(MA) 617-297-8641 (RI) 401-641-5774

Contact@MandrellCo.com

Break These Habits To Get From Paycheck to Paycheck TO Owning Your First Home (Pt. 1)

 I don’t think the majority of Americans willingly blow their paycheck weekly/monthly. It’s hardly ever a big purchase but several smaller, seemingly insignificant purchases that keep us living paycheck to paycheck. Let’s take a look at some of the obvious and not so obvious suspects that prevent us from saving to purchase our first home or investing in real estate to build wealth.

1. Paying Too Much on Housing

Since housing is likely your biggest monthly expense, this is where you can really make or break your budget. Personal finance experts recommend spending no more than 30% of your income on housing. You can spend even less and save more by getting a roommate or moving to a different neighborhood or a city where it’s easier to save money. Of Course this is easier said than done in Boston and surrounding towns. TRUE STORY: Consider living with family if roommates are not an option. Don’t try to live for free but rather, share the expenses so that you are helping with their financial burden but it is still cheaper than renting on your own. Give yourself a HARD deadline on when you need to  move out to hold you more accountable. 

2. Spending Too Much on Car Costs

Aside from housing, transportation is likely your next biggest expense. Buy a reliable and affordable used car, try to live close to where you work, and consider taking public transportation to cut down on gas and maintenance costs. If you work downtown, living close to work is an unlikely solution. Consider living close to public transportation, carpooling, biking?

TRUE STORY: My cousin realized he was paying more owning a car (car payments, insurance, gas, maintenance, parking) than utilizing public transportation. He sold his car and takes the train to work daily and utilizes Uber and zip car on the weekends if he has a lot to do. This strategy helped him save for an engagement ring and wedding.

3. Not Planning Meals Ahead of Time

Keep your grocery budget under control by planning out your meals and shopping accordingly. One of my favorite meal-planning apps comes from Food.com. It combines meal planning and money saving all in one app. If you like to live on the adventurous side, consider Daily Table, a non-profit grocery store that has discounted food items to help you stick to a tight budget; the catch… food items vary weekly so you will have to cook based on what you buy as opposed to buy what you plan to cook. 

TRUE STORY: A friend purchases prepared meals from Daily Table and says it is really good. The price works for her budget where she can have a nutritious meal (not prepare lunch herself) for a lot less than cooking when she considers her time and money to prepare a meal for herself. 

4. Buying Coffee or any other vice

America’s love affair with coffee shows no signs of slowing down. ABC News reports that the average American worker spends $1,100 a year, or $14.40 a week, on coffee. I don’t know about you…but that’s a lot of money spent on a drink. That’s down payment money or debt reduction money in the mind of someone who’s actively trying to build wealth.

TRUE STORY: Be real with yourself, maybe don’t quit cold turkey but try to reduce the number of coffees you buy by 2 each week until you are bringing all beverages from home. I weaned myself off of Orange Fanta… that was my vice. Saved a lot of money, water with lemons was my alternative. Now, I don’t crave drinks when I eat out, I can have a water with lemons alongside my meal. 

5. Carrying Credit Card Debt

Credit card debt is one of the most expensive types of debt you can carry. Those minimum payments might seem low now, but they can cost you hundreds to thousands of dollars in interest. If you have credit card debt, make a debt reduction plan. For example, try transferring your balance to a low-interest credit card, and commit to paying it off for good. Even if you can’t pay more than the minimum EVERY month… whenever you are able, try to make additional payments.

TRUE STORY: Even paying $20 extra a month helps you save. Also consider calling your credit card company every 6 months (if you have a history of on time payments) and request a rate reduction. I do it yearly and it makes a difference in the long term.

Be sure to sign up for our blog newsletter to stay informed on quick tips for a better financial future.

 

Connect with us on:

Boston Investment Specialist

 

 

 

 

 

 

Excerpt from Full Article
Read more

There are some key differences between a short sale and a foreclosure in today’s real estate market. Although the economy is on the up and up, many people are still faced with this decision and we hope this video clarifies some of the differences to help you make an informed decision.

5 comparison criteria:

  1. Ability to obtain a mortgage in the future
  2. Effect on credit score and credit history
  3. Possible effects on security clearances
  4. Current and future employment
  5. Deficiency judgement

Short Sales impact you less severely than foreclosures!

If You have further questions on the process or would like to schedule a free, no obligation consultation, contact us at Contact@MadrellCo.com.

Read more

Now that summer is finally here, it is a good time to take a look at all potential maintenance needed for your properties. As the winter months tend to be the quieter time of year, spring is typically the time that tenants move out, whether it is a result of a new job or just general life changes. Therefore, it is most important that you inspect your properties to ensure that the condition is such that you can turn them over quickly. If not, it is definitely important to address such issues to maintain the desirability of your property. Some specific areas of maintenance include:

Landscaping
One of the more important summer maintenance areas, a well landscaped property can do very well for the desirability of your property. Falling under curb appeal, this is one of the first things a potential tenant or buyer will notice when first seeing your property. And seeing as first impressions can be very important, it is critical to keep your property well maintained on the outside. The good news is that this is one of the easier jobs to do yourself and should be relatively easy to receive help if need be.

Siding and Walls
Like landscaping, the siding and walls on the outside of your property go a long way to maintaining its desirability and positive first impression appeal. When cleaning your siding is all that is required, simply wash the siding with a soft cloth or ordinary long-handled, soft bristle brush. This can be done using water and mild soap. The best approach is to start at the bottom of the siding, work your way up and rinse the cleaning solution completely before it dries. If siding needs to be replaced, this is another relatively small job and can be learned and applied in a relatively short period of time.

