You're about to buy a home, and are now "in escrow," the homestretch of the home-sale process. During this period, you as the buyer will provide the needed funds for the home (most likely from your lender and with your down payment), the owner will transfer ownership of the property and the sale will be finalized.
Which means that if everything goes right -- all contingencies are met, both the seller and the buyer meet their contractual obligations and your financing to purchase the home is in place -- the home you have been aiming to buy will soon be yours.
But even though closing day is just around the corner, you're not out of the woods yet. There are several missteps a home buyer can take that will put getting a loan, and finalizing the transaction, at risk. Read on to avoid these goofs:
Leaving town or falling off the planet
Going on vacation or becoming hard to reach while in escrow is not a good idea, especially if your lender needs to get in touch with you to process your loan. Any glitches in that process can push back the closing date for your home. For the same reason, it's not a good idea to change your cell-phone number right now. It's best that you keep in touch with all necessary people while you are working to close on the property.
Changing jobs
When you're looking to close escrow and take possession of a home, you don't want to make your lender uneasy. Changing jobs (or going solo/self-employed) during this time period could certainly make a lender queasy and lead that lender to question whether you'll be able to afford that home. Lenders prefer a steady and consistent job history. If you make a job switch just before closing on a home, it could put everything on hold while your lender re-evaluates your financial position.
Being a big spender
You're about to get a new house, so why not whip out your credit cards and buy a new washer/dryer, dishwasher and refrigerator...or maybe, take out a loan for a new car for your new driveway?
Because these big purchases (and taking on more debt) will throw off what's called your "debt to income ratio" (which measures how much of your monthly income goes toward debt obligations), a ratio lenders consider when evaluating a loan application. You don't want to end up buying items for a home you don't have -- one that you lost because you nixed your chances of securing that mortgage before it went through.
You might even run into trouble if you pay for these items with cash -- lenders look at how much cash reserves you have when approving a mortgage. And don't think you're off the hook if you lease a car instead of purchasing one -- leasing a new car at this time could jeopardize your standing with your lender as well.
Instead, try to keep the balances on your credit cards low and don't take on new debt (this includes co-signing on a loan) until after you close on your home.
Paying bills late
If you're about to close on your home, stay current on your bills -- you don't want to wreck your credit score just before your loan goes through.
Any changes to your credit status could affect the likelihood of closing on your new home, so you want to keep your credit good -- at least until you close on your home.
Opening/closing new credit card accounts
Opening up new credit cards or closing old ones just before closing on your new home could negatively affect your credit status, so again, wait until making such moves until your mortgage is secure.
Moving big amounts of money
Before that home is definitely yours, don't transfer large amounts into your checking or savings accounts -- check with your mortgage company before doing so. If they see large amounts of money moving around, they may wonder why and raise the red flag. (E.g., they may think you've secured another loan and have more debt obligations than you did when initially applying for the loan.) Again, you don't want anything to delay or hold up your closing.
Written by
Trulia.com
Friday, August 2, 2013
Wednesday, July 31, 2013
Did You Miss the Best Real Estate Buying Bonanza in Decades?
Has your best chance at getting a great deal on your dream home or investment property passed you by?
The answer is NO. But you certainly did miss the bottom — the intersection of low home prices and rock-bottom mortgage rates.
But it’s still a bonanza out there for prudent buyers! Real estate is still incredibly low priced, mortgage rates are still reasonably low and great wealth still can be earned from owning quality properties for the long term
Long-term ownership
The most likely scenario where a real estate buyer increases his or her wealth — and “increasing wealth” is the reason most people desire to own real estate — is by holding property for the long term. When you own long term, you pay down your mortgage along the way, the property’s value hopefully will increase over the years and you skip the exorbitant transaction costs that go along with buying and selling real estate over and over again. So don’t buy a home or investment property unless you are virtually positive you will own it for years. You generally have to own a property for around 7 years to start earning any equity.
