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Saving money and spending less may sound like the same thing, but they involve different financial habits to lead to financial security. Creating healthy spending habits and saving money can be difficult. With product placements, sales, subscriptions, and online shopping, buying is as easy as 1-2-3. But those steps can change, and you can begin making changes to bring yourself more financial security with the tips listed below to help you spend less and save more.

Creating Healthy Spending Habits

Record your expenses. For a month, record all your expenses. At the end of the month, go back and see your spending habits. What surprises you? What is necessary, and what is unnecessary? Evaluate those spending decisions and decide if everything is warranted.
Evaluate your income. Is your income enough to keep up with your spending habits? Take a look at what you bring in and determine if you need to spend less.
Reviewing recurring expenses. Take a look at items such as insurance policies, mobile phone plans, cable service, etc. Can you make changes there to save some money?
Determine your shopping stops ahead of time. Make a plan to shop only at specific stores. Limiting the number of stores you go to will limit the number of unnecessary purchases–saving you time and money!
Shop with a shopping list. Create a shopping list–and stick with it! Get what is on your list to avoid purchasing the other items that catch your eye.
Find patterns in your behavior. Look for trends. For instance:
- Do you shop because of stress or boredom? If you are bored and shop, you may be making unnecessary purchases.
- Are you rushing in the morning? If you don’t have time to slow down and eat, you may get the temptation to stop and grab food and coffee–which adds up daily!
- Do you opt for free trials and forget to cancel? We all do this! You are excited to try a new service, and you forget to cancel it. Make sure that you make a note to cancel when you decide you no longer want the service. Try doing it at that moment to prevent charges if you forget later.
- Do you routinely incur late fees? Late fees can add up. Create a calendar for when things are due to avoid paying late fees. Also, pay bills early if you can.
- Are there services you do not use? There are so many cool things out there: subscription boxes, streaming, rental clothes–you name it! But are you using them all? Take a look at what you can do without, and you will begin making better “sign-up” choices.
Create new habits. Everything we do is habitual. If spending is a problem, rework it for a solution. Here are some things that may help create new habits:
- Drive a different way to work to avoid making specific purchases.
- Carry only cash. You can’t spend what you don’t have.
- Find free or low-cost events to attend. Once there, they usually guide you to others.

When and Where to Spend Less

There are many key areas you can focus on to spend less, including: Food

Audit your food habits. Do you need the name brand? Can you swap for the item on sale?
Replace eating out with convenience meals at home. Eating out at restaurants can add up—quickly! Schedule your restaurant trips for something unique and eat in your own home more often.
Buy in bulk. While it is a more upfront cost, buying in bulk tends to be cheaper per unit. If you know you will purchase that much in the long run, buy the bulk instead. Not only will it save you money, but it will also save you trips to the store. Additionally, if you are going to eat at home more, buying in bulk helps you to prepare many meals ahead of time since you have enough ingredients.

Clothes

Consider forgetting brand names. Do you need the name brand? Some people do like the name-brand stuff, but that can get pricey. Try a discount retailer that gives you the name brand, but without the hefty price tag.
Shop consignment or thrift stores. Consignment and thrift stores provide you with hidden gems but without the price tag. People often donate clothes they no longer wear to these locations, selling them at discounted rates.

Overall

Shop every other week.
Count the number of stores you visit in a week and then cut that by 50%.
Limit the number of “extras” off your list that you allow yourself to place into your shopping cart.
Challenge yourself to have no-spend days or weeks.
Call your cable company and see if you can reduce your monthly bill, likewise, with your cell phone service.
Shop at warehouse stores. Often, you’ll find lower prices than you would at your neighborhood stores.

How to Save

Audit your habits. Take a look at your bank statement. How many times have you purchased a cup of coffee? How many stores have you visited? See what stands out and what changes you can make.
Bank your surplus. Do you usually spend $200 on restaurants a month? If you spent only $50 on your new savings plan, take the other $150 and put it in the bank. Do this for all your spending, and your savings will build quickly.
Look for a new financial institution. If you are looking for a new bank, shop around. Banks often offer incentives to open an account with them. Some will deposit a few hundred dollars in your account if you bank with them.
Look for higher interest rates. For instance, search for savings accounts with the highest interest rate.
Invest. You can grow your money simply by investing wisely. Consider talking to an investment advisor or invest in safe mutual funds in a diversified portfolio.

The best way to save money is to have it added for you! Check the interest rates at your financial institution and find the highest one. The more you put in there, the more you make off of it.

Takeaway

Changing your spending habits is not easy. It is a lifestyle change. Start with one thing you can change and work from there. Start with your audits and evaluate what changes you will make. From there, take baby steps. Over time, you will feel free and richer!

