Category Archives: education

3 Charts That Scream ‘List Your Home Today’

3 Charts That Scream ‘List Your Home Today’ | Keeping Current Matters

In school we all learned the Theory of Supply and Demand. When the demand for an item is greater than the supply of that item, the price will surely rise.

SUPPLY

The National Association of Realtors (NAR) recently reported that the inventory of homes for sale stands at a 4.4-month supply. This is considerably lower than the 6-month inventory necessary for a normal market.

3 Charts That Scream ‘List Your Home Today’ | Keeping Current Matters

DEMAND

Every month NAR reports on the amount of buyers that are actually out in the market looking for homes, or foot traffic. As seen in the graph below, buyer demand in February significantly outpaced the last six months.

3 Charts That Scream ‘List Your Home Today’ | Keeping Current Matters

Many buyers are being confronted with a very competitive market in which they must compete with other buyers for their dream home (if they even are able to find a home they wish to purchase).

Listing your house for sale now will allow you to capitalize on the shortage of homes for sale in the market, which will translate into a better pricing situation.

HOME EQUITY

Many homeowners underestimate the amount of equity they currently have in their home. According to a recent Fannie Mae study, 37% of homeowners believe that they have more than 20% equity in their home. In reality, CoreLogic’s latest Equity Reporttells us that 72.6% actually do!

3 Charts That Scream ‘List Your Home Today’ | Keeping Current Matters

Many homeowners who are undervaluing their home equity may feel trapped in their current home, which may be contributing to the lack of inventory in the market.

Bottom Line

If you are debating selling your home this year, meet with a local real estate professional who can evaluate the equity you have in your home, as well as the opportunities available in your market.

How Teens Can Become Millionaires

As you approach adulthood and start to think about your future, are you really ready to be financially responsible for yourself? If you answered no, you’re not alone. The Jump$tart Coalition administered a basic financial literacy test to high school seniors, and less than half of the students correctly answered the questions. Another study found that over 75% of college students believe they are not ready to make smart financial decisions for themselves.

Pretty scary, isn’t it? If you think about it, most of your friends probably don’t know how to balance a checkbook. In fact, very few teens actually have a savings account or know what long-term investing means. Do you?

A 2009 Capital One survey discovered that 50% of teens wished they knew more about personal finances. Whether you have never stepped foot in a bank or you are actively saving and investing for your future, all it takes is a little effort and a lot of patience to become confident in your financial decisions.

A Millionaire’s Best Friend

One awesome thing that you can take advantage of is compound interest. It may sound like an intimidating term, but it really isn’t once you know what it means. Here’s a little secret: compound interest is a millionaire’s best friend. It’s really free money. Seriously. But don’t take our word for it. Just check out this story of Ben and Arthur to understand the power of compound interest.

Ben and Arthur were friends who grew up together. They both knew that they needed to start thinking about the future. At age 19, Ben decided to invest $2,000 every year for eight years. He picked investment funds that averaged a 12% interest rate. Then, at age 26, Ben stopped putting money into his investments. So he put a total of $16,000 into his investment funds.

Now Arthur didn’t start investing until age 27. Just like Ben, he put $2,000 into his investment funds every year until he turned 65. He got the same 12% interest rate as Ben, but he invested 23 more years than Ben did. So Arthur invested a total of $78,000 over 39 years.

When both Ben and Arthur turned 65, they decided to compare their investment accounts. Who do you think had more? Ben, with his total of $16,000 invested over eight years, or Arthur, who invested $78,000 over 39 years?

Believe it or not, Ben came out ahead … $700,000 ahead! Arthur had a total of $1,532,166, while Ben had a total of $2,288,996. How did he do it? Starting early is the key. He put in less money but started eight years earlier. That’s compound interest for you! It turns $16,000 into almost $2.3 million! Since Ben invested earlier, the interest kicked in sooner.

What You Can Do Now

The trick is to start as soon as possible. A survey by Charles Schwab found that 24% of teens believe that since they are young, saving money isn’t important. Looks like we just blew that theory out of the water! That same survey also discovered that only 22% of teens say they know how to invest money to make it grow. Why not change that stat and learn how to become a smart investor with your money? Talk to your parents or teachers about how to open up a long-term investment account so you can become a millionaire, too. And remember, waiting just means you make less money in the end. So get moving!

 

10 Numbers That Will Revolutionize Your Budget

We’re here to talk numbers. Wait! Come back!

These aren’t chalkboard-squeaking, SAT-sweating, pencil-breaking numbers. These are fun numbers. You know the ones that show themselves on bills and bank accounts, the ones that make you wealthy. These are the numbers of the budget.

