Dream Finances
Build Your Dream Finances Now
I have talked about wealth building in another article. Now I will tell you about Dream Finances. I prefer to use the term Dream Finances, since more of you understand that term. The issue is Dream Finances versus Nightmare Finances. Dream finances include a portfolio with guerrilla budgeting, mutual funds for savings, and home buying the right way and
Dream Finances is defined by me as having the finances that allow you to sleep like a baby at night. You are living below your means, and all your financial systems are in order. Bills are easily paid, savings overflow, and investments are growing.
Dream Finances Will Allow You to Sleep Like a Baby at Night.
Understanding Money
Understanding Money is Harder Than You Think
If you are going to have enough money to live off, save and invest. You first must understand money and how it works. It is not difficult to understand money, but it does take time and attention to learn the process. You need to do a lot of reading, research, take courses, and develop an understanding of all the nuances of money.
How Does Money Work?
If you do not have much money, you may need to ask yourself, “how does money work? “How do I prioritize money issues?” It sounds so simple, just make money, and spend money the right way. But spending money the right way has proven elusive to many intelligent people.
There are those who make a lot and end up with nothing. There are those who start with little, make a lot, then end with billions. What is the difference? The latter have figured out, “how money works” by understanding money and all it entangles.
7 Habits of Wealthy Women
The 7 habits of wealthy women are not what most think. The stereotype most think, is the habits of wealthy women are full of excess and waste. But according to my experience, seeing wealthy women navigate life, they do not spend most of their life in excessive spending and waste. I see wealthy women in the media working hard; as politicians, owning their own media companies, as talk show host, and some working hard in multi-national corporations,where they have a large stake in.
Those women do not spend their time walking the aisle of expensive department stores, playing bridge or having a useless tea all day-that is the stereotype. Below I have attempted to explain some of the better habits of wealth women.
These are some of the common habits of wealthy women.
1.Wealthy Women value education
They value education and they get educated, either formal or informal. That does not mean they went to Harvard or Yale, that is not necessary. Many went to cost effective, low cost schools with no or low balance student loans. With low debt there is low stress. With the low stress they can concentrate on advancing their career.
Some go to private schools, but others to a good public institution. Some of them were taught a skill by taking inexpensive classes over time. An example is learning the in’s and outs of finance to protect their money and assets.
Another example is, reaching the top level of real estate, as a broker and managing director or becoming a master in the tech world. It takes career concentration, constant learning and mentorship, and mostly hard work.
2. They research everything they do.
A wise old man once told me;
“Believe nothing you hear, and only half of what you see, research everything”.
There is so much false evidence being passed on as real, that the anti-wealth building process is alive and well. I call it “chasing rainbows”. Wealthy women do not engage in the useless “chasing of rainbows”.
That is, do not believe mostly what a stranger tells you, professional or not. You run the risk of getting involved with bad product or companies, until you find out you have overspent and believed in a false product. Some people go by false advertising copy, some go by the fake status of the person pushing bad products, and some only plain old believe anything.
A case in point is women who get involved with either scam phone calls or dating websites where a person pretends to be something he is not. The next thing they know after 2 or 3 years they have sent the fake person their entire life savings.
Download: 7 Mistakes of New and Old Investors
A smart woman who becomes wealthy would not talk to the stranger in the first place. So, the scamming could not take place. She has already learned that there is a system in place for strangers to rob other strangers over the phone.
The best way to avoid this is to avoid others in the first place. Don’t even think there is something over the rainbow that is waiting to make you happy or rich. It does not exist. If the stranger were happy or rich, he would not be on the phone all day soliciting your money.
3. They save and invest like their life depends on it
Wealthy women understand the power of saving money and having money when they need to buy important items. That is, not everything is charged, if it is, it is paid for the same month. They concentrate on making interest, not paying interest.
Then, they go onto learn investing. Investing is the key, I can vouch for that myself, I have had several years of successful investing. I first learned how to understand stocks and bonds, then I went on to focus on mutual funds.
Since there are a wide variety of low cost, low risk mutual funds – it is easy to find great high value investments in mutual funds. Even if they hire investment advisors, they first learn how investments work before they trust a stranger with their money.
Contact Lois For Your Investing Discovery Session
4. They do not engage in predatory loan practices at the beginning or end of wealth building
They understand how to leverage with borrowed money the right way. They do not engage in predatory loans or lending. They usually use loans as a short-term vehicle to address an immediate need. Like borrowing money for a home until an investment tops out, or they save enough from their employment, business, or an inheritance comes through to pay off the home early or in cash. Cars are treated the same way.
5. They are not dependent on others for their livelihood
Women who are wealth builders do not build wealth on the backs of Dad’s or husbands. If they get money from their Dad’s or husbands it is a plus, not their main source. They work hard at a job or business and accumulate money by saving and investing on their own.
6. Whether they make their money during their lifetime or inherit it, they spend it very carefully
Wealthy women are frugal women for the most part. They work hard for their money and spend it wisely. No, they do not take first class flights unless they are doing it with frequent flyer miles. They prefer to save by going business class.
They do not buy in-season clothes; they prefer to buy discounted high value clothes. They do not like to waste time, energy, or money on purchasing things that are not extremely useful.
7. They do not boast about the money they have
The money they have accumulated through saving, investing, and working hard is their business. They understand the dangers of letting strangers know what they have. Even telling family members can be dangerous. People who have a lot of money are frequently the target of professional scammers.
A professional scammer looks normal, they talk like they are in a profession, they have business cards, brochures, fake articles about their fake business. For naive people this sometimes works, for wealthy women, they do not allow others to come to them, they seek out their own prospects and verify everything about them before getting involved. They usually do a swallow and deep background check on a person who works with a legitimate company.
Summation
In summation the habits of wealthy women suggest they are uber careful. They are not susceptible to scams and scammers. They work hard, even after they make a lot of money, and they are frugal and careful with their money.
Wealthy women make sure they know investments and savings, so they can either; invest their own money or monitor an investment advisor and the investments he or she suggest. The habits of wealthy are more positive than not.
A Primer for Avoiding Financial Waste and Living on a Tight Budget
The Talk with Your Family About Avoiding Financial Waste
If you have a family, the first thing you need to do is to get them to understand how avoiding financial waste helps a tight budget. Then, discuss what it means to live on a super-tight budget.
Tell them they may not get many of the things they want, but they can get some.
A super tight budget is something that does not mean misery, it means you must be careful. This is a part of life, not bad, not good — just necessary to keep the budget moving in the right direction.
As a matter of fact, you can tell them, because cost of living is high, everyone, in every income bracket lives on a super tight budget.
