The Art of Managing Money
You may know people who seem to have everything. They have a good job, a beautiful home, and a vacation several times a year. While you earn about the same money, you don’t have half of what they do. Managing money is an art. It requires a plan and commitment. The good news is that it’s never too late to learn.
Hold Off on Buying a Home Until You Have the Money
Buying a home comes with many expenses. In order to avoid paying PMI (private mortgage insurance), you need to have 20 percent of the asking price as a down payment. If your price range is $300,000.00, this means you need $60,000.00 in the bank. You’ll also need $10,000.00 or more to cover your closing costs. You can, of course, opt to put less down, however, it will mean a higher monthly payment. The best thing to do is contact a real estate agent, such as a Point Loma Realtor, to get the full vision of what upfront money you’ll need and what amount you can afford easily.
Borrow Only What You Need
Loans are almost unavoidable in certain circumstances. A remodel, a major home repair, and buying a new car are all large expenses that people often borrow to complete. If you have good credit you may decide to take out more than what you need. This is a mistake. Remember the more you borrow the larger the monthly payment.
Sticking to a Budget
It’s easy to spend money. However, it’s much harder to earn it. Creating and sticking to a budget will make you aware of not only your debt, the amount you owe out, but also what you use your money to buy. This will open your eyes to wasteful spending habits that otherwise would go unnoticed. A budget will also allow you to save money for things like a home, a car, school tuition, and retirement.
Paying Down Debt
Most people have some form of debt. They have a mortgage, an auto loan, school loans, and a few credit cards. The problem begins when you start to sap your income to pay all these monthly obligations and then rely on your credit to pay for daily expenses. Before long, your cards begin to reach their credit limit, and then it’s game over. If you are approaching a cash-poor scenario, now is the time to reduce your debt. Consolidating by refinancing your home or taking out a personal loan to pay off your outstanding debt are two ways to achieve it. If you are unable to acquire a loan, you can begin the process by taking the credit card with the highest interest rate and pay more to that one. Once you pay off this one, you move onto the next one.
Why You Need an Emergency Fund
Life is not always predictable. In fact, it seems that when you are tight on cash, something (that requires money to fix) goes wrong. Having an emergency fund for this purpose will only prevent a minor expense from becoming a major financial setback.
Find Inner Peace
In many cases, impulse spending happens when you become anxious, stressed, or depressed. Buying something often gives you a quick internal pick-up and makes you feel good. However, once the bill comes in for the excursion you often return to a depressed state of mind. Instead, when you have these types of feelings, turn on your favorite tunes or meditate to clear your mind and find inner peace.
Managing your money wisely is essential to achieving goals and enjoying a better quality of life.
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