Category Archives: Finance

Info The Cheaper Dates to Fly This Summer

Summer is almost upon us and no one loves it more than those who decide how much you’ll pay for airline tickets. This is their time to pump up the prices, something we’re already seeing in sales for peak travel periods in June, July and August.

Demand is the culprit, as usual; the kids are out of school, the weather is good, that’s when people want to fly. The airlines know this, and they also know we’ll pay (and should ticket buying slack off, they simply lower them a bit before attempting another increase). You know all this, too, but you may not know the summer dates to fly (or avoid) that can ease the strain on your wallet. See if any of these travel periods work for you.

Summer Dates to Fly, Summer Dates to Avoid

These dates are based on average prices from my company’s vast storehouse of airfare data. For certain routes and cities, it may be off a day or so for the very cheapest flight. This is why I also urge any airfare shopper to (1) Always compare airfare prices on a comparison search site, and (2) Always search a day or two ahead and behind your targeted itinerary dates. The savings may surprise you.

U.S. Domestic Travel

  • May 20: This is the last day of the cheaper spring season. As long as you begin your trip on this date or earlier, you’ll find better fares.
  • June 14: The final day to begin a trip and enjoy cheaper pre-summer fares.
  • June 15 – Aug. 29: The peak summer season for 2017. If you must fly now, see the tips at the end to help cut costs. The next time you’ll see prices this high will be during Thanksgiving.
  • Aug. 30: A good day to begin a late-season trip because fares will be lower; this cheaper period continues through mid to late October when another dip occurs. In fact, one of the best times to fly is during the first couple of weeks in November since demand is always low just before Turkey Day.

Travel to Europe

  • May 12: OK, the bad news first. This is the date the expensive summer season gets underway so you’re not going to get the pre-season deals. However, over the past year we’ve seen historical lows for Europe, so a summer flight may not make you feel anywhere near as much pain as previous years. A few examples of roundtrip fares, found on my site on May 10, for travel in July:

Boston to Rome – $551

Los Angeles to Copenhagen – $680

New York to Paris $654

New York to London $695

  • Aug. 21: Fares drop for fall, which to me is the perfect time to tour the Continent – smaller crowds at the airport, short lines at attractions.

Travel to Asia

  • June 9: A fairly significant price hike begins; if possible, start your trip by June 8.
  • July 20: Another price hike. Again, fly earlier in the month or at least start traveling June 19.
  • Aug. 7: Summer prices begin to drop.
  • Aug. 20: A more significant price-drop gets underway.

How to Make Peak Season Travel Cheaper

If you must fly during summer’s priciest period, you can still save something; here’s how.

  • Compare airfares: This may sound so basic but many folks continue to ignore this advice because they know their airline is cheapest. Newsflash: No airline always has the best fare on every route. See Which U.S. Airline Costs the Least? It Depends.
  • Fly cheaper days: On domestic flights, this is typically Tuesday, Wednesday, Saturday. For international travels, mid-week flights are often cheaper than weekends. Airline Ticket Prices: What a Difference a Day Makes explains the details.
  • Be flexible: Can you drive a little further to a bigger airport? It could save you money. Can you endure a connecting flight even when a non-stop is available? It could save you money. For more, see The Cheapest Way to Buy Two or More Airline Tickets.

A final way to way to save money is by using a carry-on bag, still free on most airlines (be sure to check, especially if flying what are known as discount airlines such as Spirit or Norwegian). By the way, I use a carry-on even for trips to Europe where I’d get a checked bag for free, mainly because the bag that travels with you is the bag that doesn’t get lost. Enjoy your summer.

Best Budgeting Software For You

The best budgeting software helps you manage your money in a way that is organized, provides the detail you require and yet is easy enough to follow that you will actually stick with it.

Here are four budget software systems that meet those criteria. Each system is distinguished by how it best fits your personal approach to managing your finances.

1. Best for Fans of Zero-Based Budgeting

You Need A Budget (YNAB for short) is built on the zero-based budgeting principle that calls for you to “give every dollar a job.” With YNAB you need to be involved in your finances and willing to change old habits to make the system work.

In addition to “give every dollar a job,” YNAB follows three other rules: “embrace your true expenses,” “roll with the punches” and “age your money.” According to YNAB, following those four rules will allow you to get out of debt, save money and stop living paycheck to paycheck. It’s a tall order, but YNAB users say it works.

