Are Invisible Money Leaks Draining Your Account?
Put these tips to work and get a healthier bank account — starting today.
f someone were to take a large amount from your bank account, you’d most likely notice when a transaction was declined or a payment bounced. But how quickly would you notice if a small amount were being deducted, say $5 or $10, every month?
Most of us have a general idea of how much money is in our accounts, but we pay little attention to each expenditure — especially if your bills for that apartment in Raleigh, NC, are set on autopay. So while the ship may still be afloat, small money leaks could end up wreaking havoc below the surface. Here are a few unexpected ways you might be siphoning cash — and how to manage your money and plug those leaks
Ask the average American where they overspend, and chances are, they’ll mention food, both at restaurants and the grocery store. Yet while you may shovel a large portion of your budget toward this expense, you probably waste a large amount of it as well. A study by the Natural Resources Defense Council found that Americans waste 40% of their food purchases — which equates to an average of $2,000 per year, per household. Meal planning and resisting the urge to buy in bulk can do wonders when it comes to cutting down on waste and combating this socially prevalent money leak.
Whether you're buying or selling, it's a good idea to have a pro on your side.
Are there legal benefits to using a licensed real estate agent?
The short answer is yes. Licensed real estate agents have legal obligations — formally called “fiduciary duties” — to their clients that are commonly referred to by the acronym OLDCAR.
O = Obedience
If you give an agent who is representing you an instruction with any financial implications (more about what constitutes “representation” below), they are obligated to follow it, even if they strongly disagree — as long as it’s legal and doesn’t contradict a contractual agreement.
L = Loyalty
Your agent is obliged to put your interests above those of anyone else involved in the deal — including themselves.
D = Disclosure
If your agent knows any fact that’s “material” to the sale, they are obligated to share that fact with you. And while they’re not obligated, they’re also motivated to find out as many of those material facts as possible.
C = Confidentiality
Your agent must protect your confidentiality. That means they can’t share any information about you or your situation (without your permission) with any other party to the deal.
A = Accounting
Your agent is responsible for keeping track of funds in play in the deal.
R = Reasonable care
This one is a bit sticky. An agent is obligated to use “reasonable” care and diligence while handling your affairs. Though exactly what reasonable care means in any specific transaction often ends up being decided by a judge in court.
Who is (and isn’t ) your agent
This is an important distinction. The fiduciary duties above only apply to a real estate agent who’s working for you. That means you either have a verbal or written agreement with them.
Often, you’ll run into a situation where you end up interacting, perhaps a lot, with an agent who is part of the deal, but who isn’t formally representing you. They’ll most likely be nice, professional, and helpful.
But if they’re the seller’s agent, they’re obligated to the seller, not you, and the legal obligations they have to the other party don’t apply to their interactions with you.
This Greenwich, CT home takes 'barn living' to a whole new level.
The term “high-tech homes” may bring to mind images of the Jetsons, but many builders believe residences equipped with automation and other gadgetry will soon be the new standard for houses.
The Greenwich House is an example of this new wave of residences — and it’s not only a smart house, but also a green and healthy one. Listed at $3.995 million, the home sits on .66 acres and has 5 bedrooms and 4.5 baths. It’s nestled among New England-stylecolonials in the New York City suburb of Greenwich, CT.
A standout that doesn’t stand out
But don’t expect the new 4,802-square-foot house to stick out like a sore thumb. The space-age home, built from the ground up in 13 months, is a rustic-looking white house that builder, designer, and real estate agent Sabine Schoenberg describes as “modern barn living.”
“I didn’t want it to look like a California contemporary,” she explains. “I wanted it to fit into the Connecticut landscape, and at the same time have all the smart features.”
A stone fireplace in the living room mimics the stone base of the house and rocky hillside in the backyard. The open floor plan spills all the way to the outside onto a large porch equipped with a TV and sound system.
Smartest house on the block
The house is equipped with futuristic technology, like an app-based home automation system by Crestron Pyng. It controls everything from lighting, window shades, temperature, security, and the entertainment system — right down to the music playing in each room.
A geothermal heating and cooling system works to keep the house at an even temperature without wracking up a gas or electric bills. Other innovative features include UV filters on the windows to prevent sunlight from heating up the house, and an exterior wrap that aids in reducing energy use and costs.
When you're doing the math, make sure you've got all the data you need.
