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7 Financial Moves to Make Before Your First Child

By Chonce Maddox
June 14, 2019

Starting a family can be an exciting milestone. Yet, once you have your first child, your life as you know it will certainly change.

Your finances are bound to change as well since you’ll now be spending more money. Research shows that American parents will spend $233,610 on average to raise a child from birth to 17 years old. This figure includes costs ranging from housing and food, to medical expenses and child care.

The key is to focus on preparing financially for your new bundle of joy so that you don’t get in over your head – financially speaking, of course.

Here are 6 key financial moves to make before your first child arrives.

1. Create a New Budget

You may already have a budget in place, but it’s time to update it to accommodate your growing family. Consider how some of your goals and expenses will change once you have your first child. Will you have to consider childcare costs or increase expenses in other areas?

You may even want to cut or reduce some expenses that no longer seem necessary, like eating out several times a week. Be honest about the changes you’ll need to make financially and develop a realistic budget so you can plan your spending once the baby arrives.

2. Have an Income Plan for Maternity Leave

It’s likely that having a baby will affect your household income and either you or your partner may want to take some time off work once the baby is born.

For starters, decide what your circumstances will look like when the baby arrives and how that may affect your income. If you’re expecting an income decrease, you can prepare for it by working extra hours or side hustling to bring in more money before your little one arrives.

Remember: Your new budget will help you determine how much you’ll need, and you can always cut expenses and save up in advance to accommodate the changes.

3. Build Your Emergency Fund

It’s no secret that kids cost quite a bit of money – nearly a quarter of a million dollars to be exact, according to the USDA. That’s why it’s always best to beef up your emergency fund.

For example, you’ll likely be spending more money on planned expenses like food, clothing, diapers, baby gear, and possibly childcare. However, there are a ton of additional expenses that could pop up like unplanned doctor’s visits, travel costs, and extracurricular activities.

If you plan to take maternity leave, factor in extra costs you’ll incur during this time as well, such as medical bills, household expenses, and purchasing baby gear and supplies.

To help you get a jump on this, start saving up money ahead of time. If you are currently saving 10% of your income, for example, perhaps you can double or triple that amount so your emergency fund can grow exponentially. Having at least three to six months of expenses saved is a great starting point.

Final tip: Make it automatic so some money is transferred to savings as soon as you get paid.

4. Start Buying Supplies and Gear Early

Once the baby’s arrival is just a few months away, start buying supplies and gear so you can stock up. You may even want to plan your baby shower a little earlier so you can know what you’ll need to buy before delivery time.

For example, you can budget for larger expenses like a crib and car seat and pick up less costly items like diapers, wipes, and clothes each time you get paid. This way, you’ll spread out your purchases so you don’t have to buy everything at once.

5. Anticipate Medical Costs

Having a baby is costly whether you have health insurance or not. U.S. hospital deliveries cost around $3,500 per stay. When you add in pre-natal and post-delivery care, you could be looking at an overall cost of $8,802, according to Parents.com.

To better prepare, factor in the strong chance that you may have medical bills and will need to add your baby to your insurance coverage (typically within 30 days of birth).

Make sure you know what your health insurance deductibles and copays are for labor and delivery. As the due date nears, you can also start looking for a pediatrician in your insurance network.

6. Increase Your Life Insurance Coverage

When you have a child, you become completely responsible for his or her care.

So, it’s a wise idea to help cover those expenses in the unfortunate event that you are no longer around. To do this, it’s a good idea to consider life insurance, or upgrading your current policy.

There are two types of life insurance: term which is temporarily and whole life which is permanent. Term life insurance is more affordable and you can get quotes online from sites like PolicyGenius and NerdWallet.

“It’s important to start thinking about upgrading your life insurance policy when you’re pregnant and some insurance companies will even let you increase coverage at this stage,” says Sa El, founder of Simply Insurance.

“Aside from increasing your coverage, you can also purchase a life insurance policy for your child. The best thing about purchasing life insurance early is that the rates will be the lowest since age is a huge risk factor.”

El also recommends calculating your insurance needs beforehand.

“Life Happens has a good calculator that you can use to figure out your insurance needs. You will have to consider current expenses like housing and debt, along with future expenses like college costs, in order to determine your insurable need so don’t skip this step,” he says.

7. Minimize Debt

Let’s face it. Being in debt can hold you back. Debt payments eat up your disposable income and can likely cause a new parent to stress out over money.

So, before you have your first child, try to minimize your debt and pay off most (if not all) of your accounts. By getting rid of these liabilities, you’ll free up more money to spend on other areas of your budget. Having less debt will also enable you to save more.

Enjoy Parenting Without All the Financial Stress

Worrying about money is never fun, especially when you’re adding a new baby to your family. This is why it’s important to make these seven key financial moves. This way, you can focus on raising your new baby while you thrive financially.


6 Cable Alternatives: The Best Streaming Services to Cut Your Cable Bill

By Chonce Maddox
December 7, 2018

Saving more money is one of the best ways to ensure a lucrative financial future. And, with a new year looming, now is a great time to take actionable steps to reach your money goals.

A good first step is to set up an automatic savings plan and lower some of your monthly expenses to free up money. Where to start? Try cutting out cable. Cutting the cable cord doesn’t mean you have to give up the TV shows and movies you love to watch. In fact, you can still watch your favorite shows – thanks to streaming services.

Here are 6 of the best streaming services to replace your cable service, and help you save money.

1. Netflix

You’ve probably heard of Netflix by now. It’s one of the most popular streaming services for movies, television shows, documentaries and more. Netflix is a monthly subscription service that gives you access to their entire library of content.