And keep this in mind: If you have that long-term ownership goal, the recent uptick in property prices shouldn’t be big a deal for you, because in 10, 15 or 20 years, the values should be much higher. In fact, in 15 years you’ll hardly remember what you paid today; you’ll just be bragging about how it was the best investment you ever made.
Buy good quality real estate
Beware: You can’t just buy any property and expect it will add wealth to your financial picture. You have to buy nice properties that are affordable to you — no get-rich quick schemes.
Many properties are wealth-draining, not wealth building. It’s usually the ones that sound like incredible deals, but they end up being too good to be true. A few types of properties that usually diminish your wealth are fixer-uppers, fancy prize properties, second homes, vacation rentals, land, properties in mismanaged homeowners associations, rent-to-own deals, and properties in bad areas. Most of those are going to be wealth-destroying for a variety of reasons.
To sum it up
The bottom has passed — a perfect storm of low prices and low interest rates is gone, gone, gone — but it’s still a buying bonanza out there for savvy buyers.
If you are buying a personal residence, buy a home you can afford. If you are buying rental properties, buy properties that pay for themselves.
Interest rates and home prices are still very reasonable — as long as you have a long-term ownership perspective.
Most importantly, don’t worry about what the news says and all the negative or positive commentary on the airwaves. Buy a great property for yourself, and you will hopefully enjoy the
Written by ProfessorBaron.com
The answer is NO. But you certainly did miss the bottom — the intersection of low home prices and rock-bottom mortgage rates.
But it’s still a bonanza out there for prudent buyers! Real estate is still incredibly low priced, mortgage rates are still reasonably low and great wealth still can be earned from owning quality properties for the long term
Long-term ownership
The most likely scenario where a real estate buyer increases his or her wealth — and “increasing wealth” is the reason most people desire to own real estate — is by holding property for the long term. When you own long term, you pay down your mortgage along the way, the property’s value hopefully will increase over the years and you skip the exorbitant transaction costs that go along with buying and selling real estate over and over again. So don’t buy a home or investment property unless you are virtually positive you will own it for years. You generally have to own a property for around 7 years to start earning any equity.
And keep this in mind: If you have that long-term ownership goal, the recent uptick in property prices shouldn’t be big a deal for you, because in 10, 15 or 20 years, the values should be much higher. In fact, in 15 years you’ll hardly remember what you paid today; you’ll just be bragging about how it was the best investment you ever made.
Buy good quality real estate
Beware: You can’t just buy any property and expect it will add wealth to your financial picture. You have to buy nice properties that are affordable to you — no get-rich quick schemes.
Many properties are wealth-draining, not wealth building. It’s usually the ones that sound like incredible deals, but they end up being too good to be true. A few types of properties that usually diminish your wealth are fixer-uppers, fancy prize properties, second homes, vacation rentals, land, properties in mismanaged homeowners associations, rent-to-own deals, and properties in bad areas. Most of those are going to be wealth-destroying for a variety of reasons.
To sum it up
The bottom has passed — a perfect storm of low prices and low interest rates is gone, gone, gone — but it’s still a buying bonanza out there for savvy buyers.
If you are buying a personal residence, buy a home you can afford. If you are buying rental properties, buy properties that pay for themselves.
Interest rates and home prices are still very reasonable — as long as you have a long-term ownership perspective.
Most importantly, don’t worry about what the news says and all the negative or positive commentary on the airwaves. Buy a great property for yourself, and you will hopefully enjoy the
Written by ProfessorBaron.com
Monday, July 29, 2013
What Is a Home Warranty, and Do You Need One When Buying a Home?
When you buy a computer from Best Buy, you’ll be asked if you want to cover it with an extended warranty. Some people go ahead and pay the extra money, but not everyone thinks these warranties are a good idea. Consumer Reports almost always says they aren’t worth the money.
You might be surprised to learn that, sort of like the computer from Best Buy, you may have the option of buying a warranty for your home. Depending on your situation, a home warranty could definitely be worth the investment.
