 Buying a home is a dream come true for many people, but the mortgage that goes along with this experience is more like a nightmare. Unless you’re Warren Buffett’s granddaughter, you probably don’t have enough money saved up to pay cash for a home, which means you’ll have to rely on a mortgage that is paid back over the course of many years.
The good news is, there are four ways you can save big on the cost of your mortgage, so you can use your money for other things (like investing in the stock market so you can become as rich as Warren Buffett). 1. Opt for a Shorter Loan.
Fifteen- and 30-year mortgages are among the most common lengths you can get. If financially possible, select the shorter of the two. The reason for this is simple: the quicker you pay off your mortgage the less money you will pay in interest. Take a $300,000 mortgage, for example. A 30-year mortgage, with an interest rate of 5%, means you’ll pay approximately $279,000 in interest. Keeping the same mortgage ($300,000) and rate (5%) but opting for a 15-year mortgage will result in total interest paid of roughly $127,000. This example illustrates how much you can save by cutting back your mortgage term. Tip: Ask your mortgage broker or lender to calculate numbers, including a monthly payment, based on several types of loans. They can supply you with accurate numbers, making it easy to see how much you can save by opting for a shorter loan. 2. Make a Lump Sum Payment from Time to Time.
Some people don’t have enough money every month to pay extra on their mortgage. That being said, throughout the year they receive extra money in the form of bonus checks, tax refunds, and other one-time payments. If you have the money, it makes good sense to send an extra lump sum payment to your lender. By doing this once per year it will help you shave several months or years off your term, while also saving you from paying interest. My plan is simple: I currently have a 30-year mortgage with a fixed interest rate of 5 percent. Every January, I pay an extra $1,000 in addition to my regular mortgage payment. So far, I have done this twice. By continuing to do so, I will effectively reduce the term of my loan by several years and the interest on my loan by thousands of dollars. Tip: Like many of you, I don’t come into an extra $1,000 every January. Instead, I slowly save this money throughout the year; $50 to $100 at a time. By the time January comes around, I have approximately $1,000 extra. Is it tempting to use this money for something else? Sure. But knowing that it will save me much more in the long run keeps me on track. 3. Make Payments More Frequently.
As you know, your lender will send you a statement once per month. This is the amount you are required to pay. But what if you decide to pay bi-weekly instead of monthly? By doing this, you are in position to shave several years off your mortgage. For those who have a bi-weekly pay schedule this is easy to do from a financial perspective. If you want to know just how much money you can save by making bi-weekly payments, enter your information into this bi-weekly mortgage calculator. The reason that bi-weekly payments make sense is based on one key fact: there are 52 weeks in a year. For this reason, you end up making 26 payments, which equates to 13 full payments. If you were to make one payment per month, though, you would only make 12 full payments over the course of the year. In short, when you pay bi-weekly, you end up making two extra payments each year, which is the same as one additional “full payment.” Tip: While getting on a schedule will help ensure results, you don’t have to stick with “more frequent” payments if you find that it is unaffordable. In short, it is your mortgage and as long as you pay the monthly minimum your lender will be happy. 4. Refinance.
What rate of interest are you currently paying? If it’s high there’s no better time than now to refinance. By securing a lower rate you are doing two things: lowering your monthly payment; and lowering the total amount you will pay in interest over the life of your loan. The only downside of refinancing is that you will have to pay closing costs on the loan. Make sure you factor this in when deciding if this is truly something that can help you save. The earlier you refinance your mortgage the more sense it makes. If you only have a couple years left on a 30-year mortgage, for example, it is better to finish things off at the current rate. You will pay more in closing costs than you will save. Tip: You don’t have to refinance with the same lender that is holding your first loan. This is a common myth that has negatively affected many people. When refinancing, you should once again shop around for a lender with low rates, reasonable closing fees, and top notch customer service.
Final Word
The majority of people wait for their mortgage statement to arrive and then pay the exact amount due. While there is nothing wrong with this, there are some “tricks” you can use to shave thousands of dollars and many years off your loan. From opting for a shorter term upfront to refinancing when rates go down, make sure you are always looking for ways to save. A mortgage is a huge financial commitment. By following these tips, you can benefit from significant savings on the total cost of your loan.  Some people dream of the day they can quit their job and start their own business. Unfortunately, many people never consider the financial ramifications. Instead, they think the money will be the same because they have a great business idea. Nothing could be further from the truth.