The Difference Between Spending Less and Saving Money

View Resource The Difference Between Spending Less and Saving Money

Tracking your expenses and spending is a great way to ensure you are not living beyond your means. No one wants to have their power cut off because they have to have that expensive handbag or coffee every morning. Below we will go over effective ways to categorize and track your expenses.

Needs, Wants, and Obligations

There is a significant difference between the things you need, your obligations, and things you want. You need things such as:

A place to live
Groceries
Electricity

You are obligated to:

Pay your home or auto loan
Feed and clothe your children

You may want:

Fast food
Coffeehouse coffee or drinks
A meal out vs. cooking at home

Before setting a budget or preparing to track expenses, you must first determine your specific needs, wants, and obligations, as these vary from person to person. Some of the things you need may include:

A home
Transportation
Insurance
Groceries
Electricity
Water

You are obligated to pay things such as:

Auto loan payments
Home loan payments
Credit card payments
Taxes

Expenses that accumulate based on things you want may include:

A gym membership
Fast food
Expensive coffeehouse coffee
Designer clothing, shoes or bags
Travel

Tracking Expenses

Tracking the amount of money you are bringing in versus the amount of money you are taking out each month can help you save a tremendous amount of money if that is your goal. Account statements: To start, look over all of your account statements, including all checking accounts, savings accounts, and any credit cards you may own. Determining where your money is going each month is the first, and perhaps most important, step to tracking your expenses. Create a budget: Budgeting is not for the faint of heart, and it entails hard work and dedication to succeed. Once you have successfully determined where you are spending your money each month, you can begin grouping things you need versus those you want. Determining necessities versus vanities will look a little different for each person; therefore, no two budgets will be the same. Begin your budget by allotting for things you need to survive and those financial obligations you have incurred. These may include items such as rent, mortgage, an auto loan note, both health and auto insurance, your electric and water bills, and groceries. It is essential to allot additional money within your necessities for those unexpected expenses, such as an emergency room visit. Once you have laid out your necessities within your budget, you can begin allotting for your vanities. Vanities may include things such as a meal out, a coffee from your local coffeehouse, hitting a night club, or a new handbag. Allow yourself a monthly personal spending limit within your budget, so you do not feel too restricted. Log your purchases: Whether it be a paper report that you fill out by hand or an online application, utilizing an expense report to log your purchases will help ensure you do not exceed your budgeted monthly amount. You can download many different apps straight to your phone for ease of tracking, or you can utilize things like spreadsheets or a simple notebook if you would rather the simplicity of monitoring. Identify necessary changes: After a month has passed of budgeting and expense tracking, you will begin to see your spending habits and be able to tell if your habits are healthy or not. Once you have determined areas where change may be necessary, you can easily make those adjustments in your spending to ensure a better financial future for yourself and your family.

Takeaway

Overall, categorizing and tracking your monthly expenses and spending will not only benefit you in the short term but the long term as well. Tracking expenses can seem quite daunting when you are first starting, but if you can stick with it, you will learn so much more about the things you need than those you may think you need. There are many ways to categorize your monthly necessities and even more ways to track your spending. Whether you choose to go old school and track things by hand, keep your receipts to enter expenses into a spreadsheet, or utilize an online application for convenient expense tracking, you are sure to save and cut down on your monthly payments by doing so.

Categorizing and Tracking Your Expenses

View Resource Categorizing and Tracking Your Expenses

At some point, many of us get into a bind where we need cash fast. It could be a bill that’s due, a medical expense, or a car repair. No matter what the reason, you have to get cash — and get it fast. While quick cash is not a long-term solution, there are quick cash options. Check out some ways that you can acquire cash and make your payment.

Using Your Emergency Fund

If you do not have an emergency fund, now is the time to start one. When the COVID-19 pandemic hit in 2020, it reminded many Americans how important having an emergency fund is, especially when you lose your job. If you are short on cash, this is where having an emergency fund is crucial. If you are stuck, dip into the emergency fund, as that’s why it’s there.

Creating a Budget

If you are consistently low on cash, or you are constantly turning to your emergency fund, you may need to reevaluate your finances and spending. Create a budget to curb the borrowing and cash issues.

Write down both your income and your spending. If you are spending more than you take in, you need to make some changes. Writing down your expenses will also create accountability. You likely do not know how much you spend until you write it all out and see it all together.
Cut out unnecessary spending. If you see coffee and breakfast purchases multiple times after writing down your income and expenses, perhaps you can consider making coffee and breakfast at home. Do you see various purchases of items you purchased because you wanted them, not because you needed them? Limit yourself to those types of purchases only once a month.
Call and try to negotiate payments. It never hurts to ask. Call your utilities, including phone, gas, and electric and ask to lower your expenses. If that is unsuccessful, ask to delay payments or pay in installments.

