if you’re making a simple budget for yourself, then the main thing you’ll want to decide first is whether you want to make a monthly or yearly budget. Most people like to create a yearly one to get a general big picture view of their financial goals and future plans. But, a monthly one is more helpful for everyday use. We’re going to try and condense all that down to the bare bones minimum of what every smart budget needs.

#1: List your monthly income

List out all your forms of income. This would include the paychecks from your job, but also any extra money you make from any of your side hustles. Here is also where you can decide whether you want to organize your finances for gross income or net income.

Gross income is simpler and easier to calculate. You just need to know how much you get paid and use that money for your calculations.

Net income isn’t as simple to figure out but there are advantages to using it. You figure out your net income by looking up what the income tax is in your state, and taking out that percentage from your gross income. Using net income instead of gross income is perhaps better because it more realistically reflects what you will actually receive from your paycheck.

#2: List your fixed expenses

After you have all your sources of income written down you’ll want to form another list for all your fixed expenses. Fixed expenses are the expenses you have each month that don’t fluctuate in amount. Everyone’s list is going to look different depending on what expenses do and don’t apply to you, but here is an example list of some fixed expenses:

  • Rent or Mortgage: A calculation you’ll want to do when looking at your housing expenses is to check that your total housing expenses aren’t over 28% of your monthly gross income.
  • Insurance
  • Debts: A calculation you’ll want to do when looking at your debts is to check that your total debts aren’t over 36% of your monthly gross income.
  • Loans
  • Student loans
  • Credit card payments
  • Streaming services like Netflix, Hulu, and Spotify
  • Phone bill
  • Medication you pay for each month
  • Child support
  • Education

After you’ve listed all your fixed expenses total the amount, subtract it from your monthly income, and that’s what you have left to spend on varied expenses . . .

#3: Set up your savings

Before we go into varied expenses though, let’s take a moment to think about your savings and retirement. Get a savings account if you don’t have one already, and set aside a portion of what’s left over after fixed expenses. Any amount you can afford to put away into a savings account each month will set you up for success in the long term, even if it’s only 5 to 10 dollars a month.

Aside from general savings and saving for retirement, you also want to set money aside in an emergency fund. It’s recommended that you have at least 3 months worth of your fixed expenses put away into an emergency fund at all times.

Digit is a great app you can use to help you plan and organize all your savings.

#4: List and portion out your varied expenses

Everyone’s list of varied expenses is going to look differently depending on what expenses do and don’t apply to you. Varied expenses are any expenses that are going to fluctuate in amount each month, or are considered more like luxury expenses than needed ones.

Varied expenses are a big reason to do a budget in the first place so that your varied expenses each month don’t overtake your more important fixed expenses and your savings. Here are some examples of varied expenses you might need to consider:

  • Groceries
  • Eating out
  • Entertainment
  • Gas and transportation
  • Recreation
  • Clothes
  • College textbooks

Another way to figure out the reality of what you’re spending on varied expenses is to look at your transaction history for the month and see 1) How much in total you were spending on varied expenses that month, and 2) What those varied expenses were on. Do this for a couple months back to get a more realistic idea of what you are spending on varied expenses each month.

Organizing your varied expenses is where you have the most control over your budget. Whatever is left over after your fixed expenses and your monthly payments to your savings account is what you have to spend on all your other spending for the month.

Here is where you will list out what all those varied expenses might be and portion what you have left in the budget into them. Remember that you don’t necessarily want to portion out 100% of what’s left into these categories so that you can accumulate a comfortable cushion in not just your savings account but your checking account as well.

Budgeting Tips

Invest

Making investments is a great way to beef up your financial portfolio. There are probably a trillion ways to invest, but the idea behind investments is that you put money into something that will give you more money in return later. This is called compounding interest.
interest-rate
A helpful tip to remember when going into any investment is the rule of 72. This rule means that if you take 72 divided by the interest rate you’ll figure out the estimated number of years it will take for your interest to double your initial investment.

Personal Capital and Acorns are some of the most helpful investing apps you can use to step up your investment game.

Where should I put my budget?

Figuring out where to even put your budget can get complicated. You can use excel or make your own table in Word or Google Docs or any note taking program of your choice. There are also many free budget templates online that you can print out and use. Budget tools are all around if you take the time to look and decide on which ones best suit your needs.

Click here for a free budget worksheet from the Federal Trade Commission.

You can also use budgeting apps to keep track of all your bills, expenses, plans, and goals. Some of these apps even allow you to connect your budget to your financial accounts.

Control your spending

Sometimes it can be difficult to control your varied expenses throughout the month and track your spending. You can make controlling how much you spend each month easier by using a prepaid debit card. With a prepaid debit card you put money on it like a gift card to yourself almost. You can also use a similar method of spending control by just taking money out and only using that cash for your varied expenses each week.

PocketGuard is an app that can help you track your purchases.