The Talk with Yourself if You Are Single And Budgeting on a Tight Budget
Stop waiting for prince charming. He does not exist. Sure, you have the chance of meeting a nice guy. But you will be better served in preparing yourself to take care of yourself first.
If you happen to find a nice person you have a lot in common with, then you will be prepared for the relationship. Until then create your own super tight budget for success.
Budgeting when you are single, will make it easier to budget when you are married. A tight budget is king and always will be for a low budget. If you develop good habits now, you have a better chance of identifying a partner who does the same, before a permanent relationship.
No one thinks they will get divorced or separated after marriage, but many do. The number one reason divorce lawyers’ site as the reason they give is financial incompatibility.
That information was there at the beginning but either, they did not get to know each other long enough or well enough to see it. Figure out how you can live on a tight budget before a serious relationship and do not get involved unless your partner does.
Trim the Fat from Your Spending Budget
Start today, trimming the fat from your budget. You are an intelligent person. There are many places where you can trim fat from your budget. It requires that you be open and honest with yourself.
Take a deep dive into your spending habits and find where you can trim the fat from your budget without starving or not having enough gas or train fare to get to work.
Look in your closet and identify clothes or shoes you have not worn for months. Look in your cupboards and identify things you have not used for years.
These are all things you could have done without, or you can sell off to make money. It will also help you to identify how to trim the fat from your budget by not overspending in the future.
Not All Good Things Are Good for You
There are many things that seem good for you, but if you cannot afford them, they may not be. A case in point; a great car, a comfortable dress, a new apartment – if they are not comfortably affordable – they are not good for you. Analyze everything you think you may need and may make your life better. The goods may make you feel better, but you must have the money.
Remember, when you analyze things you need include all cost. For instance, car buying may include 1. Down payment, 2. Monthly payment 3. Gas cost, 4. Monthly, Quarterly and Yearly maintenance, 5. Insurance, 6. Parking.
Where many people falter is when they leave out one of these costs when the affordability analysis is done. Because of these omissions, you can end up with a product you cannot afford. You can research mostly anything on google and ask advice from family, friends, or professionals you know.
Understanding Finances Is What Makes It All Work
Understanding finances is the key and the easier it will be to improve your finances. Because engage yourself into understanding finances you can live within your means no matter what your income.
The less you make the more extreme you will have to get. I call it guerrilla budgeting. I am not saying that high income people do not have financial problems, they do.
In fact, some multi-millionaires file bankruptcy because they are not careful, live far beyond their means, and do not engage in understanding finances through study.
While other multi-millionaire’s feel they must budget everything they buy and do to stay within a comfortable spending range. Understanding finances by constantly reading, studying, and monitoring their money is the key to their success. No one has an unlimited budget for spending money.
Believe half of what you see and none of what you hear, verify
Lois Center-Shabazz
You Can Change the Way You Think About Money
Old habits die hard. Becoming efficient in living within your means with a tight budget and avoiding financial waste is not easy. But you must change the way you think about money if you are having financial difficulties.
If you have a habit of money mismanagement and financial waste it is even harder. But, with that said, there is a lot of help, a mentor can change the way you think about money. It starts with buying the car you can afford, then buying the home or condo you can afford.
And then of course understanding comprehensive financial management is the major key to change the way you think about money. There are many aspects to managing money and avoiding financial waste, even when your budget is tight.
When you analyze your current financial situation, you will find that there are many ways to save money by elimination of waste also. Avoiding financial waste is a major key to living on a tight budget with success.
Do not Take Your Cues from Advertising Propaganda
One of the ways we get confused about buying habits is that we take our cues from the wrong places. This is where many over spenders make their mistake.
They feel they must have everything that is advertised. Advertisers sell a “feeling”, telling you this is how you will feel if you buy this product. Of course, the feeling is always, so-called, “good”.
Do not be confused, you will not feel good if you cannot afford the advertised product. In fact, you will probably feel bad. Not all advertised products are bad, many in fact are good. The problem is the amount of information you get in a 30 second ad is not enough.
Do your research if you like a product you see in an ad. Find out if the product has quality, is within your budget, and does what it says. Most of all, ask yourself if you absolutely need and can afford the product.
Before You Buy Ask Yourself; Do I need this? Do I want this? Can I afford this? And will it last?
Lois Center-Shabazz
Finally, Put it Into Action with Help from an Expert
Get help before you need it, and your finances will be in the proper order. Everyone needs help when it comes to changing behaviors and identifying best practices for spending, saving, and budgeting, investing and wealth building.
Do not feel that you are different. The most successful budgeting folks got help before becoming successful. You can get help too, that is where I come in, contact me now and we can talk about how best you will be served. If you are anxious to get started, you can start here.
Old Habits Die Hard, Change Requires a Little Work
Lois Center-Shabazz
Buy Quality Products So Your Products Last
Do not get quality confused with cost. You do not have to spend a lot of money on products or services to get quality. But, if you do not want to replace your product or service often, you must buy quality. The more you replace products the more money you spend in the long run.
This is where products that appear inexpensive cost you more money than a good product. Your affordability index goes down over time due to wasted money. Purchasing the right way is another key to avoiding financial waste, living on a super tight budget, and understanding finances. You must change the way you think about money if you are going to financially successful.
Small Business Startup Tips
You can obtain a small business by taking it over from a family member or purchasing an existing business, or by creating a first time startup business.
But, in order to be successful, you must have some beginning small business startup tips.
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The first time startup business is one you startup completely from scratch, no clients, no office space, no employees, no funding. But, you have enough education and experience in the field that makes you feel as though you could pull off a successful business venture in the next 3-5 years.
It takes at least that much time for a small business to grow to a decent amount of profitability. I have compiled a list of small business tips for you to get started.
With a brand new business, you are starting up everything for the first time in order for the business to get up and running. The totally new business is by far the most rewarding, but also the most risky of business ventures.
Women and Cars Go Together, Know How to Buy Right
The failure rate of new start up business is very high, because most people don’t know the 500 small business startup tips you should know before starting.
They go into business with a hope and a prayer instead of; 1) Knowledge of the field, 2) Knowledge of running a business, including, city, state, and federal regulations, 3) Extensive experience working in the field 4)Business accounting principles 5) Plenty of money to last before you are profitable 6) Have the ability to deal only with facts
If you are diligent and take things slowly it could work out. But you must be patient, and willing to work concentrated long hours to get started.
Also included in a new startup venture are these small business startup tips:
Obtaining A Mentor
1. Talk to many, many people who are already in the field to get the big picture. Ask them to be completely honest when they answer your questions. Tell them you need to know all of the good and bad about the business. If you don’t know anyone in the field you may not be ready.
Get the Experience First
2. Preferably, you should have worked in the field for a few years to see if it is a viable business. Your experience in your chosen field should be deep and through, no guessing games.