This browser-based subscription system runs on both Windows and Mac computers. Available Android and iPhone apps sync data to the desktop. YNAB connects to your bank and credit card accounts to download transactions, but it does not offer a way to track investments. Following a 34-day free trial, YNAB costs $50, billed annually.

2. Best for Envelope Budgeters Anxious to Go Digital

Mvelopes is based on the familiar (pre-computer) budget system of putting cash in envelopes each pay period. Each envelope is labeled for an individual bill or discretionary expense. For discretionary expenses, when an envelope is empty, spending in that category is done for that pay period.

Mvelopes makes the envelopes digital but it does much more. It links to bank and credit card accounts, allows you to see past spending and assign money to future “mvelopes.” You can set up the system to move money out of your “spending” envelope into a credit card payment envelope so you don’t run up your credit card balance.

The basic free service supports four bank accounts and 25 spending envelopes. Premier service (unlimited accounts and envelopes) costs $95 per year. The system is online and works with both Macs and PCs. Android and iPhone apps let you manage your accounts, add and edit transactions, adjust your budget and monitor expenses. There is no provision to handle investments.

3. Best for Tracking Spending for Free

Mint was acquired by Intuit in 2009 and remains a quintessential and wildly popular free online budgeting and expense-tracking software system. Mint lets you track expenses across credit cards, bank accounts (checking and saving) and even investment accounts.

You can even use the program to sign up for alerts if you overspend in a category. In short, Mint gives you a ton of information but doesn’t provide advice. It provides a great overview of your financial health. The alerts could be very helpful if you tend not to pay attention to your finances on a regular basis.

In addition to the browser-based online system, Mint has both iOS and Android apps. Mint offers online synchronization and includes bill-payment options as well as limited investment monitoring. There’s even a free credit score tracking option. (Also see: 4 Best Personal Finance Apps for 2017.)

4. Best for Those Who “Want It All”

Quicken Premier 2017 is, by most accounts, the most complete personal finance and budget software tool available. That also makes it one of the most complex software packages available. That complexity is mitigated somewhat by the fact that there are three different Windows versions plus a Mac version available.

All versions, which you must install on your computer, allow you to create and follow a budget. Each higher version provides additional features. From a budgeting perspective all versions of Quicken also let you track your spending, import bank transactions, pay bills and more.

The Premier Windows version adds future financial planning, debt reduction, retirement planning, portfolio maintenance and management, a mutual fund finder feature and tax advice on investments.

The Quicken 2017 mobile app is free and available in iOS and Android versions. The app syncs with all Quicken versions. Quicken Premier sells for $99.99.

The Bottom Line

With the exception of the Quicken line of products, most budgeting software today is online and subscription-based. That makes it easily compatible with any computer system and also available on just about any device.

The Quicken advantage is mostly in the depth of the features offered. There’s almost nothing about managing money in a home that Quicken doesn’t cover extremely well. Many people, however, don’t require or want that degree of complexity.

Any of these applications would work well for most people. Decide which approach best fits your personality and goals, download or sign up, and enjoy the financial peace of mind that comes from taking control of your budget.

Make $50K a Year and How Much Rent Can I Afford

The rent you can afford on a salary of $50,000 – or any salary, for that matter – is not the same as the amount for which you qualify. Qualification is often based on a rule of thumb, like the “40 times rent” rule, which says that to be able to pay a certain rent, your annual salary needs to be 40 times that amount.

In this case, 40 times $1,250 is $50,000. Therefore, if you make $50,000, you qualify for $1,250 per month in rent. For more on the topic see Renters’ Guide: The Rental Process.

Problems With the ‘40 Times Rent’ Rule

One drawback with this formula is that the calculation uses pretax or gross income. Although you make $50,000 a year, the amount you have to spend – your take-home pay – is less.

Another issue with the “40 times rent” rule is that it is a general rule and doesn’t take into consideration your particular financial situation. It doesn’t calculate your expenses. Instead, it simply assumes that if you spend one fortieth of your salary on rent, what’s left will be enough to pay all your other bills and obligations.

A Better Rule of Thumb

A slightly more realistic guideline suggests spending 30% of your take-home pay on rent. This rule allows for taxes, retirement and other deductions before arriving at a rent figure.

On your $50,000 salary, if your monthly take-home pay is $3,500, for example, your monthly rent should not exceed $1,050.

But there’s still the issue of your specific expenses. For that you need a budget, especially considering that $50,000 may not go too far if the cost of living is high where you hope to find an apartment.