Making Fast Cash

However, while the budget is a long-term solution, it is not a quick fix. If you need fast cash, you could try to:

Get a temporary job. Now that businesses are reopening, many places are hiring, even temporary help. If you live in certain areas, you may be able to get a seasonal position that would allow you to earn extra cash for just a short time. Additionally, sign up with a temp agency that may be able to place you quickly and with a position that pays sooner rather than later.
Sell items. As long as the buyer shows up, this could be a quick and easy way to get cash. See what you can part with and post it on social media marketplaces or selling apps. If you have a lot of items, consider having a yard sale. Don’t forget: one person’s trash is another person’s treasure.
Babysit or Tutor. If you are good with kids, try babysitting or tutoring. Both are always needed and offer payments on a day-by-day basis. Contact local moms groups or sign-up through a website or agency to get started.
Be a delivery driver. COVID has spoiled us into having everything delivered right to our door. Consumers now consistently use delivery services to have food, groceries, and general supplies brought to their door. Check out a delivery service to make quick cash. You may receive a delayed paycheck, but you can get home tips for each delivery.
Rent space. If you have an extra room in your home, try renting it out. By doing that, you can collect a deposit and the first month’s rent upfront. Additionally, if you live in an area popular with events and tourism, you can rent your space/yard/parking for the event.
Become a dog walker/caretaker. People often look for someone to walk their dog or take care of animals when they go on vacation. Advertise your services and ask to be paid after each walk to gain some quick cash.
Be a ride-share driver. There are multiple car driving apps and services. While they may not pay immediately, you can often get paid weekly, depending on how much you drive, as well as tips from your passengers. Also, look for an occasional sign-up bonus.
Pawn items.If you have an item worth money and you’re not too attached to it, try pawning it or selling it. If you pawn it, you can purchase it back at a later date (plus fees and interest). But be careful; if you miss your deadline, you will not get the item back.
Borrow money. While it may be uncomfortable, ask friends or family to borrow money. You can offer to pay it back at a specific time or a higher rate. In this case, you may be able to get the money in the quickest way possible.

Takeaway

While there are certainly ways to get cash reasonably quickly, it does not solve the underlying issue of not having the extra money in the first place. If you need cash in an emergency, perhaps you need to consider starting an emergency fund or adding more to one. You will be grateful when you do need it. In the meantime, there are plenty of options to get cash quickly, but none of them will likely provide a significant amount of money immediately.

What to Do When You’re Short On Money

View Resource What to Do When You’re Short On Money

Perhaps you have heard the now-famous phrase, “The only two certainties in life are death and taxes,” originally attributed to founding father Ben Franklin (by the author Mark Twain). Estates and estate planning incorporate death and taxes, with a good dose of law thrown to make it interesting (and complicated).

What is Estate Planning?

As defined by common law, your estate is your net worth at a given point in time (meaning, all of your current assets minus any liabilities). Estate planning is an umbrella term encompassing all the major financial and life planning decisions one must make to determine the fate of his or her assets upon death or incapacity. An estate plan also determines the estate’s impact on any dependent children you might have designated in your will and establishes your wishes for medical care. An estate plan can also help simplify the probate process and maximize the amount you can pass on to your heirs. What kinds of assets are in an estate? Common assets on the “plus side” could include real estate (both your primary residence, any second or vacation homes, and any rental properties), automobiles, cash, savings, retirement accounts, health savings accounts, stocks, bonds, exchange-traded funds (ETFs), life insurance policies, valuable artwork, and pensions. Of course, your assets may be different. Ownership in a business is also an asset. The “minus side” would include any debt, such as credit card debt, mortgages, auto loans, liens on any property, current income taxes owed, etc.

Understanding Estate Planning

You do not need to have a deep understanding of estate law or be an attorney to grasp the critical parts of a well-designed estate plan. You should, however, consider consulting with an attorney when you are ready to set up your estate plan, especially if you have a large or complicated estate or special childcare concerns. Hiring an attorney is generally worth it. They address and resolve all kinds of different situations you might not be aware of to ensure that your estate plan is correct. An attorney will also strive to maximize the benefits for your beneficiaries while minimizing the taxes owed on the estate (remember, it’s about death and taxes). Estate taxes, gift taxes, income taxes, and other related taxes may all come in to play when your estate is settled. A basic estate plan involves most or all of the following components:

A personalized will
Trust account(s)
The name of the Executor of the estate
The legal guardians for any dependents
The Durable (or Limited) Financial Power of Attorney
Advance Health Care Directive: Medical Care Directive (also called a Living Will) and name of the Medical Power of Attorney (also called a Health Care Proxy)
Funeral, memorial, and cremation arrangements
Charitable gifts and instructions, if applicable