The amount of time and money that goes into a small business is too demanding to be a guess game. If you fail the recovery could take years, if not decades.
Research is Essential
3. Do research, lots of research about the field. Find out if regulatory agencies are getting a lot of complaints about the type of business you are considering.
There is research everywhere now. You can do small business research at the small business website or sba.gov. Go to your trade association or professional website.
Know Quality Financing
4. Be careful about financing, if you can’t get a bank loan for the business that may be a hint that you are high risk, and may have a high rate of failure. There are many predatory places of financing.
Most of these offer high-interest loans or balloon payment loans. It is best to wait until you raise your credit score, save substantial down payment, and have a high grasp of business techniques.
Venture Capital Funding
5. Consider venture capital funding for the business. This is very difficult, but possible. You should have a mentor who can guide you through the process. There is a complicated web of business plans and contacts within the industry that you need to access.
Non-Profit Venture
6. Consider starting out as a non-profit venture and getting a grant to run your business. Be careful, you could be jailed if you can’t account for every single penny of the money within your business.
Running a non-profit also includes first getting a 5013C. Hiring a grant writer to write grants for your non-profit business is a good idea. Writing a grant takes skill and experience.
Get All of the Right Business Ideas You Need to Succeed
The Right Accountant
7. You must have a close relationship with a good CPA (Accountant), and a good bank, and a good business attorney. Your knowledge of small business accounting should be through, so you can choose a competant accountant. The wrong or missing accounting could damage your business for life.
Understand Leases
8. You must understand the different types of business leases there are, and that you could loose all of your personal property (home etc.), if you default on a business lease. Research the types of leases, they are: 1) Net, 2) Net, Net, 3) Net, Net, Net.
Many people sign Net-Net-Net leases with a 5 or 10 year commitment without knowing what it means. Business leases is an area that causes many small businesses to fail, understanding a lease is complicated.
Obtain a good real estate attorney to advise you on the different types of leases and negotiate one you can afford as a new business. You may consider starting with a month-to-month lease if you are using your own money, instead of bank financing, and you don’t have to do leasehold improvements.
Your Bank Loan Tied to Your Lease
If you have a 5 or 10 year loan, or if you expensive leasehold improvements and you are on a month to month rental. You could be asked to leave any time.
The best way to start a small business is from home if that is
possible. Running a business from home also posses many risk.
There are also leases on business equipment. These are especially tricky, no all the ins and outs before you consider one.
I have signed two 5-year leases with a previous business I owned, I feel this makes me fairly competant to discuss business leases.
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How To Find High Performing Mutual Funds For A High Performance Portfolio
Finding high performing mutual funds investments for a high performing portfolio is simple when you have a little research. Great mutual funds are a result of a stock market that has been going up consistently for the past few years, and is posed to continue on the current positive course. Therefore, now may be the time to research quality mutual funds.
Mutual Funds
1. Definition of High Performing Mutual Funds
There are literally thousands of quality mutual funds to research, the small list below will get you started. First there are a few things you should know. Mutual funds are used for your 401k, regular savings or investing.
You can purchase most high performing mutual funds from an online. Buy from brokers such as Fidelity Investments, Charles Swab, TD Ameritrade.
Or you can go directly to individual mutual fund company websites such as Vanguard Mutual Funds, T. Rowe Price, American Century, Parnassus, Permanent Portfolio and others. These are all low cost mutual funds.
Those I mentioned here happen to be among the largest companies, but there are many others to choose as research candidates. Most of the discount brokers offer free mutual fund research as well as Yahoo Finance, MSN Finance, and Google Finance all under the mutual fund channel.
Understand How to Research Mutual Funds From a Money Strategist
2. Finding High Performing Mutual Funds
To find high performing mutual funds you must look at cost of the fund, returns, tax Rate, and asset allocation are 4 of the major categories I look at when I research a mutual fund.
There are many more you will find when you read mutual fund reports listed on the financial websites, and in the prospectus.
It is imperative that you know what you are buying before you buy it. Re-Read the prospectus of the mutual fund you are interested in several times prior to purchase decisions.
All of the following mutual funds mentioned are no-load funds. The following facts are current as of March
2011, they were taken from several mutual fund rating companies.
3. Cost Or Expense Ratio of Funds
Cost is most important for high performing mutual funds because the performance of mutual funds go up and down over time as do most investments.
The lower the cost, the more money goes to your investment. If your mutual fund goes way down, a high cost may be challenging. A reasonable cost almost goes unnoticed if the fund performs well over time.
Learn All The Details of Mutual Funds, Schedule a Discovery Session
Keep as much of your investment as possible by focusing on low cost mutual funds. If you are a beginner it is good to focus on mutual funds that are listed as low cost and low risk.
Most of these funds do not require a load or upfront cost unless you cancel the fund before 30-90 days. Each fund varies, read the individual fund prospectus.
4. Returns of Mutual Funds
High performing mutual funds have high returns and are calculated after all costs are deducted. A great one year return may be a fluke. I like to look at the longer returns of the mutual fund. After all, an investment is the increase in value of an instrument over time.
I prefer to look at the 5 and 10 year return of mutual funds to get a broader picture. If the 1 and 3 year returns are high also, that may be the sign of a winner.
Bear in mind you must read the recent news and statistics of your mutual fund, because past performance is no guarantee of future performance.
5. Allocation of Mutual Fund Assets
You don’t need a lot of mutual funds if you choose quality, since a mutual fund usually consists of a diverse mix of stocks. There are different types of mutual funds. So if you choose to own some they should be of different asset allocation groups, to avoid overlapping investments.
Some of the different types of asset allocation groups are: Large Growth, Small Growth, Large Value, Short-Term Bond, Mid-Cap Value, Diversified Emerging Markets and many more.
When you go into an online investment area read about each different type of mutual fund available. If you are a beginner it may be a good idea to study the low risk, low cost mutual funds first.
6. Taxes Paid on Mutual Fund Profits
All of the funds listed below have low turnover, and therefore low tax rates. The turnover rate is the rate at which stocks in the fund are bought and sold. If the stocks are kept long term, they will be subject to long term capital gains tax, which is amongst the lowest taxes to be paid.