The Budget-Based Approach

The best way to determine how much rent you can afford is to add up your actual monthly expenses and subtract them from your monthly take-home pay.

This budget-based approach takes more time, but is more accurate and helps you avoid unpleasant surprises, such as running out of money and finding that you can’t pay one or more bills.

Utilities – Start with utilities, services such as water, sewer, trash, electricity, oil and gas. Water, sewer and trash are often included in rent, but not always. Other utility costs include cable, Internet, telephone, and even security and maintenance in some apartment complexes.

The cost of electricity and oil and/or gas can vary depending on the age and condition of the apartment. A well-insulated apartment, for example, will cost less to heat.

The best way to determine the likely cost for utilities in a new apartment is to ask the landlord or query several current residents.

Food and Incidentals – This category includes groceries, cleaning supplies, paper towels and other items that you use and replace on a regular basis. If you already have a grocery budget, use that as your basis.

If you are moving out on your own for the first time, establishing a grocery and supplies budget isn’t difficult or time consuming. An hour a week should be plenty of time to plan meals, and the savings can add up. For more on setting up a food budget, see How to Manage Your Grocery Budget.

Transportation – Your monthly car payment, gasoline, oil and maintenance will make up most of your transportation budget. Include parking and tolls if they are a regular expense for you. If you rely on public transportation, use those costs instead. If you own and use a car and also use public transportation, include both.

Loans and Credit Cards – You must account for loan payments like student loans and revolving (credit card) debt as part of your budget. Keep in mind that the more you can pay, especially on revolving credit, the faster the balance will come down. Don’t just pay the minimum due unless you have no other choice.

Renter’s Insurance – It is not a luxury. Renters insurance protects your personal belongings from loss or theft and provides liability protection in the event you are sued because someone is injured on or in the property you rent. These protections are not provided by your landlord.

For more, check out The Average Cost of Renter’s Insurance.

Retirement and Savings – Contributions to a company-sponsored 401(k) or retirement plan will be deducted before you are paid and do not have to be counted. Any savings that come out of your take-home pay, however, does.

Don’t forget to set aside a small amount for an emergency fund to cover an unexpected expense such as a car repair. See Building an Emergency Fund for advice.

Discretionary Spending Clothing, dining out, gym membership and hobbies are just a few things that fall under this miscellaneous or discretionary-spending category. It’s the most flexible part of your budget and can be scaled down or even eliminated as needed.

Your Rent Allowance

Subtract your monthly budget total from your monthly take-home and the amount left is the most you should pay for rent – what you can realistically afford. If the amount is too small for available apartments in your area, take a hard look at your discretionary spending first and other categories as needed.

You may also need to weigh the options of moving to a less expensive locale or sharing an apartment with roommates. In many communities, a salary of $50,000 may not stretch too far, especially if you have student loans to pay off.

About Amazon Monetizes Convenience (AMZN)

Convenience is addictive and dangerous. With no incentive to be inconvenienced, the modern world allows us to bask in our ability to be as lazy as possible. We can live like 19th-century lords and ladies with a variety of products and services to cater to our whims as if we still employed servants. Today, Amazon.com Inc. (AMZN

Amazon.com Inc
AMZN
961.35
+1.45%) has found a way to monetize convenience culture and to provide us with ample opportunities to do as little as possible.

The Ultimate Convenience

Amazon provides the perfect excuse to never leave the house again. For a $99 fee, Amazon Prime will literally delivery anything you could dream of needing — a small price to pay for endless convenience. In some cities you can have that item within two hours or pay an extra fee to have it in an hour.

The U.S. has a huge convenience culture, from drive-thru restaurants and banks to fully stocked supermarket shelves year-round. With Amazon, not only do Americans now get to enjoy all of this convenience, but they can also find and buy anything they’d like without having to fight through people at the mall. What’s more, the days of sifting through bargain bins and going from store-to-store looking for the perfect item are long gone. Today, a well-worded search term can find the exact thing you’re looking for in less than a second. One click later and your credit card is charged and the package is on its way to your doorstep.

