How to Budget for the big things, use what I call Big Thing Budgeting.
USE BIG THING BUDGETING TO GET OUT OF A MOUNTAIN DEBT: CREDIT CARDS, MEDICAL BILLS, PREDATORY LENDING
For Individuals, Couples and Small Businesses, you can get out of a mountain of debt if you focus like a laser beam on getting debt-free. It is not easy, but it is possible.
It will first require that you stop buying anything you don’t need. Get rid of the “I Got to Have it Syndrome”.
Start by keeping a log and inventory of your buying habits. Then slowly start to purge spending you don’t need to do. When you take an inventory of your buying habits, you will be surprised at the amount of unnecessary buying you do.
Second, you must start paying off one thing at a time in a big way but pay on other bills at the same time. Start with the smaller bills, pay extra to those bills with the most you can afford, then pay a small amount extra to principle to your other bills — at the same time.
Big Thing Budgeting Shaves Thousands Off Your Budget -Lois
You will see bills drop off one by one. Now, for the larger bills, you may have to start selling things you don’t need. From cars to yard sells, is where you can sell things you don’t need.
BUDGET TO BUY A CAR
Save money for your next car while your current car is in good shape. Then, research the cost of the car you are interested in. Set a budget, then go through the internet and your local newspaper to see prices and figure out monthly payments, if you plan to finance. If you don’t plan to finance, you will see how much you need to save and for how long, to pay cash.
Consider buying a certified used car at a new car dealer or a one-year-old car from a new car rental agency. Make sure you know the new car prices and options on a new car so you can compare it to a new-used car with options.
Use Kelly blue book or kbb.com, to check for cars that are good for buying as used cars. You can also check for general pricing of new and used cars.
BUDGET TO BUY A HOME
Home buying requires doing a lot of research to discover 1. how much you can afford to pay for a home, 2. how to find a good mortgage company, bank, or credit union. The best place to start is your local credit union or bank due to the savings in fees, cost and time. 3. How to buy a quality home, and 4. How to get it properly inspected – some inspectors work for the realtors, so many won’t tell you when you the home you are interested in has major problems.
Therefore, it is best to contact tradesmen directly, like electricians, plumbers, roofers, and carpenters to get a fair assessment of possible home repairs. Most of them will do an inspection in their specific area for a small fee.
Use at least 2 of each kind, so you can get a consensus as to what is wrong. You can then budget for the down payment and escrow cost to purchase your next home.
Therefore, it is best to contact tradesmen directly, like electricians, plumbers, roofers, and carpenters to get a fair assessment of possible home repairs.
There is a Right Way and a Wrong Way to Buy Cars, Homes, and Education -Lois
Most of them will do an inspection in their specific area for a small fee. Use at least 2 of each kind, so you can get a consensus as to what is wrong. You can then budget for the down payment and escrow cost to purchase your next home.
Make sure you know exactly what your payment will be in regards to your loan. What will your payment be with Principle+Interest+Insurance+Taxes? You can also do mockups of an imaginary home to calculate what you should pay.
Ask friends or family what they pay for insurance and taxes for a home you are interested in. Taxes vary from state to state, you can also search your state websites. In some states, taxes go up as home values increase, but in others, the taxes stay the same.
BUDGET FOR VACATION
Don’t put your vacation on a credit card when you can save a little all year and pay cash for your vacation. It is as simple as that. Budget in transportation, food, lodging, tours, and shopping.
If you want to go on the cheap, vacation where you have family members or friends who live in or nearby vacation spot. Pay your family member to stay with them, or cover their restaurant costs and meals. Do the math, and see what works out.
BUDGET FOR COLLEGE
Some people are obsessed with the “best college syndrome” due to the college propaganda machine.
If you have unlimited money, you can go where you want. But, if you must depend on financial aid, which usually includes substantial student loans, that is not an option. If there is one thing you want to keep as low as possible, is student loans.
Since there is 1. never a guarantee you will get a job in your field or keep it, 2. There is not a guarantee you will get a job that pays in accordance with your student loan 3. you can’t file bankruptcy on student loans.
Because of these items 1-3, you should keep student loans as low as humanly possible. That means avoiding high priced schools and high-priced areas to live in for college. The least expensive schools are community colleges, and state colleges and universities.