7. These are current Mutual Funds with Top Standings in the Respective Categories
Portfolio 1
Parnassus Equity Income Portfolio (PRBLX)
Type: Large Blend
Risk: Below Average
Yearly Expense Fee: .99
Return To Date: 3.7%
Return 1 year: 17%
Return 3 year: 5.9%
Return 5 year: 7.3%
Return 10 year: 7.0%
www.parnassus.com
Permanent Portfolio fund (PRPFX)
Type: Conservative Allocation
Risk: Above Average
Yearly Fee: .93
Return To Date: -.07%
Return 1 year: 20.4%
Return 3 year: 8.0%
Return 5 year: 9.5%
Return 10 year: 11.0%
www.permanentportfoliofunds.com
Yacktman Fund (YACKX)
Type: Large Blend
Risk: Average
Yearly Fee: .93%
Return To Date: 1.7%
Return 1 year: 8.47%
Return 3 year: 12.1%
Return 5 year: 9.4%
Return 10 year: 11.82%
www.yacktman.com
These are just a few examples of high performing mutual funds, there are many. You will find the quality mutual funds when you do your research.
This is not a solicitation to buy a mutual fund. These are only mutual fund suggestions for you to research. Read the mutual fund prospectus before you consider purchasing a mutual fund. Most are available online, at each mutual funds website.
These mutual funds were given a top rating by at least 7 different mutual fund research sites.
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The More You Know, The More You Grow – Your Finances
MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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Powerful Positive Money Affirmations
Powerful positive money affirmations are necessary to remove lifelong negative affirmations that dominate your thinking. Because negative financial affirmations start as a child, they become deeply embeded. If you have positive, thoughtful money affirmations placed by your parents and others, you will be positive about money.
Unfortunately, many of you have negative financial affirmations, placed by your family. The good news is negative affirmations can be replaced by positive money affirmations if you are willing to work at it.
What type of work does it take to replace the negative with the positive? It takes a lot of work to change old financial tapes in your head. But you can do it if you make it a concentrated task over time.
Examples of Negative Money Affirmations Growing Up:
1. You will always be poor
2. We will never get out of debt
3. You’ll never work hard enough to get ahead
4. You will always be a factory worker
5. We will never get ahead in life we were born that way
6. The money is not there, and it will never be
7. Success is not for people like us
8. It does not do any good to get an education
9. If you save and budget, the money will get away from you anyway 10. The more you try, the worse off you will be
Your First Positive Affirmation Task
The first task it to become familiar with positive money affirmations. Some of you have been programmed with negative thoughts for so long that you must search for the positive ones deep in your head. Here I have compiled a list of positive money affirmations I created, so you can move forward.
If you consistently repeat these positive money affirmations, you can rid yourself of the constant negative affirmations and thoughts about money, personal finance, and financial behaviors.
You may feel that this is basic information that most of you know. I have bad news for you, it is not. Because many of my clients I have spoken to do not understand where their bad financial behaviors come from I recommended you do a backwards analysis.
Financial Habits Backwards Analysis
This is where a backwards analysis comes in. You look back at everything people close to you have said about money, so you can change those tapes.
We do the analysis to pinpoint the exact times and places the negative thoughts were programmed in your head. Let us move forward and change your financial behaviors for the better by understanding that your money affirmations can be changed by you, and only you.
Examples of Positive Money Affirmations From Parents, Teachers, Grandparents, or others:
1. You are smart enough to be a businessperson
2. The hard work you do will be rewarded
3. If you continue to build on your abilities, you will never be poor
4. When you work hard, as you do, the rewards will follow
5. Honesty pays off, stay honest and work hard
6. A formula of a smart girl, common sense and hard work is what you have, and it will take you far and wide.
7. You will be extraordinarily successful one day and will have all the money you need.
8. You have the brain to create powerful finances, just keep doing your research
9. If you understand how to save and budget money, you will have great finances
10. Be consistent, the harder you work at it the better your chances
Here is Your Positive Money Affirmation Challenge Exercise
Choose one of the affirmations a day for two weeks, write about it and repeat it three times a day. You will slowly change the way you think. Do each of the following positive affirmations until you are done with the list. This positive affirmation challenge will take the better of 9 months to totally change financial behaviors, but sooner with many of your financial behaviors.
Of course, if you double up on your affirmation duties you can do it in half the time. The key to success with affirmations are 1. Be consistent 2. Complete the task 3. Continue to study the most powerful ones for the rest of your life 4. Document how you will use them to change your financial life forever.
22 Powerful Positive Money Affirmations by MsFinancialSavvy
Money Affirmations to Get Started, “I Will”…
Not create emergencies with irresponsible behavior
Create at least 3 savings accounts
and account for all the money I spend
Use my income for my needs first,
I realize I work to pay my bills
Only rent an apartment I can easily afford
Not let a salesperson determine my needs,
Purchase what is best for me, not him or her
Budget my budget
Marry a financially responsible person
Money Affirmations Half Way There, “I Will…”
Always understand quality items lasts long, and low quality must be replaced fast
Not go into business until I understand basic business accounting principles, customer acquisition, and business rents and leases
Spend money according to me income, not my credit card
Be prepared for most financial emergencies.
Not spoil my kids, unless I want to create a monster
Always understand that predatory loans can ruin my life for a long time, sometimes forever
Budget my time, energy, and money
Keep a budget for all phases of my life
Positive Money Affirmations That Change Your Life, “I Will”…
Create a savings account for emergencies only
Save first, invest second, keep debt low and start to build wealth
Dream it, then do it, after a lot of research preparation and thought
Understand that I alone am responsible for my finances,
Another person in the picture ads flavor to the mix
Learn basic investing skills, to protect my money and my retirement
Not believe anything I hear, and only half of what I see, I will do my research
Be the captain of my ship and the driver of my bus, I will take care of my finances
The More You Know, The More You Grow – Your Finances
MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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Should You Refinance Your Home Loan?
Should you refinance your home loan, pay off your home or buy another? Should be the first question you and your spouse ask yourselves before you decide to refinance your existing home loan.
Recent reports show that some homeowners are borrowing to the constant enticement of lower home loan rates. And, without an analysis, find that they are backing themselves into a corner of more years and more costs on their loans, including more escrow cost and higher points. The savings they “thought” they were getting on a home refinance, turned out to be huge loss.
After you purchase a home, within a few months most new homeowners will get a barrage of snail mail suggesting you refinance your nearly new home.
The reason why you will be encouraged to refinance many times after the purchase, is because of profits for mortgage companies. Just remember, your home is not an ATM machine, it is best to ignore those offers for several reasons.
When you refinance a mortgage, companies collect a whole list of payments from your refinance, as with your original loan. Refinances wildly benefit the mortgage company but can hurt you badly. In fact, the people who do not get this memo may end up purchasing their own home 3-4 times during their lifetime when refinancing.
It is Not Wise to Refinance If:
-Your purchase is new ( less than 5 years old)
-There have been years of payments on your home, the focus – pay it off
-You are not going to save enough money to make a difference
-Your home has been refinanced before
-The difference in the interest rates are small
-You will add another round of escrow cost
-You will get higher points to offset the so-called lower interest
-You are going to add years to your existing loan, losing the years you have paid
It Is Wise to Focus on Paying off Your Existing Loan:
-So you can focus like a laser beam and live mortgage free with a paid off home.