What is a home warranty?
For a fee of between $300 and $500 a year, depending on where you live, a home warranty covers the costs of repairing or replacing most any malfunctioning system in your home.
Let’s say your dishwasher starts leaking, your clothes dryer burns out, or your water heater won’t heat water anymore. If you had a home warranty, you wouldn’t have to call around to get estimates for repairs. You wouldn’t have to pay out of pocket to get it fixed, either.
Instead, you would just call up your home warranty provider. The warranty company would call the appropriate repair company it has an arrangement with. The repair company then would call you and set up an appointment. The company would send someone to your house to fix the problem, if possible, or replace the malfunctioning appliance with a brand new one. Your home warranty would cover the costs, though you’d probably be responsible for a co-pay of about $50 per incident.
Who should buy a home warranty?
Home warranties are particularly great for first-time Gen X /Y and Millennial home buyers who’ve been renters until now. They’re used to calling the landlord whenever there’s a problem, and a home warranty company takes over that role. These homeowners are working long hours and might not have the time or the energy to call around to find a plumber or an electrician to get quotes or bids, let alone wait around for the noon to 4 p.m. window for the repairman to show up. Sometimes, it takes just one costly and unexpected system repair — and the drama associated with it — to realize the savings of a one-year home warranty.
But home warranties aren’t limited to Gen X, Gen Y or other first-time home buyers. A homeowner can buy one at any time. Are you buying or do you own a 15- to 20-year-old home (or older)? Does the home have aging appliances and systems? A home warranty might be well worth your money.
Many appliances and systems start to break down after 15 or 20 years, and you don’t want them all falling apart on you around the same time. Your real estate agent can give you referrals, and you can read reviews of home warranty companies on the Home Warranty Reviews site.
Home warranties are also great for investors or “accidental landlords,” folks who end up renting their homes out because they have to move and want to hold out until the market picks back up. If you’re not an experienced real estate investor and don’t have a network of repair folks, it might be easier to pay for the home warranty. The last thing you want is a tenant without hot water calling you day in and day out. If you have a home warranty, you can cut right to the chase, keep happy tenants and minimize stress.
If you shop for a home warranty, be sure to ask each company exactly what’s covered. If something isn’t covered (such as the plumbing system), ask if you can add on coverage, and if so, at what cost
Written by Brendon DeSimone
You might be surprised to learn that, sort of like the computer from Best Buy, you may have the option of buying a warranty for your home. Depending on your situation, a home warranty could definitely be worth the investment.
What is a home warranty?
For a fee of between $300 and $500 a year, depending on where you live, a home warranty covers the costs of repairing or replacing most any malfunctioning system in your home.
Let’s say your dishwasher starts leaking, your clothes dryer burns out, or your water heater won’t heat water anymore. If you had a home warranty, you wouldn’t have to call around to get estimates for repairs. You wouldn’t have to pay out of pocket to get it fixed, either.
Instead, you would just call up your home warranty provider. The warranty company would call the appropriate repair company it has an arrangement with. The repair company then would call you and set up an appointment. The company would send someone to your house to fix the problem, if possible, or replace the malfunctioning appliance with a brand new one. Your home warranty would cover the costs, though you’d probably be responsible for a co-pay of about $50 per incident.
Who should buy a home warranty?
Home warranties are particularly great for first-time Gen X /Y and Millennial home buyers who’ve been renters until now. They’re used to calling the landlord whenever there’s a problem, and a home warranty company takes over that role. These homeowners are working long hours and might not have the time or the energy to call around to find a plumber or an electrician to get quotes or bids, let alone wait around for the noon to 4 p.m. window for the repairman to show up. Sometimes, it takes just one costly and unexpected system repair — and the drama associated with it — to realize the savings of a one-year home warranty.