Get a Side Gig

Getting an extra source of income can really come in handy. There are a million different kinds of side hustles any ambitious person these days can get into. You can babysit, drive for uber, or sell your own products. The possibilities are endless and it never hurts to have a little extra money each month.

Plan to Decrease Debts

Debt can be a real financial weight on your shoulders, but it can also be a necessary evil in order to get a house, get a car, get through college, and much more. Decreasing the amount of debts you owe can still help alleviate some of that weight and provide more financial comfort and peace of mind.

So it’s important to budget with paying down your debts in mind. You can pay down debts quicker by planning to spend more on that fixed/necessary expenses each month, by spending less on varied expenses, or by getting another job to provide more income to put into your debts each month.
 
Budgeting doesn’t have to be hard. All you really need is 4 lists and a calculator! Everyone should practice using a budget now so that you can control your finances instead of your finances controlling you.


READ MORE
Check out some of other Check City articles on budgeting:
Budgeting for Dummies
 
What is a Budget?
 
Budgeting Tips You May Not Have Thought of Before
 
3 Simple Tips to Building a Budget
 
Ways to Keep Track of Your Spending

How Much House Can I Afford?





Maybe you are a first-time home buyer and have no idea what you are doing, or maybe you’ve bought a home before, but this time you want to make sure you are being financially savvy in your decisions. Either way, there are so many things that go into buying a house that the overall process can be daunting. But by understanding how to budget for a home, and taking advantage of your local financial services, you can tackle the house-buying world and how it applies to you on an individual level.

The process for buying a house is not going to be the same for everyone. We all have different financial situations, incomes, salaries, bills, debts, expenses, and spending behaviors. We even all have different desires, wants, needs, and hobbies that go into how we spend our income and will therefore also affect our buying options when looking for a home. All of these variables should be carefully weighed and considered as you embark on your home-buying journey.

First let’s go over some key home-buying terms that you will want to be familiar with . . .

Definition of Key Terms

For an even bigger list of terms and definitions that you might need to know when buying a house, see the National Association of Home Builders’ (NAHB) Home Buyer’s Dictionary Page.

The Principal

The price of a home can also be referred to as the principal, especially by mortgage lenders. It refers to the base cost of the home, and does not include interest, fees, or closing costs. Many people use mortgages to pay for their home, meaning you’ll want to figure out how much mortgage you can afford when shopping home prices.

Down Payment

The down payment on a home is whatever the buyer can pay of the total price upfront. The less money put down in the beginning, the higher the interest rate on the mortgage will be, and the more the buyer will have to borrow from a lender. But the more you can put down in the beginning, the less you will have to borrow, and your interest rate will be lower as well. It is always advisable to pay as much for the house upfront as you can.

Homeowner’s Association Fees (HOA)

Some communities will be part of a Homeowner’s Association (HOA). Communities with an HOA are part of a planned community that often comes with communal benefits and amenities, like a pool, or snow ploughing. HOA’s also often come with certain rules for those who live in that community—rules about lawn upkeep and such—so make sure you understand the requirements and benefits of the HOA before committing to a house in their neighborhood.

Property Taxes

Owning a home and property will require you to pay property taxes each year. The percentage you pay in property taxes will depend on the location and value of your home. When looking in different locations for your home be sure to also look into what the property taxes are like in that area.

Mortgage

A mortgage is the loan and payment plan you go on with a lender to eventually pay off your home. Unless you can afford to pay the entire price of the home upfront (100% down payment), you’ll need to take out a mortgage with a lender to help eventually pay off your home through monthly mortgage payments instead of all at once.

Mortgages come with different time periods to pay back the loan. There are 15-year mortgages, 30-year mortgages, and a 5/1 Adjustable Rate Mortgage (ARM).

  • For a 15-year mortgage your payments are going to go up more and more each year and your payments are going to be higher in general. But you’ll pay less interest overall and pay off your mortgage quicker.
  • A 30-year mortgage is going to allow for smaller payments, but in the long run you will pay more in interest, and it will take longer for you to pay off your mortgage.
  • A 5/1 adjustable rate mortgage is another kind of 30-year mortgage, but your interest rate stays the same for the first five years of the loan. After that initial five years, your interest becomes subject to whatever market changes there are for interest rates.
Homeowner’s Insurance

Homeowner’s insurance is insurance for your home. It can protect you when disasters, natural or otherwise, affect your house. It can even cover some of the costs for damages caused by natural disasters or crime. It can also protect your possessions in these same scenarios and help you to replace whatever was lost or stolen. It is not illegal to not have homeowner’s insurance, but many lenders will require it. There are two kinds of homeowner’s insurance:

  • Cash-value coverage will help cover the costs of damages when they occur, but won’t usually be enough to rebuild your home should you need to.
  • Replacement-cost coverage is insurance that will cover the total cost of your house if you should ever need to rebuild it due to disasters. Most advisers will recommend you get this kind of homeowner’s insurance since it covers more.
Private Mortgage Insurance (PMI)

PMI stands for Private Mortgage Insurance. It is a form of insurance that lenders use to reduce their risks when a borrower can’t afford a down payment of at least 20 percent. Your lender will require a PMI when they are lending you more than 80% of your home’s total value. PMI is also a very costly form of insurance, but there are ways to get rid of it later by refinancing.