Where to Start

Now that you have a basic understanding of what estate planning covers, the perfect place to start is to write your will if you do not have one. Everyone needs to have a will (called a Last Will and Testament), even if you have few assets or decide you do not need any further estate planning. Why is having a will so important? A will is a legal document that directs your assets in the right amounts to the correct people (or institutions). If you have dependents, it also names the legal guardian for your minor children and the kind of care you want for them to have. Even if you have a will already, you will want to review it every time you experience a significant life change, such as buying or selling a house, having a child, or getting married or divorced. What if I can’t afford a lawyer? The good news is you may not have to hire a lawyer in some cases. There are several good online resources for writing your own will if your estate is small or not very complicated. TIPBe sure to check the beneficiary status on all your accounts, including retirement accounts and checking and savings accounts. The person you name as the beneficiary is the person you want to inherit the account. Remember, the beneficiary cannot see the balance of your account unless they are a cosigner on that account. What about my medical care needs? A complete estate plan establishes not only your wishes for your assets after death but also sets up any medical care you might need while alive, if you become incapacitated to the point that you are unable to make decisions on your own. An Advance Care Directive (or Living Will) outlines these medical care wishes and includes naming a trusted family member or friend to carry out those wishes. TIPIt is a great idea to set up an Advance Health Care Directive and name a Medical Power of Attorney (Health Care Proxy) while you are alive and well and can think through what you would want if you cannot take care of yourself or make healthcare decisions.

Takeaway

Writing and having an up-to-date will is the best place to start if you do not have one already. A will is an essential legal document if you have dependent children and are looking to provide an inheritance.
A thorough estate plan minimizes taxes and maximizes the financial benefits to your beneficiaries. An estate plan can also shorten or lessen the adverse effects of the probate process.
Setting up an Advance Health Care Directive is an important step. The directive should spell out your medical care wishes if incapacitated and a trusted person who can carry out those wishes.

What is Estate Planning

View Resource What is Estate Planning

Digital and mobile wallets have become quite popular among smartphone users in recent years. Digital and mobile wallet payments are becoming the way of the future as the number of users continue to climb day by day. Below we will go over the basics of digital and mobile wallets to help with your decision-making.

What is a Digital and Mobile Wallet?

A digital or mobile wallet, also known as an e-wallet, is precisely that. It is a wallet located digitally within a device, such as a smartphone or a smartwatch. Most require network connectivity for digital or mobile payment capabilities.

There are many popular mobile wallets such as:

Apple Pay
Google Pay
Samsung Pay
PayPal
Venmo

These digital and mobile wallets store your credit or debit card information within their database to allow for a more secure, convenient checkout option. Many retailers now have the opportunity to “scan and pay,” meaning you scan your digital or mobile wallet, eliminating the need to carry your physical wallet with you.

Are They Secure?

A digital and mobile wallet is often more secure than carrying your physical wallet containing your debit card, credit cards, or even cash you may have on you. These mobile payments are encrypted, meaning the application does not actively store your actual credit/debit card number or account number.

If your phone is lost or stolen, a digital wallet is much safer than if it were your physical credit or debit cards. The payment information you enter is only accessible to authorized users such as yourself and a company representative.

Using a Digital and Mobile Wallet

Determining which digital or mobile wallet to use often is determined by which brand of smartphone or device you are using, whether it be an iPhone, Android, or other manufacturer. With an iPhone, many users opt for Apple Pay, while those with an Android or other smartphone tend to use Google Pay or Samsung Pay. You can also utilize multiple mobile wallets at one time, including:

PayPal
Venmo
CashApp

Once you have chosen your desired digital wallet, you will begin entering your personal information, such as your name, date of birth, and address. Once you have completed this step, you will enter the credit or debit card information you wish to use within the application. Your card or account information, whichever you choose to use, will immediately be encrypted within the application’s database for your use only.

Using the digital wallet, you can send money directly to a family member, friend, or retailer. The application uses a technology known as near-field communication, meaning it uses radio frequencies to communicate between the two allowing for a successful payment to a retailer.

Not all smartphones utilize near-field communication systems. If your phone does not allow near-field communication, you can often still use a digital wallet. For example, PayPal allows users to make payments using their mobile phone number during checkout for safe, secure payments from your digital wallet.

Not all retailers support mobile payment capabilities; however, you can quickly determine if the retailer of choice can submit your mobile payment by checking the point-of-sale system for the mobile payment indicator. You also may ask a store associate if they accept mobile payments.

What Else Can They Do?

A digital and mobile wallet offers more than just convenient payment options. You can also store boarding passes, hotel reservations, concert tickets, coupons, and other card information.

Takeaway

A digital wallet, or e-wallet, is a secure payment option that holds your encrypted credit, debit, or banking account number securely within the application’s database for a safe, convenient checkout. With more smartphone users utilizing this option each day, more and more retailers will allow this payment method to be an option at checkout.

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Digital and Mobile Wallet Basics

View Resource Digital and Mobile Wallet Basics

Marriage is an exciting milestone in every couple’s life. But with every marriage comes the important conversation of finances. After tying the knot, did you discover that your significant other has a history of bad credit? What do you do now? Below you will learn more about what credit is and how to deal with your spouse’s credit issues.