Amazon Prime

In a perfectly convenient society, a person can wake up in the morning and enjoy a cup of coffee while reading a free book from Kindle Unlimited on her Fire tablet or watching something on Amazon Video. Halfway through, she might remember to order a gift for her mom. She can browse through the Amazon app to find the perfect thing and have it gift-wrapped and delivered across the country. The order will take seconds and the delivery only a few days. (See also: Amazon Lowers Minimum Order for Free Shipping to $25 (AMZN, WMT))

At lunch, that same person could order take-out via Amazon’s new delivery service, purchase ingredients for tonight’s dinner to be delivered straight away and then re-stock her home office supplies or buy a new blanket for her bed. In fact, if a Prime member notices that the temperature is falling when she puts a movie on in the evening, she can have that blanket delivered before the movie’s over.

Amazon Prime makes convenience the default option. Why would you leave the house to run errands when your phone can do them for you? Amazon’s Dash button, Amazon’s Subscribe & Save service and Amazon’s to-the-door delivery options have created a lifestyle where no one needs to go outside and interact with others at all.

The Consequences

Obviously the biggest consequence to this convenience culture is that people will become less active and interact with each other in-person less frequently. While the effects of convenience culture have been well documented, the increasing popularity of Amazon Prime and the increase of offerings of Amazon Prime will augment the problem in unimaginable ways.

It could be argued that Amazon makes our lives simpler so that we can focus on less mundane tasks. However, the feeling of finding the perfect dress after a day of shopping or the fun of discovering new foods at the grocery store are little things that we’ll lose as we become more and more dependent on the convenience that Amazon provides. (See also: Amazon’s New Echo Speaker Will Have a Touchscreen (AMZN, GOOG))

Amazon’s Point of View

Increasing dependence is like gold for shareholders. Getting an entire generation of people addicted to a product or service is extremely profitable for any company. As more people become used to the services that Amazon Prime offers, the retail world that we currently know will become increasingly disrupted. Today Wal-Mart Stores Inc. (WMT

Wal-Mart Stores Inc
WMT
75.71
-0.55%) is found throughout rural America. With lower prices and the ability to bypass heading to a busy superstore, how soon will it be before the Walmart that we all know is completely different or shuttered for good?

Walmart and other big box retailers have already had to adapt to stop from losing customers to Amazon. As Amazon has become larger, it has ironically had the same effect on Walmart that Walmart had on small businesses 20 years ago. Amazon is showing us a world in which we don’t need to leave the house or go outside or talk to anyone and can still get anything we want, hassle-free, delivered to our doors.

Method to Prepare an Expense Budget and Why

All of us look to the future and hope for the best, but not everyone makes the effort to collect the data needed to answer the question: “Will I have enough?” Indeed, most people just roll the dice and trust that an optimistic attitude will be sufficient. Yet the reality in most cases is that the future may not be the most comfortable of times.

A proper budget and financial plan requires input on four key categories: what you earn, what you spend, what you own and what you owe. The information needed for three of the four categories is relatively easy to find. It’s the spending that’s trickier, sometimes a lot trickier.

The hitch with spending is that it needs to be viewed from four different perspectives. What most of us focus on is current spending. But then we get into the retirement years and the what-ifs. The time of retirement is generally predictable. What is not predictable is the early demise of a spouse (often the key wage-earner) and the impact on expenses before and during the retirement years.

So a sensible expense budget encompasses the outgoing cash flows as they are today, as we expect they will be during retirement, and how they would be adjusted if only one spouse makes it into the late 80s or 90s. Although there’s no guarantee, a sharper focus on these alternatives will increase the likelihood of a good night’s sleep.

The key items in an expense budget include the following, which are largely fixed for extended periods:

  • Monthly mortgage or rent payment for residence
  • Food and household incidentals
  • Utilities (gas, electric, water)
  • Telephone and internet
  • Property taxes
  • Life insurance premiums
  • Health insurance premiums
  • Homeowner’s insurance premiums

Then there are fixed items for shorter periods, such as:

  • Alimony, child support
  • Auto loan payments
  • Other loan payments

Next, the unpredictable expenses:

  • Healthcare expenses
  • Legal costs

And finally, discretionary items that may be reduced as needed:

  • Clothing and personal items
  • Property maintenance and upkeep
  • Domestic help
  • Babysitting, child care
  • Entertainment and vacations
  • Books, papers, subscriptions
  • Home furnishings
  • Gifts, birthdays
  • Credit card payments
  • Charitable contributions

These are just the “normal” kinds of expenses one would need to include. In addition, there are huge variables such as funding for children’s education and outlays for major purchases such as those for a larger or second home.

Education expenses will be among the biggest nuts to crack. A child born today will probably cost $750,000 for four years of tuition and related college expenses. That’s a daunting prospect that will require either hefty savings from day one, the good fortune of a scholarship or a combination of the two.

