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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

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.

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 January 2, 2019

How Personal Finance Software Helps You Get More Out of Your Money

How Personal Finance Software Helps You Get More Out of Your Money

Do you know what mental health experts point to as the biggest cause of stress in the United States today? If you said “money,” then ding, ding, we have a winner!

Three out of four adults today report feeling stressed out about money at least part of the time. People are either worried about not having enough money or whether they’re putting the money they do have to use in the best possible way.

Your money is either in charge of you or you’re in charge of it, there’s no middle ground. Using some type of personal finance software can help alleviate some of that money stress and better allow you to manage your money effectively. Without it, you may just be setting yourself up for constant financial worry. Life is already tough enough and there’s no need to make it more difficult by simply hoping your money issues will all work out in your favor. Hint: they won’t.

This guide will help you to understand how personal finance software can better assist with both accomplishing long term financial goals and managing day-to-day aspects of life.

Whether it’s tracking the savings plan for your child’s college fund or making sure you won’t be in the red with the month’s grocery budget, personal finance software keeps all this information in one convenient place.

What Exactly is Personal Finance Software?

Think of it like the dashboard in your car. You have a speedometer to tell you how fast you’re going, an odometer to tell you how far you’ve traveled, and then other gauges to tell you things like how much gas is in the tank and your engine temperature. Personal finance software is essentially the same thing for your money.

When you install this software on your computer, tablet, or smartphone, it helps to track your money — how much is going in, how much is going out, and its growth. Most personal finance software programs will display your budget, spending, investments, bills, savings accounts, and even retirement plans, levels of debt, and credit score.

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How It Leads to Financial Improvement

It shouldn’t come as a surprise, but people who regularly monitor their finances end up wealthier than those who don’t. When you were a kid, keeping track of all of your money in a porcelain piggy bank was pretty easy. As we get older, though, our money becomes spread out across things like car payments, mortgages, retirement funds, taxes, and other investments and debts. All of these things make keeping track of our money a lot more complicated.

Some types of personal finance software can help make things a little less complicated, setting you up to meet financial goals and taking away some of the stress associated with money.

Even if you already have a Certified Financial Planner (CFP) some type of personal finance software can be of great benefit. Whereas CFPs focus on the big picture of your money, they don’t handle the day-to-day aspects that determine your overall financial health.

It’s also not nearly as complicated as you might think and can take out a lot of the tedium that comes with doing everything on an Excel spreadsheet or with a pad and pencil.

Types of Personal Finance Software

When it comes to personal finance software, it generally fits into two categories: tax preparation and money management.

Tax preparation software such as Turbo Tax and H&R Block’s software can help with everything from filing income taxes to IRS rules and regulations and even estate plans. Plus, there’s the benefit of filing online and getting your refund check a lot faster than if you were to mail off your forms after waiting in line at the post office.

For the purpose of this article, however, will be focusing more on the personal finance software that aids with money management.

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Money management personal finance software will help you to see the health of your cash flow, pay down debt, forecast for expenses and savings, track investments, pay bills, and do a host of other things that 30 years ago would have practically required a team of accountants.

When to Use Personal Finance Software

So far we’ve gone over what exactly personal finance software is and how it can be a benefit to your money. The next logical step in this whole equation is determining when it should be used and how is the best way to go about getting started using it.

Below are four of the most common and practical ways to use personal finance software. If all or any of these apply to you and your money, then downloading some type of personal finance software is going to be a smart move.

1. You Have Multiple Accounts

There’s a good chance that when it comes to your money, it’s in more than one place. Sure, you probably have a checking account, but you may also have a savings account, money market account, and retirement accounts such as an IRA or 401k.

If you’re like the average American, you probably have two to three credit cards as well. Fifty percent of Americans also don’t have loyalty to just one bank and spread their money across multiple banks.

Rather than spending hours typing in every detail of every account you have into a spreadsheet, many programs allow you to easily import your account information. This will help to eliminate any mistakes and give you a bird’s eye view of everything at once.

2. You Want to Automate Some or All of Your Payments

Please don’t say that you’re still writing out paper checks and dropping each bill in the mailbox. While it’s noble that you’re doing your part to keep postal workers employed, we’re 18 years into the 21st century and you can literally pay every bill online now.

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There’s no need to log into every account you have and type in your routing number either.

With personal finance software you can schedule automatic payments and transfers between all of your imported accounts. Automatic transfers will help to make sure you have the necessary funds in the right account to ensure all bills are paid on the appropriate date. Late fees are annoying and do nothing but cost you money. It’s time that you said goodbye to them once and for all.

3. You Need to Streamline Your Budget

Perhaps the best feature of personal finance software is that it allows you track everything going in and out of your virtual wallet.

Nearly every brand of personal finance software out there has easy-to-read graphs and charts that allow you track every cent you spend or earn, should you choose. You might be pretty amazed when you see just how much you spent on eating out last month or if you splurged a little more than you should have on Christmas gifts last year.

Every successful business on the planet has a budget and using personal finance software can help you trim the fat on your spending in ways that affect your everyday life.

4. You Have Specific Goals to Meet

Maybe it’s paying off debt or saving for up something like a European vacation. Whatever your financial goal is, whether it’s long-term or short-term, personal finance software programs are one of the savviest ways to go about reaching those goals.

You can do everything from set spending alerts to notify you when you’re over budget to automating what percentage of your paycheck goes to things like retirement investments. The personal finance software that you choose should show you exactly how close you are to hitting those goals at any given time.

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How to Get Started

From AceMoney to Mint and Quicken, there ’s no shortage of personal finance software apps out there. Many of these programs are free to download and will allow you to pay bills, invest, monitor your net worth and credit profile, and even get a loan with the swipe of a finger.

Other programs may only offer you limited services and will require a one-time fee or subscription to unlock all that they offer. These fees can often vary from as little as two dollars to 50 bucks a month.

It’s best to start off with the free version and then gauge whether you’re able to accomplish everything you’d like or if it’s worth exploring one of the paid options. Often times the subscription programs come with assistance from financial planning and investment experts — so that can be a real benefit.

When deciding which personal finance software program to use, it’s also important to look at how many accounts you wish to monitor. Certain programs limit the number of accounts you can add. Be sure that if you have checking, credit card, and investment accounts to monitor, that you choose a service that can monitor them all.

Finally, when looking around for the right personal finance software that meets your needs, make sure that you’re comfortable with the program’s interface. It shouldn’t be expected that you recognize every single feature instantly, but if the features don’t seem readable and manageable to you, then you’re not as likely to use it and get the full benefits.

Final Thoughts

Personal finance software can go a long way in helping you to take control of your money and meeting your financial goals. It’s important to note, however, that some focus more on budgeting and expense tracking while others prioritize investing portfolios and income taxes. Explore several different programs and read reviews to find the one that’s right for you.

In this day and age, managing one’s personal finances in a secure manner that allows the user to have a real-time visual representation of their money is easier than ever before. With the numerous applications that are out there — both free and subscription-based — there’s no reason that every person can’t take control of their money and ensure they’re making smart money moves.

Featured photo credit: rawpixel via unsplash.com

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