Interest Rate

Interest rate is a percentage of money added to your loan as payment to the lenders for borrowing a home loan from them. The interest rate you get on your mortgage will be determined based on your credit history and score. Usually the interest rate will be included in your monthly mortgage payments.

Credit History

Your credit history comes from your credit report and shows your history of paying debts and bills. It is meant to show how often you are on time or late in payments and your overall level of responsibility with your finances. Your credit history and score are what lenders will look at when deciding the interest rate they will put on your mortgage.

Credit Score

Your credit score differs from your credit history in that it is an overall score calculated from your credit history to show how much of a credit risk you are for the lenders. Instead of looking at an entire credit report or history, lenders can simply look at this score to get a quick, overall idea of your credit’s well-being.

Gross Income

Gross income refers to your total income before taxes.

Net Income

Net income refers to your total income after taxes. It is also referred to as “take-home pay.”

Understanding Mortgages

When applying for a mortgage, there are four main factors listed below that lenders will consider and that will influence the kind of mortgage and interest rate you can get:

  • Your income
  • Demands on your income, like debts, monthly bills, loans, and other expenses
  • Your credit history
  • Your credit score
Types of Mortgage Lenders

There are also five general categories of lenders that you can get your mortgage from, and each one comes with its own pros and cons.

  • Federal government agency lenders
    • Federal Housing Administration (FHA)
    • US Department of Agriculture (USDA): These mortgages can be for homes in more rural areas. The USDA can also be used to rebuild and rehabilitate old properties that qualify.
    • Department of Veterans Affairs (VA): These mortgages are for veterans. You can even use them to make your home more accessible.
  • State government lenders
  • Nonprofit lenders
  • Local lenders, banks, and credit unions
  • Larger banks and lenders

The 5 Steps of Buying a Home

Step 1: Look at Your Credit Score

When starting the house hunt many people like to begin with the fun part by getting on Zillow and browsing for the perfect home. But you can’t figure out how much house you can afford on Zillow. If you are serious about buying a home, then you should look at your credit score before you start looking for a home. While looking at your credit score you will want to keep your eye out for the following:

  • See where your credit score is at—how good or bad it is.
  • Check your credit report for any errors and have them corrected.
    • Get on this now because if you need to correct your credit report, the changes will take some time, even months, to correct.
  • Look for ways you can better your credit score.
    • Figure out the reasons your credit score is lower than you want and develop plans to fix those issues or habits.
    • Paying down your general debt will also help your credit score.
Step 2: Do Calculations and Budgeting

The big question most people want to know when looking for a home is how much can I afford? There are many methods for figuring out your own budget for buying a home. Which method you choose will depend on what feels most comfortable for you. But in general, financial advisers will tell you to spend 2.5 to 5 times your annual salary on a home. Again, it is ultimately up to you where you decide to land in this range.
Method One: Based on Your Savings
People are generally advised to pay at least a 20% down payment. In order to figure out the amount of house you can afford based on what you have saved for a down payment, use the following equation:

Method Two: Based on Your Annual Income
If you want a quick estimate of the amount you can afford for a house, below is an easy calculation you can do based on your annual income.

Method Three: the 28/36 Rule
The 28/36 rule is a recommendation that your budget has no more than a 28% front-end ratio and a 36% back-end ratio. Lenders will look at both these ratios to decide your mortgage loan, so it is important to understand where you stand according to this ratio because this is how most lenders will decide what you can afford to borrow from them. When budgeting for a home, you can use this ratio to see if you meet these requirements and to see how financially ready you are to buy a home.

  • Front-end refers to your total housing payments (PITI) to income ratio.
  • Your total housing payments is not just referring to the Principal, but also the Interest, Taxes, and Insurance (hence, PITI). This front-end ratio means that you should not spend more than 28% of your monthly gross income on your total monthly mortgage payments.

  • Back-end refers to your total debt to income ratio (DTI).
  • This back-end ratio means that you should not spend more than 36% of your monthly gross income on debts. Debts include credit card payments, child support, auto loans, student loans, and any other debts you may have.