One of the hottest topics in housing is whether it’s better to rent or buy a home. The answer always changes based on market conditions, so it’s handy to use a rent vs. buy calculator to do comparisons on the fly.
But you should also know how rent vs. buy calculations actually work so you can feel confident in deciding what’s right for your budget and your family. Here are two easy ways to do this.
Checking the numbers
The first thing you need to understand is how rent vs. buy math works for you personally. You do this by calculating the monthly costs of home ownership, subtracting tax benefits, then comparing the final figure to the rental cost of a similar home in the same neighborhood.
Let’s assume you have a credit score of 750, and a $300,000 home purchase price with 10 percent down (that’s $30,000) for a 30-year fixed mortgage. Current rates are around 3.25 percent.
In this scenario, a mortgage calculator quickly tallies your total monthly housing costs as follows:
|Mortgage payment of principal and interest
|Private mortgage insurance (PMI)
|TOTAL monthly housing cost
Next you calculate your tax benefit. As a homeowner, you get to deduct your mortgage interest and property taxes.
To calculate annual mortgage interest, you multiply your $270,000 loan amount by your 3.25 percent rate to get $8,775. To calculate annual property tax, you multiply your $300,000 home price by a national average of 1.2 percent property tax to get $3,600.
The sum of $8,775 in mortgage interest and $3,600 in property tax is $12,375 in deductible costs. Based on the income needed to qualify for a $300,000 home, your tax bracket is likely around 28 percent.
To get a quick estimate of annual tax savings, we multiply $12,375 by 28 percent to get $3,465.
Next we divide $3,465 by 12 months to get a monthly estimated tax savings of $289.
Then we subtract $289 from your total monthly housing cost of $1,675 to get estimated after-tax cost of $1,386.
Finally, you compare this estimated after-tax housing cost of $1,386 to market rent for a comparable home in the same city. Be sure to compare properties of the same size, quality, and location to ensure your analysis is accurate.
When you're updating your home, the last thing you need is a lousy contractor.
Whether you’re a professional real estate investor, like me and my husband Tarek, or you’re a homeowner with dreams of renovating to update and improve your house, having a quality home renovation team you can trust is absolutely essential.
After all, even if you’re planning on doing some stuff yourself, you’re not going to be able to do it all on your own. And you don’t want to end up paying top dollar for low-quality work.
So, how can you be sure that you find and hire the absolute best people for the job? If you follow a few simple steps, you can rest easy knowing that you’ve built a team that will take care of you and your home.
Do you have a plan?
Before you start Googling contractors, plumbers, and other renovation experts, you need to have a plan for your renovation. If you’re a design wiz, you might be able to create this plan on your own, but there’s nothing wrong with calling in a pro.
Getting an architect or interior designer involved in the process is a good idea, but you need to be very clear about what you want from them and how involved they’ll be.
If you don’t mind spending some extra money, you could have an architect design your entire remodeling project, hire all of your contractors, and oversee construction for you. Most of us don’t have the cash to do that, though, so we make a few compromises.
At this point, put together information on everything that you know you want included in your renovation. Then meet with a few different designers and/or architects to get an idea of what they can do for you.
You can follow the same guidelines to choose a designer, contractor, painter, plumber, or any other member of your team.
Create a list of candidates
To start your search, ask friends and family members who they’ve worked with on their home renovations. If you have any friends or colleagues in the real estate business, be sure to ask them which renovation experts they recommend. If you don’t get a lot of suggestions, go ahead and do a search online for the kind of work you want done.
Before you call anyone on the list, search for customer reviews of their services. Look at review sites to see what real customers have said about them; you want service providers with an overall positive review trend.
Don’t worry if you see one or two disgruntled reviews, but if you see more than that, you might want to cross that candidate off your list.
Call your best candidates
Once you’ve narrowed your list using friends’ recommendations and online reviews, it’s time to get on the phone. Call each of your candidates and ask them a few questions about their work and experience.
At the very least, you want to make sure they’re licensed and insured, how long they’ve been in business, and how much experience they have with the kinds of renovations you want. You should also ask for references and then follow up on them to make sure your candidates were being honest with you.
If a contractor, designer, or other renovation pro gives you a list of references and most of them don’t check out, then they’re either working with phone numbers so old that they don’t belong to their customers anymore, or they’re lying to you. Either way, move on.
You've just made a huge investment. Make sure you protect it.
