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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.

More by this author

Sarah Hansen

A corporate-sales professional turned entrepreneur

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Last Updated on April 28, 2020

9 Millionaire Success Habits That Will Inspire Your Life

9 Millionaire Success Habits That Will Inspire Your Life

As technology evolves and information becomes more accessible, it has also become more challenging to define success. A lot of people are trapped in the rat race while trying to discover the actual formula for success.

You could become overwhelmed with what tools, techniques or philosophies to imbibe while trying to get tips over the internet. At every click and turn, there are ‘how-tos and quick-fix’ on how to become successful overnight. You will find several courses, articles, videos and books on how to achieve financial success.

But what if I tell you it doesn’t have to be complicated as people made it out to be? What if you could achieve success by merely following these 9 millionaire success habits?

1. Read for Personal Development

A daily habit I have discovered millionaires share in common is reading. For instance, if you are an entrepreneur, you need to read to become an efficient leader and a productive business owner. Reading helps you to grow and learn without going to a business school.

A research conducted by Thomas Crowley indicates about 85% of self-made millionaires read at least two or more books each month. [1] Warren Buffett is one of these examples. He spends 80% of his day reading. In the early days of his investment career, he would read 600 to 1000 pages in a single day.

While millionaires sometimes read for pleasure, they also learn to improve themselves. They read topics on leadership, how-tos, self-help, biographies, lifehacks and also follow current events.

Here’re some recommendations for you: 25 Best Self Improvement Books to Read No Matter How Old You Are

2. Establish Multiple Sources of Income

Another success habit I noticed about successful people is that they don’t depend on a single income source. Every millionaire possesses multiple sources of income. This helps them to manage economic challenges and also make more money.

They are passive income addicts. They earn interests from loans, rental income from real estate, royalties from intellectual properties, dividends from investments. They also launch a side business or run a website or sell information products.

How income is made either passively or actively is what separates the successful from the wannabes. They are always learning ways to build multiple streams of income.

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3. Live on a Stipulated Monthly Budget

An average millionaire does not believe in luck and jackpot. They take the time to understand cash flow-income and expenses. Based on this, they establish a monthly budget and religiously stick to it.

The essence of the budget is to minimize unnecessary expenses. This will help you gain complete control of your financial life. Budgeting helps you to avoid overspending to achieve your financial goals. Here’re some tips to help you stuck to your budget: 32 Hacks for Sticking to Your Budget

4. Manage and Maximize Money

The most significant education for a millionaire is financial intelligence. Nobody attains financial freedom without gaining financial intelligence. This is the more reason millionaire, regardless of their income, keep their knowledge about tax strategies updated.

They always seek to reduce their tax bills. One approach they employ is by living or incorporating their business in states with no income tax.

Do you know that about 60 companies paid $0 legally in the 2018 tax year? Some of these companies that ‘avoided'(note: not evaded) federal income tax include Chevron, Amazon, Halliburton, General Motors, Delta. Their US income was totaled at $79 billion with an effective tax rate of -5%.

What’s the deal? They got a tax refund.

How do they accomplish these?

An ITEP report indicated that they have the culture of throwing huge sums at tax experts who assist them in discovering creative, as well as convoluted means of paying little tax as much as possible.[2]

5. Avoid Debt

Another habit that separates the millionaires from the rest of the world is how they manage debt.

They don’t live an extravagant lifestyle; instead, they only buy what they need and can pay for. They do not book hotels and flights by using their credit cards to pay for them.

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They are conscious of the interest rates even when they use credits cards or take loans. If possible, they try to pay with cash because of its zero percent interest rate.

6. Set Daily Goals

It does not matter if they are setting up a business, a career, or financial projections; they have the success habit of setting short term goals. They plan daily and weekly goals to generate momentum in achieving their long-term goals.

Ensure you prioritize when setting daily goals. This will help you to achieve the most important to-dos on your list.

Setting priorities will help you to focus on highly rewarding activities. If you desire financial freedom, it is wise to pursue activities that earn you thousands of dollars rather than hundreds of dollars.