Why Good Credit Is Important

A credit score is an overall assessment of how financially reliable or unreliable you are based on your credit report. When you are applying for a new loan or line of credit, whether it be a personal loan, auto loan, or even a credit card, it is reported to one of three national credit bureaus and added to your credit report. These credit bureaus also track your ability to repay debts both on time and in full. Having good credit comes into play with many aspects of life. If you wish to purchase a new home or vehicle, a lender will assess your credit report to determine if you are a reliable borrower or not. Also, when doing things such as apartment hunting, the prospective landlord may run a credit check to determine if you can pay your bills on time. A future employer may even run a credit check to determine if you are dependable.

Will My Credit Be Affected?

Simply enough, no. When two people are married, their previous credit history remains their own. Your spouse’s credit score does not directly affect your credit score and vice versa. It does, however, affect your future finances and debts and credit purchases you take on jointly. So, any debts you take on jointly will appear on both you and your spouse’s credit reports. If you and your spouse are applying for a loan together, especially when purchasing a home, and one of you has a low credit score while the other has a much higher score, it may be beneficial to apply with only one of you instead of both. When applying with a spouse with bad credit, you may not be approved for the amount desired or might end up paying a much higher interest rate.

Identify the Issues

It is not uncommon for couples to avoid the discussion of finances, especially before they are married. If you tie the knot and have yet to have a discussion on finances, now is the time to do so. If you or your spouse have credit issues, it is imperative to keep an open mind and try not to judge their past choices. It is essential to understand why your spouse has credit problems to help them identify and attack the source. To figure out where you stand, obtain a copy of both of your credit reports. Take a thorough look over each credit report to determine what led to either yours or your spouse’s credit issues. Was it overspending, the loss of a job, or an emergency? Getting to the root of the cause will help you immensely along the way.

Plan of Attack

To repair damages, you must first learn the ins and outs of what caused them. When reviewing credit reports, make a list of all collections accounts available and the payoff amount for each. Work to pay off each of these debts, either in small amounts of each consecutively or one at a time if it is easier that way. Reduce credit card balances to 30% or less of the total credit limit. Keeping credit card balances to 30% or less of the card’s total limit shows lenders that you can maintain a healthy balance between borrowing and paying off debts. In repairing the damages done to your credit report, one of the options you may want to pursue is to seek out help from a professional credit repair company. These experts spend every day helping others just like you and your spouse, maybe even those who are worse off. A credit repair specialist can make recommendations and help you establish a plan to get you in good standing with credit bureaus. Below are a few tips to aiding in the repair of your spouse’s bad credit:

Establish a household budget and stick to it.
Build an emergency fund.
Create a plan to pay off all debts.
Share a credit card account, or make your spouse an authorized user on your credit card. Use your good credit to boost theirs.
Open a secure credit card. This line of credit is great for those with bad credit or no credit. A cash deposit of equal or less value than the credit limit available needs to be issued.

Do not let a significant other’s credit history scare you off. Unless the two of you apply for a joint line of credit, your credit will not be affected in any way. Help your spouse build their credit so the two of you can enjoy all that life has to offer.

Working Through Credit Issues with a Spouse

View Resource Working Through Credit Issues with a Spouse

When purchasing a standard mortgage from a private lender, you may be required to purchase private mortgage insurance (PMI). However, PMI can be costly, usually charging you around 0.5% to 1.0% yearly interest on your loan amount. The interest rate may seem like a small, even negligible amount of money, but if you are purchasing a mortgage for a home, it can be a substantial sum of money. For example, if you purchase a $500,000 home, you could be charged $2,500 and $5,000 a year in mortgage insurance, or approximately $210 to $420 every month. Even for one year of payments, this can be a significant chunk of your money and added together with all of your other bills and expenses; it can add up. So, it is no wonder why people want to get rid of PMI as quickly as possible. Luckily, you can take specific steps to eliminate PMI as promptly as possible. In this article, we will go over what PMI is, its cost, and how to get rid of it.

Defining PMI

Private mortgage insurance is an additional payment to your mortgage that usually ranges between 0.5% to 1.0% of your mortgage balance every year. In addition, PMI is in place to protect your private lender if the home buyer defaults on their mortgage.

PMI Costs

In most cases, homebuyers who use a standard mortgage with a down payment of less than 20% must purchase PMI. In addition, PMI costs depend on the amount of risk a lender has to take on: low risk means lower costs, while high risk usually equates to higher PMI costs. Factors that can affect your PMI costs include your down payment amount, credit history, and type of loan.