Buying home insurance for the first time is overwhelming, especially if you’re trying to go it alone.
Before shopping for coverage, review these common insurance questions to make sure you’re armed with the knowledge to find the best policy for your needs.
Do I need a policy before buying a home?
Most states require drivers to possess auto insurance before taking the car off the dealer’s lot. But home insurance is different. You can legally own a home sans insurance.
However, if you need a loan to buy your home, your lender will likely require you to purchase home insurance as a way to protect its investment.
What coverages are included?
Standard home insurance policies typically include coverage for the structure of your home, its contents, liability, other structures (such as a toolshed), and additional living expenses. Let’s break these down.
Structure: If your home is damaged or destroyed by a covered peril and needs to be repaired or rebuilt, your insurance can help pay for these expenses. Structure coverage is not the same as the amount you paid for your home. You need to set your structure coverage for the amount it would take to rebuild your home from the ground up.
Contents: This coverage can kick in if your belongings are damaged or destroyed. It’s typically set between 50 and 70 percent of your home’s structural coverage. If you have high-value items, such as an extensive jewelry collection or rare pieces of art, there will likely be a cap on the repair/replacement value (between $1,000 and $2,000). To get more coverage for high-value items, you can add a rider policy to your home insurance.
Liability: If someone is injured on your property, the liability portion of your insurance policy can help pay for medical, rehabilitation, and/or funeral expenses, as well as legal fees in the event that the injured party sues you. Liability is typically set at $100,000 worth of protection. However, it’s wise to set your coverage between $300,000 and $500,000 — especially if your home includes attractive nuisances, such as a pool or trampoline — as medical and legal costs can add up rapidly.
Other structures: If your home has a detached garage or shed that is damaged or destroyed by a covered peril, your insurance can help pay to repair or rebuild it.
Additional living expenses: In the event that your home is destroyed and needs to be rebuilt, this coverage can help pay for living expenses, such as hotel and food bills for the duration of time that you’re displaced. Check with your insurer to see if this protection only covers you and your family for a specified amount of time.
What are covered perils?
Standard home insurance policies can cover damage caused by fire, windstorms, hail, lightning, theft, vandalism, explosions, and riots. Typically, water damage, such as that from freezing and bursting pipes, is also covered.
However, damage resulting from floods or earthquakes is not covered. Those types of natural disasters require separate policies and should be purchased if you live in a high-risk area, such as near a body of water or in California, where floods and earthquakes, respectively, are common.
How do I know how much coverage I need?
Complete a home inventory. This is a complete list of everything you own and each item’s value. Home inventories should include photos or video of all your possessions and the amount you paid for them — if you have the receipts, that’s even better.
Make multiple copies of the list and keep it in various safe locations, such as a safety deposit box. Having this inventory will allow your insurance agent to accurately recommend the amount of coverage you need, and will help get the ball rolling quickly if you need to file a claim.
Easy, Breezy: 8 Ways To Create A Fan Strategy
There’s no need to suffer in the summer heat. Follow these fan-focused tips, and you’ll be resting easy in no time.
Even if you don’t live in Phoenix, AZ — the city where the temperature most often climbs to 100 degrees and higher — you’ll quite likely experience a heat wave this summer. When the temps and humidity soar so high that you want to stick your head in the freezer (not recommended), don’t fret. Take action!
Forget instituting a ban on cooking, hot showers, and hot coffee. Instead, rely on your good sense to create a chill environment. Here are eight tips on how to cool down a room (or an entire apartment) with fans and a little ingenuity.
1. Crack a window at night
It might sound counterintuitive to crack open a window after you’ve just spent a day dodging heat and humidity, but temperatures tend to cool off in the evenings, so take full advantage! Position a standing or window box fan in front of an open window to bring the cooler air into your space and create a sleep-inducing cross breeze. Ah, white noise.
2. Keep the blinds closed during the day
Much like how you don’t want your nosy neighbors peeking in, you don’t want sun creeping in and heating up your home either. Close your blinds and curtains to keep some of the daytime heat at bay, or invest in thermal fabric. Have a window box fan? During the day, point it outward to push out warm, still air. This works especially well if you can run a ceiling or standing fan at the same time to circulate the inside air.