Dave Ramsey’s Advice

Dave Ramsey has influenced and guided a lot of people in their financial affairs with his knowledge. Below is some of his basic advice for buying a home:

  • Pay a 100% down payment in cash when you can.
  • Choose a 15-year mortgage over a 30-year mortgage.
  • Keep your mortgage payments (plus insurance and taxes) no more than 25% of your take-home pay (net income).
    So unlike the 28/36 rule, Dave Ramsey advises that your front-end ratio be no more than 25%, instead of 28 percent. He also advises that you use this percentage on your net income, or take-home pay, rather than your gross income, because this will better reflect the money actually going to your account after taxes.
What to Remember When Budgeting:

The Mortgage:
Just because a lender qualifies you for a certain amount that does not mean you should use it all. How much mortgage you can qualify for is very different from how much mortgage you should use. The maximum loan amount that your lender is willing to let you borrow, does not reflect your personal budget and what you actually want to be paying each month. This is why being able to do your own budgeting and calculations is important because then you can see and decide for yourself how much you are willing to borrow.
The Down Payment:
When preparing to buy a home, what you really want to be doing is preparing for the down payment. The higher a down payment you can afford the better.

Your down payment should be at least 20% of the total price of the house. But, you can find loans that accommodate lower down payments if that’s what you require:

  • Fannie Mae, Freddie Mac, the Federal Housing Administration, the USDA, and the Department of Veterans Affairs are just a few options for low down payment mortgages.

Other Costs and Fees Associated with Buying a Home:

  • Closing costs and fees. Some examples of what may be included in the closing costs are appraisal fees, loan fees, attorney fees, and house inspection fees. Closing costs and fees will vary and depend on local tax laws and the cost of your home. If you want to estimate how much your closing costs might be, they generally range between 2 and 5% of the cost of your home.
  • Taxes, insurance, and HOA fees for certain neighborhoods.
  • Home maintenance, upgrades, and repairs: Homes need regular maintenance, remodeling, normal upkeep over the years, and repairs when emergencies and damages suddenly occur.
  • You’ll need to potentially buy appliances, furniture, and decorations.
  • You’ll be responsible for paying all your utilities, which can include, heat, electricity, water, sewage, trash removal, cable television, and telephone services.

Your Other Financial Goals:
Buying a home is a big financial goal and dream in life, but you probably have other financial hopes and dreams as well. Don’t forget to factor these in as you budget and look for a home. Some of these other goals may include general savings, saving for retirement, buying a new car, raising children, paying for their college, starting a business, vacations, trips, and any other hobbies, interests, or personal endeavors that may also require a place in your budget.
Know Yourself:
It is important to understand the kind of spender you are. This is another reason doing your own budget for your future house is a good idea, because then you can thoroughly be aware of your spending habits and therefore be more realistic when it comes to budgeting in a mortgage as well.

But you also need to be mindful of how you handle debt. For some people, being in a certain amount of debt can be stressful, while others don’t mind it so much. Be aware of whether having a larger mortgage on your hands is going to bother you or negatively impact your internal well-being. This will also factor into what you decide to do financially about budgeting for a mortgage.

You can also hire a personal financer to look over all these factors for you and take a more personal, detailed look into all of the many costs involved for you individually. Hiring a professional may be wise if you do not have the time or patience to look into these variables yourself. It is less wise to rely solely on a lender’s analysis because they will only look at income and credit history, and not consider your personal, bigger picture.

Step 3: Find Your Agent

Buyer’s Agent
A buyer’s agent is the kind of agent you want to be working with directly because they are meant to work with the buyer (you) and will thus work to get you the best price you can get.
Seller’s Agent
This is not who you want to be working with directly because they will be trying to get the best price for the seller. Though usually the buyer and seller agents will mediate offers and agreements and work alongside each other in that way.

Now it’s time for the fun part—the home search! After you’ve done all your budgeting and have all your ducks in a neat, planned-out row, you can begin to search for the home that fits your wants, needs, and budget!

Remember all the budgeting calculations you did above when you are filtering in your price range. It’s recommended to select a price range 10% above and below your calculations as a cushion when you are searching.

What to look for in location:

  • A healthy economy: low unemployment rates and good incomes
  • A good real estate market: look at whether the homes in the neighborhood are selling well, meaning they sell close to or above their asking price.
  • A healthy community: look for a range of ages in the residents and families nearby.
  • A good school district: even if you don’t have children, being in a good school district will help your home retain its value and make selling your home easier should you need to sell later down the road.
Step 5: Enter Your Contract and Close the Deal!

Once you’ve made your choice you can work with your agent to make an offer to the sellers. If all goes through, your agent will draw up the papers and officialize a closing date, which is usually 45 to 60 days after the offer was accepted by the sellers.

When entering into a housing contract you will first want to make sure you have the following common contingencies in your agreement. This means that your contract relies on these personal requirements being met first:

  • obtaining a mortgage
  • getting a home inspection

Buying a home is a big deal and naturally you want to be as knowledgeable and savvy about the basics as possible. By applying these basic rules you will know how to buy a home in the smartest way possible.


READ MORE
Visit the Department of Housing and Urban Development (HUD) for seminars and counseling about buying a home.


Visit the HUD’s common questions page for even more answers to your home-buying questions.


Use an online “How Much House Can I Afford” calculator to plug in your numbers and quickly see how much house you can afford.


Listen to NPR episodes about home-buying to learn more about the home-buying world.