-If you continue to have a payment after several years, your payment will go down in regard to inflation.
-There are many tricks in refinance loans, because of this you can make big mistakes and increase your chances of lost.
-If the difference of total money saved and new interest rates are too small.
-When you don’t have the expertise and cannot do research to understand the loan process first.
A True Story About a Refinance Loan That Worked
I counseled a woman and her husband, who wanted to know if they should refinance their home, due to a decrease in her husband’s salary.
Here is The Analysis We Did:
1. We obtained her original loan documents and discovered her original and current loan was 33 years. They did not know this; they were told it was a 30-year loan. And because it was stated in months, they did not bother to calculate it.
At the time of the analysis they had 23 years left on her original loan.
With a new 15-year loan, she will shave 8 years off her original number of loan years. This includes the years from the remaining:
23 years (original loan) – 15 years (the new loan) = 8 less years to pay a mortagage in total, with the new loan.
2. They original loan interest was 6.7%. The interest rate on the new loan was 3.8% for a 15-year loan.
So, now they has 2 out of 3 major factors that will decrease the cost of their loan. The cost will decrease by both significant interest rate and number of years. Because of this she will not lose money in the refinance but will instead save money, lots of money.
3. Their payment will go from $3400, Principle+interest+taxes+insurance, to $2400. They will pay $1000 dollars less a month in payments. Coupled with the decrease in years, this is a real winner and takes a financial burden off the family.
Why Did the Above Mortgage Example Work?
The above 3 facts are called being in the right place at the right time. It was right because the low interest rates intersected with the savings from years.
They saw the savings and went with the new loan. Also, 5 years later, she had enough money after their finances improved, to pay off their new loan. Now, they live loan free and shaved 10 years off their mortgage.
This is one of a few cases I analyzed where it made sense and saved money to refinance. In most other cases, the refinance costs, coupled with years lost, do not make a new loan cost effective. Usually, the hidden costs are huge.
Considering the continuing low-interest rates on home loans, is it time for you to consider purchasing a home? — Or refinancing your existing home? Some homeowners are said to be refinancing their existing loan over and over.
If you are in the market for a new home, one of the best times to purchase a primary mortgage is when interest rates are low. Also, you need to find a reasonably priced home. But as far as refinancing, in my opinion, I do not feel that many of the constantly refinancing homeowners understand all the facts (and high cost) surrounding home refinancing.
A one-time refinance is appropriate if you have done your homework and analysis, before you contact a mortgage broker. Then you know that a refinanced loan will be a benefit to you.
If you do not correctly answer the question, “How does refinancing work?” before deciding to refinance, you could get yourself and your home loan security at risk. Know for absolutely, if you should refinance your home loan.
Refinancing an Existing 30-year Loan
1. Each time you refinance to a new 30-year loan, you can go over your 30-year period to 40 years, 50 years and sometimes 60. If a homeowner does this every 5 year for 20 years, then at the end of 20 years you will have 30 years left to pay on your mortgage. Instead of 10 years if you did not refinance your original loan.
The extra years of interest and principle will substantially increase the amount of money you pay on your mortgage over time. And this will increase the actual cost of your home.
The Solution:
-Calculate how many years you have already paid on your home loan.
-Look at the number of years on your new prospective loan
-Compare the interest rate of your old loan to your new loan
-Find out the total cost that will be charged to you for the loan, by the Mortgage Broker
-If you have a 30-year loan with 15 years left to pay. Then try for a 10-year loan if the interest rate is very low. There should be a significant difference between your existing interest rate and the new interest.
-Make sure every loan you get has no pre-payment penalties. Also, pay extra to principle each month to make sure you don’t go over the 30-year mark. Paying off any mortgage loan early can save thousands of dollars.
The Purpose:
The issue becomes, “Why are you getting the refinanced mortgage in the first place?” Are you desperate for money to use for medical purposes, college, or some other dire emergency?
Or, are you looking to save money on your overall cost and either put the extra savings into a general savings account, retirement? Perhaps you want to retire earlier with no mortgage, pay down other bills, or lower your existing payments due to financial stress? And Does refinancing your home work or hurt you?
These are questions you must answer and make your intentions crystal clear to yourself and your spouse before you decide to refinance.
How Much Will it Cost to Refinance Your Home Loan?
It will cost you a hefty sum of money each time you refinance your existing home loan or purchase one for a new home. And even the so-called no-cost loans will cost you. The purchase price of a new loan is either 2%-4% of the new loan. In the case of the no-cost loans; the fees are added into your loan as a higher interest rate on monthly payments.
You will, therefore, pay for the cost included in your monthly payments. It can take as long as four to six years to pay off the cost of your home refinance, so plan to stay put for a while if you choose to refinance.
Understand the Secrets to Buying a Great Home, Before You Start >
Home Loan Resources for Primary and Refinance Loans
There are several resources to help you make a wise decision when it comes to choosing a loan for a new home. Understand how detrimental repeatedly refinancing your existing home can be. Refinancing your home should be a rare consideration and carefully calculated decision before you visit a mortgage company.
Credit unions and your local banks offer the best solutions for a mortgage. If you do not have optimal credit and money saved in a bank or credit union then carefully select a mortgage company.
The U.S. Department of Housing and Urban Development offers numerous resources on its Web site, www.hud.gov, for homebuyers. It publishes an eight-page booklet, “Looking for the Best Mortgage,” which offers advice on finding the best deal. General tips include:
1. Contact several mortgage lendersand brokers for information.
Check hsh.com to see what the average mortgage rates are now.
3. If you have a good relationship with your local bank, start with them. Especially if you have a substantial saving or checking account with them. The mortgage division is usually a separate business in your bank, but a relationship with the bank will make getting a mortgage easier.
4. Obtain all cost information, including interest rates, points, fees, down payment requirements and private mortgage insurance.
5. Negotiate your mortgage where possible. Mortgage deals vary from day-to-day. Once you find a deal you like, lock it in.
6. Federal law prohibits discrimination in mortgage lending, know your rights.
7. Understand your credit. If it’s not good, finding a loan could be difficult. To obtain a copy of your credit report, contact free credit report .
You should know your credit score and examine your credit report before you shop for a refinance.
Contact Me For a Free Personal Finance Consultation in Home Buying>
Sometimes credit reports have mistakes on them and they can be taken off by contacting your credit reporting agency in writing, before you shop for a loan.
The primary goal for you is to make sure you answer the question thoroughly, “Does refinancing your home work?”. know should you refinance your home or buy a new one.