The basic plan is $7.99 per month: Watch on one screen at a time in standard definition. Download videos on one phone or tablet.

The standard plan is $10.99: Watch on two screens at a time. HD available. Download videos on two phones or tablets.

The premium plan is $13.99 per month: Watch on four screens at a time. HD and Ultra HD available. Download videos on four phones or tablets.

Netflix doesn’t always feature the most up-to-date episodes for TV shows, but they have an awesome line-up of original shows including Stranger Things, Black Mirror, and House of Cards. You can sign up for a free 30-day trial here.

2. Hulu

Hulu is a streaming service that has an affordable monthly subscription rate. You can watch movies, TV shows and now even live television.

Hulu has a great TV show collection including their own original series. New users can get a free 30-day trial. After that, the cost is just $5.99 per month for the first year. For the second year, the monthly fee goes up to $7.99. Hulu does show ads on streaming shows, but if you want an ad-free experience, you can update your plan to $11.99 per month.

Hulu also allows you to stream 50+ of the top TV channels, and you can add on content from networks like HBO®, SHOWTIME®, CINEMAX® and STARZ®. This membership is $39.99 per month.


DIRECTV NOW is a no-contract streaming service with four service plans, ranging in price from $40/month to $75/month.

This option is great for someone who likes to watch live TV as DIRECTV NOW provides access to over 65 channels for the basic $40 monthly plan and more than 125 channels for the top tier $75 monthly plan.

The best part is that you don’t have to commit to a contract or hidden fees, and you can cancel any time. You can sign up for a free 7-day trial of DIRECTV NOW here.

4. Sling TV

Sling TV is a streaming service that’s similar to DIRECTV in that you can stream live TV channels to your devices instead of paying for cable.

Sling TV is great for sports lovers and there are three main packages: Orange ($25/month), Blue ($25/month) and both ($40/month). Sling TV even offers a $5 kids add-on package with family-friendly networks.

The one downside is that while Sling TV allows you to stream movies from the site, not all of them are free. Yet, you can try out the service for seven days before committing to a paid subscription. Get more details here.

5. Amazon Instant Video

If you’re an Amazon Prime member, you’ll have unlimited access to Prime Video. This allows you to stream TV shows and movies from various devices.

This service makes sense to have if you like to watch movies and Prime originals, like the award-winning The Marvelous Mrs. Maisel. Since Prime Video comes with a paid Amazon Prime membership, this is a great perk for those already taking advantage of other membership benefits, including fast and free shipping on more than 100 million items. Get a 30-day free trial here.

6. YouTube TV

YouTube is one of the most-used websites to date. Some of the video content can be addicting and it’s great to support up and coming content creators. While I can watch free YouTube content all day, a paid streaming service is also available.

YouTube TV – touting itself as cable-free live TV with no cable box required – is just $40 per month. For that price, you get access to more than 70 different channels covering everything from news and sports to entertainment and scripted shows. You can have up to six different accounts per household and use the personalized DVR service.

This streaming service is only available in select areas right now but you can check to see if your city has it and sign up for a free trial here.

Cut the Cord and Save

Imagine how much money you can save by cutting the cord and getting rid of cable. Better yet, take action and actually cancel your cable subscription. Then start adding up the savings when you switch to one of these more affordable television streaming services.


20 Questions About Homeowners Insurance You’re Too Embarrassed to Ask

By Jeanine Skowronski
August 30, 2018

I got homeowners insurance in a blur. My mortgage lender told me a policy was the last thing needed to fully approve our home loan and in a (totally unnecessary) panic, I called my car insurer, gave them my soon-to-be address and got coverage. Shortly after closing, a giant packet came in the mail, detailing a policy I had already paid for.

This isn’t the best way to buy insurance — one of the many lessons I learned as a first-time homebuyer — but closing on a home is stressful. I’m probably not the only person to purchase a homeowners policy without a plan. To help you and future shoppers out, here are 20 questions about homeowners insurance you might be too embarrassed to ask.

1. What is homeowners insurance?

Homeowners insurance is a form of property and casualty insurance. It covers your home and the stuff inside of it in the event of theft or some disasters.

2. Wait … some disasters?

Yes. Homeowners insurance commonly covers these perils: fire, windstorm, hail, lightning, smoke, explosion, theft, vandalism, riot and vehicle collision. It commonly excludes — i.e. doesn’t cover earthquakes, flood, power failure, war, nuclear explosion, neglect, ordinance of law (locally forced repairs) or intentional damage.

3. But that list includes some of the worst natural disasters, no?

Well, if you live in an area that’s susceptible to the perils most likely to occur — namely, earthquakes and floods — you can get coverage for them, usually separately. (In fact, if you live in a flood zone, you need to buy flood insurance to get a mortgage. Federally regulated lenders are legally required to make people living in high-risk flood areas buy a policy.)

4. Fair enough. Is homeowners insurance required by law?

No. Unlike car insurance, states don’t mandate you insure your home. But, if you’re financing a house, your mortgage lender will likely require you to get some. They don’t want to lose money on their investment. And, honestly, neither will you.

5. Why do I need homeowners insurance?

Because houses are expensive and disasters don’t discriminate or only do damage. In 2017, a series of wildfires destroyed thousands of California homes, while Hurricane Harvey forced 30,000 people into temporary homes.

6. So homeowners insurance will replace my house if it’s destroyed?

Here’s the short answer: If your house is destroyed by a covered peril, a standard homeowners policy will go a long way toward repairing or rebuilding your home.