FEATURE IMAGE BY BRENO ASSIS

Paying Down Your Mortgage Last

Despite the connotations of the title, we are not telling you to worry about paying your monthly mortgage payment after all other expenses are paid off. That’s risky business. To the contrary, your monthly payment should be one of the first things you pay.

Paying down your mortgage last refers to the time it takes you to pay off the debt completely. In the grand scheme of debts, savings, and other investments, it should be the last debt that gets overpaid.

A Home Mortgage is a Huge Decision

A mortgage for a home is probably the biggest weight you’ll ever carry. On top of borrowing hundreds of thousands of dollars for a single purchase, you have to worry about paying it off over thirty years (in many cases). That means you won’t see an end until you’ve reached the end of your career. The prospect of paying off a loan for that long can be somewhat depressing. Many want to get out of debt faster, so they put extra money into their monthly mortgage payments at the end of the month. This plan is riddled with the following dangers:

Consider Your Retirement

Every penny you put towards paying off your mortgage could be better placed in retirement. The longer you ignore the necessity of saving for retirement, the harder it is to gather enough money to retire comfortably. In fact you could find yourself wanting at the end of your career and wishing you had spent a little more effort saving money rather than squandering it on a loan you would have paid off by that point anyways. To avoid that possibility, prioritize saving extra money into your retirement as opposed to paying off your mortgage.

Also invest in yourself. Save some of that extra money you would normally spend to get you out of debt. You want a hefty emergency fund, just in case you lose your job or suffer another form of financial setback. In a way, you’re insuring your ability to keep the house should you suddenly lose a large chunk of your monthly income.

That loan is going to be with you for a very long time. Your monthly minimum is due every month, regardless of whether or not you’ve been overpaying in recent years. If you save the money instead of add it to your mortgage payment, you’ll have it later to pay off your monthly obligation should you be out of work or unable to pay your bills that month. You need an excessively large savings fund to do that.

That fund takes a lot of time and effort to build. Put everything you can into it to secure your financial future in the event of emergency. If an emergency never comes around, you’ll have that much extra to put towards your retirement.

Consider Your Other Debts

Your other debts will hurt your more. Debts like student loans, car loans, and home equity lines have higher rates of insurance, meaning you’ll be paying far more percentage wise for those debts than you would for the mortgage. Concentrate on taking care of these smaller debts first so you can be as debt free as possible (freeing up more money later for retirement and other savings accounts).

Now, if the time comes that you have your retirement well under control, have a hefty savings account you could live on, take on no other debts, and still have money left over, then you should start looking into getting out of your mortgage faster. Pay a bit of extra money every month. Ensure that it is applied to your principal and not just saved for the next month’s payment. Your lender will likely assume that the money is to be set aside to cover next month unless you specify otherwise.

Start paying biweekly. Pay half of your monthly mortgage payment every two weeks. Since months don’t divide perfectly into four week increments, you’ll end up paying an extra mortgage payment at the end of each year.

Refinance your loan to a shorter term. Talk to your lender about refinancing based on good behavior. You’ll likely have to pay more every month, but you’ll get out of debt sooner that way. Sound like a better deal?

Also, don’t pay a service to handle any of these options. Ask for a free opportunity to do it yourself.

Take advantage of financial opportunity to get yourself out of the biggest debt of your life. Wait until your retirement and savings are in hand, and your other debts are paid off before you do that though. There’s too much risk in throwing your extra money into the black hole of your mortgage when you’re not already prepared for the future.

How to Budget As a Single Parent

If you ask several of your friend’s what their greatest joy in life is, their answer could very likely be their children. When people decide to have children, their lives are changed forever.

Most people picture themselves getting married eventually and settling down to have children. What people don’t anticipate is separation or divorce.

Sometimes separation or divorce is inevitable. In these cases, it can be difficult to decide who should have custody of which children.

Because of divorce, many parents are forced into being single parents. While this is difficult, most parents are happy about and willing to take care of and raise their children even if they must do it on their own.
Many people know that raising children on their own is harder than raising them with two people, yet they still buckle down and do the best they can because they love their children. Being a single parent obviously has many challenges.

One of the biggest challenges of being a single parent can be learning how to budget. You now must support your family with only one income coming into the home.

While it may seem impossible, nearly 13 million American parents do it every day. They learn what they need to do to budget, and they make it work.

What do single parents need to do to budget? Here are a few tips on how they can get started.

First, Assess Your Finances

The first thing you should do is take a look at the status of your current finances. It’s unfortunate but divorce is not cheap, especially if it took a long time to reach an agreement. Once the divorce is final you’ll most likely be left with a considerable amount of legal debt as well as typically couples are expected to split any liabilities such as the mortgage, car payments and any other long term or even short term loan liabilities from installment loans, cash advances etc…

Next, Adjust Your Budget

Once current liabilities have been assessed every single parent should sit down and re-adjust their budget. They need to look at their fixed costs, variable costs, and one-time annual costs, and try to compare these costs with how much money they think they will make within the year.