The More You Know, The More You Grow – Your Finances
MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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Creating Great Personal Finances in Marriage or a Partnership
Creating great personal finances in marriage starts way before you get married.
PERSONAL FINANCES DURING THE DATING PERIOD
You can get a snapshot of your friend’s personal finance habits by discussing your likes and dislikes while your relationship is in the early dating stage.
This is beneficial because if you see someone who has really bad habits early, you can block yourself from taking the relationship any further. Great personal finance in marriage begins way before marriage is talked about.
Relationship therapist site that one of the top three reasons for divorce is financial problems. Either one or both people in the relationship are over-spenders and don’t pay attention to debt, that is a recipe for disaster. Get out early and save yourself from a long relationship of misery.
Signs of Someone Who Mismanages Money Terrible:
1. They live a lavish lifestyle for their income,
2. They complain that they have debts they can’t pay,
3. You witness them mismanaging money when it comes to paying bills or refusal to live within a budget.
4. They asked you to pay when you go out and it’s their turn.
5. They borrow money from you while your dating
6. A huge sign is if they asked you to sign for a big purchase they can’t qualify for such as a car or motorcycle.
7. Owes money to the IRS – your check could be garnished if you file jointly and your new spouse is not paying. If one or more of these signs exist, especially number 5 or 6, it may be time to leave the relationship now.
PERSONAL FINANCES DURING THE ENGAGEMENT PERIOD
Discuss personal finances after you get engaged, this is crucial since good finances are a major aspect of good marriages. The more you know and agree on early the better your finances in the long run. The engagement period is your last chance to evaluate your future spouse before you get married.
This is when you get deep into habits that could make or break a good marriage. One of those habits is spending. This is your last chance to identify your chances of getting great personal finances in marriage that will be lasting.
Don’t use this period to brag about your ring or only think about the type of dress or tuxedo you want. But, focus more on the fact that this is your last chance to get to know each other on a deeper level.
Ask a lot of questions of each other before you are married, obtain and share your credit reports with each other, work to get both credit reports in good shape before you get married.
Pay off any excessive debt either of you may have, pay off bills that may hinder a good relationship, sell off things you don’t need, and could be used to pay off debts. Understand how personal finances (budgeting-spending-investing), now, will affect your relationship later.
If one or both of you has bad finances or bad financial habits now, you may not be a good fit for marriage to anyone soon. It’s ok to get out now, even though the rings and dress have been purchased. It is far cheaper than a divorce.
PERSONAL FINANCES IN MARRIAGE
After you are married, maintain good finances together to help maintain a good marriage and a good family life. As stated before, marriage counselors state financial problems as the main source of marital problems and eventually divorce.
Maintain good finances to help maintain marital bliss and a financially stable life together. Secure finances, that includes a financially secure home life, includes the frequent discussion of and analyzing.
You are now responsible for the finances of one another. One with poor finances could affect the purchase of a home or car. One with poor finances could put the family into an unnecessary bankruptcy. If you lose one spouse to death the other is responsible for paying off their debts, if the debts are listed only in the deceased name.
Some debts are transferable through estates, some are not. As a married couple, there are benefits to purchasing a home or car together, keep finances strong together so these purchases will be possible.
If you find yourself in the unfortunate scenario of marrying someone who is a terrible money manager, that can be fixed if the person is willing to admit it and work with you to change. Start with my free personal finance worksheets available on this website.
Here are some helpful tools you can use now! All free for my readers
Lois Center-Shabazz | Course Delta Agency
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11 Powerful Ways to Save Money on Utilities, and Use it for Your Budget
You can save on utility bills and then use the money for your budget. I have a lot of experience with utility bills. The many homes I have owned give me experience in utility choices, use, and maintenance. After living in areas with high utility bills and areas with lower utility bills, I can safely say I have utility experience.
The areas with low utility bills have a way of sneaking high cost in if you do not pay attention. Understanding utility use and care is a large part of maintaining a home.
11 Great Ways to Save Money on Utility Bills And Find Money for Your Budget:
1. Lights –use energy efficient light bulbs and automatic on/off switches to conserve energy
When you use overuse lights it makes a big difference in your bill. In some places electric bills are awfully expensive where there is a utility monopoly. Too many families or even singles do not keep what I call, “light awareness”. If you leave a room, turn out the lights, it is that simple.
If you want to use lights for security purposes, use automatic on/off switches. You can pick up one from your local hardware store, there are many examples. These are useful when you go out of town and do not want others to know that no one is home. Just make sure you keep the light use to a minimum.
Energy efficient light bulbs shave considerable money off your bill. Some energy efficient bulbs you will use, will seem to last forever. If you use the combination of low light use and energy efficient lights, you can see low utility bills here by far.
Children are another reason lights are kept on too long. It is OK to explain to your kids, no matter what their age without putting pressure on their little minds. Some kids even feel important when they are asked to help and why.
2. Gas–Keep gas for cooking and fireplaces to minimum to knock a dent in your bill.
Many of you love cooking with gas, so there is a lot of gas being used. There are also gas fireplaces. There are two types of gas. Natural gas usually used in the cities and LP Gas (liquid propane) usually used in rural areas.
Because I have experience with both, I can say that electricity is far cheaper than LP gas in rural areas and natural gas is less expensive than electricity in urban areas.
Because LP gas is so expensive, I never run my pilot in my country home fireplace. Of course, natural gas is cleaner to burn for the environment. To save money, it is best to build a wood burning fireplace, especially where wood is plentiful. Keep all gas appliances during off during non-use to save money on burning. Keeping gas use low, will enable a low utility bills in this area.
3. Water – Is one of the least expensive utilities, but you can save money by controlling use
If there is a leak, you water bill will explode. One way you can find if there is a leak is if your water bill is exceptionally high over past few months. Use only what you need and turn your water off when not in use. Get leaks fixed immediately.
4. Low flow water fixtures are recommended – these save on water and heat
Low flow water fixtures keep the flow to a minimum, so you do not use as much water as if you have a high flow valve. So, they save on water and if it is hot, save on hot water.
The problem is that many people do not understand how important this is and instead they remove the part that restricts the water flow in show heads and faucets. It works best with toilets.
Understanding the difference, it can make in your water and heat bill, will help to understand its importance.
5. Septic/sewer – Avoid busted pipes and improper maintenance
In rural areas or urban areas that have not been fully transformed you will have a septic system instead of city sewer system. It must be maintained with a septic enhancer or you could have an expensive backup. You also must have it cleaned out every few years or you could get into expensive trouble.
6. Landline phone vs cell service – You can now get one monthly fee for local and long distance.
With landline phones you get enhanced 911 calling, which is important for the extremely sick or elderly. This means if you live in a major area the call is traced to your location immediately. The ambulance will know where to go even if you hang up.