Down payment percent. For example, someone paying a 15% down payment may have a lower rate than someone putting down a 5% down payment on their home. Smaller down payment amounts pose higher risks to private lenders. Therefore, they offset this risk with a higher PMI in the form of larger mortgage payments.
Credit history. Credit history tracks how responsible you have been in past payments related to borrowing money. Individuals with high credit scores will generally receive lower PMI rates when compared to those with low credit scores.
Type of loan. Fixed-rate loans are a lower risk due to a fixed loan rate, meaning the rate will not change. Fixed-rate generally yields lower PMI costs because there is less risk involved. Adjustable-rate mortgages, on the other hand, are at higher risk than fixed-rate loans. They are at higher risk because they can change, perhaps to a rate that makes making your monthly payment challenging.

Getting Rid of PMI

It is no surprise that anyone that can get rid of PMI generally wants to. Paying for a mortgage alone can be a heavy burden without the weight of additional costs that PMI brings about. There are four standard ways to get rid of your PMI:

Automatic cancellation. Under the Homeowner Protection Act (HPA, also called the PMI Cancellation Act), your mortgage lender is obligated to cancel your PMI when your principal balance is scheduled to reach 78% of the original value of the home. Or, if you are current on payments, when you’ve reached the midpoint of your amortization schedule. So, for example, your mortgage lender would cancel your PMI if you are ten years into a 20-year mortgage.
Request PMI cancellation. Once your principal loan balance reaches 80% of the original value of your home, you can request to have your PMI canceled rather than waiting. If you are close to the 80% mark and have the ability to, you might want to make additional payments to reach 80% so that you can request to cancel PMI earlier than planned.
Refinance. Refinancing is a great option when mortgage rates are low. If your home’s value has increased since you purchased the house, what you owe may be less than 80% and qualify you to cancel your PMI.
Reappraisal. Like refinancing, appraisal involves reevaluating the value of your home. In a real estate market that is quickly gaining, you may be ahead of the original schedule set to eliminate your PMI. If you have owned the home for five or more years and you owe 80% or less of your loan balance for the new valuation, you may be entitled to cancel your PMI.

Takeaway

PMI can be an extra cost that everyone wants to avoid if they can. Before purchasing a home, consider factors like your credit score, your planned down payment, and the type of loan you are considering purchasing to see if you can do it beforehand to avoid or reduce PMI costs. If you have PMI, try getting over the 20% mark as quickly as possible, or consider refinancing or reappraisals if the housing market is doing well.

Getting Rid of Private Mortgage Insurance

View Resource Getting Rid of Private Mortgage Insurance

Pre-qualified and pre-approved are some of the most common terms you may encounter when applying for a mortgage. Unfortunately, most people often use these two phrases interchangeably, not knowing they are not the same. For this reason, this article discusses everything you need to know about pre-qualification and pre-approval, covering their definitions, requirements, differences, and more.

What Does Pre-Qualified Mean?

During the earliest stages of the lending process, you may want to get some guidance on how much you will be able to borrow when looking to purchase a home. To do that, lenders and banks need to have a rough idea of where you stand financially and your base qualifications for a loan. Therefore, they may request you provide your financial information, including assets, income, debts, etc. This process is known as ‘being pre-qualified’. It can be conducted online, in person, or over the phone and is usually free.

What Does Pre-Approved Mean?

On the other hand, being pre-approved is usually the next step after pre-qualification. Here, you will be required to complete an application for pre-approval for the loan. You will then provide the lender with additional information and documentation along with your application. The lender will then conduct a thorough financial background check based on the provided information. If your application meets all the requirements for that particular loan, the lender will offer a specific loan amount based on your financial background. You will also find out more about the interest rate for the loan you have been pre-approved for at this stage. In addition, pre-approval allows you to begin searching for homes within the price range provided by the bank or lender. Finally, pre-approved means you can start negotiations with the seller because you have a higher chance of being approved for the mortgage.

Differences Between Pre-Qualified and Pre-Approval

As mentioned earlier, these two terms are often thought to mean the same thing but are entirely different. Below is why, but keep in mind there might be slight variations in requirements per lender.

Mortgage Application

In a pre-qualification, you don’t need to fill out a mortgage application. Instead, the lender or bank wants to know where you stand financially. In a pre-approval, you need to fill out a mortgage application.

Application Fees

You do not typically need to pay any application fee during pre-qualification. However, some pre-approval applications involve an application fee.

Financial Background Check

A pre-qualification does not include a financial background check, but pre-approval does. The latter may analyze your bills, debts, credit history, and anything in between to find out whether you are eligible for a mortgage and the exact amount to offer.

End-Goal

The end goal of pre-qualification is to find out about you as the borrower, but a pre-approval focuses on finding out more about your finances. It involves analyzing documentation to prove the information you provided during pre-qualification.

Down Payments

You don’t need to estimate your down payment during pre-qualification, but you do need it for pre-approval.