But home warranties aren’t limited to Gen X, Gen Y or other first-time home buyers. A homeowner can buy one at any time. Are you buying or do you own a 15- to 20-year-old home (or older)? Does the home have aging appliances and systems? A home warranty might be well worth your money.
Many appliances and systems start to break down after 15 or 20 years, and you don’t want them all falling apart on you around the same time. Your real estate agent can give you referrals, and you can read reviews of home warranty companies on the Home Warranty Reviews site.
Home warranties are also great for investors or “accidental landlords,” folks who end up renting their homes out because they have to move and want to hold out until the market picks back up. If you’re not an experienced real estate investor and don’t have a network of repair folks, it might be easier to pay for the home warranty. The last thing you want is a tenant without hot water calling you day in and day out. If you have a home warranty, you can cut right to the chase, keep happy tenants and minimize stress.
If you shop for a home warranty, be sure to ask each company exactly what’s covered. If something isn’t covered (such as the plumbing system), ask if you can add on coverage, and if so, at what cost
Written by Brendon DeSimone
Friday, July 26, 2013
How to Sell Your Home and Buy Another at the Same Time
Being a move-up buyer can be tough in today’s market. Although deals are closing rapidly, there’s no guarantee that your new dream home will close at the same time as your old dream home. Selling and buying at the same time is a delicate dance, but it is doable. There are a few ways to pursue this plan:
1. Sell first, then buy. This is perhaps the safest plan, but it calls for multiple moves. In this scenario, you list your home and complete the transaction before purchasing another home. When you sell your home, you put the bulk of your belongings in storage and live in a temporary rental or, if possible, enter into a rent-back deal with your home’s new owner. The advantage of this method is that you know exactly how much you can spend on a new home, and you don’t have to worry about temporary financing. Also, without another home waiting in the wings, you’ll be less tempted to drop the price or to take the first offer that is below the asking price. The disadvantage is that it is a disruptive experience, and you could be displaced for a while if you are home-shopping for a long time.
2. Buy first, then sell. This strategy minimizes disruption. You can move into your new place at your leisure and then take time to prepare your home for sale. The major disadvantage is that, depending on how fast your old home sells, you could be shouldering the burden of two mortgages for some time. You are also responsible for maintenance and security on the vacant home. This scenario works best if your first home is already paid off.
A variation of this plan is to buy a new home with the plan to rent out the old one for a year. This buys you some time with money coming in, but being a landlord comes with its own stresses and responsibilities. You may also need to repair or renovate the home after it has served as a rental.
3. Buy and sell simultaneously. To execute this plan, you need to prepare for all contingencies and to know that if your timing is off, you will face one of the two scenarios listed above. The trickiest bit can be timing the financial burden. One option is bridge financing. This enables you to own two homes for a short amount of time. To do this, you need to either borrow money from family or obtain a short-term loan from a bank or other lending institution to span the time period between when you close on your new home and sell your old one. In essence, you are getting a short-term home-equity loan, also known as a HELOC, a Home Equity Line of Credit, on your present house and using it as a down payment on your new house. You then repay the loan when you sell your first home. It is not easy to qualify for a conventional bridge loan, since you have to demonstrate that you have enough money to pay for both mortgages for an indefinite period of time.
Experts advise applying for the HELOC well before you buy a new house. That way most of the credit on the line is unused until you actually need it. Lenders don’t like a HELOC that works only for a very short time, and it’s a challenge to get a HELOC if your present home is on the market.
Try to schedule the closing date on the sale of your old home after the closing date on the home you buy. In this way, you can stay in your present home until you move into your new home. Otherwise, you can attempt to negotiate a rent-back arrangement.
There is no right answer in choosing any of these scenarios. Your Realtor may be able to advise which is best, depending on the local market. However, much depends on your financial stability, as well as your tolerance for risk or disruption.
