Saving on Tools for Your New Home

Saving on Tools for Your New Home

Ongoing maintenance is one of the most important – yet most often overlooked – expenses you’ll need to plan for when buying a new home. By taking the time before you move in to gather the tools you’ll need to perform minor fix-it jobs, you avoid one huge cash-draining trip to the mega-store to fill your tool box. Great bargains can be found on used tools with just a little bit of effort. Search garage sales, Craigslist ads and estate sales for:

  • Toolbox
  • Hammer
  • Nails of various sizes
  • Phillips (4-pronged) and flat-head screwdrivers in various sizes
  • Tape measure
  • Stepladder
  • Duct tape
  • Stud finder
  • Pry bar
  • Vise grips
  • Needle-nose pliers
  • Box cutter
  • Tin snips
  • Wire cutter/stripper
  • Multi-purpose tool
  • Electrical tester
  • Power drill with bit set
  • Steel chisel
  • Box cutter/utility knife
  • Level
  • Putty knife
  • Adjustable crescent wrench
  • Allen key tool
  • Heavy-duty extension cord
  • C-clamp
  • Hacksaw
  • Superglue
  • Durable flashlight
  • Lubricant/WD-40
  • Sandpaper

If you aren’t especially familiar with certain tools, save pictures of them to a mobile device or print out pictures so you remember what to look for at sales. Not only will picking up these items ahead of time save you money, you’ll also experience far fewer 2 a.m. panics when you’ve had a breakdown and all the hardware stores are closed!

Home Repair Financing Options

83107352Performing a fix-it job on your home has the double benefit of making your day-to-day life better AND improving the value of your dwelling. With that said, there’s not always a pile of money lying around to do needed maintenance or improvements. Luckily for you, there are ways to invest in your home without having to fork over the cash right away.

Local emergency repair loan
Many cities and area housing organizations have money earmarked for providing loans to homeowners wishing to make critical repairs to their home. NeighborWorks is a helpful resource for finding organizations in your area that provide these types of loans. Visit and click on “Find a NeighborWorks Organization” for more information.r

Title 1 loan
Offered by financial institutions but insured by the federal government, Title 1 home improvement loans can provide you with up to $25,000 for non-luxury home upgrades. You don’t need to have equity in your home, the repayment term can be as long as 20 years, and the interest rate tends to be very competitive. However, you should be aware that your home is being used to secure the loan. For more on Title 1 loans, visit the U.S. Department of Housing and Urban Development’s website at

401(k) or 403(b) loan
If your employer allows it, you may be able to take a loan from your retirement plan to make home improvements. The advantages of this option are that the interest is low, you don’t have to pay loan origination or closing fees, there aren’t credit score or home equity requirements, and you don’t have to risk your home if you’re not able to make payments. However, it’s important to remember that this choice could mean less money in your retirement later on. You also run the risk of having to pay back the full amount of the loan or face penalties should you leave your employer.

Cash-out refinance
With a cash-out refinance, you get cash for the equity you have in your home. In essence, you replace your existing mortgage with one for a higher amount. You can then use that additional money to make your home upgrades. Make sure you are able to afford the new payment levels before you commit. Talk to your mortgage lender for more information.

Credit card
If the total cost of your work isn’t too high, you may be able to use a credit card to pay for the upgrades. However, it’s wise to calculate the total time it will take you to pay off the debt and how much interest you will pay in that time. If you are making the repairs to increase the value of your home, it probably doesn’t make sense if the cost of the repairs plus the interest is more than the anticipated value added to your home. Also know that the interest rate for using a credit card can be significantly higher than some other options.

Unsecured personal loan
If you decide to pursue the option of a personal loan for the necessary work, make sure you calculate the full cost of the loan – including fees and interest – before committing. Given the lack of collateral needed, if the numbers check out, a personal loan can be a great option.

FHA 203k refinance loan
Through this type of product, provided by the Federal Housing Administration, you lump together your current mortgage and the cost of your non-extravagant home improvements. Talk with your mortgage lender about this option.

