We recently posted about investing in yourself and it seemed to have resonated with a lot of people. It could be because we are still at the beginning of the year and there is still follow through with the resolutions we made for ourselves. Some people join a gym, others start a savings account, and then there are people who are determined to buy their first home. Talk about investing in yourself! Stick to your goal. Almost all of the resolutions we set for ourselves are long-term. So why buy a home when you can rent? I mean you’re not sure you’re going to be living in Naples, Chicago, Boston, etc. forever.
The answer is obvious: When you rent, you are investing in someone else’s financial future. If you don’t plan on living in the city forever, then I would look into rentals in the area. If you are able to rent out your property for a much higher amount than your mortgage, then it might be worth looking into. For example, I purchased a condo this year. My mortgage is about $500 less than what the rent was on my apartment. I used to pay close to $1,500 in rent. My mortgage and HOA payment put my living expense at $1,053. My mortgage is an affordable payment I can make every month and when I am done fixing it up, I can rent it out for $400-$500 more than my mortgage payment. So even if I move, I will still enjoy tax benefits from this property (since my mortgage, interest, and property taxes are all deductible on my income tax), have the additional income for savings, AND have someone else who rents pay off my mortgage while my property is most likely to increase in value with time. How awesome is that?! Of course, I am a Realtor® and I had the help of my Broker to determine where to invest. I had to wait three years into my Real Estate career to be able to buy. Every year I told myself I was going to buy but my actions said otherwise. So stick to it! Real Estate is a strong foundation for people to build on their financial wealth for the future. We are here to help! You can always call or stop by to discuss how we can help get you started on the path to homeownership.
If you need some ideas for saving money or help with credit, here are a few tips:
1. Start by checking your credit score.
Here is How: Your banks offer it, websites like Credit Karma do too. Your credit score affects your ability to buy as well as your loan’s interest rate.
2. Figure out your Debt to Income ratio.
Here is How: Add all your monthly bills like cable, power, etc. and divide by your gross total income (income before taxes). This equals your Debt to Income ratio. The lower this ratio is, the better you look to lenders because you are considered less of a risk.
3. If you have too much debt or need to save in order to buy, we suggest creating a realist, sustainable budget.
Here is How: Start with small changes and progress from there. I suggest using a budget app like Intuit’s Mint. You get to set your budget for expenses like shopping, credit cards, insurance, and everything else. It alerts you when you have gone over your budget and best of all, it allows you to stay on track when it comes to your money.
4. Plan for major purchases or expenses.
Here is How: If you have birthdays, holidays or big bills coming up, start saving ahead of time. Groceries can get expensive as well so make sure to take advantage of digital savings. Grocery stores like Lucky’s and Publix let you see their weekly savings so you can plan your meals ahead of time and avoid last minute restaurant trips. You can save even more on the Lucky’s app by earning $5 for every 100 points you earn. $5 off my grocery bill? Yes, please!
5. Open up a savings account whether it is at your current bank or an online bank.
Here is How: Banks like Chase offer incentives for opening up savings accounts but online banks like Ally offer a high Annual Percentage Yield (APY refers to how much money you earn on a deposit over the year). Once you have opened up your savings account, start putting away 10% of your residual income away and increase up to 15% whenever you are financially able to do so. The secret to success is to set up the savings account for automatic deposit.
6. Low credit score? Start to pay off that pesky debt.
Here is How: Start by taking a look at your credit report. Are there mistakes or late payments? You can dispute them online or via mail. Does one credit card charge you a higher interest than the other? Pay that one off first. Make sure to make every payment moving forward on time.
7. No credit? You can work on improving that.
Here is How: There are options like E-credable that allow your bill payments to be used to create a credit report and credit score. This option allows you build your credit without accruing any more debt by taking out credits cards.
8. Cut out unnecessary expenses.
Here is How: The subscription box(es) you love so much? Unless it’s life or death, cancel them. It will be much more gratifying to receive a box at your own house than the place you rent. Don’t think a subscription box can make a difference? According to inc.com, the average subscriber to box deliveries receives at least seven boxes and has another 12 on their wish list! I am subscribed to four and the yearly amount I spend is close to $1,200! This does not include my unhealthy Starbucks obsession. Another way to save is cutting off your cable. I do not watch a lot of t.v. but there are t.v. streaming services I use for a whole lot less than what Comcast cable would charge me. If you decide to cut off your cable, you are not alone. A November 2017 Leichtman Research Group collection of data showed that in the third quarter, large satellite companies and cable operators lost about 405,000 users!
We hope these tips help but if you need additional information or have any questions, as always, our doors are open. You can contact us at (239) 228-5348 or stop by at your new office location: 3200 Bayshore Drive, Naples, FL 34112.