There are some colleges that are priced like state colleges and universities, but you must do your homework and compare all cost. Private colleges and universities are unreasonably high cost and they have a lot of hidden costs, which makes the total difficult to calculate.
The for-profit schools offer quick learning and high prices. Today, some of them are now calling themselves non-profit due to the unpopularity of the for-profit model.
Private colleges and universities are unreasonably high cost and they have a lot of hidden costs, which makes the total difficult to calculate. The for-profit schools offer quick learning and high prices. Today, some of them are now calling themselves non-profit due to the unpopularity of the for-profit model.
The for-profit schools do massive advertising on television and the internet, this is your main clue. All colleges and universities have their cost listed on their websites. Make sure you find these costs and know exactly what you are getting into before you consider any college.
Your total student loan balance should not surpass your first years’ salary. Example: If you plan to be a teacher and your first year’s income is $25,000, your student loan should be capped at $20,000. Understand the details of student loans with the eBook on student loans.
BUDGET TO PAY OFF STUDENT LOANS
There ae people all over Pinterest bragging that they paid off $60,000 of student loans in 5 years. This is possible due to re-amortization. When a loan is amortized to 20 years by your loan servicer, you can amortize it to 10 years by paying extra to principle every month.
If you have a 10-year loan, you can knock it down to 5 years. You can live tight, give up the finer things in life, and knock down those years with extra payment to principle.
You have to check your statements to make sure the extra payment is added to principle and you have to state that on your check, they will always try to put the extra to interest, even though it makes no sense. Big Thing Budgeting is essential when it comes to student loans, if not done correctly, these loans can follow you to your grave.
You have to check your statements to make sure the extra payment is added to principle and you have to state that on your check, they will always try to put the extra to interest, even though it makes no sense. Big Thing Budgeting is essential when it comes to student loans, if not done correctly, these loans can follow you to your grave. Learn more on my instagram.
Understand the way predatory lending works such as car title loans and payday loans. Why are many cars confiscated with a car title loan? Why do payday loan balances go from $500 To $3500?
I would have to write another article for an explanation, but a car title loan can easily double or triple if the money isn’t paid on the date due repeatedly, and a payday loan gets a rollover when the employee does not have the money to repay the loan on time.
Both problems push the balance way up over the top. The most effective way to pay off these loans is to stay away from predatory loans. Using predatory lending is probably the direct opposite of using Big Thing Budgeting, don’t get caught in the predatory lending trap. Predatory lending also includes car title loans, unsubsidized student loans and high interest car loans.
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Lois Center-Shabazz | Course Delta Agency
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Owner occupied real estate now and in the future
Your owner-occupied real estate now and in the future, is one of the best long-term investments one can make. Time has shown that owner-occupied real estate can produce tremendous long-term returns. In a few areas of the country the tremendous returns have even been short-term. In some cases, homeowners have sold homes held 30 or 40 years, for 30 to 40 times their original cost.
The least expensive for maintenance cost is the owner-occupied real estate investment, simply because most owners correct problems as they arise.
The hardest part of real estate investing is to know when prices are inflated or low. To understand this, you must do a lot of research or endure a lot of pain until prices stabilize. Residential real estate as an investment requires, skill, intelligence, research, intuition, a lot of time, very hard work, and luck.
Here are items to look for before and during your owner-occupied real estate now and in the future home search, for a successful property.
Good Credit Score
Before you start to look for a home the first steps are to;
Get a copy of your credit report
Go over it closely, make sure all the credit listed belongs to you
If you Find credit that does not belong to you, write Experian.com and challenge the reporting with them.
Stop charging, and start paying off credit you already have
Pay off anything that is past due, and maintain your bills monthly
Do not get a loan until your credit is cleaned up to the best of your ability, this may take months to a few years. Save for a down payment or get a no down payment loan and pay more points (or higher interest rate). Research any mortgage company you plan to use and make sure they are legitimate.
If you are a first-time home buyer consider FHA loans, or NACA (naca.com) to help with the qualifying process. Every city has a first time home buyers organization in town to help with the buying process.
Quality home – Well inspected
Make sure you are getting a quality home, by getting quality inspections from plumbers, electricians, HVAC, and carpenters. There are many home buying nightmares where buyers used a lone home inspector who missed most if not all the problems. If you find problems in an inspection, you will know what you are up against. You can either: 1. Find another home, or 2. Ask for a reduction in price so the problem can be fixed in your increased loan amount.