For 20 years, Dave’s class Financial Peace University (FPU) has taught families how to win with money by laying a solid foundation, which is—you guessed it—a budget! The 10 numbers below prove that even the most free-spirited among us can benefit from a little focus on the numbers each month.

1 – One piece of paper is all you need to make a budget. Forget the fancy spreadsheets and scientific calculators—you just need space to write everything out. Of course, if you’re a nerd and it makes you feel better, go ahead and fire up Excel or print one of Dave’s budget forms to get as detailed as you’d like.

$8,000 – Families who learn to budget in FPU report an average turnaround of $8,000 in the first 90 days. This represents $5,300 reduction in debt and $2,700 saved. Think about where you were at just three months ago. Wouldn’t it feel nice to be $8,000 ahead today?

We’d love to help you get there with Dave’s $8,000 Turnaround Giveaway, celebrating 20 years of life change through FPU. You can enter once a day through September 2!

56% – We talk about budgeting all the time, so it might sound like it’s what all the cool kids are doing. It’s not. In fact, 56% of Americans admit they don’t budget. Many of them don’t even know what they spend each month on housing, food and entertainment. Don’t be like these folks. Be weird!

0 – A zero-based budget is the key to winning with money. Give every dollar a name, on paper, on purpose before the month begins. This means your income minus your expenses should equal zero. Take control of your money by telling it what to do!

15% — Studies show people spend 15% more money when they pay with a card instead of cash. Identify budget categories where you tend to overspend. Then make a cash withdrawal for those areas and place the money in the envelope. When it’s gone, it’s gone!

3 – A kid’s budget is broken into three areas: give, save and spend. Budgeting helps kids understand the value of work and how to use their own money to make purchases and bless others. It also teaches kids to be content—a refreshing quality in today’s youth.

20 billionThe turnaround tracker is at 20 billion and counting. More than 2.5 million families have taken FPU since it launched in 1994. The tracker is a real-time calculation of the estimated turnaround that occurs each time another family signs up for FPU. While you’ve been reading this, another family likely paid off their car loan and saved $1,000!

18% – Families who use the zero-based budget save 18% more money than people who don’t. This means they’ll build an up emergency fund and pay off debt more quickly simply because they’re applying the wisdom of giving every dollar a name. If you’re smart, you do what works.

4 – The first time you budget, it’s going to hurt. The next month, you’ll still be confused. By the third month, your needs—and the ability to meet those needs— will finally start to make sense. By month four, you’ll feel like an old pro. What once took hours will eventually take just twenty minutes and might—just might—be a little fun.

312 – Dave and Sharon Ramsey filed for bankruptcy in September 1988. As a result, they made big changes to how they handled their money. Dave and Sharon began budgeting immediately and the budgeting continues today. They’ve completed 312 budgets so far. Yes , Dave and Sharon still complete a budget each month—and that means you should too.

Budgeting really is the secret to winning with money. Start now or refine your current budget with our free Guide to Budgeting or search for an FPU class in your area.

How has budgeting changed your life? How has it helped you reach a goal that seemed unattainable? Tell your story in the comments below!

(Courtesy of Dave Ramsey, “Top 6 Life–Changing Articles of 2015″http://www.daveramsey.com/blog/10-numbers-revolutionize-budget?ictid=4UQRP211)

5 Simple Ways to Cut Down Your Grocery Bill Without Coupons

Most of us have a love-hate relationship with the grocery store. Some coupon-savvy families squeak by on less than $300 a month, while others jam-pack their carts to the tune of $300 a week.

So who’s right?

It depends. We recommend spending 5–15% of your take-home pay on food, which includes groceries and meals out. But even if your food budget falls within that healthy range, maybe you’d still like to see it come down a few notches. Check out these five easy ways to change your grocery shopping habits for the better—without clipping coupons.

1. Redefine Dinner

If the word dinner conjures up a big homemade meal with a nice cut of meat, two steaming sides, a crusty French loaf and a chocolaty finish, cut yourself some slack! This isn’t the 1950s and weeknight suppers don’t have to be a big production.

Your kids and spouse will survive on BLTs, omelets or a nice salad several times a week. So don’t be afraid to plan simple, one-item-only meals. Reduce your guilt andyour budget by redefining the most expensive meal of the day.

2. Buy the Store Brands Already!

You know generic pasta is cheaper, but you’re still not convinced it won’t ruin your great-grandmother’s lasagna recipe. In a 2009 Consumer Reports study, 29 brand-name foods went up against their generic counterparts. Of the 29 pairings, 19 scored “equally good” in the blind taste test. In other words, your less-expensive lasagna will taste just as delicious.