Loan Estimate

During pre-qualification, the lender will provide an estimate of a loan amount for you. However, the same does not apply for pre-approval; you won’t find out how much the lender can offer until they’ve reviewed your finances.

Loan Amount

The loan amount offered during pre-qualification is just an estimate, which could change during pre-approval. On the other hand, the amount shown during pre-approval is usually the specific amount the lender will give.

Interest Rate

During pre-qualification, the lender won’t tell you anything about the interest rate. But, pre-approval involves disclosing the interest rate after the lender establishes a certain amount they are willing to part with based on your financial background.

Key Takeaways

Pre-qualification and pre-approval have two different meanings, even though they may sound almost the same. During pre-qualification, you’ll provide basic information, such as your income, down payment amount, desired mortgage amount, and so on. But, on the other hand, the pre-approval process requires copies of your pay stubs as proof of income, financial background check, bank statements, down payment amount, desired mortgage amount, tax information, and so on. Another essential thing to note is that pre-qualification comes before pre-approval. Therefore, the lender may provide an estimate of what they can offer based on the information you provided during pre-qualification. The amount may change during pre-approval after reviewing your financial records. Lastly, pre-qualification provides a rough idea of how much mortgage you may be eligible for, while pre-approval gives you the confidence to engage sellers, knowing the lender has a certain pre-approved amount to offer.

Being Pre-Qualified vs. Being Pre-Approved

View Resource Being Pre-Qualified vs. Being Pre-Approved

Buying a home can be complex. Since it’s probably one of the most significant purchases you will make in your lifetime, it’s a good idea to assemble a team to guide you through the process. Having a solid support team in place will take some of the burden off you as a buyer, as you can rely on experts to make sure everything is just right before and after you make your purchase. Below, we will discuss the benefits of building a team, who will be on it, and their specific roles.

Benefits of Building a Team

Going through the home buying process can be likened to an obstacle course. You could find it challenging to navigate on your own, especially if this is your first home purchase. However, having the expertise of a team of professionals can protect your interests as they guide you through finding a home, making an offer, getting financing, and finalizing the sale. Let’s look at a few advantages of the team approach to home buying.

Less stress. When you have a home buying team, many of the jobs that would fall on you are taken up by the different team members, meaning less work and less stress for you.
Less money. While you have to pay for the services of each team member, they save you money in the long run. For example, if you hire a home inspector, he may save you some money by getting you a lower price for the home due to repairs.
Less chance of something going wrong. Your team members are professionals, meaning they know precisely what they are doing and how to spot and address problems that inevitably arise during the home buying process.

Core Members: Who Does What?

Each of the core members of your house buying team brings expertise and benefits to the home purchase process. These core members and functions include the below:

Agent: A real estate agent is responsible for listing a property to sell. On the other hand, a buyer’s agent is there to support you and help you find a home and a price that fits your needs, desires, and budget. In addition, a buyer’s agent allows you to find a suitable property, negotiate a final offer, and hire other professionals you will need in the home purchasing process.
Lender: Your lender is a financial institution like a credit union or bank that lends you the money to purchase your home. A suitable lender makes the mortgage process simple for the home buyer, supplying you with a good menu so you can choose the loan that best suits you. It is a good idea to look for a lender with experienced loan officers who can assist you and answer any questions that may arise.
Loan Officer: The lender assigns this team member to help you understand the ins and outs of financing your home. Check to see how many years of experience they have to make sure you have an expert loan officer. You should feel listened to by your loan officer and not pressured, so if your loan officer isn’t meeting your standards, you should consider finding a different loan officer.
Real Estate Attorney: It’s a good idea to have a legal advisor like a real estate attorney when making any significant financial investment. A real estate attorney will ensure that everything is fair and legal and that you are in no way getting the short end of the stick in a deal. A real estate attorney considers your interests throughout the whole home buying process. Some states require you to have a real estate attorney during closing.
Title Company: The title company validates the title of the home and provides insurance for said title. This process legitimizes the buyer’s ownership of the property.
Appraiser: The appraiser inspects the property and compares it to similar nearby properties to determine its value.
Home Inspector: A home inspector visits the home before accepting the initial bid and before finalizing the latest offer. A home inspector looks around the house, evaluating the condition and potential cost of repairs. The information from the home inspector allows the buyer to ask the seller to fix said repairs or, if not, lower the price. While a home inspector may seem the same as an appraiser, they usually go into more detail regarding specific repairs, issues, and the home’s general condition.
Insurance Agent: Insurance agents aren’t necessary as some other team members during the early part of the home buying process, but they are becoming more common as members of the entire home buying team. Insurance agents help you understand what damage you are responsible for as a homeowner, informing you, so you know what insurance policies will be good for you to buy. For example, if you live in a flood-prone area, your insurance agent will undoubtedly suggest you purchase flood insurance, or if you have a government-backed mortgage, they will explain that you might be required to buy flood insurance.