Some examples of fixed costs are bills that arrive at your door every month. Monthly costs could include bills for TV, cable, internet, insurance, and utilities.

Although no one really likes to pay these kinds of bills, they are necessary to pay if you want to have a permanent residence. These are costs that you usually cannot cut out of your budget.

Then you have your variable costs. Variable costs are costs that are not as fixed as a monthly bill.

Check Your Variable and One-Time Annual Costs

Variable costs vary between people and families, but they could include clothing, groceries, money spent on eating out, traveling, vacations, etc. Families will spend different amounts of money on different things, so your family’s specific budget will be customized to your family.

One-time annual costs can include but are not limited to real-estate taxes, income tax, Christmas presents, registration renewals, and other payments that are made once a year. When one parent is newly single, usually they start looking for ways that they can trim down the amount of money they spend each month and each year.

In general, the area that you’re probably going to be able to cut back on the most is the variable cost category. As discussed earlier, fixed costs are usually costs that cannot be eliminated from your budget.
You may be able to pay less on your fixed costs, but you will most likely not be able to get rid of any of them. Variable costs are where you are going to be able to do the most trimming.

If you were able to spend a lot of money on clothing before you separated from your partner, you may not be able to spend as much money on clothing if you are now a single parent. Additionally, as a new single parent, you may have to pay for things that you are not used to paying for.

These things are most likely going to be related to your children and the care of your children, like daycare, childcare, transportation for your children, or education. Another issue that single parents must face is that they may simply just not make enough money to be able to support their family anymore.

Many single parents face a difficult decision when they reach this point. It can be difficult to just quit their current job and try to find a new job in this economy.

Because of this, many parents decide to go back to school and get a higher degree so that they can secure a higher paying job. Before a single parent makes this decision, they should carefully consider what they really want to do.

Going back to school could cause much financial strain on the family. Single parents should make decisions about their financial situation with the best interests of their children in mind.

A Lesson on Making Money from Investing

For many people, the safest place they can think of to keep their money is between the mattresses or in a safe in their home. That’s where they feel their cash is safe, in a place that they can pull it out and touch it if they wanted to. Banks won’t give you very much interest, not to mention you could lose all your money should they fail. Many folks like their green backs where they can see them.

The only problem is that unless that money is meant to help pay off a mortgage soon, start a new business with, or spend on some other large purchase, that money is doing nothing more that gathering dust and age, when it could be gathering value.

In the game of monopoly, can you win the game by circling the board; never buying properties and collecting your $200 every time you pass Go? Of course not, in fact, you start the game by purchasing every property you land on, hoping to be the lucky one to purchase the biggest investments (that have the biggest payouts) at the end of the board.

The person that holds onto their money in Monopoly is quickly forced out of business as everyone else snatches up property. Although they lose access to their money, they are rewarded over time with payouts much larger than they could have ever hoped. They also put folks out of business that keep stashing away their money under their mattress.

The game of Monopoly is won off of the principle of investments. Earning money is one thing, putting your money to work for you is another. The key is to know what investments are worth your money.

Investing in Real Estate Property

Since we’re on the topic of Monopoly, why not continue with the only investment built into the game: purchasing property. Property is, and always will be, valuable. As there is a limited amount of it, its supply will always remain stagnant. As the worldwide population is always rising, the demand for living space is rising as well. Therefore, the more property you own, the richer you are.

Some pieces of property are worth more than others. For instance, a half-acre lot located across from the entrance to Disneyland is going to be worth a heck of a lot more than an acre of dessert in the middle-of-nowhere, Nevada. That said, real-estate is always a worthwhile investment, because it will always have value. Some just have more than others.

There are three great ways to make money off of a piece of property. First, purchase a piece of property, sit on it for a few decades, and then turn around and sell it. Without settling, you can often get more from it than what you paid for it. That’s more money than you’ll get with it under your mattress.
Second, purchase a lot that has a building on it (residential or commercial) and rent out the property to other companies. Set rent prices just above your costs (eg. mortgage, property taxes, etc.), have residents pay for utilities and damages, and you’re golden. Your property is not only gaining value, but it’s also giving you monthly, financial gains. When you purchase an apartment complex close to a university, you have a lot of earning potential. Although you have to become a manager of a property, you can make money immediately off of this. Why not make money in your sleep though?

Third, flip houses like pancakes. Purchase a run-down, foreclosed, or short-sale home, fix it up, and sell it. There are plenty of bank-owned properties out there just waiting to be sold at a cheaper price. Buy one, spend some time fixing it up and sell it. You can often earn up to $30,000 to $40,000 dollars off of a single house.

There’s always a risk that the home won’t sell right away, but you still own property that will appreciate in value as you sit on it.
Investing in property is just the Monopoly way to go. Many people have made their fortunes in the stock market, investing in companies that take off and then selling at their peak. Others invest in startup businesses.