HVAC Systems
Your tenants are definitely going to have working A/C during the summer months, so this is one of the most important areas of focus within your property. One of the specific components to pay attention to for A/C maintenance is cleaning the air conditioner coils, both inside and out before cooling season begins. When the coils are dirty, the system runs longer, which reduces efficiency and increases cooling costs. Another component to address is to check and refill the refrigerant charge if necessary. If you do not have the right amount of cooling refrigerant, you run the risk of damaging the air compressor. Lastly, clean and calibrate the blower system components for optimal airflow. This will lead to a longer lasting and more efficient system.

Read more

The majority of Bostonians hate writing a check to their landlord every month, particularly if you live in Roxbury, Jamaica Plain, and Lower Mills areas. Sometimes you are cursed with noisy neighbors, or a super strict landlord who is looking for any reason to push you out so he can get the next highest paying tenant.

If any of the above applies to you, you probably want to buy a home…yesterday! Wanting to buy a home and being ready to do so are two different things. Are you financially ready for the monthly mortgage payment and budgeting for repairs?

Here are five signs that you’re not ready to buy a house just yet. But don’t fret; even if you are struggling with these financial issues, you can still become a homeowner. You’ll just need a bit of patience and improved financial skills.

Buying a home is expensive. You’ll need money for a down payment. If you are buying a home with an FHA loan, you’ll need a down payment of 3.5% of your home’s final purchase price, depending on your credit score. For a $300,000 home, that comes out to a down payment of $10,500. Thanks to Mass Housing, we have a 3% down payment program, but that still equates to $9,000. These numbers do not include closing costs, moving costs and other miscellaneous costs associated with moving into a new home. 

Closing costs are the fees that mortgage lenders, title insurers, attorneys and others charge you to originate your mortgage loan. We generally tell people plan for an additional 2% to cover these costs which equals $6,000.

It’s true that you can get help with some of these costs. You can use gift money from relatives, for example, to pay for all or part of your down payment. You might be able to convince a home’s seller to pay for all or part of the closing costs. In our current market, sellers are not inclined to do closing cost assistance unless you plan to purchase well above asking. 

What to Do

It’s best to start searching for a home only after you’ve saved enough money to cover a down payment and your estimated closing costs. Another option would be to look into programs available by your municipality that encourages home ownership by providing financial assistance. There are also some non-profits and other organizations that allow you to purchase with 0% or a rate lower than industry standard. (NACA.com)

Sign 2: Your Credit Score Is Bad

Your credit score is a key number when you’re applying for a mortgage. The best interest rates go to individuals with the best credit scores (above 740). The lower your score, the higher your interest rate and subsequently, the higher your monthly mortgage payment. You can purchase a home with a 580 credit score according to FHA guidelines but there are only a few lenders willing to accept a score this low. 

What to Do

First, order at least one of your three credit reports from AnnualCreditReport.com. You are entitled to one free copy of each of your three credit reports — maintained by the national credit bureaus of Experian, Equifax, and TransUnion — once every year. Once you get your report, read it carefully. It will list how much you owe on your credit cards and how much you owe on student loans and car loans. It will also list whether you have any late or missed payments during the last seven years. Those late or missed payments will send your credit score tumbling.

Next, order your FICO credit score. You can do this from the credit bureaus, too, but you’ll have to pay about $15 to do so. If your score is low, and there are negative marks on your credit report, it’s time to start a new history of paying all your bills on time. You also need to pay down as much of your credit card debt as possible. Both of these actions will steadily increase your credit score, though it could take months or even more than a year before your score recovers enough to make you a good candidate for a mortgage loan.

Sign 3: You Have Mount Everest of Credit Card Debt

Your debt-to-income ratio is another key number when it comes to buying a home. Lenders want your total monthly debts, including your estimated new mortgage payment, to equal no more than 43% of your gross monthly income. If your debt-to-income ratio is too high, you’ll struggle to earn approval for a mortgage. Some lenders will go as high as 50% due to the high cost of rent but generally, they want to see that you are not up to your eyeballs in debt.  

What to Do

I would say pay off your credit card debt but if you could have, you probably would have by now. I will STRONGLY recommend you always make more than your minimum monthly required payment. 

Sign 4: You Routinely Miss Your Monthly Payments

Making late payments, or missing payments completely, is a sure sign that you’re not ready for the financial responsibility of owning a home.

If you miss a mortgage payment by more than 30 days, your credit score will fall by 100 points or more. If you miss enough, you could lose your home to foreclosure. This is not like a landlord where you get warnings before it affects your credit… this is immediate. 

What to Do

Learn better financial habits before you apply for a mortgage. Set up reminders on your phone or computer alerting you when bills are due or use my favorite method… automatic payment. You could set aside one day each month dedicated to paying bills if you prefer the old fashioned paper method. Don’t apply for a mortgage until you’ve broken the habit of regularly missing your monthly payment due dates. 

Sign 5: You Don’t Have a Stable Job

You’ll need a steady, reliable stream of income if you use a mortgage to finance the purchase of a home. If you’re worried that you’ll lose your job, or your income is sporadic with no real pattern, you should probably NOT purchase a home. Generally, you need 2 years of full time work history. If you are self employed, you will need other documentation to help qualify you for a loan. 

What to Do

Find a job that is reliable and that pays you a stable income each month. Don’t take the risk that everything will work out. You don’t want missed mortgage payments on your credit reports. And if your job is unstable? You’ll greatly increase the risk of these red marks. If you are self employed or you operate on seasons… then you should think of yourself as a chipmunk… get good at storing away for the slow months. 

I hope this advice was helpful. We strive for our clients to be responsible home owners and want to ensure you will not be putting your home up for sale due to foreclosure. We want to help you BUILD WEALTH THROUGH REAL ESTATE!

 

For More information, please contact one of our agent specialists for your area or connect with us on… 

Dorchester Real Estate Agent

 

 

Read more