The what-if scenarios must be addressed as well. Downsizing is often worth considering as a means to reduce expenses. And, of course, several of the fixed items will drop simply because there would be only one person involved.

Once this is done, the process of looking ahead requires an extrapolation of where things are today and the understanding that this is a dynamic process with periodic adjustments to stay on course. It can be a challenging task for individuals and is perhaps best handled with the assistance of a qualified financial professional.

Here When to Talk to Your Kids about Finances

When should you start talking about financial matters with your kids? I suggest as soon as possible. My father worked in the investment field his whole career and I grew up hearing stories about how putting a little away each year can add up to a lot in 30+ years. I remember being a freshman in high school and my dad telling me if I put $2,000 in my IRA for 20 years, when I was ready to retire I’d have a million dollars. Now that got the attention of a 15-year-old. Don’t worry if you or a family member aren’t in the financial industry, there are a lot of resources to help educate your kids about money.

There are plenty of books, websites and YouTube videos that not only educate, but can confuse and overwhelm. Therefore, I suggest keeping the message simple: “save a little every month until you retire.” The amount will change as income increases but the premise of paying yourself before you pay others is the message you want your kids to understand. My father gave me a book that I have given many of my clients who have given it to their children, called The Richest Man in Babylon, by George S. Clason. The book is about a man in ancient Babylon who put one coin for every 10 coins he earned into his pouch and later he was able to use those saved coins to earn more coins for himself. His simple act of saving and investing is how he became the richest man in Babylon.

The goal of the conversation is to get kids excited about saving by showing what they can accomplish with baby steps. As their savings grow, the next conversation is about where to put the savings and how much to save.

Applying to College

Eighteen-year-olds should not be expected to make a decision about whether or not to attend a university without understanding or at least having a conversation with their parents about the cost and how their schooling is going to be paid for. At that age, if their options are properly explained they will understand enough to have an opinion on their selection. If the choice is $100,000+ in college loans for a private university or $40,000 in loans from a state school, the child who will be responsible for the loans certainly needs to be involved in that decision. Treat them like the adults you want them to be.

Family Finances

I have seen clients take very different approaches to talking with their kids about finances, but I believe it is prudent to educate them about your goals and financial philosophy. Kids don’t need to know their parents exact net worth at age 21 but as their parents enter their 70s I think they should. For estate planning, legacy and philanthropic planning, it is important to understand what a total estate looks like. Waiting until an illness or advanced age occurs can cost a family financially by not having enough time to initiate a plan, and your goals might not be achieved.

Before You Get Ill

Too often advisors are contacted by the children or grandchildren of someone becoming ill later in life. Suddenly they are in charge of their financial affairs. Between the illness and the newly appointed responsibilities for their financial wellbeing, it can be overwhelming, but having a proper estate plan, healthcare directives, and well-organized financial assets will make the responsibility less of a burden. We help our clients remove some of those stresses by keeping their financial affairs organized, and during the legacy planning we’ll create a wealth transfer plan (WTP). The WTP is incorporated within a comprehensive estate plan and helps the beneficiaries understand what is important to you and why. This makes the management of your assets easier for them and hopefully keeps everything more in line with your goals.

A WTP is comprised of three parts:

  1. A wish list, containing your personal goals, values and desires that you would like to be carried out for/ by your future generations.
  2. An implementation outline listing the steps that are necessary to satisfy the wish list.
  3. A personal letter written in your own words to your future generations in which you express your goals, rationale and desires regarding your intentions. This is not a legal document, just an opportunity for you to speak from your heart about what you want and why you have made the decisions you have.

Ask for Help

Many people don’t feel comfortable trying to explain their financial state to family members, sometimes because they fear they don’t fully understand it themselves. But these concepts and conversations don’t have be covered by a family member. I have been asked to help friends and clients have these conversations with both their kids and their parents. If you don’t feel comfortable having these types of conversations, consider asking a friend who is financially savvy, your advisor, CPA or attorney to help. Starting the conversations early using examples like savings and college will hopefully make you feel more comfortable with future financial conversations. Either way, I do recommend that you bring in a trusted advisor when you start your legacy planning.

Tips How Much Cash Should I Keep in the Bank

Everybody has an opinion on how much money you should tuck away in your bank account. The truth is, it depends on your financial situation.