There are many details to consider before you quit your job and start a business. This may end up being the best move you ever make, but you need to make sure your finances are in order, first. Below are five things to consider before you jump ship and start your own company: 1. Weigh your current income against the potential with your new venture. Will you eventually be able to earn as much as you did at your past job? Do you have the ability to earn more? While there is nothing wrong with making less money, you need to be prepared for this. Would a lower income support your current lifestyle? The bottom line is simple: if you are going to start your own business, the potential to earn as much or more than your past gig is a very important factor to consider. If it will likely be less than this, be honest with yourself if that is OK with you and your family. 2. How long will it take to generate income? There is no surefire way to answer this question, but you definitely need an idea of the time line that you are up against. Will you be able to earn the same amount within a couple of months? A couple of years? Obviously, the quicker you generate income (even if only a little), the better off you are going to be. The best way to answer this question is to research the industry in which you are getting involved, while also having a solid business and marketing plan. Better yet, if you can begin working on your side business while working at your full-time job, you can get a great idea of the business’ potential and even start creating some income before you quit. 3. An emergency fund is of utmost importance. If you have money in the bank, you may feel comfortable working without an income for an extended period of time. As a general rule of thumb, try to have an emergency fund that will cover at least six months of expenses. This will give you the time necessary to get your business off the ground and profitable. Simply put, the more money you have in the bank, the less stressed out you will be. 4. Know how much money you need to start your business. Along with this, make sure you know exactly what you are getting into over the long haul. Some businesses do not require much start-up capital; others call for tens of thousands of dollars or more. Although it would be nice, the initial cash layout may not be all that you need. There is a good chance that your new business will require a steady flow of cash, month after month. If you are not generating income, you must consider other options such as savings, outside funding, and loans from friends and family (this last one is a risky proposition and should be avoided if possible). 5. Do you have the financial backing of a spouse? This can be a pro or con, depending on your situation. Some people are lucky enough to have a spouse earning enough money to keep the family afloat during the start-up phase. On the other side of things, there are those who bring in all the money for their family. In this case, it is much more difficult to dump a steady salary and hope for the best with a new business. Perhaps even more importantly, if you have a spouse, you need to make sure you have their emotional backing as well. Without their support, it could make for a very stressful experience trying to succeed in your business. Many of the tips above can also be applied to those who are trying to prepare financially for a job loss or bout of unemployment. Before you give up on your current job and start your own company, make sure to consider the five financial details above. Have you tried to start your own business? Do you have any additional tips to add to the mix? (photo credit: Phil Sexton)  Many people dream of leaving the “rat race” behind and starting their own business. This sounds like a tall order, but in reality, it is quite possible if you take the proper steps along the way. One of the best ways to reach this goal is to start a side business while you are still working full-time. This minimizes your risk, while giving you hope that you will eventually be able to move full-time over to your business. You will also deal with much less stress because, presumably, you will at least have a solid cash flow from your side business before you ever quit your “real job.”
Several years ago, while working full-time in sales, I decided that I wanted to become a freelance writer. Like most people, I was worried about quitting my job and taking the leap. To play it safe, I began to take jobs on the side until I felt comfortable moving into this full-time. Along the way, I learned quite a bit. Below are five tips for starting a side business while keeping your full-time job: 1. Be willing to work long hours. There is no denying that you are going to be tired after an 8+ hour day at work. But remember, if you ever want to be in charge and own a business, you have to make sacrifices. For several months, I worked eight hours at my full-time job and then sat at the computer for at least four more. Fortunately, since I enjoy writing so much, the second part of my work day was not nearly as stressful. 2. Don’t let your performance suffer at your full-time position. You owe it to your employer to do your job well, even if you are thinking about leaving in the near future. Along with this, keep one thing in mind: you don’t know for sure that your side business is going to take off. For this reason, you may end up staying at your current job for longer than you thought. Don’t burn any bridges! 3. Get help. Even though this is something I avoided, since I was only starting a freelance writing business, most people will be able to take advantage of this benefit. If you have a partner, make sure to spread the work evenly, which will make it much easier for you to work two jobs. A partner also helps to speed up the startup process, meaning you can quit your full-time job sooner rather than later. 4. Create a business plan before getting started. Just because you are not working at your business full-time does not mean you should bounce around all over the place hoping for the best. If you are going to start a side business, you should be serious about staying on track and sticking with your game plan. A business plan gives you direction from the start on everything from organizational structure to marketing strategies. You can also pinpoint exactly what goals you need to reach before you can quit your job. You can find sample business plans online at sites such as: Bplans and Small Business Information. 5. Set goals. How much money do you want to be earning by the end of the year? What type of revenue will allow you to feel comfortable leaving your current position? Setting some smaller, near-term goals will help you build up your confidence and momentum. Do you want to leave your full-time job within a couple of months? Within a couple of years? Goals will keep you motivated and moving forward, even when times get tough. These five tips should help you get well on your way towards achieving the dream of running your own business. Are you currently working on a side business? Have you made the leap to working on your own business full time? I’d love to hear your tips and thoughts on the subject! (photo credit: Ivan Walsh)  Most people value the importance of health insurance. Unfortunately, not as many people believe that dental insurance is essential to their well being. Don’t underestimate the importance of taking care of your teeth, or you’ll really regret it when you’re older. The good news it that if you need dental insurance, buying a policy is easier than ever before.
