For most of us, loans are a necessary part of life. Building credit responsibly ensures that when we need a little extra cash or funds for a significant purchase like a car or a home, we get fast approval with the very best terms available. While it is often easy to obtain credit regardless of your circumstances, there are differences between the types of borrowing available and the amount of interest you’ll be charged.
It’s important to fully understand how credit works, so we will break down the subject to give you clarity.
As we have established, a good credit score is important because it helps creditors determine the level of risk someone carries. This information will determine if credit will be extended, the type of loan offered, the interest rate, and potentially the repayment period.
Having a high credit score is beneficial because it ...
Personal debt is often referred to as consumer debt and it simply refers to money we borrow to pay for goods or services we need or want. When a bank, credit union, or store provides money to borrow they are known as a creditor or lender. The consumer or individual agrees to pay back what is borrowed with specified terms. There are various forms of credit that can be extended to an individual, some of them are as follows:
Unsecured credit cards — these are funds that you can borrow up to a certain limit or dollar amount without any asset (owned by you) to back the borrowed amount. The credit is revolving, meaning if the funds are not used up to the credit limit they are available to borrow at any time. Once the balance is paid off or down, borrowing may resume. Finance or interest rate charges accumulate each month based on the outstanding balance and the stated annual percen...
Everything You Need To Know About Buying a Home Pt. 1 (Credit & Mortgages)
Buying a home is without a doubt the most significant purchase we make in our lives — nearly all of us buy property with a mortgage. There are so many different types of mortgages available on the market that it is difficult to understand the wildly varying terms and conditions. Understanding the relevant terminology behind this very important purchase is the first step towards demystifying the process and allowing you to make the best decisions.
Here we take an in-depth look into the world of mortgage finance.
The Down Payment
One of the first steps to owning a home is to plan for the amount of money you want to put down. The down payment serves as immediate ownership or equity in the home. It is a good goal to have saved at least 20% of the home value to pay upfront and then finance or get a mortgage for the remaining 80%.
When a home buyer has less than 20% to pay upfront, ...
Everything You Need To Know About Buying a Home Pt. 2 (Taxes, HOA, & Post-Purchase)
There’s no way around it: once you have bought a home, you have taken on another tax obligation. How much you pay in property tax depends on the value of your property and where you’re located. It’s always worth taking taxes into account when you’re house hunting. Bear in mind that areas with high property tax rates generally have a wider choice of amenities than those where you have a lower rate.
How do property taxes work?
Even though some states in the U.S. don’t levy income tax, every single one has property taxes! This is because they are a vital source of revenue for state and local governments. As a resident, you want to ensure your community is well looked after.
The money gained from property taxes is used for infrastructure such as transport links, schools, colleges, and public safety. It makes sense then that the local counties that have the widest range of amenities and best quality schools are going to cost more in property tax than some other counties across the country.
There are different ways you can pay your property t...
Investing is one of the hardest parts of personal finance for an individual. Once you get your budget and debts under control, it’s time to commit to investing for your long-term goals. Every individual is different in how they view the risk related to investing in the capital markets.
There are many market types you may consider for investments — stocks, bonds, real estate, commodities, precious metals, or fine art. The stock and bond markets are typically where we begin as investors. Let’s keep our discussion around traditional stocks and bonds for simplicity. The ideas presented here are a foundation, and once you understand them, you can begin educating yourself for additional investment diversification with real estate, commodities, precious metals, or art. To begin investing, it is important to understand the ideas of investment strategy, security selection, fees, and portfolio review.
When evaluating investments, there are five question...
Many people remember growing up, and their parents telling them there won’t be any money left once they are gone, so don’t count on an inheritance! We even hear of wealthy individuals who refuse to give their children an inheritance for fears they will lose their ambition. Parents today are making more money and are interested in leaving a legacy for their children and future generations. Here are ways to ensure the legacy you leave behind is what you intended.
The Expense of Children
We all know kids are expensive but do we know how expensive? We have the average cost per year of in-state college at $25,000 ($39,000 for private college) plus the $233,610 cost to raise a child in 2017, reported by the U.S. Department of Agriculture. Wow, that will give you sticker shock for sure.
If an account can be created to save for the items below, before having children, then there will be significantly less st...
Money and the Day to Day — Banking, Identity Theft, and Windfalls
Thinking about personal finance can be overwhelming. It’s the reason many people turn and run the other way when they hear words about investing or a budget. This article is just about the day to day uses of money and what simple things you need to know. These are the big three items that may impact your daily life.
Paying for Goods and Services — Banking
We fund our spending habits with our paycheck. Most of us get our paycheck direct deposited these days, and even if you don’t, it is likely you will deposit some of that money into a bank account. You will pull out cash periodically or use a debit /credit card for your spending. Banks are a part of our life every day, and you need to understand how they operate.
Banks and Credit Unions Operations
Banks are public or private for profit institutions ...
When you have been disciplined about your finances and have started saving a healthy amount of money, there will be a time when you should consider hiring professionals to help you as your wealth grows.
There will be benefits to having professional expertise available to protect your wealth, grow it further, and keep as much of it for you and your family as possible. Let’s talk about the types of professionals to consider hiring when to hire them, and how.
Professionals to Consider
Accountants have the expertise you need to save money on taxes and keep you prepared in case of an audit. With the recent changes that go into effect for 2018, you will feel more confident managing the tax changes with the help of an accountant.
Here are some items that may make you consider using an accountant:
When we are in a meaningful relationship, sometimes finances can be a tough subject to discuss. We found several surveys that stated around 50% of couples did not discuss money. Money discussions are essential to a healthy relationship. Honesty and teamwork will make your dream work!
Here are the ten key components to having a healthy money relationship with your partner.
Ten Key Components
1. Personality Types & Emotions
We all have unique personality traits and past experiences that contribute to how we make decisions. Many of us learned about how to use money from those close to us, and not through a formal education. So, automatically we all have baggage and prior money experiences that we bring to a relationship.
It is important that, as a couple, we talk about how...
Preparing for the unexpected is not always something people want to think about when trying to improve their financial situation. It is the one area of our finances we commonly put off. Someone who is prepared and protected from a disaster can avoid significant setbacks in their financial situation; after all, large setbacks can ruin your future. There are several ways someone can protect themselves from extreme risk: emergency funds, insurance, and planning.
Types of Risk
Let’s cover more about this idea of risk. We all know our basic needs are food, shelter, and clothing. Without these, we would be in big trouble. In addition to these, our health is a basic need as well.
If there is a natural disaster, it can be difficult to replenish your food supply. Roads may be closed, so suppliers may n...