7. What’s the long version?

A homeowners insurance payout is dictated by the fine print of your policy. For starters, you’ll have coverage limits. If your house itself (or “dwelling”) is insured for up to, say, $350,000, you won’t get more than that to replace it. And you could get less, depending on the type of homeowners insurance you have.

8. What types of homeowners insurance policies are there?

There are two big ones we’re referencing here: A replacement cost homeowners insurance policy pays claims based on the cost of rebuilding or repairing your home at the time it is damaged or destroyed. An actual cash value homeowners insurance policy pays claims after accounting for any depreciation in your home’s value.

9. Which one is better?

Replacement cost homeowners insurance will cover more damage to your property and possessions. Actual cash value homeowners insurance is cheaper, but it usually won’t pay out enough to fully repair or rebuild a damaged home.

10. How much homeowners insurance do I need?

That depends on how much home you’re buying, where you’re buying it, the condition of your property and how much stuff you have …

11. How much stuff I have?

Yes, because homeowners insurance provides coverage for your possessions, too, just like renters insurance. You’ll have a total coverage limit for personal belongings and individual limits for high-priced items, like jewelry. The rule of replacement cost vs. actual cash value insurance also applies.

12. Huh. What else does homeowners insurance cover?

In addition to property and personal belongings damage, standard homeowners insurance covers liability in the event someone injures themselves at your house and loss of use, which is a fancy way of saying it’ll pay for for temporary housing while your house is in repair. Separate coverage limits apply to each category.

13. OK, but, really, how much homeowners insurance do I need?

Ideally, you should base your property coverage limits on how much it would cost to rebuild your home. That’s sometimes the house’s current market price, but it could climb higher. You should consider insuring over market price if your house is older, you’ve got other structures on your property (like a shed or four-car garage), or construction costs in your area run high, for example.

14. What about my personal belonging limits?

Coverage for your stuff and temporary relocations are generally based on a percentage of your property’s coverage limits. Standard policies usually cover personal belongings at about 50% of your dwelling limit and loss-of-use at about 20%, according to the National Association of Insurance Commissioners. You might need more coverage if you have pricey possessions.

15. What about my liability limits?

Liability limits start at $100,000, but most homeowners should have between $300,000 and $500,000 worth of liability coverage to protects their assets in the event of a lawsuit.

16. Can you explain liability coverage some more?

Sure. The liability portion of your homeowners insurance kicks in if someone is accidentally injured on or around your property. Say they slip while hanging out by your pool or your dog bites them. So long as there are no exclusions (which is possible, particularly with certain dog breeds), liability insurance will pay for that person’s medical expenses and any court costs you incur if they sue. Liability insurance also covers property damage caused unintentionally by you or your family members, like if your kid breaks a neighbor’s window while playing catch in your yard.

17. Got it. How much does all this homeowners insurance cost?

Again, it’ll vary, depending on how much coverage you need. (We can help you compare homeowners insurance quotes here.) However, a standard policy costs homeowners about $1,100 a year, according to the Insurance Information Institute.

18. How can I lower the cost of homeowners insurance?

You can opt for a higher deductible — that’s the amount of money you’ll have to pay out of pocket before your insurance kicks in. But less risky ways to save include bundling your homeowners insurance, usually with your car insuranceor asking if you qualify for any discounts.

19. What homeowners insurance discounts are there?

Sometimes homeowners insurance companies offer lower rates to first-time homeowners or first-time customers. You might also score a more affordable policy by adding certain security features to your home, like an alarm system. You can learn about more obscure homeowners insurance discounts here.

20. One more thing: What’s an umbrella policy — & why?

Umbrella policies offer extra liability coverage on top of what’s already covered by your standard homeowners insurance or car insurance policy. Umbrella coverage starts at $1 million. Our agents generally recommend an umbrella policy to people who have more than $500,000 in assets since that’s typically where your standard homeowners policy will cap coverage. But you should also consider umbrella coverage if you’re at risk of multiple lawsuits, like if you have a few teen drivers in the house or you own multiple properties, especially rentals. You can learn more about umbrella insurance here.

Equally confused about life insurance? No worries. We have 20 questions about that coverage you’re too embarrassed to ask right here.

This article originally appeared on Policygenius.com.


How to Determine the Budget for Your House

By Ben Luthi
July 27, 2018

Saving up for a down payment on a house is one of the most important things you can do before starting your house hunt. But even a 20% down payment won’t help you much if your monthly payments on a new house stretch your budget too thin.

This is what is often referred to as house poor and it’s a wise idea to avoid this. So, how do you really know how much house you can comfortably afford to buy? You can start by estimating all of your eventual monthly housing costs, including your mortgage, insurance, taxes, repairs and more.

Read on to learn about the costs involved in buying a house. From there you can best determine what you’ll actually be spending every month.

Principal and interest

This is the basic monthly cost of your mortgage loan, which you pay directly to the lender. This includes your monthly principal as well as any interest that you pay on the life of your loan.

Keep in mind that if you’re making a down payment or have closing costs, the loan amount will be different than the sales price of the home. As an example, let’s say you have your eye on a home with a sales price of $250,000 and can afford a $25,000 down payment.

The closing costs, which are fees and expenses you pay to complete the sale of the home, will be three percent of the sales price or $7,500. You’ll be expected to pay this amount when you close on the sale of your house.

Getting back to the actual mortgage, in this scenario your total loan amount is $225,000. Let’s say you choose a 30-year fixed-rate mortgage with a 4.5% interest rate. Using a simple loan calculator, your monthly principal and interest payment would be $1,140.04.