What you need to keep in the bank is the money for your regular bills, your discretionary spending and the portion of your savings that constitutes your emergency fund.

Everything starts with your budget. If you don’t budget correctly, you may not have anything to keep in your bank account.

Don’t have a budget? Now’s the time to build one. Here are some thoughts on how to do it.

The 50/30/20 Rule

First let’s look at the ever-popular 50/30/20 rule. Instead of trying to follow a complicated, crazy-number-of-lines budget, you can think of your money as sitting in three buckets.

Costs that Don’t Change (Fixed): 50%

It would be nice if you didn’t have monthly bills, but the electricity bill cometh, just like the water, Internet, car and mortgage (or rent) bills. Assuming you’ve evaluated how these costs fit into your budget and decided they are musts, there’s not much you can do other than pay them.

Fixed costs should eat up around 50% of your monthly budget.

Discretionary Money: 30%

This is the bucket where anything (within reason) goes. It’s your money to use on wants instead of needs.

Interestingly, most planners include food in this bucket because there’s so much choice in how you handle this expense: You could eat at a restaurant or eat at home; you could buy generic or name brand, or you could purchase a cheap can of soup or a bunch of organic ingredients and make your own.

This bucket also includes a movie, buying a new tablet or contributing to charity. You decide.

The general rule is 30% of your income, but many financial gurus will argue that 30% is much too high.

Financial Goals: 20%

If you’re not aggressively saving for the future – maybe funding an IRA, a 529 plan if you have kids, and, of course, contributing to a 401(k) or other retirement plan, if possible – you’re setting yourself up for hard times ahead. This is where the final 20% of your monthly income should go.

If you don’t have an emergency fund (see below), most of this 20% should go first to creating one.

Another Budget Strategy

Financial guru Dave Ramsey has a different take on how you should carve up your cash. His recommended allocations look something like this (expressed as a percentage of your take-home pay):

Charitable Giving: 10-15%

Food: 5% – 15%

Saving: 10% –15%

Clothing: 2% – 7%

Housing: 25% – 35%

Transportation: 10% – 15%

Utilities: 5% – 10%

Medical/Health: 5% – 10%

About That Emergency Fund

Beyond your monthly living expenses and discretionary money, the major portion of the cash reserves in your bank account should consist of your emergency fund. The money for that fund should come from the portion of your budget devoted to savings – whether it’s from the 20% of 50/30/20 or from Ramsey’s 10% to 15%.

How much do you need? Everybody has a different opinion. Most financial experts end up suggesting you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000.

Personal finance guru Suze Orman advises an eight-month emergency fund because that’s about how long it takes the average person to find a job. Other experts say three months, while some say none at all if you have little debt, already have a lot of money saved in liquid investments, and have quality insurance.

Should that fund really be in the bank? Some of those same experts will advise you to keep your five-figure emergency fund in an investment account with relatively safe allocations to earn more than the paltry interest you will receive in a savings account.

The main issue is that the money be instantly accessible if you need it. (On the other side, remember that money in a bank account is FDIC insured.) For more advice, see Building an Emergency Fund.

If you don’t have an emergency fund, you should probably create one before putting your financial goals/savings money toward retirement or other goals. Aim for building the fund to three months of expenses, then splitting your savings between a savings account and investments until you have six to eight months worth tucked away.

After that, your savings should go into retirement and other goals – invested in something that earns more than a bank account.

Finance : How Long Must Take to Save for a Down Payment

The more money you can put down on a purchase, the less your loan will cost. That’s because you will pay less in interest. This is true of any loan, regardless of how large a sum you are borrowing. For this reason, it’s important to save as much as you possibly can before making that big purchase. The question is: How much should you save? That – and your resources, of course – will determine how long it will take to reach your goal.

Differing Views on Loans and Down Payments

Many personal finance gurus believe that taking out a loan for any reason is not a good idea because the amount of money you’ll pay over the life of the loan makes the asset you purchased way over priced. Let’s say you buy a $200,000 home with a 4% interest rate; on a 30-year loan, you would pay more than $140,000 in interest. That’s a lot of money thrown away.

But it’s not that easy, right? For most of us, if we didn’t take out a mortgage, we would never purchase a home.

Others argue that the responsible use of credit is healthy. Whatever your opinion, even the experts agree that the more money you can put down, the more cost effective the loan. And that means you have to save as much as possible.