Still not sold? According to a 2014 academic study, when chefs bought staples like salt, sugar and baking soda, they were much more likely to buy the generic than were non-chefs. And they’re the food experts! The study concluded that if more of us purchased store brands, we could save roughly $44 billion collectively. It pays to be brand un-loyal.

3. Change Up Your Grocery Stores

What made you pick your current grocery store? Is it the friendliest? How about the most convenient? Maybe you just know where everything is? Don’t let a comfortable routine cost you money.You may even find that two grocery stores are your best bet—one for meats and bulk items and another for everything else.

If you’re still not sure which grocery stores are worth checking into, ask around. People love talking about getting a good deal, and the ones who are getting the best deals will gladly gush about their favorite spots. Figuring out a new grocery store may be frustrating at first, but it’s worth learning a new layout to keep that extra $20 in your wallet.

4. Make a Detailed List

A list is simply a plan. You must plan out what you’ll make for breakfasts, lunches and dinners for the next week and then write out each ingredient you’ll need for those meals (plus a few snacks, of course).

When you arrive at the store, remember to buy only what’s on your list. This is key to staying on budget! And if you go shopping as a family, let your kids help plan the meals on the front end so they know this trip isn’t a junk food free-for-all. It’s much easier to stay on budget when you’re shopping with a plan and working as a team.

5. Always Use Cash

The best way to stick to a lower food budget is to pay with cash. When you enter the grocery store with cash in hand, you know exactly how much you can spend. Plus, you’ll stick to the meat-and-potatoes necessities of your budget rather than your ice cream-and-cookie impulse buys.

If you still find you’re eating high on the hog at the beginning of the month and then scraping by on tuna fish by the end, make a cash run every two weeks, instead of every month. This way, you’ll have a better picture of how much you can actually afford to spend each week, versus for the entire month.

Better Habits, Better Budget

By simply starting a few new habits, you can lower your monthly food budget and meet your money goals even faster. That means more cash to pay down debts, invest for the future, or save up for something fun—like a babysitter and a nice meal out where someone else cooks and cleans up.

See why Dave recommends eMeals to help you gain control of your family meal plans and food budget.

(Courtesy of Dave Ramsey, “Top 6 Life–Changing Articles of 2015” http://www.daveramsey.com/blog/5-ways-cut-grocery-bill-without-coupons?ictid=604O1208)

Thinking of Selling Your Home? Get Ready to Negotiate!

Thinking of Selling Your Home? Get Ready to Negotiate! | Keeping Current Matters

Now that the market has showed signs of recovery, some sellers may be tempted to try and sell their home on their own (FSBO) without using the services of a real estate professional.

Real estate agents are trained and experienced in negotiation. In most cases, the seller is not. The seller must realize their ability to negotiate will determine whether they can get the best deal for themselves and their family.

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house.
  • The termite company if there are challenges
  • The buyer’s lender if the structure of the mortgage requires the sellers’ participation
  • The appraiser if there is a question of value
  • The title company if there are challenges with certificates of occupancy (CO) or other permits
  • The town or municipality if you need to get the COs permits mentioned above
  • The buyer’s buyer in case there are challenges on the house your buyer is selling
  • Your bank in the case of a short sale

Bottom Line

The percentage of sellers who have hired a real estate agent to sell their home has increased steadily over the last 20 years. Meet with a professional in your local market to see the difference they can make in easing the process.

How to Stop Overspending at Target

You’re at Target. You only need shampoo and toothpaste.

But then you feel the gravitational pull of the Dollar Spot. Look at all those adorable, unnecessary knickknacks! You grab a few goodies for the kids and keep moving.

Then you see a gorgeous green scarf up ahead. You steer forward to take a peek. Just as you suspected, it looks perfect over your light gray pea coat. Plus, accessories are 15% off right now!

In the cart it goes.

Maybe you’ll just glance at the jewelry while you’re here . . . Any of this sounding familiar?

Name Your Dollars

Target knows their customers. And they know it’s hard to pass up a bargain—especially a cute bargain.

So how do you stop your impulse shopping and actually spend less at this mega chain?

As simple as it sounds, you must make a budget. That means give every dollar a name.

Here’s how it works: At the beginning of each month, sit down with your spouse and create a spending plan for everything from gasoline to eating out. If you want some new clothes, that’s okay, just work them into your budgeting categories ahead of time.

Once you’ve spent every dollar on paper,then you can start spending the real stuff (we like to use cash). Just don’t go over what you’ve allocated!

Related: Learn more about making a zero-based budget

Watch Out for Sales

Easier said than done, right? Target is, after all, brilliant when it comes to sales.

They offer racks upon racks of discounted clothing, reduced-price housewares at the end of every aisle, and a customizable Cartwheel app, which offers rotating deals on everything in the store you already love.

But how much is all this “saving” really costing you? Math time, people.