Home equity line of credit (HELOC)
If you have equity in your home – meaning you owe less on the home than its current value – a HELOC may be worth considering. Since it is a revolving line of credit, you can keep the account open long-term and borrow from it and pay it down repeatedly. The maximum amount you are able to borrow depends on how much equity you have. Understand that the interest rate on a HELOC is usually variable, meaning it could go up during the time you have the line of credit open. However, the interest rates on HELOCs tend to be relatively low.

Home equity loan
As with a HELOC, a home equity loan allows you to borrow from your home equity while using the home as security for repayment. Unlike a HELOC, the loan is a one-time disbursement, normally with a fixed interest rate. Whereas a HELOC can be better for an ongoing project, a loan may make more sense for a one-off fix or upgrade. You will pay loan fees, but like a HELOC, the interest you pay on the loan can be tax deductible.

In addition to the financing alternatives listed above, be sure to consult your local housing authority about grants or other incentives you might be able to qualify for.

Given the sizeable financial ramifications, it’s important to consider all your options when it comes to financing home improvements. Thankfully, you have several different choices and should be able to find one that fits with your situation and goals.

Is a Higher Credit Card Limit Better?

103580194You open the letter from your financial institution to learn that they are offering you a higher limit on your credit card. As you read further, you learn that they are doing so because of your strong credit history and the fact that you have an excellent payment history with the card. But should you accept? There are arguments on both sides.

Your FICO credit score – the score most commonly used by lenders – calculates into your scoring what percentage of your available credit you are using on your revolving accounts. Since your credit card is a revolving account, a higher limit could quickly mean a higher score. For example, if you currently have $600 in charges on the card and a limit of $1,000, you are using 60% of your available credit. If the limit on the card is raised to $1,800, your usage percentage instantly drops to 33%.

You’ve survived just fine with your current limit. No point in opening yourself up to additional temptation that can come with a higher limit. After all, you can improve your usage percentage on the card simply by paying off the balance each month.

You don’t know what emergencies the future might hold. While the best option for dealing with them is an emergency savings account, a credit card with a higher limit could help you have greater payment flexibility should unforeseen calamities arise.

In the case of identity theft, a criminal might be able to rack up more charges if your card has a high limit. Be aware, though, that your responsibility for these kinds of charges is limited by federal laws – and possibly by the credit card issuer. The main downside will probably be in the amount of hassle you have to endure to get your record cleared.

Credit may not always be so readily available. You may not think you need it now, but who knows what your plans will hold in the future. Maybe in a few years you will want to start a business or put some of the expenses of furthering your education on the card.

If you are considering asking for a higher limit, be very careful to check your credit reports and scores before you do so. Some people have found that when they contacted their credit card issuer to request an increased limit, an account review was conducted that actually resulted in their limit being lowered.

When it comes to having available credit, you’re better off in terms of your FICO score to have a few cards with high limits rather than several cards with lower limits. Not only can applying for new credit cards bring down your score, but having a high overall number of cards can ding your rating too.

There isn’t anything necessarily bad about a higher credit limit. You do, however, need to think about your tendencies and goals before taking on a higher limit. That way, you can be guaranteed you have the limit that works best for you.

Credit Builder Loans: What You Should Know

490456983A secured credit card can be a wonderful way to build a positive credit record. However, credit builder loans shouldn’t be ignored as an option for establishing a strong credit history.

How does it work?
There are a couple different types of credit builder loans that are the most popular. In the first type, the “loaned” money is actually put into a savings account for you at the financial institution issuing the loan. You make monthly payments on this money so that by the end of the payoff period, you have access to the money you paid, plus any interest that may have accrued.

The second type of credit builder loan is similar to a secured credit card in that you are essentially putting down a lump sum security deposit and then being extended credit in that same amount. In the case of this type of credit builder loan, you pay down the line of credit that was given to you as a result of your deposit.