Written by Herbert J. Cohen
1. Sell first, then buy. This is perhaps the safest plan, but it calls for multiple moves. In this scenario, you list your home and complete the transaction before purchasing another home. When you sell your home, you put the bulk of your belongings in storage and live in a temporary rental or, if possible, enter into a rent-back deal with your home’s new owner. The advantage of this method is that you know exactly how much you can spend on a new home, and you don’t have to worry about temporary financing. Also, without another home waiting in the wings, you’ll be less tempted to drop the price or to take the first offer that is below the asking price. The disadvantage is that it is a disruptive experience, and you could be displaced for a while if you are home-shopping for a long time.
2. Buy first, then sell. This strategy minimizes disruption. You can move into your new place at your leisure and then take time to prepare your home for sale. The major disadvantage is that, depending on how fast your old home sells, you could be shouldering the burden of two mortgages for some time. You are also responsible for maintenance and security on the vacant home. This scenario works best if your first home is already paid off.
A variation of this plan is to buy a new home with the plan to rent out the old one for a year. This buys you some time with money coming in, but being a landlord comes with its own stresses and responsibilities. You may also need to repair or renovate the home after it has served as a rental.
3. Buy and sell simultaneously. To execute this plan, you need to prepare for all contingencies and to know that if your timing is off, you will face one of the two scenarios listed above. The trickiest bit can be timing the financial burden. One option is bridge financing. This enables you to own two homes for a short amount of time. To do this, you need to either borrow money from family or obtain a short-term loan from a bank or other lending institution to span the time period between when you close on your new home and sell your old one. In essence, you are getting a short-term home-equity loan, also known as a HELOC, a Home Equity Line of Credit, on your present house and using it as a down payment on your new house. You then repay the loan when you sell your first home. It is not easy to qualify for a conventional bridge loan, since you have to demonstrate that you have enough money to pay for both mortgages for an indefinite period of time.
Experts advise applying for the HELOC well before you buy a new house. That way most of the credit on the line is unused until you actually need it. Lenders don’t like a HELOC that works only for a very short time, and it’s a challenge to get a HELOC if your present home is on the market.
Try to schedule the closing date on the sale of your old home after the closing date on the home you buy. In this way, you can stay in your present home until you move into your new home. Otherwise, you can attempt to negotiate a rent-back arrangement.
There is no right answer in choosing any of these scenarios. Your Realtor may be able to advise which is best, depending on the local market. However, much depends on your financial stability, as well as your tolerance for risk or disruption.
Written by Herbert J. Cohen
Wednesday, July 24, 2013
Is This The Best Time to Buy a Home … For You
We’re at the beginning of a housing recovery. Everyone is sprinting out of the gates to get into the real estate market. Mortgage loan rates are low. Credit is becoming easier to get. The economy, despite dips here and there, continues on a gradual, upward incline. People are feeling more secure in their jobs. Home sales are up in some areas, but prices are still down from where they were before the 2008 market bust.
All these trends tell the same story: It’s a good time to buy a home. But is it a good time for you to buy a home? The timing may seem right, but everything else needs to be right, too.
Here are some things to consider before jumping into the market.
The perfect home might not be out there right now
Buying a home isn’t like buying a high-definition TV. It’s not an impulse purchase, either. It’s likely the biggest purchase you’ll ever make. Your home is your solace. It’s the place you’ll return to after a long day, where you can escape from the stress of the outside world, where you’ll make memories with your family. It’s important to make the right choice.
Meanwhile, in many markets the housing inventory is tight. With fewer homes to choose from right now, you might not find the right place that will feel like home to you. If that’s the case, wait! More inventory will eventually come. If you settle for a smaller house now because you want to “time” the market, you will be stuck selling and then buying a larger house in just a few years.
Wait for the home you’ll be happy living in for at least five years, if not 10-20 years. And if you don’t feel like you’re going to live in your home for at least five years, you may be better off renting anyway.