With cell service this is usually not the case, they can only tell the general location.
Small Savings Become Big Money Over Time, -Lois
Landlines are usually is less expensive than cell service. The issue is you will not have cell service when you are away from home if you do not own one. There are very inexpensive cell service contracts, you must talk to your chosen carrier and get an inexpensive fit for you. Cell phone contracts are competitive and constantly changing, so stay informed.
7. Heat/air — This is where the cost can be quite high.
The thermostat is king; keeping the thermostat down with heat, and up with air, can save a few thousand dollars a year. Investing in a programmable thermostat will save when you are away. The largest costs come when you must replace your system. Know what the costs are before you ask a professional to replace your system.
Also, updating to an efficient system will save money over time and pay for itself. We upgraded to a complete heat, air, and programmable thermostat modern system and it paid for itself in 3 years. Out bill was almost cut in half. Here is where you can find money for your budget in a huge way.
THE ULTIMATE HOME BUYING COURSE FOR WOMEN->
8. Fireplace – A wood burning fireplace is a great alternative for heat.
You can keep the thermostat down exceptionally low and make up the heat with the fireplace. It will basically take the chill out of the air. But, you will be comfortable.
9 Open windows – In places where you get a cool breeze from windows.
Use natural breeze instead of air conditioning. Air conditioners are an extremely expensive way to cool when you have free cool air. Keeping air conditioning use to a minimum will allow you to find a maximum
10. Energy efficient window coverings help to control the atmosphere.
There are many types of window coverings that control the heat or cold at the surface of the window. Energy efficient window coverings run the gamut from shades to curtains. Check with your local window covering retailer and they will review the best options for your windows.
11. Unplug – plugged up electrical appliances use electricity and generate costs.
Many homeowners and apartment dwellers do not know this. You will see a difference in your electrical bill when you unplug all unnecessary outlets. It is also wise to unplug during major electrical outages to prevent short circuits.
Consistency is the Key to Saving Money, -Lois
THE IMPORTANT FACTS ABOUT HOME BUYING ARE HERE->
In Summary
If you do not need the lights, gas, air, or heat – keep it off, and you will lower your bill. You will save money on utilities that you can use for your budget, only when you have “utility use awareness”.
Leave home and turn off – do not keep your electricity or heat on if you leave home. There are a few exceptions. An exception would be if you live in an area that gets cold winters and your pipes would freeze if the heat is not kept on low. Remember to wrap pipes, wherever you can to prevent frozen pipes bursting during cold winters.
Use an automatic timer to turn on and off lights when you are away, or they need to be on for an extended time.
Fireplaces are great for heat if you can get the wood at low or no cost.
A septic/ sewer system requires maintenance, find out from your local septic person.
Water is not free, so use it sparingly, in some areas it is downright limited.
You can get an inexpensive landline or cell phone contract, do your research.
These are surefire ways to save money on utility bills. As you use these suggestions, you will see a deep cut in the money you spend on utilities.
You will be surprised that you will find money for your budget, you hadn’t dreamed of. Save money when maintaining a home, by understand how to efficiently use your utilities.
UNDERSTAND FANTASTIC FINANCES FOR BIG THING BUYING HOMES->
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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3 Best Factors to Consider In Order To Buy a Great Home
There are many reasons you should buy a home. This article applies to owner-occupied ownership when you buy a home, only. Rental real estate is quite different than owner occupied home ownership. I will walk you step-by-step through key elements of the home buying process.
The loans are more difficult to qualify for than owner occupied. Tax deductions are much treated differently. If you do not hold home investment long enough, you could be required to pay short-term capital gains taxes. These home buying tips will enable you to understand the most important elements of home buying you should know before your search.
The More You Know, The More You Grow In Useful Facts
Here Are 3 Factors to Consider Before You Purchase a Home:
1. Home prices are low or reasonably priced for your area, which makes the area affordable
Home prices fluctuate about every 7-10 years. Occasionally, due to a catastrophic event where there are a lot of foreclosures, the prices go way down. When the event is over, and people are back to work the prices usually go back up.
The prices fluctuate from low to high for several reasons. Some of the reasons are:
1) If there is a big layoff in a town, everyone is trying to sell at the same time and there are few buyers, home prices may take a nosedive.
2) A major industry has moved out of a town and there are few buyers for a home, prices will go down, 3) Interest rates have spiked up and it is hard for buyers to qualify for a mortgage and therefore prices of homes may correct down.
On the other hand, prices go up sometimes when:
1) Loans are easy to qualify for (as in the real estate crises from 2003-2008), and people got loans who should not have them, this causes many loan defaults in a short period of time.
2) A new high paying company may move into the area and there is a shortage of homes to buy, people start bidding up homes, as in some areas of the U.S. that have high employment and low inventory of homes.
3) New homes are not being built, and new companies move into the area quickly, so there is a shortage of homes.
You get the picture. Real estate does not go up constantly, as some beginner home buyers tend to think, there are sometimes corrections in a high market, and low markets go high for various reasons.
Never Rush to Buy a Home:
The point here is that you do not want to rush and buy a home in an area that you are not familiar with; the prices may be high and at the top of a market. For reasons unknown to you, prices are starting to come down.
This is important to know because, if you must sell in a short period, you may have to sell for less than you paid for the house. This is called, being under water with a mortgage, you will lose money.
Typical appreciation for a well-kept home usually runs around 3-5% per year, according to the National Association of Realtors.
Know what is going on in your area, make sure you are not buying at the top of a market, unless you know you will be in the area for a long time, otherwise, you could be stuck with a home you can’t sell for more than you paid.
You Will Have the Best House, for The Best Price Possible, if You Follow the Home Buying Process; When You Buy a Home.
2. Buy a home when you have had a steady job for a while.
It goes without saying that income is what pays the bills. Make sure that the company you work for is stable or your business is on sound footing before you buy a home with a mortgage.
Most mortgage companies will want to see 2 years of tax statements, in addition to that. They will usually also order their own copy directly from the Internal Revenue Service. If you are self-employed, agents will ask for actual bank records of your small business deposits.
During this time also make sure you have savings in place for a down payment, and escrow and closing cost. It is also a good idea to have additional savings to keep in place in case of a job layoff.
3. Buy a Home when you plan on living in the area for several years.
As I discussed in number 1, real estate goes up and down. When prices get high, many times there is a correction and prices come down for a while.
If you happen to NOT do your homework and buy in a real estate market that is about to come down, for a variety of reasons, you may find yourself upside down with your loan for a while.
This will take more years to make a profit on your loan. You will have to ride out the correction, and get back your escrow and closing cost as an initial investment. Normally it takes about 4 years just to get back your escrow and closing cost as the home value increases.