How does it help?
Credit builder loans are reported to your credit files and show up on your credit reports just like unsecured personal loans. Because of this, the (hopefully) positive payment history can be a boon to your credit. Also keep in mind that having both a revolving account and an installment account on your credit reports helps your FICO score. So if you already have a revolving account – like a credit card or line of credit – on your reports, but not an installment account, a credit builder loan can add that installment account for you. However, if you already have another installment account like a car note, personal loan or mortgage in your credit file, you may not be helped much by adding another one.

Is it better than a secured credit card?
Neither a credit builder loan nor a secured card is inherently better. Both can enhance your credit profile when used properly. However, if you are worried that using a secured credit card might encourage you to make unwise purchases, a secured loan may make more sense for you.

What questions should I ask?
As with any loan, you should always make sure you understand:

  • The total amount of the loan
  • The interest rate you pay vs. what you earn
  • The term (length of payoff time) for the loan
  • The monthly payment
  • Loan origination or closing fees
  • Fees for missed payments
  • Credit bureaus loan payments will be reported to (the more the better)

It’s important to know that the interest you pay on a credit builder loan may be higher than what your deposit it earning. However, when used wisely, a credit builder loan can help you build the kind of credit standing that will save you thousands down the line on car loans, mortgage payments or other credit expenses.

Zapping Cell Phone Data Costs

482254717If you’re like a lot of people these days, a smartphone is integral to your day-to-day functioning in the world. As such, you may stream movies, use apps, or surf the web without a second thought. If you’re not careful, though, the amount of data you’re using can quickly mean a much larger phone bill than you’d like. Here are several ways to hold down your data usage costs.

Know usage and options
It’s important to know what your data plan is and how many gigabytes you get per month before you incur large overage fees. In addition to explaining your current plan, most cell service providers can let you know how much data you’ve been using for the past few months and which plan would best fit your needs. Take advantage of this to find the data option that best suits for desires.

Set limits or alerts
Major smartphones let you program into your device safeguards against using too much data. Research how to set up these roadblocks and you’ll enjoy a much less expensive ride on the information superhighway. If you want to really be on top of your data, you can even download an app to monitor your usage in minute detail.

Watch videos at home
When you’re stuck at the DMV or enduring a long public transportation ride, it’s tempting to kill some time checking up on the latest funny cat videos making the rounds. However, be aware that this is potentially a very costly diversion. Consider doing some reading or using a non-data gobbling app instead.

Preload your entertainment
If you consider watching videos a vital part of your on-the-go entertainment, download them at home using Wi-Fi and then cache them on your phone for later viewing.

Consider a text-only browser
A huge part of the data you download when browsing the internet comes from images. By using a text-only browser – there are several choices available – you can cut a huge chunk out of your data load.

Use mobile versions of sites
Mobile site options don’t just make it easier to navigate, they also cut down drastically on your data usage by limiting the amount of images and other data that needs to be downloaded onto your phone. Some sites may automatically take you to their mobile version, but other sites you visit a lot may default to the desktop version.

Avoid clearing your cache
If you’re especially tech-savvy, you know that clearing the cache on your phone can make your device run more smoothly by freeing up some internal memory. However, when you do this you delete previously downloaded images and other stored data. This in turns means you use more data when you re-visit sites and have to re-download everything that was stored during your last visit.

Be app wise
In general, it’s a good idea to know what you’re getting yourself into before you download an app. Not only is this a good idea for information security, but also for your data usage. Make sure you are aware of how much data an app will use before you add it to your collection. Also be sure to research low-data alternatives to your current go-to apps.

Use Wi-Fi
When you’re at home or in another place with a Wi-Fi connection, there’s no reason to be using up your allotment for data. Switch off the cellular data in your phone’s settings and switch it over to the Wi-Fi setting.

Restrict background data
Your apps may be hogging your data without you even knowing it. Select the setting to limit background data and reel in apps that are continuously “pushing” you data. When you install an app, select the choice to forego push notifications.

It’s tempting to think of your smartphone as a “Whatever I Want/Whenever I Want” kind of tool. However, if you get too carried away, your service provider may charge you whatever THEY want. By taking a few precautionary measures, you can avoid painful overages and keep control over your smartphone charges.