There are a number of opportunities out there, you just have to be willing to reach out and grab them. When you have money that you don’t plan on using for a good long while, consider investing some of it in a bond, stock, or property that could pay out a bigger sum than a mattress ever could. It could mean the difference between a comfortable retirement and no retirement at all.

The Usefulness of Loans from Large to Small

Loans come in all shapes and sizes. There are a few larger ones that are commonly discussed that you may have a question or two about. The following is a description of many of the loans you may have heard of or come into contact with yourself.

You may have heard homeowners talking about paying off their mortgage, or having to take out a second mortgage to be able to keep the house and pay all of their bills.

A mortgage is a loan taken out to finance the purchase of a home. These loans come in the amounts of several thousand dollars and are just to be taken out to pay for real estate. They accumulate interest over the years just like any other loan. Mortgages are typically paid off in fifteen to thirty years. The major difference with these loans is that part of the mortgage includes signing the right of your home to your debtor should you default on your payments.

If you prove that you are unable to pay your mortgage, your lender has the right to take back the house for themselves. This is called a foreclosure. These houses are now the property of the banks. They work to sell those homes as quickly as possible in order to make back the money they invested so many years ago. They are a pain for real estate agents to sell, but buyers can usually get a good deal on them. So with such a difficult circumstance, how would a second mortgage help you?

A second mortgage is just that, another mortgage taken out on your property. This money is taken out for another large purchase however. That purchase can include a car, college tuition, etc. It can also be used to help pay off other outstanding debts. It might even be used to help pay the terms of the first mortgage. Interest rates for this mortgage are usually higher than for the first and you pay more in the long run. Depending on your circumstances, it could be worth the effort.

Payday loans are the smaller versions of these big loans. They are short-term (quickly paid off) loans taken out in smaller amounts (typically smaller than your bi-monthly salary). You write a check to your payday loan service for the amount you need, plus a fee, and they give you cash right away.

Once you have the cash, you are free to use it to pay off immediately pressing bills. Once your paycheck comes through, your payday loan professionals will collect their payment and the transaction is completed.

These are great for getting the money you need quickly. Discretion has to be used on how you use your next paycheck, but when you’re looking to keep a house, a car, or in good standing with someone, a payday loan can be very helpful.

These are the 2 common personal loans that financial institutions hand out regularly. There is still one that you might have heard a lot about, but wonder how it differs from the rest of the lot: business loans.

Business loans exist in a different realm than these more personal loan options. Businesses work through a significantly larger amount of money than most individuals. Hence, they qualify for much larger loans a lot easier than individuals.

A small business loan can run anywhere between a few thousand dollars to fifty-thousand. A large one can push a million dollars, depending on the profitability of the business.

They qualify for their loans in much the same way everyone else does. The lender looks at a lot of the same aspects as they do for individuals. Their number one concern is to determine the likelihood of you paying back your loan. Giving you that money is still a gamble of an investment.

That gamble can be reduced with considerations of past sales numbers, available budgets coming in, preorders waiting to fully cash in on their end of the deal, etc.

Companies must present their assets, sales, and purpose for the loan in no uncertain terms in order to convince the bank or organization to take a chance on them. Your confidence and work behind the scenes will all be paid off with a check for an amount close to what you were looking for when you do it right. The key is to show trends and predict realistic futures to show that you will have the means to pay off this loan.
The companies take that information and review how risky the venture is, determine if you are eligible, and set an interest rate that will ensure they will have their money returned in full.

Businesses may exist on a different plane than individuals, allowing them larger loans, but many of the same principles apply to them as well.

Are Timeshare Investments Worthwhile?

It’s that time of year again when everyone gets sick of the cold weather that winter has to offer and they start to day dream of warmer times and locations. For those of us you that plan ahead, winter can be one of the busiest times of year for vacation planning. Most vacation rentals open up their schedule around the first of the year and in most cases its first come, first serve to try to get your favorite cabin, condo, or camping spot. In the midst of all this vacation planning madness it can be tempting to start looking into “investing” in a timeshare.

If you’re not familiar with timeshare properties, these are properties that are typically resort style condominium units that you can buy rights to use. In exchange for your investment you are given a set amount of time (typically one week) each year that you get to use the property.

It’s easy to get sucked into timeshare sales pitches, some of the top time share companies in the nation will travel from city to city offering free dinners, discounted vacations, and other gifts and prizes for just attending the seminar, once they get you there they will lay out a very convincing sales pitch by illustrating things that time shares will do for you and your family such as:

  • Create Family Memories
  • Locations from Myrtle Beach to Snowy Colorado
  • A Wise Investment for the Future

It’s important to understand though that the sales reps at these seminars work on a commission so sometimes you’ll get sales reps that will either tell you half-truths or just flat out lie to you about what you’re getting in to. Most timeshare owners that are dissatisfied with their purchase are unhappy because of lies that were told to them during the sales process.

