The SmartyPig Blog

Stop! Before You Buy That Home Do This

Today’s guest post today brought to you by writer, David Glenn. 

Buying a home just might be one of the biggest—and perhaps most daunting—experiences of anyone’s life. It’s not only a huge commitment, but a lot of time, thought, and money goes into making such an important decision. For tbe most smooth and pain-free home buying experience, though, you’ll need to take these four tips into account.

1. Save for a Down Payment

Saving money isn’t easy for most people—in fact, it’s easy for very few. The reality is, though, that more often than not, you’ll need to have a certain amount of cash saved up for a down payment for a home before you will be approved for a mortgage. The exact percentage will vary, but it is usually anywhere from 5 to 20%. On a $200,000 home, that could be anywhere from $10,000 to $40,000—not pocket change by any means. To help you set a goal and work toward it until you reach it, use a tool like SmartyPig. This FDIC-insured web-based service makes it easy–and actually fun–to set goals and work toward them. It rewards you for saving money by giving you gift cards when you reach your goals and cash rewards for everyday purchases. Create a goal for something as little as a pair of shoes or for the down payment on your dream home. Decide how much you want to save and when you want to meet your goal—SmartyPig will suggest a monthly contribution. Link your bank account and set up automatic withdrawals so you don’t even have to think about it. Add more money whenever you can and get to your goal faster. SmartyPig makes it easy and fun to save.

2. Spring for a Home Warranty

When shopping for a home, look for one that is covered by a home warranty. Home warranties or home protection plans vary, but typically they cover systems like the air conditioning, electrical, heating, plumbing, the garage door opener and appliances like the washer and dryer, dishwasher, oven, microwave, refrigerator, etc. If any one of these systems or appliances breaks, the company through which the home is covered will fix or replace the systems. This will not only save you a lot of headache and a lot of money, but having a home warranty will also make selling your home a breeze.

3. Strengthen Your Credit

The lower your credit score, the higher your monthly payments will be. Work hard to get your credit score above 680–at the very least–before buying a home. Ideally you’ll want a score higher than 720, though. You’ll pay a lower down payment and your monthly payments on your mortgage will be considerably lower. There are a number of techniques you can implement to be well on your way to lowering your score: (1) Use just one or two credit cards with good interest rates. Putting balances on lots of different credit cards will lower your credit score since your score is partly determined by how many of your cards have balances. (2) Keep your eye on your credit score. You can get a free copy of the three credit bureau reports—Equifax, TransUnion and Experian—every 12 months through AnnualCreditReport.com. Stagger the reports and get one every four months to really stay on top of your credit score.

4. Figure Out What You Can Afford

Before you even start looking for a home, you’ll want to figure out what you can afford. The last thing you want to do is go home shopping and fall in love with a home only to find out later that you really can’t afford it. You’ll need to take your income into account, set against your debt to figure your debt-to-income ratio. It’s usually a good idea to say that your monthly payment on a home should be about 28% of your monthly income. If you have two incomes coming in, resist the urge to combine the two incomes and take 28% of that; it’s not usually a good idea to always depend on two incomes, especially for something like a mortgage. If one of the providers lost his or her job, you could potentially lose your home.There are also financial calculators online that can help you figure out what you can afford.

Once you’ve got these four tasks underway and under your belt, you’re that much closer to your dream home. Start shopping; the next thing you’ll have to worry about is how to decorate!

David Glenn is a home improvement expert. He occasionally freelance writes about real estate tips, home maintenance and DIY home repair. 

Don’t Hide the Small Stuff

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“One in five Americans has hidden a purchase of $500 or more from their significant other, according to a new study from CreditCards.com. And an estimated 7.2 million Americans have a bank account or credit card that their spouse doesn’t know about.” Quotes Yahoo.com in an article this week on financial infidelities. And surprise, it’s not women hiding that extra trip to the mall, its men that are more likely than women to “cheat” with their pocket book.

It may not sound like much, but a small purchase here can add up to many more there, and before you know it you are hiding a credit card’s worth of items. At SmartyPig we can solve that problem for you. Saving up for purchases, even small ones like a new sweater, are easy with SmartyPig. Instead of heading to the mall, stash that money in one of your goals – and presto! You can buy that sought after item guilt free. We challenge you to do so next time you feel the need to buy! And then let us hear about it.

Wishing you successful saving.