Opening the Hood on Auto Credit Scores

155571883You’ve accessed your credit scores in preparation for buying a vehicle. You’ve done everything in your power to get your scores as high as possible. Then you sit down with your lender only to be told they use something called “auto credit scores.” No need to get flustered. While there are a few key differences, auto credit scores are pretty similar to general credit scores. Once you know the ways they vary from your general credit scores, you can quickly understand how to master yours.

What’s different?
Auto credit scores normally put greater emphasis on:

  • Whether or not you’ve had an auto loan or lease in the past (having at least one is better)
  • Payment on vehicle loans or leases (missed payments are bad)
  • Settlement for less than the amount owed on an auto loan or lease (bad)
  • Auto loan or lease sent to collections (bad)
  • Repossession of a vehicle (bad)

How do I know which kind of score is being used?
As with any type of loan application, your best method is to simply ask the lender what type of score they will be using to consider your application. In the vast majority of cases, a lender will use an auto credit score for an auto loan or lease.

How do I get my auto credit score and report?
Before you run off to the internet trying to get your auto credit reports, know that the information used to compile auto credit scores comes from the information that is already in your regular credit reports from Equifax, Experian and TransUnion. You can get those for free once a year by calling 877-322-8228 or visiting Odds are that you won’t be able to get a copy of your auto credit report unless it is provided by a lender.

Depending on which score your lender is using, you may not actually be able to access your auto credit score either. This isn’t as bad as it sounds, though. If you can access your general credit score, such as the highly popular FICO scores, you should have a good idea of what your auto score will look like. In most cases, the general credit scores give you a good approximation of what your auto scores will look like.

How do I address my auto score?
To put it simply, always pay your vehicle loans or leases on time and avoid at all costs negative outcomes like collections or repossessions. Since auto scores do also consider other types of credit you have used – like credit cards or mortgages – it’s wise to pay those on time too. In addition, credit scores usually favor those who:

  • Keep balances low on revolving accounts, like credit cards or personal lines of credit
  • Keep revolving accounts open for an extended period of time
  • Have a diversity of types of credit
  • Limit their applications for new credit

Auto credit scores aren’t terribly complicated for the most part. Just keep in mind are that if you miss payments or fail to meet your obligations with vehicle leases or loans, doing so will bring down your score and may mean paying more to have access to a vehicle in the future.

Preparing Finances For A Maternity Leave

177535333When you’re welcoming a little bundle of joy into your life, unanswered money questions can distract from your bonding time and bring unnecessary stressors into your first days together. However, by planning ahead, you can create a maternity leave with far fewer financial worries.

Talk to your HR person
You don’t want to start planning your maternity leave based on false assumptions or outdated information. Schedule an appointment with your human resources contact to arm yourself with the knowledge you’ll need to begin designing your maternity leave financial plan.

Think about a flexible health spending account
While you’ve got your HR person’s ear, ask about how a flexible health spending account might help you save on your upcoming medical and childcare expenses. By putting pre-tax dollars toward these costs, you may be able to save a bundle.

Know your insurance coverage
Yes, you’ll want to know how your health insurance plan will cover you and your child going forward. But also know that short-term disability insurance may provide a payout during your maternity leave. Be aware that your plan provider may require that you sign up for this type of plan before you become pregnant.

Odds are that you’re aware of this, but caring for a new child turns your world upside-down and inside-out. Your finances certainly aren’t spared from this upheaval. Create a spending and savings plan for your maternity leave period that will recognize and incorporate these changes. While there will definitely be new costs, you may also be able find significant savings in areas like entertainment, transportation or dining out.

Save aggressively
Even if you work for an employer who offers paid maternity leave, it’s still a good idea to build up barrier against money problems in your baby’s first months. The beginning of a baby’s life is notoriously unpredictable cost-wise, so it’s better to be prepared than left guessing. If you don’t have an employer-provided paid leave, it’s even more vital to start stashing cash.