Corrections in the Real Estate Markets:
If you must ride out a correction it could take many years longer. If you happen to buy at the bottom of a real estate market, you could get lucky enough to ride up the value of your home, and you could sell much faster or a profit. It is important the house is well-kept and affordable for you.
In any case, you should study your area, study the real estate market, study the economy or the changing of the economy in the area, and know when to buy. That is; know if you are at the bottom or top of a market. Real Estate works best when it is held long term, a key factor in home buying tips.
In normal cases, it could take as long as 8-10 years to make a profit from your real estate purchase. Use this calculator to find out the home you can afford.
This will take more years to make a profit on your loan. You will have to ride out the correction, then get back your escrow and closing cost as an initial investment. Normally it takes about 4 years just to get back your escrow and closing cost as the home value increases. The home buying process tighly weaves, escrow, title, costs, mortgages and time.
In any case, you should study your area, study the real estate market, study the economy or the changing of the economy in the area. And know when to buy, that is; know if you are at the bottom or top of a market.
Use all of these great home buying tips to buy a great home, but first understand the home buying process.
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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Secrets to the Timeshare Presentation
Timeshare presentations include free cheap vacations, free gifts or free meals, including champagne breakfast, but not so fast. They are not really free. Because of the high pressure sales it is essential that you do your homework before attending a timeshare presentation, and please don’t buy on a whim.
The most important aspect of a time share presentation is to understand what you are NOT buying.
Understand the true meaning of a timeshare and read the contract before you sign under pressure. Most timeshare buyers buy under pressure while on vacation or walking through a mall, to get an invite to a high pressure sales presentation. I have spoken to many who have done this very thing and regretted it later.
The most common question I am asked is, “Should I buy a timeshare to save money on taxes and own a wonderful place to vacation”?
I talked to a friend who did tax audits and was assigned to an 8 inch thick stack of timeshare tax foreclosures. This prompted me to look further into the timeshare craze. Later, even going as far as to spend a week in a timeshare condo owned by a friend, I and a friend, attended a high pressure sales presentation ourselves.
Understand the true meaning of real estate and finance, let’s chat
The Definition of a Timeshare
The first thing you need to know is that when you purchase a time share you are purchasing the right to use a vacation room or condo typically for 1 week a year. This is if you purchase 1 unit. The quality of available condos go from type A to type D. A, of course being the nicest and best equipped.
You do not own a share of the building, you do not own a room, and you definitely don’t own the land that the condo is built on. What you buy is one unit of time or one week of time. Some people buy two weeks of time.
Typical Timeshare Cost
Understand what it means to sign a timeshare contract; you are promising to pay in full the contract price of the time share, the interest payment, and the yearly maintenance fee.
The payment is usually from 8-12 years. The yearly tax and maintenance cost is for life.
A lady ask me at a conference, “why did my timeshare company send me to collections”?
I told her, “you did not understand that you were purchasing the timeshare with a loan and lifetime maintenance cost when you signed the documents”. Of course, she said no.
For some strange reason most timeshare presentations don’t make it clear that the buyers have to pay maintenance for life, and the maintenance goes up over time. They assume you know you are signing for a loan.
When You Don’t Pay The Time Share Loan Principle And Interest Payments
If you don’t pay the time share principle and interest payments you will be sent to collections. When the balance is not paid from collections, you will be foreclosed on. If your time share is paid off and you do not make the yearly tax and maintenance cost your time share will be sold for back taxes.
How Most Buyers Find Out About Timeshares
They go on vacation, on a honeymoon, or just stay at a resort hotel. The company who owns the hotel may also own a timeshare unit building.
They will offer a free $100 bill, lunch, or dinner to coerce you into listening to a timeshare presentation, which is usually a high pressure sales presentation.
The company gets back the “free stuff” many times over when you make payments on the timeshare loan and the lifetime tax and maintenance cost. So, once again, you learn, there are “no free lunches”.
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A Motivating Factor For Buying a Timeshare
High sales tactics make some buyers think they are actually purchasing ownership in a condo unit. Some people are motivated by the false tax savings.
Because of the ease at which you can purchase a timeshare many people who buy them do not itemize for tax savings. Also, they are in too low a tax bracket to actually receive a savings from the timeshare. The tax savings are tiny, almost non-existant.
For those in higher tax brackets the tax savings on a timeshare is too small to make a difference. Another reason people buy timeshares is because they enjoy the vacation swaps. This is when you can swap timeshares with others, to vacation in different locations. Some timeshare presentation vacations sales are simply fake.
When Buyers Falter On Their Time Share Payments
Judging from conversations I have had with timeshare owners many don’t understand their obligations because:
1. They signed up under pressure – did not read the contract.
2. The sign up was quick and didn’t understand what they are buying.
3. Some are young and gullible, so they sign up without the knowledge of contracts.
4. Many people don’t understand that they have to pay taxes and maintenance cost every year for life. This is necessary to use the timeshare “time” alloted to them for the year.
Concentrate on buying “actual” real estate, learn the best way
The best way to get out of your timeshare contract during or after your vacation is to realize you usually have a 3 day right of rescission on contracts. That must be in writing, preferably notarized, and sent next day mail, certified. Rarely, does anyone realize this, or use this tactic.
Typical charges of a Timeshare
I have friends who bought a time share 16 years ago, they said they purchased theirs for $17,000. Most of the 16 years their yearly tax and maintenance costs were $500 per year, a year ago it changed to $1000 per year. The timeshares are much more expensive now.
That is a class A Timeshare, the highest value. Let me remind you again that you are “only buying” time to use a space, “not” any real estate.
Currently, a typical Class A time share is in the area of $25,000 principle or more, plus interest, and $1000 per year (lifetime) payments for tax and maintenance. There are different packages available.
Selling A Timeshare Condo
Selling a timeshare is difficult because you don’t have the same high pressure sales tactic abilities that enabled you to sign. The market for used timeshare contracts is tiny almost non-existant. You are competing against current new timeshare sales. The first place you should start to sell your timeshare is to contact your timeshare company “in writing”, that you purchased from. They will usually charge you a small fee to take it back.
There are companies who promise to “exit your timeshare contracts”, and they may be helpful. Do your homework, and make sure the company is legitimate. In recent news reports many who have used these companies say were ripped off, and their contract was still in tact after they paid the company.
The organizations representing timeshares say it is best to negotiate directly with your timeshare company to get released from your contract.
You do not have the expertise to do a timeshare presentation on timeshare vacations – to sell it on your own. Don’t make an unwanted timeshare a lifetime timeshare obligation.
Lois Center-Shabazz | Course Delta Agency
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