If you get 25% off a decorative pillow that you never intended to buy, you’re still paying 75% more than you would have! That’s called spending, not saving.

Avoid these shopping traps by making a list before you go. Then practice some self-discipline once you’re there. If an on-sale item isn’t on your list, don’t put it in your cart—Cartwheel or not.

Delay Gratification

If you’re having trouble sticking to your new budget and shopping list, use your psychic abilities. Look into the future and imagine how you’ll be using this “must-have” item a month from now.

Will your kids still be playing with that cheap paddle ball game? Will that owl statue actually fit on your fireplace? Or will those fake leather heels start rubbing blisters on your feet?

Nine times out of 10, the answer will be to put it back. But what if you still want it?Then you wait.

Work it into next month’s budget (and next month’s list) and revisit your feelings in 30 days. If you still love it, buy it without the guilt.

Related: 2 Words That Will Change the Way You Shop

Make It Work

A budget isn’t a bad thing. When done right, it actually gives you permission to buy what you want. So before you slip out to Target the next time, prepare yourself for the temptations ahead.

And if you happen to leave the store with more than you bargained for, take it back. That’s what receipts are for.

Need help making a budget? Check out Dave’s latest budgeting tools and forms.

(Courtesy of Dave Ramsey, “Top 6 Life–Changing Articles of 2015” http://www.daveramsey.com/blog/how-to-stop-overspending-target?ictid=CJFMH207)

How Long Does It Take To Save A Down Payment?

How Long Does It Take To Save A Down Payment? | Keeping Current Matters

In a recent study conducted by Builder.com, researchers determined that nationwide it would take “nearly eight years” for a first-time buyer to save enough for a down payment on their dream home.

Depending on where you live, median rents, incomes and home prices all vary. By determining the percentage a renter spends on housing in each state and the amount needed for a 10% down payment, they were able to establish how long (in years) it would take for an average resident to save.

According to the study, residents in South Dakota are able to save for a down payment the quickest in just under 3.5 years. Below is a map created using the data for each state:

Years Needed to Save 10% Down | Keeping Current Matters

What if you only needed to save 3%?

What if you were able to take advantage of one of the Freddie Mac or Fannie Mae 3% down programs? Suddenly saving for a down payment no longer takes 5 or 10 years, but becomes attainable in under two years in many states as shown in the map below.

Years Needed to Save 3% Down | Keeping Current Matters

Bottom Line

Whether you have just started to save for a down payment, or have been for years, you may be closer to your dream home than you think! Meet with a local real estate professional who can help you evaluate your ability to buy today.

Don’t Let Rising Rents Trap You!

Don't Let Rising Rents Trap You! | Keeping Current Matters

There are many benefits to homeownership. One of the top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.

Don’t Become Trapped

Jonathan Smoke, Chief Economist at realtor.com recently reported on what he calls a “Rental Affordability Crisis”. He warns that,

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

The Joint Center for Housing Studies at Harvard University recently released their 2015 Report on Rental Housing, in which they reported that 49% of rental households are cost-burdened, meaning they spend more than 30% of their income on housing. These households struggle to save for a rainy day and pay other bills, such as food and healthcare.

It’s Cheaper to Buy Than Rent

In Smoke’s article, he went on to say,

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”

 “While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

Perhaps, you have already saved enough to buy your first home. HousingWire reportedthat analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we reported last week, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

Existing Home Sales Up 3.9% [INFOGRAPHIC]

Existing Home Sales Up 3.9% [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • The annual adjusted sales are currently at a 5.36 million pace.
  • 14,684 homes sell every day in the United States.
  • October marked the 44th consecutive month of price gains.

Millennials: What FICO Score is Needed to Buy a Home?

Millennials: What FICO Score is Needed to Buy a Home? | Keeping Current Matters

In a recent article by the Wharton School of Business at the University of Pennsylvania, it was revealed that some Millennials are not looking to purchase a home simply because they don’t believe they can qualify for a mortgage.

The article quoted Jessica Lautz, the National Association of RealtorsManaging Director of Survey Research, as saying that there is a significant population that does not think they will be approved for a mortgage and doesn’t even try. The article also quoted Fannie Mae CEO Tim Mayopoulos :

“I do think that there’s a sense out there in the marketplace among borrowers that credit may not be available, especially for people with lower credit scores.”

So what credit score is necessary?

A recent survey reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780.

In actuality, the FICO score on closed loans (as reported by Ellie Mae) is much lower and has been dropping over the last several months.

FICO Score Requirements | Keeping Current Matters

Bottom Line

Millennials who are considering a home purchase should get advice from a local real estate or mortgage professional now. They may be surprised how much the requirements for a mortgage have eased.