Home purchased at the bottom or middle of a market
Know if your home buying market is in a bubble or if your home is over-priced. If it is you may not be able to sell the home for several years, even if you must move.
An affordable price is a home that fits your budget and is generally around 30% of your gross. Create a sustainable “overall budget” before you buy.
Look for signs the home has been well-maintained. Inspect the heating and air conditioning units well, the roof should stand the test of a heavy water hose. The floor should be level when you place a marble on the floor it should not roll, if it rolls, you may have a serious foundation problem.
Value increases over time: The more jobs or tourism there is in the area, the more valuable the area may be in terms of increase in home value over time. Then an area with no jobs or tourism can transform in several years when something valuable is added. As well as places that go under due to a decline in an area that has no jobs or amenities. It is best to look at an area with amenities at the time of sell.
No monthly house payment or rent
After the mortgage is paid off, you will have no house note or rent to pay. This is a tremendous savings. But, you will still have maintenance and taxes. It is important to factor in taxes as you age. Will your retirement check be enough for taxes and home maintenance?
The advantages and disadvantages of owner-occupied real estate is listed below:
Key advantages of owner-occupied real estate are:
• You can qualify for the lowest interest real estate loans available
• You can qualify for low down payment consideration, of 5%-10%. There are also extra low-down payment loans for first time buyers who qualify, as low as 3% down.
• You qualify for a full array of owner-occupied tax deductions. IRS Homebuyers Credit
• Most owner-occupied homeowners take pride and joy in maintaining their own home, so the long-term maintenance is usually reasonable.
• Owner-occupied real-estate profits have been tremendous when held long-term.
• There is a capital gain exclusion for taxes up to $250,000 if you have lived in the house for 2 of 5 years.
Key disadvantages of owner-occupied real estate:
• The debt carried when a home is leveraged with a mortgage loan.
• The responsibility of up-keep, for some this is an advantage, since they enjoy the up-keep.
• You are responsible for taxes.
Your owner-occupied real estate now and in the future, has many more advantages than disadvantages.
Lois Center-Shabazz | Course Delta Agency
Author, Blogger, Course Creator, Investor, & Money Strategist
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We’re VERY close to finishing our long-awaited Fantastic Finances Course For a Personal Finance Bounce.
I have been working on this online course for more than four years, but I am finally going to wrap it up. I will be releasing it in September. This very short fantastic finances poll will help us help you get the right course.
This course will be entirely focused on “Support and Positive Financial Change”. It will include eight weeks of printed pdf’s, 8 complete personal finance books by Lois Center-Shabazz — in the form of downloadable eBooks, video tutorials on 8 crucial personal finance topics, a guide to create your Most Valuable Finances (MVF) profile, a complete course outline to guide you through the Most Valuable Finances Course, a Facebook support group, and a weekly live question and answer session with Money Pro and course founder, Lois Center-Shabazz.
It is going to be a complete brain dump of everything we know about “Support and Positive Financial Change”.
We are going to cover all the ways that we use to generate our support and positive change zones, and we are going to show you exactly how we change those zones to increase your net worth and financial IQ for life.
HOWEVER, we need your help. Before we finalize everything and send it off to the web course portal, we need to make sure we have covered everything. So please help us create the right online course with this Fantastic Finances Poll For a Personal Finance Bounce
This is where YOU come in. Please take a few minutes to answer this super-short survey — there is only one thing we want to ask you.
YOUR POLL QUESTION: What are YOUR top two questions about Support and Positive Financial Change that we absolutely NEED to answer in our Fantastic Finances Training Course? —->
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Super Sane Savings
Guerilla Budgeting That Banks
Big Thing Buying: Cars, Homes, Education
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or All The Above
GET A GOOD HOME LOAN TO BUY A HOME
Affordable Payment (P+I+T+I = principle,interest,taxes,insurance)
Your payment should be within the limits of your income to buy a home. If it is at all possible, base the payment on one income. It’s best to keep it at about 30% of income, before taxes, but you can go higher as you decrease other bills such as no car note, purchasing a home with low utilities, having a short commute and low gas usage, carefully budgeting groceries. The 30% is about what lenders look at also to buy a home.