Consult a tax pro
One of the unintended – but potentially positive – ramifications of bringing a new child into your home is the change in your tax status. Claiming the Child Tax Credit or deducting childcare expenses can mean less burden at tax time.

Start to think about childcare
You don’t want to spend your first few months with your child worrying about how he or she will be cared for after your maternity leave is over. As much as possible, research your options for childcare now to avoid having to rush into any decisions later.

If you’re giving birth, chances are that by your third trimester you’ll often be too tired to sit down and focus on money questions for extended periods of time. By taking care of these issues as soon as possible, you increase your chances of having fewer financial worries and more time to enjoy your new blessing.

Credit Card Cash Advances: What You Need To Know

476751241If you’re in a bind and desperate for money, a cash advance via your credit card can seem like an oasis in the financial wilderness. Be careful, though. There are several key things you need to make sure you are aware of before plunging in.

Interest rate
A common mistake is to assume that the interest rate on cash advances is the same as the interest rate for purchases you make using the card. To avoid being burned, know the interest you’ll be charged before you borrow. Chances are it’s significantly higher than your rate for purchases.

Teaser rates
Does your cash advance come with a low initial rate that quickly jumps if you don’t pay the money back within a certain time? Make sure you’re aware of any rate hikes that could kick in.

Transaction fee
Like the interest rate, the transaction fee can be a real shocker if you haven’t done your homework. If the combination of the interest rate and fees makes a cash advance too expensive for you, explore cheaper options for coming up with some quick cash.

Grace period
When you make a purchase with a credit card, there is normally a grace period before interest is charged on the money borrowed. However, with cash advances, it’s not uncommon for interest to be charged from the moment you complete the transaction.

Payment rules
Since the money you borrow via cash advance gets added to your credit card balance, it’s important to know how the any payments you make for the card will be applied. For example, when you make your regular monthly payment, how much of that gets applied to the cash advance portion of your debt? You don’t want to encounter a situation in which you are only paying on your lower interest debt while the higher interest debt goes untouched.

Credit card cash advances should never be used in lieu of emergency savings or as an excuse to live beyond your means. They should only be considered in emergencies, and even then they should be weighed against cheaper or less risky options.

First-Time Landlady/Landlord Checklist

iStock_000007589790SmallGetting started as a housing lessor is a really big step. However, by breaking it up into well-defined smaller steps, you can take a lot of the stress out of putting the place up for rent.

Business type
From a personal finance perspective, becoming a lessor isn’t something it’s wise to rush into. Consult with a financial planning professional and/or an attorney to understand the ramifications of your new venture for your taxes, investments and other money issues. Knowing which type of legal entity you will want to use for your business is central to this new phase in your life.

Separate bank account
For legal and tax reasons, you need to have rent checks and other rental-related monies going in and out of an account different than the one for your personal finances. Contact your credit union or local bank about setting up a business account.

Alternate contact information
To avoid annoying – or downright scary – scenarios with tenants, you’re better off providing them with a phone number and address different than your personal ones. Get a P.O. Box at your local post office and have a number other than your cell phone as the primary contact point.

Contact sheet
Once you’ve set up the contact details you’ll provide to your tenants, it’s smart to provide them with a handy way of accessing that information. Also include – perhaps on a laminated card – information for the property management company (if applicable), local fire department, police station and any other vital entities.

Filing system
Unfortunately, it’s likely that at some point you’ll encounter a dispute of one kind or another with a renter. By keeping comprehensive and well-organized records of payments, communications, work invoices, and other key information, you make the process of resolving issues much easier. It will also help come tax time.

Yes, you’ll probably need nice photos of your unit for your advertisement or listing of the property. However, also keep in mind that your photos may need to stand as evidence of the condition of the unit prior to your tenants moving in. If there are problems with damage when they move out, you may need to be able to show before-and-after shots to make your case.

Rental application
“They seem nice” isn’t a solid reason for choosing your renters. You will need a proper application form to get information like name, Social Security number, employer details, etc. Once you have found an application template you like (whether from a legal professional or from the internet) fill it out with your own minimum requirements to establish a baseline of what you will accept.