The Bottom Line

Buying a home can be complex, stressful, and exciting simultaneously, but if you have the right team, it can be relatively easy, and you can rest assured you’re getting a good deal for the property you are buying. If you don’t know where to start, you can always begin with an agent, and they can help you find the rest of the team members.

Building a Home Buying Team

View Resource Building a Home Buying Team

You have finally received the phone call or email you have been waiting on regarding your recent job interview. But, the excitement begins to fade when you realize that the offer isn’t exactly what you were looking forward to when you initially applied for the job. When that happens, you can either take up the offer anyway or negotiate better terms — the latter is always the best thing to do, even though it may seem a little bit uncomfortable at first. For this reason, this article discusses the art of negotiating a job offer, hoping you will find the much-needed courage to ask for what you believe you deserve before taking on a new job.

What to Negotiate

The answer is simple — you can negotiate anything that does not meet your requirements as far as the job offer is concerned, as long as it is reasonable and negotiable. Here are some examples:

Your salary: This is usually the most commonly negotiated item on a job offer. We will discuss more on this later.
Work schedule: If the job offer doesn’t suit your schedule, you can politely inform your potential employer about it. Chances are, they will consider realigning their proposal to match your schedule. The last thing employers want is an employee who doesn’t show up on time for work because of a conflicting schedule. Most employers will consider this request, especially if you are a student who needs to dedicate some time to study because they know you will benefit the company in the long run.
Child care: This usually comes up if you have no one to care for your child while at work.
Travel expenses: If your job requires a lot of traveling, you can negotiate with your potential employer to develop a structure that creates a win-win situation for both parties in terms of plane tickets, mileage, accommodation, etc.
Start date: You can negotiate a different start date if the one stated by your new employer does not match your availability at the time.
Hiring bonus: These days, many employers provide hiring bonuses to entice workers to join their firms. However, if the hiring bonus does not live up to your expectations, you could consider negotiating it higher.
Other benefits: Things like sick leave, vacation time, and stock options are other examples of items you can negotiate more to your liking.

Why Negotiate Your Salary?

According to studies, most managers expect new and potential employees to negotiate their salary and benefits, despite not mentioning that the job offer is negotiable. So even if the job offer does not state that it is open to negotiation, this should not stop you from negotiating. If you are reasonable, there is often nowhere to go but up! It is therefore advisable to negotiate your salary if:

You intend to continue with your education, and you need extra money for tuition.
You have lots of experience in that specific field.
You’re paying for a student loan, and the current salary offer won’t be enough to cover loan payments and other bills.
You require special medical insurance to cover a specific condition that your potential employer doesn’t cover.
You will be providing mentorship or coaching to employees of the company offering the job.
You need childcare services, but the job does not provide such.

Tips For Negotiating Your Salary

Now that you have decided to negotiate your salary, your next move will determine whether the potential employer will accept your proposal. Here’s what to do:

Don’t accept the first offer just yet. Taking the first offer means you are also accepting its terms, making it more challenging to negotiate. Unfortunately, many job seekers are often quick to accept such proposals out of excitement, only to find out later when it is too late that some terms do not meet their expectations. However, you will also need to clarify to the employer that you are still interested in the job even though you have not formally accepted their offer.
Know your worth. Most hiring managers will want to know how much you made at your previous job. Your response helps them decide where to begin the negotiations from the financial perspective. So, if you undervalue yourself, they will always want to start at the lowest wage possible or maybe a little bit higher, but not exactly what you are worth. As a result, it will take you years to reach the salary you should have been earning earlier.
Prove your worth. It is one thing to know your worth, but proving it is different. When demonstrating your worth, ask yourself these questions:
- Do you have any extra training that would benefit the potential employer?
- Are you studying any course that would help the potential employer?
- Do you have any job-specific skills or experience?
- Did your previous employer offer better pay for the same role?

The Aftermath

One of the most important things to know before negotiating a job offer is that you do not need to challenge every offer element. You do not want to seem like a dissatisfied employee even before working at your new job. Instead, choose two to three issues that you want to discuss with your potential employer and then build your case around them. Also, for the best results, remember to keep a positive attitude throughout the negotiations.

Negotiating a Job Offer

View Resource Negotiating a Job Offer

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What Does Pre-Approved Mean?

Differences Between Pre-Qualified and Pre-Approval

Mortgage Application

Application Fees

Financial Background Check

End-Goal

Down Payments

Loan Estimate

Loan Amount

Interest Rate

Key Takeaways

Being Pre-Qualified vs. Being Pre-Approved

Benefits of Building a Team

Core Members: Who Does What?

The Bottom Line

Building a Home Buying Team

What to Negotiate

Why Negotiate Your Salary?

Tips For Negotiating Your Salary

The Aftermath

Negotiating a Job Offer