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Real Estate

Benefits of Recuded Debt

Benefits of Reduced Debt

If you’ve set a goal to pay down your debt this year, you’re not alone. Strategically reducing or paying off debt benefits your finances tremendously, but can positively impact other areas of your life as well.

Reduce stress.

According to a recent study, more than 85% of Americans intermittently feel stressed by their finances and 30% feel stressed constanly.*  By making a commitment to pay off your debt, you’re also making a commitment to your overall health and well-being by minimizing a large cause of your stress.

Improve your credit score.

Although credit cards and lines of credit may help establish your score, maintaining low balances positively impacts it overall. Additionally, if you plan to finance large purchases, such as a car or home, keeping your outstanding balances low may classify you as a lower credit risk and qualify you for reduced rates.

Easily pay an unexpected bill.

If your debts are low, you’ll be able to save more in an emergency fund to handle financial surprises, such as an unexpected home repair bill.

Increase your disposable income.

Many Americans live paycheck-to-paycheck; their hard-earned money is already earmarked to pay off debts and bills before it’s even deposited in a bank account. However, the less debt you are in, the more disposable income you will have available to enjoy now or save for later.

Boost your retirement income.

If you want to maintain your lifestyle long after retirement, the time to save is now. Unfortunately, one of the biggest impediments to building a retirement nest egg is existing debt. The good news is, when you pay down or pay off your debt, you can choose to contribute additional funds to existing retirement accounts for enjoyment of your golden years.

Model good financial habits for others.

If you want others to cultivate good financial habits, be the example they can follow. People, especially children, mimic the behaviors they see. Explain how to cultivate good financial habits and why it is important to do so. Additionally, provide reasons why it is best to avoid unnecessary debt.

Become more generous. 

The less debt we have, the more generous we may feel with our money. Whether it’s tithing more, donating to a local school or sports programs or giving money to a cause dear to us, we may feel like we can give more.

 

Harness the benefits of compound interest

Whether you’re paying down debt or are debt-free, transfer a percentage of your earnings each paycheck to an interest-bearing account. The intent is to make a portion of your earnings work for you.

“Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it.”                                                                                                              -Albert Einstein

 

 

3 Ways to earn extra money

Looking for ways to earn more money? Whether you want to pay down debt, build emergency savings or invest, consider these options.

  1. Get side hustle. Do you have a hobby or skill that could net more money on the side? Whether it’s photography, web design or crafting, consider sharing your skills to earn extra cash.
  2. If you have extra room in your home or an in-law apartment, consider renting it through Airbnb. Be sure to check the regulations in your area to ensure you’re in compliance with municipal codes or homeowner’s association rules.
  3. Clear the clutter. Sort through your stuff and set aside items that you don’t use, are in good condition and others would enjoy. Consider selling them online, at a consignment shop or in a garage sale.

 

Sources: *CNBC, March 20, 2018; Buffini & Company

Closing Simplified?

January 18th, 2016

Blog 5 photoIt just became a lot easier to navigate the complicated mortgage process. New disclosures being utilized in the mortgage world requires lenders to provide home buyers with two new forms that clearly detail their home-loan terms. For many buyers these changes are an improvement in what is a rather intimidating process. For the average consumer, home-loans are the biggest investment in their lives. Luckily, today we have the TILA-RESPA Integrated Disclosure rule which in two pages accomplishes what the four pages of the Loan Estimate and Closing Disclosure used to do.

Additionally, lenders have to provide folks looking to buy a home a loan estimate form within 3 days of a submitted application, minimizing the nerve racking wait time of previous years. This estimate consists of three pages detailing amount, interest rate, and where the figures can change post-closing. Having the estimates more easily available makes comparing loans a whole lot easier. However, one should still look out for the type of interest rate; whether it’s fixed or adjustable and if there is potential for any future penalties. The forms additionally estimate closing costs of your transaction.

Having these figures clearly stated should make it a lot easier to compare loans from different providers; allowing you to shop around to find the best rates and terms. Finally, the forms help the closing process, for lenders now must provide the closing disclosure 3 days prior to closing.  Buyers can approach a closing with more confidence knowing that the figures previously agreed to will be what is seen at the closing. These new forms are a step in the right direction to get closing simplified.