Take home mortgages. Although you can put down as little as 3.5% with an FHA loan or 5% with some other loans, you will probably pay a higher interest rate because the lender sees you as a higher risk borrower. That means the cost of the loan is unnecessarily higher.

Any home mortgage that doesn’t reach the 20% loan-to-value level will have private mortgage insurance added to the monthly payment. That means that you will pay between .5% and 1% of the loan amount annually for this insurance. For this reason alone, it’s best to put at least 20% down for a mortgage.

The same principle is true for car loans. You don’t have to worry about PMI on an auto loan, but cars depreciate fast. If the loan stretches out too many years, you risk finding yourself owing more money on the loan than the car is worth.Car gap insurance can help against that risk, but you’re better off not putting yourself in that situation in the first place. That is why experts recommend at least a 20% down payment on any auto loan. If you can’t afford that large a down payment on the car you want, consider looking for a cheaper model to keep the cost of the loan within your price range.

How to Save

A 20% down payment on a car loan or home mortgage is a large amount of cash, and for many households it isn’t practical. Still, you should attempt to reach these levels.

In the case of a car, the down payment doesn’t necessarily have to be in cash. Dealers will often lower the price of a new car if you trade in your old automobile as part of the deal. Or you could sell your car privately to raise money. The same is true for a mortgage. Selling your current home at a profit becomes the money you use for your down payment. Don’t take the first offer you receive if it’s below market value. Better to wait a little longer and get a fair sale price so your down payment is larger.

If you’ve barely saved anything, the hard truth might be that you need to slow down and be patient before making that big purchase. Create a budget for yourself that allows you to save as much as you can each month.Also look through your home and see what you can sell to raise money. You may have more value than you think tied up in your belongings.

You also might consider taking a part-time job or doing freelance work to earn extra money to put aside for your purchase. To motivate yourself, spend some time calculating how much you could save over a year if you worked a second job.

This Top 7 Most Common Financial Mistakes

Here we’ll take a look at seven of the most common financial mistakes that often lead people to major economic hardship. Even if you’re already facing financial difficulties, steering clear of these mistakes could be the key to survival.

Mistake No. 1: Excessive/Frivolous Spending

Great fortunes are often lost one dollar at a time. It may not seem like a big deal when you pick up that double-mocha cappuccino, stop for a pack of cigarettes, have dinner out or order that pay-per-view movie, but every little item adds up. Just $25 per week spent on dining out costs you $1,300 per year, which could go toward an extra mortgage payment or a number of extra car payments. If you’re enduring financial hardship, avoiding this mistake really matters – after all, if you’re only a few dollars away from foreclosure or bankruptcy, every dollar will count more than ever.

Mistake No. 2: Never-Ending Payments

Ask yourself if you really need items that keep you paying every month, year after year. Things like cable television, subscription radio and video games, cell phones and pagers can force you to pay unceasingly but leave you owning nothing. When money is tight, or you just want to save more, creating a leaner lifestyle can go a long way to fattening your savings and cushioning your from financial hardship.

Mistake No. 3: Living on Borrowed Money

Using credit cards to buy essentials has become somewhat normal. But even if an ever-increasing number of consumers are willing to pay double-digit interest rates on gasoline, groceries and a host of other items that are gone long before the bill is paid in full, don’t be one of them. Credit card interest rates make the price of the charged items a great deal more expensive. Depending on credit also makes it more likely that you’ll spend more than you earn. (To learn more about credit cards

Mistake No. 4: Buying a New Car

Millions of new cars are sold each year, although few buyers can afford to pay for them in cash. However, the inability to pay cash for a new car means an inability to afford the car. After all, being able to afford the payment is not the same as being able to afford the car. Furthermore, by borrowing money to buy a car, the consumer pays interest on a depreciating asset, which amplifies the difference between the value of the car and the price paid for it. Worse yet, many people trade in their cars every two or three years, and lose money on every trade.

Sometimes a person has no choice but to take out a loan to buy a car, but how much does any consumer really need a large SUV? Such vehicles are expensive to buy, insure and fuel. Unless you tow a boat or trailer, or need an SUV to earn a living, is an eight-cylinder engine worth the extra cost of taking out a large loan?

If you need to buy a car and/or borrow money to do so, consider buying one that uses less gas and costs less to insure and maintain. Cars are expensive. You might need one, but if you’re buying more car than you need, you’re burning through money that could have been saved or used to pay off debt.