Mortgage insurance

Depending on the type of loan you apply for and the size of your down payment, you may be required to pay mortgage insurance. The beneficiary of the insurance policy is the mortgage lender and this coverage protects the lender if you default on your loan.

To give you an idea of what to expect, here’s how much mortgage insurance typically costs by loan type and your loan-to-value ratio, which is calculated by taking your total loan amount and dividing it by the value of the home.


Loan typeLoan to valueMortgage insurance cost
Conventional loan0% to 19.99%$30 to $70 per month for every $100,000 borrowed
FHA loanAll loansUpfront cost at closing of 1.75%; annual cost of 0.45% to 1.05%
USDA loanAll loansUpfront cost at closing of 1%; annual cost of 0.35%
VA loanAll loansUpfront cost of 1.25% to 3.3%; no annual cost

So, let’s take our previous example to calculate your monthly mortgage insurance costs. You opt for a conventional mortgage, and your loan-to-value ratio is 90%, so you’ll need to pay what’s called private mortgage insurance (PMI). The lender’s insurance company charges $50 per $100,000 borrowed. So, with a $225,000 loan, your monthly PMI bill would be $112.50. This premium will be added to your monthly mortgage payment.

With conventional loans, your PMI requirement will “fall off” your loan automatically once your loan-to-value ratio reaches 78%. That said, you can request to have it removed once your loan to value is 80%.

Homeowners insurance

Once you buy a house, it will likely be the most valuable asset you’ve ever had. As such, you’ll want to insure it against damage, loss and other hazards.

In addition, if you have a mortgage, the lender will require an adequate homeowners insurance policy because it technically owns the property until you pay off the loan. Homeowners insurance costs can vary depending on where you live and other factors. But the average annual premium in the U.S. is $1,083 or $90.25 per month.

Depending on your mortgage lender and situation, you will either pay this directly to the insurance company or to the mortgage company into an escrow account. In an escrow account, your lender collects your monthly insurance premiums and then pays for the insurance on your behalf. By tacking your homeowners insurance premium onto your monthly mortgage payment, it ensures that you don’t accidentally miss a payment and lose your coverage.

Property taxes

State and local government agencies collect property taxes every year based on the value of your home and the property upon which it stands.

Property tax rates not only depend on the state where you live but also your county, township or school district. So, let’s say you live in Arizona, where the average property tax rate is 0.77%. With a home value of $250,000, your property tax bill would be $1,925 annually or $160.42 per month.

Maintenance and repairs

Whether your home is brand new or 100 years old, you can expect to pay for regular maintenance and unexpected repairs. The worst part about this is that there’s no way to know for sure how much these expenses will cost.

For this reason, it’s wise to have an emergency fund with enough money in reserves. Consider opening a separate bank account to keep the money away from your everyday spending. As for how much you should have saved up, experts recommend that you save between one to three percent of the home’s purchase price. If you split the difference and save two percent on a home worth $250,000, that’s $5,000 a year or $416.67 per month.

Calculating your monthly payment

Once you determine the budget for your new home, you’ll have an idea of whether or not you can afford the house you’ve got your eye on.

For that $250,000 home, here’s how the costs add up:

  • Principal and interest: $1,140.04
  • Mortgage insurance: $112.50
  • Homeowners insurance: $90.25
  • Property taxes: $160.42
  • Maintenance and repairs: $416.67

All told, the total monthly budget to afford that house is $1,919.88 — or $1,503.21 if you already have the $400 plus a month saved up in your emergency fund.

So, take a look at your budget before you decide whether you can comfortably afford to buy a particular house – without becoming house poor. If you discover that it’s just too expensive, no worries. You can either keep looking for another other house that fits your budget or continue to save more money for a bigger down payment.


5 Things I Wish I Had Known Before Buying My First House

By Ben Luthi
July 22, 2018

When my wife and I bought our first home in September 2017, we made our fair share of mistakes. In hindsight, we should have done some things differently.

The good news: I won’t make the same mistakes again and am grateful that we did make the right choices in some instances. To help you learn from my mistakes as well as my smart money moves, here are 5 things I wish I had known before I started house hunting.

1. A mortgage broker won’t necessarily get you the lowest rate

A mortgage broker acts as a middleman between you and lenders. These brokers compare loan deals with several lenders to find you the best package. They charge a small fee for their efforts.

Since we were new to the game and didn’t feel comfortable doing everything on our own, we found a mortgage broker. He came highly recommended, and we were excited to work with him. Yet, when we were under contract for a house, I wasn’t impressed by the interest rate the broker was offering from one lender. I figured that this was a result of our low down payment —  just three percent at the time.

But when that deal fell through, we decided to build a house and had time to build up a 10% down payment in our savings account. Even better: the home builder told us that if we got our mortgage through one of their partner lenders, the builder would pay our closing costs. When we told our broker about the offer, he told us that was a common tactic by home builders and that we’d end up with a higher interest rate.

Not the case. In fact, the builder’s partner lender offered us a better interest rate than the broker. We gave the broker an opportunity to match or beat the rate, but he was unable to do so.

The bottom line: a mortgage broker won’t always get you the best interest rate. Do your research and explore all options before settling upon a mortgage.

2. Your emotions can work against your best interests

Once we signed an initial contract on the first home we fell in love with, we hired a home inspector to see if there were any major problems with the house.

The results of the inspection were overwhelming:

  • We would need to replace half of the roof.
  • We needed a new water heater.
  • The water pipes were cracking and the entire system needed to be replaced.
  • There was water damage in one of the bedrooms from a window leak.

To fix all of the issues, we were looking at $20,000 out of pocket, and the seller offered just $500. Yet, I loved the house and I wanted to make the repairs. I had to step back and detach emotionally. From that point, I realized this house was looking like a money pit.

