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Did you know?
From 2001 to 2005, the average homeowner saw the value of his or her house jump by more than 50 percent.
It’s no secret that banks charge an insane amount of interest on any loan they give out. Especially for mortgages. In fact, for many years, you’re not actually making payments on your home- you’re just paying the bank thousands of dollars in interest only. Which is just crazy! For tips on how to avoid this and save up to $100,000 on interest, read this article by Anita at Live Like You Are Rich:
What did we decide? Ultimately, because we didn’t know what the future held, and for more financial security, we decided to go with a 15 year loan but we pay an additional couple hundred dollars a month towards principal. We are on track to have our home paid off in about 10 years. This will save us $100,213.35 in interest alone.
It’s absolutely okay to have money that you spend on things that you want, rather than things that you need. I love buying books, makeup products, and going on outings- the zoo, summer festivals, museums, day trips, and vacations. That’s what I love, and I’m willing to spend a little bit extra to travel and have things that I like. But I budget my money, and make sure I can afford it. And that’s fine! However, there are tons of items out there that people waste MILLIONS of dollars on each year, and I’m guilty of some of them. They won’t actually make you happy, and you won’t miss them when you stop buying them. For a list of things that frugal people never purchase (at least, not at full price), check out this post by Jennifer at The Intentional Mom:
-Bottled water- a complete waste of money, it’s all literally tap water in a plastic bottle.
-Paper cups or paper plates- they’re convenient for a BBQ or picnic, otherwise, stick with reusable plastic/glass.
-Household repairs- there are some instances where you should call a professional, but most simple repairs can be learned from Youtube.
-Late fees, speeding tickets, parking tickets- completely avoidable.
-Movie rentals or books- go to the library for free!
We all have our guilty pleasures. I love buying cheap, useless junk from eBay and getting used books from thrift stores. Some people love going shopping for clothes when their closets are full. Others waste hundreds of dollars a year on power ups for iPhone games. And it’s okay to treat yourself- it’s your money, and you should spend it how you like. However, it’s never useful to just pour your hard-earned cash down the drain. The $150 you spend on eBay this year could have been used to buy a plane ticket. That shopping spree could have been a payment on a brand new car. There are usually way better investments for you money. For a list of things to just stop buying, check out this post by Jacob at I Heart Budgets:
-Credit card interest- buying something on credit if you NEED to (like hospital bills or auto emergencies), or for getting rewards like cash back or airline miles is fine. However, without having the money to back it up, you soon can find yourself thousands of dollars in debt, and waste money by paying the interest.
-Appetizers at restaurants- they cost as much as an entree, and the entree portions are usually huge enough where you don’t need the extra food.
-Overdraft fees and ATM fees- budget your money and plan ahead.
If you are just now beginning your journey to buy a home, you probably have a lot of questions. You’ve probably heard terms like “adjustable rate,” “debt to income ratio,” “FHA loans,” and others- but you don’t really have any idea what they mean. If you know absolutely nothing about getting a mortgage, let alone the different types, then you need to read this guide by Elizabeth Bennett Colegrove at the Reluctant Landlord. It’s an easy to read post that outlines exactly what you will need to get a mortgage, as well as different types of loans you may qualify for. Check it out:
First time home buyer
Only 3.5% down payment
First time home buyer
Available in underprivileged and low income areas
Strict appraisal guidelines
When shopping for a mortgage, it’s important to follow the right path. Don’t get suckered in by promises of zero down payment, temporarily low interest rates, and no credit checks. Programs like this certainly exist, but will usually end up taking advantage of the buyer. You might save some money now, but you will end up paying through the nose in the long run. Read this article by Mark Riddix at Yahoo Real Estate for more mortgage mistakes to avoid:
-Adjustable Rate Mortgages- offer low interest rates up front, then raises them after a few years. It works, but only if the housing market is in full swing. If your home doesn’t build you any equity, it can quickly become a nightmare.
-No Down Payment- borrowers who make a down payment are more likely to make sure they don’t lose their investment.
-Liar Loans- these are loans that require little to no documentation
-Reverse Mortgages- there are high upfront costs, and the owner loses ownership of their home.
We all have those things that we know we don’t -need-, but that we keep mindlessly buying anyway. This week, I decided that I’m done with soda. I won’t drink it if it’s not in the house, and I’ll become healthier (and save more money) by drinking water instead. There are tons of things in my house like that. For a list of things you don’t actually need to buy, check out this post by Stacy at Six Dollar Family:
Cooking herbs- grow your own, sustainable, fresh herbs.
Lotion- I tried my own homemade dry skin repair cream and I haven’t looked back since.
Body Wash- try making homemade body wash
Pasta Sauce- I now make our own homemade pasta sauce saving myself an average of $2.00 per jar.
Dishwasher detergent- I started making my own homemade liquid dishwasher detergent.
Everything you do today affects you in the future. If you exercise and eat healthy now, in the future you will probably have less medical problems. If you save your money and don’t buy that impulse purchase today, you can use that money for a vacation later. In fact, it’s especially true in the world of finance. Smart saving and frugal spending now will pay off big later! However, mistakes you make now can still do damage to future-you. Check out this post by Haniya Rae at Bustle. These are things that can prevent you from getting a mortgage later:
-Not saving for a down payment
-Having a bad credit score and doing nothing to improve it- pay those bills on time!
-Not having a credit score at all
-Having too much debt
-Not getting pre-approved
-Not working at the same place long enough- 2 years!
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