Buying a home is a journey
The home buying process is an evolution. It can take twists and turns, and you may end up in a type of home or a location that you least expected. Most buyers spend up to one year on the home search from the time they engage their real estate agent until they close on the home. Learning and getting comfortable with your local market takes time and experience. Buyers spend months looking at listings and doing online research before they even contact an agent. Feeling competitive with your co-worker or friend who just bought? Don’t. For all you know, they were looking for many months before you even thought about buying.
Don’t be seduced by low prices and interest rates
Even though our world moves quicker and information flows faster than ever today, real estate was always meant to be a long-term investment. If you’re in it for the long haul, you shouldn’t be focused on buying at the right “time.” Make the best choices not just for today, but also for years from now.
Don’t feel pressured to buy because of rising interest rates or the fear of home prices rising. Interest rates, though they have gone up recently, are still at 30- and 40-year lows. When the time is right for you to get serious in the market, negotiate the best price possible and lock in the best rate possible. Look for homes where you can create value.
Slow and steady wins the race
The best strategy, today and always, is simple: Buy the home that’s best for you, when it’s the right time for you to buy. As always, research the market as much as possible. Talk to your agent. Think everything through carefully and calmly. Be proactive — not reactive.
Written by Brendon DeSimone
All these trends tell the same story: It’s a good time to buy a home. But is it a good time for you to buy a home? The timing may seem right, but everything else needs to be right, too.
Here are some things to consider before jumping into the market.
The perfect home might not be out there right now
Buying a home isn’t like buying a high-definition TV. It’s not an impulse purchase, either. It’s likely the biggest purchase you’ll ever make. Your home is your solace. It’s the place you’ll return to after a long day, where you can escape from the stress of the outside world, where you’ll make memories with your family. It’s important to make the right choice.
Meanwhile, in many markets the housing inventory is tight. With fewer homes to choose from right now, you might not find the right place that will feel like home to you. If that’s the case, wait! More inventory will eventually come. If you settle for a smaller house now because you want to “time” the market, you will be stuck selling and then buying a larger house in just a few years.
Wait for the home you’ll be happy living in for at least five years, if not 10-20 years. And if you don’t feel like you’re going to live in your home for at least five years, you may be better off renting anyway.
Buying a home is a journey
The home buying process is an evolution. It can take twists and turns, and you may end up in a type of home or a location that you least expected. Most buyers spend up to one year on the home search from the time they engage their real estate agent until they close on the home. Learning and getting comfortable with your local market takes time and experience. Buyers spend months looking at listings and doing online research before they even contact an agent. Feeling competitive with your co-worker or friend who just bought? Don’t. For all you know, they were looking for many months before you even thought about buying.
Don’t be seduced by low prices and interest rates
Even though our world moves quicker and information flows faster than ever today, real estate was always meant to be a long-term investment. If you’re in it for the long haul, you shouldn’t be focused on buying at the right “time.” Make the best choices not just for today, but also for years from now.
Don’t feel pressured to buy because of rising interest rates or the fear of home prices rising. Interest rates, though they have gone up recently, are still at 30- and 40-year lows. When the time is right for you to get serious in the market, negotiate the best price possible and lock in the best rate possible. Look for homes where you can create value.
Slow and steady wins the race
The best strategy, today and always, is simple: Buy the home that’s best for you, when it’s the right time for you to buy. As always, research the market as much as possible. Talk to your agent. Think everything through carefully and calmly. Be proactive — not reactive.
Written by Brendon DeSimone
Monday, July 22, 2013
Redfin Agents Anticipate Kinder, Gentler Housing Market
Technology-powered real estate brokerage Redfin says its latest
boots-on-the-ground intel reveals the housing recovery is poised to soften with
reduced competition and less intense price hikes.
Redfin's Redfin Real-Time Agent Survey for the second quarter even
hints that real estate agents are more likely to recommend that buyers step back
and wait for the market to cool a bit later in the year.
Other reports, including a recent market analysis from Capital Economics, says the double-digit annual price
increases early this year are on their way out.
That doesn't mean sellers are losing their edge - yet.