The bottom line: don’t let your emotions rule as you may end up regretting your choice. Luckily, we got out before it was too late.

3. Your monthly payment is a lot more than your mortgage

Your monthly housing payment is a lot higher than your mortgage payment alone. Here are the main elements of a monthly housing payment:

  • Principal and interest: This amount goes toward paying off the mortgage loan.
  • Private mortgage insurance: You will pay this if your down payment is less than 20% on a conventional loan. You can, however, request to have it removed once your loan amount is 80% of the value of the house.
  • Homeowners insurance: This coverage protects you against damage and theft. We pay monthly into an escrow account, and the lender makes our premium payment for us annually.
  • Property taxes: These are due annually, but your lender may require you to pay a monthly portion into an escrow account.
  • Maintenance and repairs: Our home is only nine months old, and we’ve already spent money out of pocket for maintenance and repairs. To avoid any nasty surprises, real estate experts recommend saving between one percent and three percent of the home’s value each year. This way, you’ll be able to pay for those unexpected home repairs. .

When we received the final disclosure that broke down our monthly payment, it was higher than I anticipated. Yet, if we knew what the house would cost us each month from the beginning, we may have lowered our house budget even more to make more room for other things in our budget.

The bottom line: make sure you factor in the total monthly cost of owning that house. This will give you a true sense of what you can afford.

4. Your first home is never going to be perfect

After months of checking out existing homes, my wife and I were disappointed that we couldn’t find one without problems. Ultimately, we decided to build a new home.

Brand new homes, however, are not perfect and you may still have to pay for repairs or deal with issues – even in your first year in the house. For example, the insulation subcontractor didn’t blow any insulation above my kids’ rooms in the attic, and the builder made some major blunders with the landscaping that took months to fix.

Because we thought we were avoiding all of these problems by building a home from scratch, it’s been a frustrating experience.

The bottom line: be realistic and save your pennies. No house is problem-free.

5. Get everything in writing

During the building process, the construction manager for our home promised us some things that he didn’t deliver on. When we tried to get the builder to make good on the promises, he refused.

The bottom line: get everything in writing, even minor things. This will help keep the builder, seller and others accountable. After all, buying your first home is likely the biggest financial decision you’ll ever make, so take as much control of the process as you can.

The final word

While we made some mistakes buying our first home, we also learned from our experience.

When it comes time for you to buy a house, make sure you take the time to set realistic expectations and budget wisely. This will help you enjoy your new home without second-guessing yourself at every turn.


How We Saved BIG Buying Our First Home

By Chonce Maddox
July 20, 2018

Buying a house is a symbol of the American Dream, but it can also easily become the American Nightmare if you’re not financially prepared.

My husband and I bought our first home in May and we took all the steps needed to make this an enjoyable experience. We also didn’t want to go broke in the process. It was our goal to buy a house with a  mortgage payment we can afford. More importantly, we still wanted to enjoy our lives, travel, and continue to save money.

Here are a few ways we saved big as first-time home buyers. Better yet, we’re not house poor.

We Got a Fixed-Rate Conventional Loan

There are many different types of mortgages. We went for a conventional loan with a fixed interest rate.

Why? As mortgage interest rates are now low, we wanted to lock in the best rate possible to ensure that we have fixed payments every month.

Another reason why we chose a conventional loan was because we wanted to make a sizeable down payment and knew we would not have to pay private mortgage insurance (PMI) if we could pony up 20% of the cost of the house. A general rule of thumb is to put at least 20% down to avoid paying PMI. But, if you can’t do this, a conventional loan allows you to get rid of your PMI payment once you have 20% equity in your home – even if you couldn’t initially afford a hefty down payment.

We Improved Our Credit

My husband and I started working on improving our credit two years before we applied for a mortgage. We paid off debt, used credit cards wisely, and corrected any errors on our credit reports.

We focused on developing better spending habits and paying bills on time. By the time we got pre-approved and started looking for houses, both of our credit scores were over 750.

Because lenders look at credit scores for co-borrowers, they will often take the lowest score into account. Yet, neither of us wanted to be the weakest link. Plus, since both of us had such strong credit scores, we secured the best interest rate for our mortgage. This will save us thousands of dollars over time.

Our House Was Move-in Ready

Buying a move-in ready house was super important to me. My husband and I are not handy and we wanted something we would not have to completely renovate.

Our home was the perfect compromise. It was listed at a price that was at least $15,000 less than other homes in the area, was moderately maintained and had some good bones. The kitchen was updated along with one of the bathrooms. The roof was new, the HVAC system was in good shape and there was even a new deck in the backyard. Another bonus: a sprinkler system was recently installed. We definitely didn’t need to invest anywhere near $15,000 into the house. The only thing I really wanted to do immediately was hire a cleaning service and replace all the carpeting with laminate flooring. No big deal.

The best part: we didn’t have to spend extra money on hotels or stay with family while having major work done to the house.

We Bought Almost Everything Used

To save a ton of money when buying our house, we purchased used furniture. We also budgeted to buy stuff for the new house – using only the cash we had available in our bank account.

I found most of what I needed on the Facebook Marketplace. Among my bargain buys: a glass table with six chairs, a sectional sofa, an indoor storage bench, a patio table, and a wicker loveseat for the patio. Total cost: under $1,000. Can’t beat that price.

Our Sellers Purchased a Warranty

The sellers of our new house were kind enough to purchase a 13-month warranty that we can use if certain things in the home need repair. Because our house was built in the 60s, something is bound to need fixing.

