Sunday, January 3, 2016

MONEY MATTER$

Hello my friends.  It's the start of a new year and for lots of people that means changes and new beginnings.  If you're a long time reader of my blog, you know that I love my crochet hooks and knitting needles.  But, like all of you, reality comes first and for me that means taking care of my business responsibilities.  I thought I would share some of my insights about the following.  I'm not professing to be any type of expert and the following are just my thoughts...

REAL ESTATE
Property can be a great asset if it is purchased under favorable conditions.  The real estate bubble that burst a few years ago was a wake up call for sure.  Investing in real estate should not be thought of as a get rich fast transaction.  Maybe you are looking to purchase a home but do not want to finance or qualify to obtain a bank loan.  You might want to look at buying a home on a real estate contract directly from the sellerYou will still need a down payment but that can be negotiated with the seller.  There will be closing costs that need to be paid by both the buyer and the seller.   

Here's a scenario:  you are renting a home and the landlord offers to sell you the home on a real estate contract.  You currently pay $1,650/month in rent.  The purchase price will be $295,000 at 5% interest over 30 years with $10,000 down payment.  That means your monthly payment for interest and principal would be approximately $1,530.00/month; less than your current rent.  But, you will also be required to pay the property taxes and insurance on the property which will add approximately $500/month for a total of $2,130.00.  But wait, the mortgage interest you pay and the property taxes you pay are deductible on Schedule A of your annual Federal Tax Return which will save you money on your taxes since these amounts are deducted from your adjusted gross income. And, you will be a homeowner and building equity each month with every payment you make. 

Frequently I read where someone wants to pay off their mortgage.  This is a great idea but there are other options.  If you have a low interest rate on your mortgage, take advantage of that cheap money and use any additional funds you may have to invest in additional property.  Here's a scenario:  You have a job which enables you to pay your bills and your mortgage.  You have extra money that you can save to make a down payment on an investment property.  You rent out the investment property and the rent from that property makes the mortgage payment on that property.  You now have an asset that is making you money and at the same time you are gaining equity in the property.  Just be careful when it comes time to pick that investment property.  Remember, location, location, location and beware of high HOA (home owners association fees) as this can take a bite into your profit.  And, I would recommend you stay away from "adjustable rate mortgages" as you are exposing yourself to a lot of liability if you go this route. 

VEHICLES
I wish I lived in the center of a big, bustling city as I love public transportation.  But, as I've only lived in small, isolated towns or in big suburbs, a car has always been a necessity.  Sometimes as vehicles age, the costs of keeping them running can be very costly.  I love the idea of buying a new vehicle at 0% interest or even 1.50%. There are some great deals out there to be had.  And, you might also want to look at leasing a car.  It's going to depend on what type of vehicle you are looking for as to whether it is financially a good idea.

CLOTHING/HOUSEWARES
There are plenty of bargains to be had out there.  As I mentioned before in my blog, TJ MAXX is probably my favorite store.  You can find many name brand items such as Calvin Klein, DKNY, Ralph Lauren and many more.  And, if you're into gourmet bakeware/cookware you can find Emile Henry and Mauviel copper ware, too.  My local Ross gets name brand clothing and when I shop on Tuesday, I get a 10% off discount for being over 55 years of age.  Just remember that you'll never know what you will find at these stores so you may need to shop there often to see if you can find what you need.  Online you can find bargains, too.  My daughter loves Tory Burch and Kate Spade.  If you sign up on their websites, when they have a sale, it can be quite reasonable.  I always buy my items at a discount or on sale and I hate to pay shipping! 

INSURANCE
Growing up my parents were not big fans of life insurance or other types in investment.  After my mother passed away, my father invested in short term nursing home policy.  Unfortunately, he did have to use this policy as he was in a nursing facility his last year.  And, this policy paid out as promised.  At that time, both my husband and myself purchased a policy for long term care.  Back in 2003, the costs of my father's care was over $5,000 month.  This can easily eat up a persons savings very fast.  If I continue to pay the annual premium for the policy we have for the next 20 years, it still will be less than the cost of one year in a nursing home without any insurance.

TRAVEL
From the time when I was in junior high (now called Middle School), I dreamed of traveling.  That was in the mid 60's and I think it would have been the perfect time to discover the world.  Lots of people have hobbies which they are passionate about; our family likes to travel.  I think I'm the guilty one who led them down this path :)  The world is such a small place today that it's quite easy to get from point A to point B.  You might say you will never go on a cruise but  there are bargains to be had on cruise lines especially during the month of January.  And, if you live near a port city then you have it made as you don't need to purchase any air fare!  A couple of pointers for cruising; it's great for a families since everyone has their room and all the food they desire.  If you enjoy wine, most cruise lines allows you to bring on board a bottle or two.  You can enjoy all the ships amenities onboard for very little or no cost. But, be careful booking expensive excursions onboard.  It can easily eat up a budget.  My daughter is an expert on port excursions and she does this for us at very little cost.   If cruising is not for you, then have you thought about Airbnb?  It's a website where you can book lodging all over the world.  It's usually someone's home that they are renting out.  We've used this service many times, always with great results.  And, it's much cheaper than staying at a hotel.

I'd love to hear from you if you have any comments or questions.  I promise I'll get back to posting about my crafts.  There's a project I completed for Christmas and I'm excited to share the results with you.  And, I hope your New Year is off to a great start.  It is here at Lilly My Cat :)

My best to everyone,

Pat


 



8 comments:

  1. Pat, excellent advice especially as we start the New Year. Money does matter and I am hoping to be more aware of my spending over the next year, I did pretty good until Christmas shopping and then I blew it big time, must be better prepares for next year.
    Hugs,
    Meredith

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  2. Great tips Pat! I totally agree about real estate...what a great investment...so many people don't realize that they can own for less per month than they pay in rent.

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  3. You have reminded me that I need to adjust what I am spending for insurance. You are right: money matters! Thanks :) xx

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  4. Lots to think about for many people. You are right, money does matter! xx

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  5. Those are some very useful tips and ones I need to pay more attention to....especially my insurance coverage.
    I was in the accounting field for forty five years, so I know the importance of keeping a close eye on your finances.
    Wishing you a Happy and Healthy New Year !
    ~Jo

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  6. Best wishes to you and your family for the new year 2016. I've learnt to budget and be wise about our spending from an early age and one has to be even more aware in these days when money matters are more complex and we're now living on our pensions.

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  7. Great post, especially the car bit, we're mulling over new vs fairly new vs old at the moment as it's somethingwe're going to have to think of soon.

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