3. Ice, ice baby
Fair warning: This may look silly, but it works. Position a table or standing fan behind a shallow bowl of ice, frozen water bottles, or ice packs. Aim the fan at you so you get the ultimate cool breeze — without the hefty air-conditioning bill. Brilliant, simple, and economical! Bonus: Add a small fan on your nightstand and keep a spray bottle of cold water to mimic this same technique.
4. Consider proper fan logistics
Ceiling fans can be a lifesaver in the summer. To get the most use out of them, make sure they rotate counterclockwise (if viewing from below) and set them to have a maximum downdraft. For a bedroom up to about 175 square feet, opt for a 42- to 48-inch six-blade ceiling fan, while a space up to about 365 square feet can benefit from a 56-inch blade. If your only ceiling fan is in the living room, camp out there to stay as cool as possible. Also, leave the fans on during the day to help speed up the cool-down process in the evenings.
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5. Close off parts of your home
Even if you live in the coziest one-bedroom, close off spaces you aren’t currently using so your fan doesn’t have to work overtime. Kristen Van Dyk of Factory Paint & Decorating suggests leaving the bathroom fan on after a shower “to minimize the amount of warm steam and humidity in your rental unit.” Bonus: This has the dual effect on cutting down on mold and paint peeling issues, especially in bathrooms without windows.
How to Prepare Your Home for an Appraisal
What you need to know about the process, from a veteran certified appraiser.
Getting your home appraised can often be a nerve-wracking experience. Your home and your handy work will be on display to be judged and valued so that you can move forward with selling your home.
But it doesn’t have to be a stressful experience. With the right tools, tricks and savvy, the appraisal process can not only go smoothly, it can also help you make a giant financial leap toward a future in a new home.
Do your homework
“Just like anything else — for example, if you’re going to select a doctor, dentist, or lawyer — you do your homework to find out the appraiser’s market knowledge of the area,” says Rick Singh, a property appraiser in Orange County, FL.
Ideally, your appraiser will be a local who knows the area well and who has been around long enough to see changes in the market. It’s also crucial to hire an appraiser who is state certified.
Check your maintenance
Whether it’s a loose shingle, chipped paint or dirty carpet, be sure to take care of it before the appraiser comes. Anything obvious that needs work could potentially eat away at your home’s value.
Also, keep a list of maintenance work that has been done on the home. Have a running list of what you have fixed and upgraded in your home as well as the amount of money you have spent.
Maximize curb appeal
When you’re getting your home appraised, remember that your house should look like the nicest one on the block.
“Landscaping plays so much into making a good first impression,” Singh says. “And remember that a first impression is a lasting impression. Make sure [your yard] is tidy and up-to-date. Trim or replace dead plants, and make sure it’s nice and green.”
Ensure appliances work
Do you have a dishwasher that only works when you give it a little kick, or a refrigerator that doesn’t keep your food as cool as it used to? These malfunctioning big-ticket items in a home could be a huge disadvantage to your home’s appraisal value.
Show pride in ownership
Although your home isn’t necessarily valued on the interior decor, it doesn’t hurt to show that it’s well cared for.
This doesn’t necessarily mean you have to trade in your T.J.Maxx finds for a pricey interior makeover, but make sure your home is neat, tidy, and exhibits that you generally have an interest in keeping your home looking its best.
9 Budget-Friendly Staycation Ideas for Families
Just because you're staying home doesn't mean you can't have an adventure.
Disneyland, the beach, camping, Grandma’s … just a few of the many places your kids would nominate as a vacation destination this summer. But staying home?
So, how do you sell a staycation to your little rascals? Oh, and not spend a ton of money? Fill it with fun and adventure.
Look for activities that are simple to pull together and entertaining for all ages — bonus points for those with educational benefits.
Check out these nine kid- and budget-friendly ideas — and a few tips from a frugal mom — that will make your summer staycation just as lively and memorable as any trip.
Camp out in your backyard
Pitch a tent, pull out the camp chairs, and roll out those sleeping bags. It’s time to go camping – in your backyard! This just might be the quintessential summer staycation experience that every kid should have.
Study the local flora and fauna; practice wilderness skills; roast marshmallows over a fire pit, grill or in the microwave; tell scary stories; spot constellations in the night sky.
You’ll get all the fun of camping without the long drive or gross campsite bathrooms.
World culture day
Immerse yourself in a different culture for a day. Pick a city, country, or area of the world that fascinates you and your children.