Among other things, the warranty covers electrical work, plumbing and HVAC repairs. All we need to do is pay a service fee for a contractor to come out to either fix the issue or replace the item.

We’re DIYing like Crazy

Finally, we DIYed a lot to save money. As first time home buyers, we enjoy working on projects together and learning new skills. For example, I installed a backsplash and my husband sanded drywall in our second bathroom.

We’re even getting the family involved. My dad installed our flooring and window treatments, saving us the cost of hiring contractors to do this.

Final Word

Buying a home is a huge financial commitment. But, if you plan ahead you don’t have to go completely broke in order to achieve the American Dream. By taking a page from my book, you too can take steps to save money, pay down debt and become a homeowner.


5 Financial Moves to Make Before You Go House Hunting

By Ashley Eneriz
July 18, 2018

So, you’ve been poking around at houses. You’ve found the neighborhood of your dreams and you’re ready to say “sayonara” to your grouchy landlord.

Yet, moving out of your apartment and buying a house isn’t as easy as it sounds. While you may be mentally ready to make the leap, you also need to be financially prepared. This means you’ll need enough savings for a down payment and a strong credit score – especially as we are in seller’s market.

In a seller’s market, homes sell at an accelerated rate, at higher prices – often after bidding wars. According to Realtor,com, homes are selling 10 percent faster and for nine percent more money than at this time last year. If you’re a first-time house hunter and you aren’t prepared, you may end up losing out on house after house.

Sounds stressful, right? Luckily, we’re here to help with 5 ways to prepare for house hunting. Take a look:

1. Get Pre-Qualified

Pre-qualification for a mortgage is a quick and free process that can be done online or in-person with a lender. In the pre-qualification process, you start by answering a few questions about your finances. Based on the information you provide, the lender will tell you if you’ll be approved, how much house you can afford, and what your interest rates will be. It is ideal to get a quote from two or three different lenders. This way you can choose the lender with the best rates and fees.


While this is not a promise or guarantee that you’ll be approved for the loan, you’ll have an estimated loan amount that can help you determine your house budget.

2. Save for a Down Payment

While some first-time home buyer programs help you purchase a home for as little as three to three-and-a-half percent down, here’s the truth: a higher down payment can help you get approved for a loan quicker and grant you access to lower interest rates, according to Experian.

Also, if your down payment is less than 20 percent of the home price, you’ll typically be required to pay annual Private Mortgage Insurance (PMI.) We know: 20 percent can be a of lot of cash to save up. For a $250,000 home, for example, you’ll need to save $50,000. And, while it’s a good idea to save as much money as possible before house hunting, it’s also important to buy a home you can afford. For this reason, it’s a good idea to talk to a real estate agent and mortgage lender to help you figure out how much home you can realistically afford to buy.

3. Boost Your Credit Score

An excellent credit score isn’t just for bragging rights. A score higher than 740 will allow you to get approved for a better mortgage with lower interest rates.

Not sure what your credit score is? You can fix this fast by ordering a free credit report through Annualcreditreport.com. With your credit report in hand, make sure all the information is accurate. If not, go through the proper channels to fix this (Annual Credit Report’s website helps you with this).

If you need to improve your credit score, there are many ways to do this. According to Randall Yates, founder of online mortgage marketplace The Lenders Network, here’s a good first step: “A simple way to increase your credit score quickly is by paying down the balances on your credit cards.”

“Try to get each card balance below 15% of the credit limit to maximize your score and improve your chances of getting approved with the best loan terms,” says Yates.

By doing this, you’ll be slowly but surely improving your credit utilization rate, which accounts for up to 30 percent of your credit score. You can figure out your credit utilization rate by taking the amount of your credit card debt and dividing it by your credit limit. For example, if you have $1,000 in debt and a $2,000 line of credit, your credit utilization rate is 50 percent. You can learn more about how to improve your credit utilization rate here.

4. Have a Steady Source of Income

Even if you hate your job, think twice before getting a new job immediately before house hunting. Why? Your work history and income paints a picture for mortgage lenders. A solid job makes you appear financially stable and reliable. And, you often won’t get approved for a loan if you’re unemployed or have only been at your job for a short period of time.

5. Get Pre-Approved

Once your finances are ready and you are actively looking for a house, it’s time to secure a mortgage pre-approval letter. A pre-approval letter is different from a pre-qualification letter because an underwriter investigates your finances top to bottom. There is no hiding a late payment or excess amount of debt from the underwriting process.

“The pre-approval process is very quick, and can be completed in as little as an hour,” says Ariel Szabo, a Boston-based real estate agent. “The one variable that could hold up the process is how long it takes you to submit the necessary documentation,” she explains.

What financial paperwork should you have ready to submit?

“At a minimum, your mortgage officer will need to review your taxes, proof of income, and statements of your assets and debts,” Szabo says. You should also have your driver’s license and social security number ready.

A pre-approval is a game changer. Once you have a pre-approval letter, you become a noteworthy buyer and sellers will know you can actually afford to buy the house.

Are You Homeowner Material?

Buying a home is an exciting adventure, but it is also a serious commitment. By following the 5 steps here and being prepared, you’ll be ready to start house hunting and hopefully snag your dream home.


4 Tips for the First Time Home Buyer

By Jackie Lam
July 14, 2018

When my apartment complex was sold a couple of months ago, I had a hunch I would need to move.

Lo and behold, a few weeks ago, I received official notice that our cluster of apartments would be taken off the rental market for good. Yes, I’d definitely be forced to relocate.

