Extinguish that fire, and save!

Let’s say you need to wash the dog, call your dad back, do your taxes, and take care of the fire that’s rapidly consuming your kitchen. It’s time to make a priority list! Let’s say you performed these tasks in the order they’re listed. By the time you tackle your taxes, there won’t be a house left to get those mortgage deductions.

The takeaway: prioritizing matters!

In this case, dousing the flames first is a no brainer. And here’s another no brainer: make savings a top priority! Now, of course there’s a caveat: if food and shelter are an issue, or emergencies pop up, your priorities will change. But in everyday life, as you’re crafting that superstupendous budget of yours, treat savings as if it were one of your most important bills. In a lot of ways, it is. Don’t go with the mindset, “Well, I’ll pay these important bills, get some needs, get some wants, and then if anything is left over, I’ll put it in savings.” That way of thinking isn’t going to get you an early retirement. You need to pay yourself first to get ahead!

You know your situation best, so make a plan, and write down some goals. Say you’d like to put $100 away per month. Instead of hoping it’s there on the 31st, put that money directly into your savings right along with your mortgage, utilities, and groceries. Make it a priority, and it’s far more likely to happen. All your other expenses tend to find a way to fit.

Say you’re loving this plan, you’re getting excited and want to save, but maybe you don’t trust yourself to actually part with your funds each month. One of the most effective ways to save is to have it taken out automatically. Just call up your bank or credit union, and ask to have whatever amount you’d like moved from account to account. So let’s say Steve is bringing in $2000 per month, and wants $200 automatically moved from checking to savings. Since Steve has quite the imagination, he decides to play a little game with himself. He pretends that he’s only making $1,800 per month. So sad. He got a pay cut at work for telling his boss how he really feels about TPS reports. He’ll have to tighten his belt and make a few adjustments. A year later, Steve takes a peak at his savings account, and BAM! He’s got $2,400 big ones sittin’ in his account! (Not to mention any interest he may have earned.)

Steve knows that to get ahead, he needs to pay himself first. He’s also the kind of guy who puts out the kitchen fire before washing the dog. Like Steve, once you get in the habit, it’s really not too difficult to save. Start small and work your way up. Even $10 per month is INCREDIBLY better than no dollars per month. Keep in mind that the habit is far more important than the amount!

Get Movin' On Financial Upkeep

Well, it’s now 2012, and you’ve likely got a few resolutions. While losing weight and eating healthier are important, let’s not forget the financial side of things…You know, the things that ultimately keep all that money that you love so much in your pocket. Now is the perfect time to get some financial upkeep checked off your  list. Here are just a few ideas to get you movin’:

• Evaluate your budget. First off, you have one, right? (If not, what better time to start than now!) Is  your current budget working for you? Have you consistently overspent in a particular category? Have your income or expenses changed? Netflix increased their prices, in case you haven’t heard or aren’t extremely mad about it—have you factored those kinds of increases into your 2012 budget?
• Clear out the filing cabinet. Just make sure you hold on to important tax documents, receipts you’ll need, etc. Clear up some space for your 2012 documents. 
• Side note: assuming you get a tax return, what are you planning to do with it? The Play Station 3 is ever so tempting, but why not beef up your emergency savings, or get the jump on some debt?
• Check out your 401(k) and other investments. It’s good to check in at least once a year. You know, make sure no one has stolen your money and that your asset allocation is where you want it. You’re a year older now—are your investments too aggressive?
• Run through your will to see if any situations have changed. You have a will, right? (If not, check out some of the free will making websites for less complicated situations). 
• Make a plan to pay off debt! Check out powerpay.org, schedule a session with us, sit down with your spouse to plan it out—do whatever will work for you to get moving on reducing your liabilities. Even $20 extra per month toward your debt could potentially save you hundreds in interest. Now is the time to tackle it! 
• Pull your credit history. Go to annualcreditreport.com and order your report for free. Remember, you get one free pull per year from each of the three bureaus, so that’s 3 histories per year. This free history does not give you your FICO score, but it’s more important that you scan through your history and make sure everything is accurate. You’d hate to get hit with higher interest rates because of a mistake. 

So there are the bare bones. Take these one at a time, and when combined with your other resolutions, you’ll soon be on your way to a skinny body and a fat wallet.

As always, the Family Life Center is here to educate and help you attain your financial goals.

So, You Think You're Ready to Buy a House?

While the joys of paying rent, living in less than 900 square feet, and hearing your neighbors argue with each other every night can be tantalizing, you may find yourself thinking it’s time to buy a house. But before you go and load up with a mountain of debt, here are just a few things to consider.

Shopping for homes can be fun, but be careful not to fall in love with the “big dream house” just yet. Once your mind is set, it will be tempting to find any way possible to buy it, despite it being “just a hair” out of your price range—(it has vaulted ceilings, for heaven’s sake!). People tend to push the boundaries of what they can afford when it comes to houses, and often miss the first step, which is to evaluate your budget. It’s of utmost importance that a mortgage payment fit within your household budget. Consider worst-case scenarios. Be conservative in your estimates. YOU know much better than any lender or real estate agent how much you can actually afford. Just because the bank says they’ll lend you $200,000 doesn’t mean you should take them up on the whole amount. You want your finances to be comfortable and secure—not stretched to breaking point. You might even want to try “practicing” a mortgage payment for a few months, and putting any extra savings in your down payment fund.

Speaking of your down payment fund, you have one, correct? It exists? And it’s not the money you’ve designated as your emergency savings? Because, even when you’re in a home--particularly when you’re in a home--emergencies still happen. When it comes to down payments, the more the better—but shoot for at least 5 percent of the purchase price.

Now, let’s say you’re ready to talk to some lenders. What are they going to care about when deciding to lend you money? They’ll most likely be focusing on your income, your down payment, and your credit score. Credit scoring is an entire topic unto itself, but for starters, find out where you’re at. Make sure you regularly check your free report at annualcreditreport.com (NOT freecreditreport.com). If your score is
over 760, you’re in great shape to get some of the best interest rates. If it’s lower, expect to pay more money in interest to the bank, or possibly even get turned down for a loan. Lenders will charge you more to borrow their money if you have a lower credit rating. Just think, you wouldn’t want to lend money to that shady cousin who doesn’t have a job and hasn’t ever paid you back in the past, right?

Another thing to keep in mind: don’t forget closing costs. Ah, closing costs. Those nasty fees we always forget about in our budget calculations that will cost you around 3% of the loan value. If you’re buying an existing home, the seller will sometimes pay these costs, but when you’re adding everything up, don’t forget those extra few thousand dollars. Every lender will charge closing costs, but they don’t all charge the same, so shop around. When researching lenders, try to compare at least three—not all lenders are created equal. When you’re going to fork over this kind of money, it makes sense to look for the best deal.

Lastly, don’t expect all your troubles to evaporate once you’re in the home. Your old landlord probably won’t be up for fixing your broken toilet anymore. Do you own a lawn mower? Are you used to paying for your lawn to be watered? How do you feel about shoveling your own driveway? Do you have money in reserve to fix the broken water heater? There are a ton of benefits to owning a home, but it’s well worth it to consider every aspect of such an important purchase.

Want to learn more essentials on this topic? You’re in luck. The USU Family Life Center is a HUD-approved, non-profit agency that offers a free homeownership workshop every month, as well as one-on-one counseling to go over your specific situation. Purchasing a home can be complicated and stressful, but it doesn’t have to be. Just call (435) 797-7224 to get moving!