7. Don’t Act Rich

The goal is not to act rich but to be productive. Interestingly, Thomas Stanley buttressed in his book that for the most prestige brands of cars, about 86% percent are toys of the non-millionaires. While most believe that people with huge fortunes tend to drive exotic cars, in reality the largest consumers of pricey cars are aspiring millionaires.[3]

According to findings by Experian Automotive Researchers, 61% of individuals who earn $250,000 or more rarely buy luxury brands. Instead, they buy Hondas, Toyotas, and Fords like the rest of the world. The reason is they are not ready to spend money on premium cars that tend to drop in value in a couple of years as it would cost money. Millionaires invest in assets that appreciate.[4]

8. Own or Buy Businesses

In Robert Kiyosaki’s cashflow quadrant, he divided how you earn income into four quadrants. The E and the S quadrants take the left position while the B and the I are on the right side. According to Robert, it is possible to be on all quadrants, but the millionaires are not.[5]

  • E stands for employee – they work for others
  • S stands for self-employed – they work for themselves
  • B stands for a Business owner- employees work for them (500 or more employees)
  • I stand for Investors – Money work for them like Warren Buffet.

Your goal is to move from the left quadrant to the right quadrants where you own big businesses or make money work for you.

It is possible to become financially successful by pursuing what you love. For instance, if you love writing, aspire to be the best seller. Wealth and passion work together.

Check out How to Start a Small Business with Little to No Money for tips.

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9. Avoid Get-Rich-Quick Scheme

A millionaire holds patience as an essential virtue. It takes patience to become successful, not only in finance but in every aspect of life. While it is possible to become financially successful at an early age, most millionaires hit it at age 50. They live a moderate life, invest in their future and retire rich.

Bonus: How to Develop the Millionaire Success Habits?

Having learned these habits, the next question is,

How can I develop the Millionaire Success habits?

Here are six values you will need to develop:

Establish Your Life Vision

You need to be clear about what you want in life to set yourself for a life of success. Your vision has to go beyond becoming a millionaire to understanding why you want to become one. Any great entrepreneur you will ever find has a clear vision and an established mission.

Understanding why you are doing what you do will drive you to become the kind of successful person you want to be.

Make Your Passion a Profession

When your passion becomes your profession, work becomes pleasurable. Loving what you do enables money to flow to you and through you.

So what’s going to be? Wake up every morning by speaking positive words into your work, love what you do, and focus on the work that brings you joy.

Take a look at this article and learn how to make it happen: 5 Steps To Turn Your Passion Into A Career

Focus on Solution

Focusing on the solution means establishing the problem that you or your business address. This will help you focus on the solutions when others are faced with challenges.

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A millionaire has a mindset that is fixed on the solution. He or she knows there’s a way out, and that every problem is an opportunity in disguise.

Improve your problem solving skills with these tips: 6 Effective Ways to Enhance Your Problem Solving Skills

Develop Your Leadership Skills

Leadership skills are an asset that is indispensable if you want to develop a millionaire success habit. The more you hone your leadership skills, the more you will attract leaders who share your values.

Be Growth-Focused

Millionaire entrepreneurs prioritize self-improvement. Here’s how to achieve it:

  • Get a coach. Coaching will impact your life, and you will achieve peak performance in life and business when you have a life coach.
  • Be coachable. It is not enough to have a coach; you must be coachable. Sometimes, you need feedback and counsel to reposition your life and business. A coach has the wisdom and experience to counsel you from a higher perspective. The more you receive feedback and work on yourself, the more you become better at what you do and who you are.

Flip Your Thought Pattern From Acting To Being

It is not enough to have a millionaire success habit, you must also become a person of positive influence. This is how you can become significant. Bill Gates is not only rich; he is changing lives in Africa and different parts of the world.

If you want to become successful, you must first be and think like a successful person. This is how resources you need can flow into your life.

Here’s a final thought from me:

It is not enough to do something to have something; success is about being someone who possesses what is needed to take positive and inspired actions.

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Featured photo credit: Austin Distel via unsplash.com

Reference

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