Tenant checks
Don’t wait until you have applications rolling in to decide on your strategy for conducting background or credit checks. Perform an internet search engine query for “tenant screening” along with the name of your town/city/area well in advance of listing your unit. While you’re on the web, read reviews of different tenant research providers to find the most respected company.

Rental agreement
Sample rental agreements can be found on the internet, but be careful. You need to have paperwork that is both in compliance with local laws and that takes full advantage of the rights guaranteed to you. To make sure you are covered, have a local legal professional familiar with real estate laws in your area review the agreement.

Property management agency?
Handling the day-to-day aspects of a rental property can be a load. Consider paying for the services of a property management company to handle the niggling details that inevitably come up.

New locks
It may seem like an unnecessary additional expense, but changing the locks on any doors accessible from the outside is imperative. You can’t have a situation in which former tenants are just waltzing into your new lessees’ place.

Unit condition
At the very least, clean the unit, make sure necessary repairs have been made, and check the working condition of the heating, cooling, water, plumbing, electricity, etc. Be aware that in some areas, local laws stipulate that an inspection is required before a unit can be rented.  Check with a local legal professional who specialized in real estate issues to know your responsibilities in this area. Make sure to also ask about local requirements for smoke and carbon monoxide detectors.

You may think your unit is worth $1,500 per month, but if the local market doesn’t support that, you are going to lose a significant amount of money waiting for your dream renter. Take the time to research what similar places are going for in the area. By pricing your unit competitively, you stand a better chance of getting the right people to start renting quickly.  Remember to gather information not only on monthly rent, but also deposits.

The best way to find options for advertising your unit is to put yourself in the shoes of your potential tenants. By using the internet like you’re looking for a place, you’ll find local agencies that will come up first in internet search results. Craigslist is one example of an easy-to-use and popular way to list and rent out apartments.

Move-in checklist
To further protect yourself and avoid misunderstandings, use a move-in checklist with your tenants before you hand over the keys. This should include a detailed description of the condition of the unit and should be reviewed with the tenants point-by-point. At the end, have the tenants sign and date the checklist. This is also a good time to review the particulars of the lease with the tenants before having them sign it too.

No money, no keys
You may enter into your time as a landlady or landlord with visions of being the “nice” or “flexible” lessor, but there are some areas where you need to follow the rules pretty closely. Always collect first month’s rent and deposit BEFORE your tenants move in. That way, you save yourself from some potentially major headaches.

If it’s your first time renting out a place, you’re better off erring on the side of caution and over-preparing. As time goes by, you can whittle down some tasks, but in the beginning your best bet is to cover all the bases.

Snow Tires: Are They Worth It?

479116077The dog days of summer probably don’t having you contemplating your vehicle’s winter driving needs, but maybe they should. After all, fall is when older model snow tires typically go on sale as newer versions hit stores. A great deal can be had if you are willing to pick up last year’s latest and greatest. But it begs the question: Is it really money saved or is it money wasted?

Argument for
Winter tires have been shown to make driving safer in snowy or icy conditions. The money you don’t have to pay for a fender bender or higher insurance rates makes the expense worth it.

Argument against
A new set of four new snow tires can be around $1,000. The expense isn’t worth it, especially since safe driving can prevent most accidents.

Argument for
While the price may feel high in the short-term, using snow tires can double the life of your regular tires, thus keeping down your overall tire cost.

Argument against
Buying winter tires means constantly having to store at least one set of tires.

Argument for
Your insurance company may give you a rate discount for using snow tires.

Argument against
Having to repeatedly change tires gets expensive and puts unnecessary wear and tear on the rubber.

Argument for
If you can’t afford four snow tires, you can always get two for the back wheels. While an imperfect solution, it will still improve your winter driving safety.

Argument against
Snow tires wear quickly on cleared roads, meaning you are paying extra money to wear down your tires when there is no snow or ice.

As with most spending decisions, the final choice on snow tires comes down to what you want to prioritize. By identifying which of the above factors is most important to you, it’s possible to make the right call for your situation and needs.