Some of the most common lies include:

  • Timeshares can save you money
  • Timeshares are a financial investment
  • Timeshares can easily be rented or sold at anytime
  • Exchanging a timeshare is possible at any time, any place
  • The timeshare offer is only good for today

As you consider investing your money in something like a time share it’s important to pull the emotional side of things out of the equation. It’s easy to let yourself think that if you don’t move forward with an investment like this you’re a bad spouse or parent because you don’t care about investing in memories with your family but it’s important to understand that you can still have amazing family vacations and oftentimes for less than the cost of a time share.

You see, what most people don’t understand about time shares is the fact that when you purchase a time share, once the initial investment is paid off, you still have the maintenance fees for as long as you “own” the property. These fees can oftentimes cost anywhere from $1200 – $2000 per year which is more than a nice annual family vacation would cost.

Something that most people don’t understand about timeshare properties is that they aren’t necessarily designed to just replace hotel expenses as they are pitched, the system itself is designed for people who might like to own a second home but maybe not be able to afford a full vacation home or similar resort facilities. So if you’re not at the point in your life where you have the additional income to pay a second mortgage, then timeshares are definitely not for you.

Some of the reasons we recommend NOT “investing” in a timeshare are:

First, it’s not an investment. The term investment would imply that you’re going to be able to sell it, ideally for a profit, at a later date and you can’t give the things away once you own them. All you are doing essentially is pre paying your hotel bill for the next 20 years in advance and those of us that know anything about money know that you’d be much better off putting that money in an investment and the investment would produce enough for you to be able to pay your hotel bill.

People like the idea of a condo and having a place that they can go. They’d probably even like to use a condo as a family thing being a place that they can go to, a traditional location that they can go to every summer. But it’s important to understand that people have done that for years without time shares. You can still go to the lake, but rent the lake house or beach condo for a couple weeks instead of tying yourself down to a lifetime maintenance fee.
The problem is that you are locked in, and while some of the time share people give you the ability to trade back and forth but even then they’re telling you where you can stay even after you’ve “pre paid” your hotel you are just stuck in these things. In a recent survey of people who had gone through the process of purchasing a timeshare they had about a 98% dissatisfaction rate.

Second, they are almost impossible to get rid of. If you are able to sell your property you will never get the initial $5,000 – $50,000 that you originally invested. Usually at best you’ll be able to find someone willing to take over your annual fees. We did a search in the completed listings section of eBay recently and out of the hundreds of people who

What if you’ve Already Invested in a Timeshare?

If you’ve already invested in a timeshare property then there are several options for you. The first option is to simply enjoy it. By simply remembering why you purchased it in the first place and make sure you get your use out of it each year. However, if you’re like the vast majority of timeshare owners that are trying to get rid of their properties then below is some information for you.

Beware of Companies That Approach You about Selling Your Timeshare

Unfortunately, timeshare owners have become a large target for scam artists. They realize that in this down economy people are desperate to get rid of their timeshare properties and would be open to having help in selling these properties. What typically happens is a person will call you knowing that you are a time share owner, they will then say that they can help you sell it or that they might even have a buyer already lined up but that you need to pay them for their services in advance.

Once you’ve paid them for their services they will most likely say that the sale fell through but that they will continue to search out buyers. Usually months or even years will go by without these companies ever delivering an interested buyer or refunding your money.

Another Option Is Donating

While some timeshares can maintain or increase in value over time, the vast majority of them decrease in value down beyond what you might be paying in annual fees. Now these timeshares can be almost impossible to get out of in fact a lot of the time you will see them selling for $100.00 or less on eBay because people just want to get out of the expensive annual fees. One way that people have found to get out of these timeshares is to donate them to charities.

Now it’s important to understand that this isn’t a guaranteed way out of your time share but it’s a way that you can get rid of your time share and have a nice tax deduction. In fact you will be able to get the full appraised market value of your time share as a write off even though the timeshare itself will probably sell for much, much less when the charity that you donate it to turns around to sell it.

Now there are some guidelines, you can’t donate properties that current have a mortgage on them or if you’re behind on your maintenance fees. When it comes to these types of donations a representative from the National Associates for Cancer Research called these types of donations a “win win” because the donor is reliever of the responsibilities of paying costly ongoing maintenance fees for a time share that they no long want and the charities are able to fund their programs. Now it’s important to point out that this isn’t a fast process. It can take up to three months to get the paperwork put together and process your time share so if you’re thinking of a tax deduction you’ll want to act sooner rather than later.

NEED QUICK CASH?

start your application

* Required Field

 

  • HACKER SAFE certified sites prevent over 99.9% of hacker crime.
  • Cashwise
  • RLS
  • Check City BBB Business Review
  • CFSA
  • UCLA

Apply Now Or Call 1-800-404-0254

Find A Location | Contact Us | Wireless Policy | Terms of Use | Privacy Policy | © 2004-2019 Check City Online. All Rights Reserved.