SmartyPig’s Media Mad Woman, SFoss@SmartyPig.com

Start Thinking About Retirement: 5 Helpful Tips for Millennials

Guest post by Audrey Clark:

People who were born between 1980 and 2000 are referred to as Millennials. Experienced financial services writer Michelle Nguyen has found that, as a group, Millennials seem resistant to the idea of investing for retirement. They distrust the financial community and feel more comfortable simply saving their money, rather than investing it. They are also used to instant gratification, meaning that they typically prefer short-term profits to long-term revenues. These factors make it somewhat difficult for financial advisors to market to them in the traditional way. Nguyen, writing for Advisor Software Sales, notes that Millennials have witnessed so many severe fluctuations in the stock market that they have learned to be suspicious of common investment opportunities. A new report published in Bankrate.com stated that almost 40 percent of young people between the ages of 18 and 29 prefer to simply save their money rather than invest it. On the other hand, a recent survey showed that 70 percent of Millennials who began working at the age of 22 also started retirement savings plans. Goal-oriented financial planning works best for them. Advisors can help them keep focused on retirement goals and help them prepare for market fluctuations. Here are five tips that may inspire them to view retirement plans in a positive light.

  1. Don’t trade. Invest. Look more for long-term investments instead of frequently traded stocks. Most of the horror stories about major losses in the stock market are due to trading. Instead, young investors will feel more secure if they regularly invest a certain amount of money into an individual stock or mutual fund.
  2. Invest in dividend-paying mutual funds. Investing is easier when some benefits are received quarterly or even annually and not at some far off future age of 65. Mutual funds that pay dividends can be held in a 401(d), Roth IRA or other types of investment accounts. Young people can also save for a Roth down payment with Smartypig.
  3. Invest in precious metals. More than 50 percent of Millennials say they do not trust the stock market as a place to invest and do not want to depend on it as their sole investment vehicle. A safe and increasingly popular alternative is to invest in precious metals. Precious metal investing is often a good hedge against loss with other investments and is not subject to the extreme fluctuations that may be seen in the stock market. SBC Gold explains how a precious metals IRA works by using cash available within the IRA to purchase certain precious metals like gold, silver, platinum and palladium.
  4. Use technology to monitor retirement investment plans. Millennials have grown up with technology. Many are able to transfer funds back and forth between savings and checking by using a smartphone app. They deposit checks by simply taking a picture of the check and uploading it through their bank app. These digital natives should consider using a phone app to monitor their retirement investments.
  5. Learn as much as possible about all retirement benefits. Millennials should learn as much as they can about all investment plans, how they work, and what best suits their needs. They should participate in their employer-sponsored plans. If the employer matches funds deposited, take advantage of that benefit. Ask for recommendations from family and friends about investments and financial planning consultants. Seek counsel from professional financial planners and be prepared to ask questions.

The recession has it made difficult for many Millennials to plan for their retirement, especially for those who have had difficulty finding a well-paying job and/or are still paying off their student loans. Nevertheless, it is never too early to start saving for retirement. Author Bio: Audrey Clark is a skilled freelance blogger covering a range of topics from careers and finance to travel and leisure, along with everything in-between. When not writing, she’s always on the lookout for her next adventure. Connect with Audrey on Twitter and Google+.

How Are You Using Your SmartyPig?

We asked our users to give us a few of their goals in the new year, here’s what we heard:

My goal this year is to do things for ME. and learn to say NO to others more often – Karen W.
Buy healthier food but still not increase my food budget. – Sharon B.
Start a new savings goal each quarter. Sarah L.
Start a goal for car repair and new car purchase
Save up for new house I will buy – Blanca S.

Reaching Your Financial Goals

financial-goalsSetting them is the easy part; saving “more,” paying down debt, not using a credit card. We all have areas that need work and identifying them is the first step in this process. After you’ve discovered your weak areas, it’s time to set the goals and conquer them. Just like the nearly half of all Americans intend to do this January. The experts at US News discuss how we can get there in a recent article posted discussing resolutions and how to easily achieve them.

First and foremost, be flexible. Things come up – deal, and move on. You can’t prevent a blown tire (usually), so pay for it and continue your emergency fund saving as planned. Visualize and specify your goals. SmartyPig is great for that. Name your goals and relish in your monthly updates. Can’t you just feel that warm beach sun now? Lastly, find your motivation. Working towards a good financial base for your family, or rewarding yourself with a new TV for a good job at work. It’s important to keep your eyes on your prize.

Wishing you successful saving.

Sarah Foss, SmartyPig’s Media Mad Woman, SFoss@SmartyPig.com

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