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Ways to Save Big on the Big Three: Car, House, and Education

Ways to Save Big on the Big Three: Car, House, and Education
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There are three big-ticket items that most people need to pay for in life: a car, a home, and a good education. However, doing your due diligence can help make these purchases a bit less painful to your paycheck.

Car

Everyone remembers their first car. Turning those keys and hearing the engine roar feels like a graduation to adulthood. Unfortunately, part of being an adult is dealing with the payments along with the thrill of the open road. Here are some ways to make sure to save.

1. Buy at the Right Time

As far as car dealerships go, it pays to do your homework. The end of the month, end of the summer, and end of the year are all great times to snap up some deals. At the end of the month, dealerships may be close to qualifying for sale bonuses from manufacturers. If they are nearing their quota, they make be more ready to make a deal.

At the end of the summer, dealerships are trying to clear out inventory to make room for next year’s models. And, at the end of the year, customers are thinking about Christmas shopping and not car shopping. It’s a lean time for car dealerships, which means they will be very happy to make you happy. This concept also works during periods of inclement weather. If there has been a longer period of ice and snow or an unusually hot spell, many people may not feel like car shopping. Yet, dealerships still need to report good sales numbers. If you can brave the elements, you may find a reward in a much better deal because you visited the dealership when others stayed home.

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2. Increase Your Loan Payments to Save Interest

Of course, the best scenario is to save over time to pay cash for a vehicle. However, realistically most people need to take out some sort of financing. With any loan, you never want to pay the minimum payments if you can help it. Always remember, a loan is set up to benefit the lender, not you. You can easily pay multiple times your original purchase price in interest if you simply follow your lender’s payment timeline.

There are several great sites that can motivate you to pay off your debt faster by showing how much you save over time by just increasing your payments. One fun trick if you can’t afford a lot of money for extra payments is to just round up. So, for example, if your payment is $360 per month, you pay $400. When paying off loans every little bit helps, and that $40 extra per month put toward your principle will equal big savings over time.

3. Buy Used

You pay a price for that new car smell. The minute you drive your new car off the lot, it loses about 9% of its value. During the first year, you lose a total of 19% in depreciation. The following year, you lose another 12%. After this, your car depreciation holds steady at 9% per year. Therefore, it makes sense to look for well-maintained cars that are over two years old. When buying, make sure to take it to a mechanic whom you trust for a full inspection. Also do a background check to verify that it hasn’t been in an accident. If you really just have to have the smell of a new car, save yourself some serious money and get the fragrance spray.

House Savings

When buying a house, the amount of time you take to educate yourself can mean thousands of dollars in savings. You can passively buy a house through normal channels, but you will spend more for the convenience. Remember, many real estate investors don’t have a realtor license. They just took the time to become educated on the process.

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1. Know Your Spending Power – Get Approved for a Loan

Meet with a loan officer, review your credit, and determine your buying potential. You don’t want to waste your time looking at homes that you can’t afford. You can also see if there are any blemishes on your credit report that are easy to fix so you can qualify for a better interest rate. Make sure you research the costs involved with buying a home in your area. You need to know how much you will need for a down payment based on your credit score and debt-to-income ratio. If your credit is strong enough, you may not have to put any money down for the loan. You will still need to pay closing costs and other fees (unless you can get your seller to pay them), so make sure you have enough extra cash on hand before signing the mortgage.

2. Know your market

Knowing the housing market is crucial to making educated real estate purchases. There are several sites you can use to research public records online. Mortgage records are public information. You can easily see how much someone still owes on their property vs. their asking price. This is useful to know when negotiating on a home.

You can see when someone has the breathing room to negotiate down and when someone is trapped in a mortgage and must stick to a certain price. The more equity someone has in their home, the better the chance they will drop their asking price if they need to sell quickly. Also, get comp reports of home sales in the area either through a site or a realtor. See if home sales are rising or falling. Location is key when buying real estate. Look for homes in areas with good schools, strong infrastructure, pleasant neighborhoods, and other amenities that would increase resale value.

3. Look into REOs, Short Sales, FSBOs, and Foreclosure Sales

Not going the traditional route to buy a home can be scary, but if you put some effort into learning the system, the rewards are huge! I want to stress that this is just to an overview of areas you can research. You will need to study these topics in depth to become educated to the point where you can properly evaluate risk vs. return on investment. There are entire books written on these topics, so I will just pique your interest in this article. This is where the investors play. It pays to become educated and comfortable with alternative sources of home purchases.

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FSBO

Our first home we bought was a FSBO (For Sale By Owner). We literally drove through the neighborhood, saw the sign, and knocked on the door. Because the owners didn’t do their homework and comp their home correctly, we saved about $10,000 just in the initial purchase price of the home. Since we didn’t utilize a realtor, the seller didn’t have additional realtor fees to work into the asking price, so we both benefited.

REO

REOs (Real Estate Owned) are properties that are owned by a lender. When a home goes into foreclosure, the bank puts it up for auction. If no one buys it, it clogs up the lender’s inventory. Banks don’t want to hold actual properties and care for their upkeep; they just want mortgages. Many times, a bank will cut a great deal on an REO property just to get it off their books.

Short Sales

Short sales happen when a bank agrees to work with the seller in foreclosure and accept less than the mortgage amount from a qualified buyer. This helps the bank avoid the hassle of going through the foreclosure process. Again, most banks don’t want REOs, and if a buyer shows up with cash to do a deal, the banks may be willing to talk even before the house goes to auction.

Foreclosure

When a home goes into foreclosure, and no short sale deal is made, it is put up by the bank for auction for investors to bid on. If you spend some time understanding this process, you can be right there in the action and pick up a great deal on a nice property. Again, to ensure you aren’t buying a lemon, arraign to visit the house beforehand and get it inspected. Also, make sure there are no additional liens on the title. Since you are representing yourself in this deal, you must do your homework to make sure you are getting a good return on your investment.

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Education Savings

The price tag of a quality education has been steadily increasing in recent years. Student loan debts follow most people well into their career. It pays to limit them as much as possible.

1. Find Free Money

If there is anything more fun that going to college, it has to be finding free money to pay for it! There are so many sites that show you how to find scholarships. You will have to do some digging to see if you qualify. You may also have to write essays explaining your education worthiness over your competition. But, a little bit of work goes a long way if you can decrease the total amount of loans you will need to take out.

2. Choose Federal over Private Loans

Federal loans have a fixed interest rate that is lower than private loans will offer you. Private loans also do not have locked-in interest rates and, therefore, your payments can increase if your interest rates go up. This means you pay more money over a longer period of time. Avoid private loans at all costs unless you have no other option. Also, only borrow what you honestly need and live modestly. You don’t have to take out the full qualification amount. Take a side job for extra income while in school and over summers to make sure you have the smallest possible debt upon graduation.

3. Utilize Community Colleges

You can still have the diploma from the four-year college of your choice without carrying the full amount of debt. Spend your first two years at a community college to get your base credits out of the way. These colleges are usually much less expensive than state or private colleges, which are about triple the price tag. Also, if there is a community college close to your home, you can save additional money on living expenses by staying with family. You can then transfer to the college of your choice for the final two years.

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While I’ve given you some ideas on how to save on the three big-ticket items in your life, the work still falls to you. All of these avenues are very doable, you just have to be willing to work harder than the average consumer. This is why most American’s work to pay off huge debts instead of building up their net worth. With some smart planning, research, and applying a bit of knowledge know how, you can spend more time working to build up your nest egg instead of paying off years of unnecessary debt.

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Sarah Hansen

A corporate-sales professional turned entrepreneur

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There
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Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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