Research articles about predatory lending and avoid it, if at all possible. It is called predatory because the requirements to qualify are low and the risks are high.
COST OF A LOAN TO BUY A HOME
Many people don’t know that loans cost money. This is covered in the escrow and closing cost fees and is extra from the down payment. There are 50 states and several cities within each state. Every state and the city within the states have their own closing cost schedule. Here is an example showing one city, within one state. The city is Los Angeles and the state is California, on a $200,000 loan.
LOS ANGELES CLOSING COST–LOAN AMOUNT $200,000, TO BUY A HOME
Origination fees charged by lenders $1,030
Third-party fees $1,196
Loan amount $200,000
ITEMIZED ORIGINATION FEES CHARGED BY THE LENDER
Origination points $586
Commitment fee $370
Document preparation $58
Broker, originator or lender $920
Tax service $76
ITEMIZED THIRD PARTY FEES
Attorney, closing or settlement $639
Credit report $25
Flood certification $11
Borrower’s share of state and local transfer taxes and fees $0
Mortgage tax $0
If you have sellers that are badly in need of a sell, sometimes they will agree to pay your sellers cost. Sometimes you can bundle the sellers cost in your loan.
THE AVERAGE COST OF HOMES
Some places in the country average home prices are $50,000 and Some $1 million. It depends on where you live. In places where there are several high-income jobs and a shortage of home inventory such as San Jose, California the cost of the average home is almost $1 million dollars. In contrast, the cost of the average home in Houston, Texas is less than $200,000.
WHAT TO LOOK FOR WHEN YOU SHOP FOR A HOME
Many general inspectors do quick inspections and leave major work for you to discover after you buy. You can get inspections from actual tradespeople for a reasonable fee. The trades would include electricians, plumbers, air conditioning, roofing, and carpenters. They would be more likely to find major problems than a general inspector.
When you do find, problems wrong you have two options 1. Ask the sellers to fix them, or 2. Ask them to lower the price so you can fix them with extra money from the loan.
This is difficult, but try to get copies of the electrical, gas, water, and other utility costs. Some homes have high utility cost and some have low cost. The larger the home, the more the utility maintenance cost are. Some high maintenance comes with old or malfunctioning equipment.
DISCLOSURE FROM SELLERS
Some states have strict disclosure laws and others don’t. Request that your seller discloses all potential problems with the home, neighbors, or the neighborhood.
Make your home sell contingent on everything you ask for, otherwise, the deal is off. This will motivate the sellers, real estate agent, and lender to be honest and do everything in a timely manner. It also gives you an out if something is found to be wrong during the process and you can get your deposit back.
Get a copy of the taxes paid for the year. Also, the real estate agent or lender can usually tell you what the home taxes are for your home.
ESCROW ACCOUNT TAXES AND INSURANCE
If you don’t want to have to pay a tax bill bi-yearly or worse yet yearly, you can request an escrow account, where you pay your taxes and insurance monthly with your payment. This is much easier than the lump sum, for most homeowners.
Your down payment is in addition to your escrow and closing cost. Most lenders want a down payment of 10% to get a good interest rate to buy a home. There are some no-down loans, but generally, your interest rate and payment are more. I prefer the down payment loan, and lower interest rate – it is less risky for the homeowner.
MOST REQUESTED INFORMATION
You will be asked for proof you can purchase a home or secure a loan. You will be asked for 1. proof of income from a job or business, 2. proof of income from income taxes provided by you and the Internal Revenue Service, 3. credit reports that show credit score and credit history. 4. proof of source of downpayment 5. proof of rent history or payment history of current loan.
LOAN BALANCE LIMITS COMMUNITY AND JOBS, TO BUY A HOME
Start with and affordable home. Don’t let a real estate agent or a lender talk you into getting more home than you know you can afford. Sometimes they don’t consider your existing bills or obligations you know you will have in the future, like the need for a better car or a kid going to college.
Look for a good neighborhood. There is no such thing as perfect people or a perfect neighborhood. But, you can search schools, crime and jobs nearby. The searches are not always accurate, but they will give you an idea.
Lois Center-Shabazz | Course Delta Agency
Personal Finance: Author, Blogger, Course Creator, Money Strategist
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