"There has been a recent softening of the market, said Redfin Agent Mark
Biggins.
"Inventory has begun to increase steadily, while buyers are becoming fatigued
and dropping out. The buyers that are active have more homes to choose from and
this is spreading out demand, reducing the number of offers any given house will
receive," Biggins added.
Redfin collected data, June 21 through June 25, 2013, from 380 Redfin real
estate agents in 22 major metropolitan markets across the U.S.
Real estate agents surveyed by Redfin:Expect more modest price gains - 86 percent of agents believe home prices
will rise in the coming months, down from 97 percent in the first quarter. Only
16 percent expect home prices to "rise a lot," down from 44 percent in the first
quarter.
Notice less competition. Only 11 percent of agents recommend that buyers use
aggressive strategies such as waiving contingencies and expanding their budget
when facing a bidding war, down from 15 percent in the first quarter and
signaling a shift away from the fierce competition seen earlier in the year.
Nevertheless, still struggling with low inventory and multiple offers - 93
percent of agents pointed to low inventory and multiple offers as the most
common challenges facing buyers, down slightly from 96 percent in the first
quarter.
Recognize that it is still a strong seller's market - 86 percent of agents
surveyed described now as "a good time to sell," up from 82 percent in the first
quarter. Meanwhile, only 46 percent described it as "a good time to buy," down
from 57 percent in the first quarter.
Written by Broderick Perkins
Real estate agents surveyed by Redfin:
Written by Broderick Perkins
Friday, July 19, 2013
Most Consumers Misunderstand Budgeting
Budgeting goes hand-in-hand with planning to buy a home, but many consumers
don't make the connection.
A survey by the National Foundation for Credit Counseling (NFCC) revealed 57
percent of those who responded believe incorrectly that a budget is a
restriction on how they choose to spend money.
Fewer, 43 percent, understand that budgeting allows them to direct money
spending to chosen goals.
"A budget actually provides the structure through which a person can be in
charge of his or her spending, directing the dollars to their best use," said
Gail Cunningham, spokesperson for the NFCC.
"Spending should be a reflection of a person's priorities, but without a
plan, the priorities often get pushed aside in favor of the tyranny of the
urgent," Cunningham added.
A budget, often part of homeownership counseling curriculum, is designed to change
spending habits from wants to needs. It does so by allowing you to see where
your money is being spent.
Once you know where your money goes, you can make changes to unnecessary
spending and direct spending and savings toward practical financial goals, say,
buying a home.
NFCC's June Financial Literacy Opinion Index was conducted via the homepage
of the NFCC Web site (www.DebtAdvice.org) from June 1 to June 30, 2013 and was
answered by 793 individuals.
Benefits of budgeting
NFCC says the reluctance to construct a budget suggests that people may be
afraid to face the financial facts, choosing instead to allow the most pressing
need or want of the moment to make the decision for them.
Instead of being restrictive, a budget often creates more money due to smart
spending choices. If financial freedom is the goal, a spending plan is the tool that starts the process.
NFCC reminds consumers that a budget's spending plan includes the following
benefits:
"It's a shame that budgeting has a negative connotation. Everyone needs a spending plan, but when times are tough, a budget is even more critical," Cunningham said. "When every penny counts, it's important to count every penny," she added.
Written by Mark K. Hicks
- Creates a thoughtful awareness of spending
- Relieves financial stress
- Increases financial security
- Helps structure a plan for the future
- Allows planning for large purchases
- Assists in meeting financial goals
- Frees up money to designate for savings
- Uncovers money available to invest
- Allows preparation for emergencies
- Avoids late payments through scheduling timely payments
- Finds hidden money for debt repayment
- Potentially raises the
credit score
"It's a shame that budgeting has a negative connotation. Everyone needs a spending plan, but when times are tough, a budget is even more critical," Cunningham said. "When every penny counts, it's important to count every penny," she added.
Written by Mark K. Hicks
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