For the past eight years, I paid lower-than-market rent for my bungalow-style one-bedroom apartment. And yes, my low rent had allowed me to stash cash away into a savings account. But still – I panicked. I frantically started scouring online for apartment listings. As you probably guessed, rent in Los Angeles is super duper high, and the nice places get swooped up fast. Plus, all of the apartments comparable to mine were almost double my current rent.

Then a light bulb went off. Okay, maybe my partner suggested it. Perhaps I should consider buying my first house? As a single, female self-employed freelance writer who lives in the most unaffordable housing market in the U.S., I’m not exactly the obvious home buyer. With a sufficient down payment—we’re talking 20 percent here—it turns out my monthly mortgage, plus any HOA fees, would roughly equal my newly increased rent. I’m also a commitment-phobe. I’m the type of person who considers committing to a brand of eco-detergent a small victory.

Nonetheless, buying a first home isn’t a bad idea. Here are the steps I’m taking to prepare for homeownership:


I’ll be zeroing in on the cost of homes in my preferred area. I’ll also poke around to gauge exactly the type of property I want. And as I get closer to actually making an offer, I’ll work on getting pre-qualified for a mortgage (yikes). Will I get an FHA loan or a conventional loan? How much will I qualify for? What are the conditions? So much to figure out.

Understand the costs involved

Boston-based financial planner Eric Roberge of Beyond Your Hammock makes an excellent point: when you’re leasing, your rent is your most expensive cost. But when you own your home, your mortgage is the absolute minimum you’ll pay. There are also taxes, insurance, and the cost of routine maintenance and repairs. When you buy a house, you also need to consider closing costs. In my case, I need to make sure I’m prepared to stomach all the expenses that come with owning my own place.

Leveling up

With any endeavor, my standard M.O. is to gradually level up. In other words, slowly invest in something, test things out, then reassess.

Case in point: when I took an interest in roller derby, I borrowed gear for six months before investing in my own set of skates. I’m currently practicing drums on a basic practice pad before buying an electronic drum kit. And as for the #freelancelife, I moonlighted as a copy editor and writer for several years before taking the leap to full-time status.

How will I gradually level up to buying a house? The long-term goal is to sock away a certain portion of my income each month. It’s an ambitious number, and I’ve automated my savings so that I can accomplish this. I’m also socking away any extra cash I get. My target amount for a down payment? At least 20 percent.

Saving money each month will also help me get into the habit of saving for maintenance and repairs, which is a big part of responsible homeownership. The general recommended amount? At least one percent of the purchase price. So, if I’m hunting for a $300,000 condo, this means I’ve got to have at least $3,000 saved up for repairs

Time to Get Real

As my fellow self-employed writer pals can attest to, working for yourself makes the home buying process more stressful.

For starters, there is more documentation required than if you worked a day job as an employee. Plus, it can be tougher to qualify for a mortgage if you don’t have a steady income. Indeed, I have a lot to think about. Plus, I have no clue what my life situation, needs and wants will look like in a few years. Will I be married, wanting to have a child? Will my freelance business be in a growth phase? Will alien bunnies take over the planet? As you can see, there are many unknowns.

At the same time, saving now and starting to explore the possibility of homeownership will get me in the proper mindset. In turn, I’ll be able to gauge if buying a house is truly the right choice for me. Here’s more good news: if it turns out that I don’t want to be a homeowner after all, I’ll have a healthy nest egg to funnel into something else. It’s important for me to get my ducks in a row—both mentally and financially. This way I’ll be prepared to buy a house if it turns out to be the right choice for me.


How to Sound Like a Pro When Buying a House

By Taylor Milam-Samuel
July 11, 2018

Here’s the truth. The process of buying a home includes a lot of unfamiliar words that you’ll probably never need to know again. But as you go through the steps of purchasing a home, this new vocabulary is crucial.

Besides, you’ve already taken steps to improve your finances to put you in a position to buy a house. You’ve automated your savings, built a fund for your down payment and started researching neighborhoods in your city. It’s only fitting that you now learn the lingo so that you are prepared to be a homeowner.

Here’s everything you need to know to sound like a pro and make an informed home buying decision. The best part? We’ve translated this terminology from “finance speak” to plain English.

#1: What is a mortgage?

7-word summary: Legal agreement between you and the lender

Your mortgage is an agreement between you and your mortgage lender. It’s a legally binding way of shaking hands and agreeing to the terms. Lenders are often banks or credit unions, but can also be mortgage brokers or other types of lenders. The mortgage agreement basically states that you are obligated to pay the lender the full amount of the mortgage (plus interest) through a payment schedule.

Your house is collateral for the mortgage. This means that your house serves as a guarantee that you will pay back the lender. If you don’t make your payments, the lender has a claim on the house and will have a way to recoup the cost of the loan. This helps to reduce the risk for the lender.

Mortgages are typically large amounts of money—upwards of $100,000 and often 20 percent of the price of the home.

#2: What is a fixed-rate mortgage?

7-word summary: Same interest rate throughout the mortgage term

Fixed-rate mortgages tend to be the most popular because the interest rate doesn’t change throughout the length of mortgage, which is typically 15 or 30 years.

This means that a fixed-rate loan may be a great option if you want a stable, reliable monthly payment that won’t fluctuate. It feels a bit like renting—you have a set monthly payment and pay the same amount every month until the lease expires.

#3: What is an adjustable mortgage rate?

7-word summary: Fluctuating interest rate throughout the mortgage term

If you don’t have a fixed mortgage rate, then there’s a good chance you have an adjustable mortgage rate, or AMR. These mortgage rates typically have a short-term fixed rate period and then transition into adjustable rates.