Explore the culture by making decorations or outfits, following customs, and using typical language phrases. Make a meal from the country, play traditional games, and learn fun facts from library books or websites.
“If you live in a city or metropolitan area, you can recreate any number of cultures,” explains a Pittsburgh mom and budget blogger at Femme Frugality. Femme created a “Parisian experience” in Pittsburgh by visiting museums and cathedrals, checking out a bridge with love locks, and dining at an outdoor cafe and French restaurant — all within her hometown.
Get your chef on
Have a budding Jamie Oliver or Rachael Ray on your hands? Let your little chefs put their skills to the test with a fun “Top Chef” style competition. Introduce a mystery ingredient, work in teams, and see what you can come up with.
If competition isn’t your style, simply head to the farmer’s market or grocery store and pick out a unique ingredient and see what your family can come up with to use it in a dish.
Have a sweet tooth? Have a bake off and create your favorite cookies, cupcakes, or cake. Share the goodies with friends and neighbors, too.
7 Ways To Compete With Cash Buyers In A Seller’s
If you really, really want the house, here’s how to play ball.
The old adage “money talks” rings true in real estate. After the stock market crash in 2008, homebuyers with all-cash offers quickly became sellers’ most sought-after suitors. All-cash, after all, means no mortgage, and no loan means no need to rely on lenders. So now that the market has heated up again, bidding wars are the new normal, from Alexandria, VA, real estate to homes for sale in San Angelo, TX. Unfortunately, it’s common for a seller to favor an all-cash offer over an offer from a buyer whose deal hinges on a mortgage approval.
“If you’re shopping for a home, there’s a good chance you’ll be competing with all-cash offers,” says John Lazenby, president of the Orlando Regional Realtor Association. “As of February 2014, 43% of all offers were all-cash! Couple that with the fact that it’s a seller’s market out there, and it can be very difficult — and competitive — to get the house you want.” So what’s a homebuyer to do? Here are seven ways to compete with all-cash buyers in a seller’s market.
1. Put your best foot forward
Don’t wait to submit your best offer. If you want a specific house and it’s a competitive market, you need to put in your very best offer first. “Assume that you will not have the opportunity to negotiate on price, so make your best offer upfront,” advises Lazenby. Adds Ross Anthony, a real estate agent with Willis Allen Real Estate in San Diego, CA: “If you are afraid of overpaying for the home, make sure you look at the current appreciation rate for the market. You may pay a little extra today, but if prices keep increasing and you keep getting outbid, you may find yourself priced out by the end of the year or paying significantly more for the same property anyway.”
2. Go a little higher
The highest offer doesn’t automatically mean a sale — but in many cases, it can’t hurt to inch your price up a bit, says Anthony. “It sounds obvious because it is, but this is often the most important thing to consider when offering on a home in a competitive seller’s market. More often than not, cash buyers are investors and investors want to increase their margins as much as possible by getting the property for as little as they can,” he explains, and that gives you a little negotiation power. “You must understand that in order to make your offer more attractive, you will most likely have to beat out the competition on price. Make sure your agent takes a close look at the comparable sales and can justify the purchase price, but also adjust your expectations of getting a home for less than it’s worth. Sometimes as little as an extra $1,000 on top of the list price can be the determining factor in the seller’s eyes.”
3. Find out the seller’s terms
“When telling agents that I might be coming forward with an offer, I first ask them what terms the seller is looking for,” explains Heather Witt, a real estate agent with Partners Trust in Los Angeles, CA. “Does the seller need extra time in the property to find a new home to live in? Are they looking for a quick close? Do they want to control who processes escrow and title? Do they already have those services picked out so that I might write an offer that won’t need to be countered?” Having a real estate agent who can handle this early negotiating on your behalf can mean the difference between landing a home and losing it.
4. Be flexible
“In any market, the buyer who is financing must be creative when up against all-cash buyers,” says David Dubin, a real estate broker with Douglas Elliman in New York, NY. One key to creating a winning offer? Emphasize your flexibility. If your agent can find out the sellers’ desired terms, you can sweeten the deal by letting the sellers drive the timeline and some of the specifics. “The more flexible and accommodating the buyer is, the more a buyer’s bid will pique the interest of the seller,” says Dubin. Simple things such as being accommodating with the closing date, offering to rent the house back to the sellers while they continue to hunt for their new home, or requesting minimal repairs can go a long way when competing with an all-cash offer.