Mistake No. 5: Spending Too Much on Your House

When it comes to buying a house, bigger is also not necessarily better. Unless you have a large family, choosing a 6,000-square-foot home will only mean more expensive taxes, maintenance and utilities. Do you really want to put such a significant, long-term dent in your monthly budget?

Mistake No. 6: Treating Your Home Equity Like a Piggy Bank

Your home is your castle. Refinancing and taking cash out on it means giving away ownership to someone else. It also costs you thousands of dollars in interest and fees. Smart homeowners want to build equity, not make payments in perpetuity. In addition, you’ll end up paying way more for your home than it’s worth, which virtually ensures that you won’t come out on top when you decide to sell.

Mistake No. 7: Living Paycheck to Paycheck

In November 2016, the U.S. household savings rate was 5.5%, but other countries had considerably higher rates of personal savings. For example, France, Germany and Japan personal savings rates average around 10% or more, according to the latest data. Clearly it is possible to enjoy a high standard of living without financing it with debt.

The cumulative result of overspending puts people into a precarious position – one in which they need every dime they earn and one missed paycheck would be disastrous. This is not the position you want to find yourself in when an economic recession hits. If this happens, you’ll have very few options. Everyone has a choice in how they live, so it’s just a matter of making savings a priority.

How to Banks Can Notarize Your Documents for Free

If you need to get a document notarized, a simple, free solution can usually be found at the nearest branch of your bank. Getting a document notarized is typically very simple. Present the document to a notary public and sign it in her presence. After that, she officially notarizes the document using an official stamp, writes in the date, and adds her own signature. The notary usually asks to see photo ID to verify that you are indeed the person whose signature she is notarizing on the document. Having a document notarized is essentially a third-party verification of your identity as the person signing the document.

Examples of legal documents that commonly require notarization are mortgage documents, wills, trusts, power of attorney authorization and medical documents.

Banks and Other Places You Can Find a Notary Public

Nearly all U.S. banks – certainly all the major money center banks, such as JPMorgan Chase & Co., Bank of America Corporation and Wells Fargo & Company – usually have a notary public on staff in most of their branches. If the branch where you most frequently do your banking is a small one in a rural area, there may be a notary public available. If there is not, the branch manager, or even a teller or personal banker, can usually tell you about a local branch of the bank that has a notary on the premises.

Most banks provide free notary public services to their customers. If you aren’t a customer of the bank, the bank may charge you for the notary service, or decline to provide the service and suggest that you go to your own bank.

Other financial services firms, such as credit unions, thrifts, real estate firms or insurance company offices also commonly have notaries public available. As with banks, such firms usually provide you with the notary public’s service at no charge, provided that you are a client or customer of the firm. If you are not a client, then it may either charge a small fee or it may not be willing to notarize a document for you. If this is the case, it may suggest that you go to a similar firm where you are a client.

Public offices where you can find a notary public include the local clerk of court’s office and sometimes a public library.

Law offices commonly have a notary on staff. If you need a power of attorney form notarized, you can generally have it done for free at the office of the attorney who prepared the document for you.

Notarized documents are sometimes shipped overnight, so some UPS or FedEx stores have a notary public available. The local American Automobile Association (AAA) office is another place that may offer free notary services, if you are an AAA member. Travel agencies also may have notaries on staff. Pharmacies or doctor’s offices may offer notary services, since medical records are one type of document that may require notarization.

Even if you aren’t able to obtain free notarization, the typical fee is minimal, usually no more than a dollar or two. However, even if the notary public doesn’t charge you anything, it’s nice to tip her a couple of dollars; she has, after all, provided you with a service.

The Importance of the Notary Witnessing Your Signature

When you get a document notarized, what you’re actually having officially notarized is the fact that you, the appropriate legal party, are the person whose signature appears on the document. Therefore, the notary has to witness you signing the document. Do not sign it before seeing the notary. Notaries take a legal oath that they will not notarize any document unless they have indeed witnessed it being signed by the appropriate party.

If you have made the mistake of signing the document prior to seeking out a notary public to notarize it, the situation isn’t irreparable. The notary will probably ask you to come back with an unsigned copy of the document. After witnessing you sign the copy, she will compare the signature to the one you made on the original. As long as the signatures appear to match, she will notarize the original document for you. If you don’t actually have to have the original document itself notarized – that is, if a notarized copy will suffice, she can simply notarize the copy. The safest procedure is to ask the notary public to notarize both documents. That shouldn’t usually present a problem, as long as you have proper identification and the signatures on both documents are obviously identical.