Below are five details to keep in mind if you need dental insurance: 1. Check with your employer first. If you get health insurance through your employer, there is a very good chance that you can also get dental coverage. Even better, you can probably get the dental insurance for just a few dollars a month. Simply put, dental insurance is not nearly as expensive as health insurance. So, before you shop around, ask your benefits department if they offer dental insurance. You may be surprised to find that not only do they offer this coverage, but that they have a couple of plans to choose from. If they don’t, check out the next option. 2. Buy your own dental insurance. If your employer does not offer coverage or you are self-employed, buying a plan on your own is a great idea. There are many online service sites that make this simple. A few to check out include: eHealthInsurance, DentalPlans, and DeltaDentalIns. 3. Discount plan or full-fledged insurance? Many people get confused when shopping for dental insurance because of the number of products on the market. On the one hand, there are dental discount plans. This is not dental insurance. Instead, you will pay a discounted rate for everything from regular checkups to advanced procedures. This type of plan will save you approximately 50 to 60 percent on covered care. Dental insurance, on the other hand, works like a health insurance plan. You will pay a higher premium for this type of coverage, but it will save you a significant percentage on your dental care and procedures. 4. Consider the details of the policy. Will you pay a co-pay with every office visit? Is there a deductible? Are you covered at 100 percent for all procedures? These are the questions that you need to answer as you shop for a dental insurance policy. For example, some policies have no co-pay but procedures are only covered at 70-75 percent. With this, you need to consider how much you would pay should you need any work done and if you can afford that. 5. What do you get for free? My policy, for example, gives me two free cleanings per year. At the very least, I know that I can go to the dentist for a cleaning, every six months, and not pay a dime. This is quite common, so I urge you to find a dental insurance policy that offers this benefit. If you follow the above advice and compare at least three policies, you should be able to purchase high-quality coverage at an affordable price. With many different ways to buy, as well as a variety of policies to choose from, there is no excuse for not keeping your teeth healthy! Do you have any additional tips on shopping for a cheap dental insurance plan? (photo credit: Sam Pullara)  Selling on eBay is a great way to earn extra money. In fact, there are hundreds of thousands of people earning a full-time income selling on eBay. What are you waiting for? One thing that holds back many people is the inability to find items to sell. While this is a common concern, it is not one that has to stop you from earning a regular income.
Here are three ways to find items to sell on eBay: 1. Volunteer to help others clean out junk from their home – as long as you get to take some things with you. Most people are more than willing to let you have what you want, if you help in the grueling labor. After all, they are just going to throw most of the items in the trash anyway. To get started with this idea, ask friends and family first. This way you can perfect your system, and get a better idea of what you are looking for and what the process entails. From there, do what you can to advertise your service and spread the word. Don’t overlook the benefits of taking out a small ad in a local newspaper. Although it may sound silly, there are many people that will take you up on your offer. 2. Become a garbage picker. Get this: every Wednesday night when people in my neighborhood put out their trash, the same person comes by, with his van, to see if he can find any valuable “trash.” Last week, while putting my garbage on the curb, he stopped and asked if I was throwing out anything that could be resold. Although I wasn’t, we struck up a nice conversation. He later told me that he makes $200 to $400 per week reselling items on eBay that he finds in other people’s trash. Imagine if you did the same? This may not be the most glamorous work in the world, but when the money begins to roll in, you will have a huge smile on your face. Remember this: somebody else’s trash can be your treasure. 3. Buy at thrift stores for cheap, and then list the items on eBay. This is a strategy that I have used time and time again to make a few extra bucks here and there. The great thing about this strategy is that you can visit several thrift stores in a short period of time after you map out an effective route. Additionally, these stores are always getting new items. If you visit enough, you are sure to find a few things here and there that can make you a pretty penny on eBay. For example, a few months ago I purchased two men’s sports jackets for $10 each. Two days later I resold both of them on eBay for $30 each, which represented a 200% return. For a few minutes of work, I made a profit of just around $40. If selling on eBay sounds exciting to you, follow the tips above. These tips will help you make significant sales and profits steady from an income source you had never considered before. Do you have any other tips for finding items to sell on eBay? Or any tips on the sale process itself to maximize your profit? (photo credit: NatalieMaynor) | | |
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