An adjustable mortgage rate loan means that the interest rate can fluctuate – some months may be higher than others. This doesn’t mean that you’ll get a daily email with a new rate. Instead, it means that there are preset intervals during which the rate may change for a period of time. As a result, your monthly mortgage payment may change too.

#4: What is private mortgage insurance?

7-word summary: Insurance that provides additional protection for lenders

Also known as PMI, private mortgage insurance is a type of mortgage insurance that not everyone has to pay. PMI is another way that lenders protect themselves from losing money. You’ll typically be required to pay PMI if you have a conventional loan and have less than 20 percent of equity in the home.

Some buyers avoid PMI altogether by making a downpayment that is 20 percent or more of the purchase price. For example, if you buy a home that is $500,000, you’ll need to pay PMI until you have at least $100,000 of equity. You can avoid PMI in this situation with a down payment of $100,000 or more.

#5: What is an appraisal?

7-word summary: Expert opinion about the value of property

An appraisal is basically written evidence that the value of the property is based on fact (and not just what the seller wishes it is worth). Here’s the deal—you’ll probably want to know how much a potential home is worth and lenders definitely want to know what the home is worth.

Sellers list homes for an asking price, but this may or may not be the actual value of the home. There are a lot of factors at play when it comes to determining the value of a property and lenders often require buyers to get potential properties appraised by a professional.

#6: What are closing costs?

7-word summary: Fees and payments for purchasing a home

You probably already know that buying a home is expensive and you might have even heard the words “closing costs” thrown around a few times. Even though this sounds mysterious, closing costs are actually just the fees and payments associated with buying a home.

Here’s what is often included:

  1. Appraisal fees
  2. Government taxes
  3. Title insurance
  4. Tax service provider fees
  5. Prepaid expenses like property taxes or homeowners’ association fees

It’s okay if you’re not an expert

As you’ll probably only buy a handful of properties throughout the course of your entire life, it’s okay if you’re not a full-fledged expert on the topic. But even though you may never be an expert, it’s always a good idea to know the basics and feel confident in your decisions. And, keep in mind: the sooner you start preparing to buy a house, the better off you’ll be when the time comes to make an offer.


How to Save Money on Your Utility Bills

By Melanie Lockert
March 26, 2018

Do you cringe each month when you get your utility bills? When you see a super high bill, do you wonder what happened? We’ve all been there, and high bills for gas, electricity and cable can certainly put a dent in your bank account.

But all is not lost. If you want to keep your utility bills low, here are some habits you can change.

1. Use it or lose it

It’s easy to keep lights on after you’ve left a room or keep a heater cranked even if you’re not cold. In fact, keeping the water on might be second nature for you.

But, if you want to save money on your utilities, you may want to instead adopt a use it or lose it strategy. In other words, if you’re not using it, lose it. Turn it off.

Besides simply getting into the habit of turning everything off, it also helps to practice mindfulness when it comes to your consumption of energy and other resources. Ask yourself, “Am I using this right now? Does this need to be on?” If the answer is no, take some time to turn off certain appliances. This may help you feel better as well as save money on your electric, water and heating bills.

2. Buy energy efficient products

If you have to buy a new appliance like a fridge, washer or dryer, make sure you buy an energy efficient model. This will help cut down on your electricity costs and you may also be eligible for rebates. If you don’t need a new appliance, you can also save money simply by swapping out your incandescent light bulbs for energy-efficient options. According to Energy.gov, if you replace your five most used light fixtures with ENERGY STAR models, you can save up to $75 per year.

3. Keep your thermostat temperature low

Having just the right temperature in your home is important. But let’s face it, you’re probably at work and gone for at least eight hours a day. You certainly don’t need to be blasting the heat or air-conditioning when you’re not home.

To help you save money, consider keeping your thermostat set seven to 10 degrees lower than you normally do. While you may decide to manually change the temperature to suit your comfort level when you’re home, this will help you from wasting energy in the long-run. In fact, by doing this one simple thing, you can potentially save 10 percent of your heating and cooling costs each year, according to Energy.gov.

4. Unplug

If you’re not using a certain appliance, consider unplugging it to help reduce your electrical costs, according to Energy.gov. Just think about it: when you’re not using your TV, coffee maker, and phone charger, they are probably still plugged into the wall socket. Give your appliances a break and unplug. Your wallet will also thank you.

5. Plug up leaks

It’s common for windows and doors to have air leaks. Hot or cool air coming in or out through these holes and gaps can result in higher energy costs without you even realizing it. To fix this, try caulking your doors and windows to create seals and prevent air from getting in or out of your windows and doors. Check out this how-to-guide to get started. According to Energy.gov, this simple change can result in a savings of $83 to $166 per year.

6. Get advanced power strips

While it’s a good idea to unplug your electronics when they’re idle or not in use, sometimes you’re in a rush or you may forget. The solution? Advanced power strips (APS). These can help lower energy costs by reducing the electricity that is used when your devices are not being used.

7. Negotiate your bills

You might think that your utility bills are set in stone but this isn’t always the case.

Companies like Billcutterz or Trim can help you negotiate better rates on services like cable, wireless, and cell phone. In essence, Trim and Billcutterz can contact your providers for you and do all the dirty work. These cost-saving services are free and make money if they actually score you some savings or refer you to a partner. Of course, you can always pick up the phone and call your service providers yourself. You may be able to negotiate a lower price on your own.

Bottom line

Your utility bills can spike at any time and it can be frustrating. Luckily, you can refer to these 7 tips to effectively lower your utility bills. This, in turn, will help you free up money to save for your financial goals.

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