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Monthly Archives: February 2017
When should I open a checking account for my child?
Many parents establish a savings account for their child early in life in order to save birthday money or a part-time job paycheck. But what about a checking account? When is the best time to add one to my child’s list of responsibilities? Most would say the best time to add a checking account is early in the teen years, but the real answer, however, is when your child has demonstrated an acceptable level of maturity concerning the money they have been entrusted with thus far.
What do I need?
A teen checking account can help guide your child in the right direction before poor spending habits become the norm. Since you, as a parent, will likely have to co-sign for your child’s checking account, this can be an account that the two of you can handle together. You’ll both have access to the account information, including the ability to monitor transactions. This will allow you to review check payments, withdrawals and other activity before it’s gone too far off track.
To open an account you will need:
- Your child’s Social Security number and date of birth.
- A picture identification, i.e. your driver’s license.
- Personal details such as your address, email address, and date of birth.
- Your initial deposit, including cash or checks.
What about a debit card?
A debit card is an additional responsibility that comes with a checking account. Any time your child uses their debit card, a given amount will be deducted from the funds in their checking account. It’s critical to explain the risk of overdraft and the consequences that accompany it. They should also be aware of the risks they open themselves to should they lose their card or have it stolen. They should immediately report the loss of their card to the issuing bank and never write down on paper or verbally share their PIN with anyone.
As a parent, you want your child to be able to handle their finances in the most effective way possible. A saving account is an excellent head start, and a checking account is a wise follow-up. It’s never too early to get started on their financial education, and these products are the stepping stones that will serve as the foundation for their success.
What it means to have a “friend in the industry”
“I have a friend in the industry.”
It’s safe to say that in the world of mortgage, we have all heard this one before. When someone broadcasts this to you, the real question is, “What does having a friend in the industry mean?” It could mean, “A realtor lives down the street from me.” It could mean, “My son’s basketball coach is an appraiser.” Or it could even mean, “I know someone at church who works for the bank.”
We all have “friends” in the industry – not just the mortgage industry either, but in many industries. And working in the industry doesn’t make them all experts. Having a friend in the industry and having a trusted advisor to help you determine your mortgage options are two completely different things. Just because you have that “friend” in the industry, it doesn’t mean that you’ve shared your financial situation with them. Most people tend to keep their private business…well, private. However, by having a relationship with someone who is a trusted advisor, and who puts your interests above all else, that’s really having a friend in the industry.
If you’re looking for a “friend in the industry”, let us know because we are here to help!
Why you should focus on price versus monthly payment when buying a car
Should you be more concerned with the purchase price or monthly payment when buying a car? Ask ten people and the answers will most likely be split right down the middle. From a financial perspective, however, it’s smarter to negotiate based on the purchase price of the vehicle. The amount of the monthly payment can be sliced and diced any number of ways, but it all adds up to one number in the end.
Why focus on the purchase price vs monthly payment?
The purchase price of the vehicle, plus interest, is the amount of money you will pay over the life of your auto loan. There are several factors that can impact this amount:
Your credit rating: The lower your credit rating, the higher your interest rate. It’s smart to work on raising your credit score before making any large purchase. You are entitled to request a free copy of your credit score from all three credit agencies on an annual basis. Check it thoroughly to ensure all the information is correct, no unexplained delinquencies are noted, and any open issues are resolved. Anything less than an excellent credit rating will cost you more money in interest than necessary.
The term of your loan: A standard car loan has steadily crept from 60 months to an increasingly common 84 months over the last few years. Simply stated, the longer it takes to pay off your loan, the more money you pay in interest, which increases the overall cost of the car.
It seems that most buyers are more concerned with negotiating a specific monthly payment rather than the total price of the car. They have room in their monthly budget for $300 and not a penny more. Kudos for being budget conscious, but understand the consequences of extending the term from 60 to 72 months simply to create a lower payment amount. An additional year of $300 payments plus interest only increases the total cost of the car.
Another consideration is the length of time you plan to keep your car. Will you be ready to trade it in or sell it in 3 or 4 years? How much equity will you have accumulated, especially if you didn’t make a large down payment? Cars generally depreciate 22% in their first year and the longer the term of your loan, the longer it takes to build up equity.
Know your options
While monthly payment negotiations could very well put you in the driver’s seat of your ultimate dream car, it might not be the most financially sensible approach. It’s important to understand the choices, the alternatives and their long-term effects on your wallet. Going into any purchase with the knowledge of how it works and what your options are makes you a better consumer and a smarter decision-maker.
How to make Valentine’s Day inexpensive
Valentine’s Day is tomorrow which means now is the time to start scrambling. If you’re anything like a lot of folks, you probably have yet to make plans for your special someone. The problem with putting it off until the day before is that when you start calling restaurants to get a reservation, the only available times are before 5:00 and after 10:00 pm. So what are you left to do? Luckily, you still have enough time to make Valentine’s Day inexpensive and plan a romantic evening without heading to a fancy restaurant. Here are a few quick ideas:
- Dinner at the house. This can make for a really special evening if you take the time to do it right. Try to pick out a main entrée that you know your significant other will enjoy, then utilize your favorite search engine for a recipe. If you’re not quite sure what you’re doing in the kitchen, there are tons of recipes available online and you can probably even watch a video on how to make it happen.
- Be at their service. Instead of spending lots of cash on expensive gifts, give up your time. Offer to give a massage or do errands that they might otherwise do. Suggest doing the dishes or another one of your partner’s dreaded chores for a month and you’ll really have made them feel special.
- Plan an activity together for a later date. Think about something they would enjoy doing (painting, hiking, watching their favorite show) and plan to do it together. Get a nice card, type out your proposed plan and insert it in the card. Although this activity may not be something you’re super excited about, if you know it will make them happy, it will definitely be worth it.
Valentine’s Day is supposed to be a day about the love and adoration you have for your special someone, so don’t make it stressful or expensive. If you haven’t planned out that special date yet, there’s still time – but not a whole lot.
Average Wedding Cost Reaches $35k
Thinking about having a wedding soon? Are you prepared for the cost? According to The Knot’s 2016 Real Weddings Study, the average cost of a wedding in the US is $35,329. The study goes on to say that weddings today are less about the bride and groom, and instead are geared more towards entertaining guests. From the venue to food, decorations, and entertainment, couples are providing guests with unforgettable experiences. Don’t let this number scare you — it’s just an average, so there’s room for you to spend less (or more).
If you haven’t started saving for a potential wedding, now might be the time.
Todd’s Mortgage Minute: Are you really ready to buy your first home?
In the mortgage industry, nothing is more rewarding than helping a client purchase their first home. The day is met with excitement, enthusiasm, and oftentimes photos to remember the day that someone has started “a new life!” That day can also be met with anxiety, worry, and wondering, “Did I make the right decision by purchasing this home?” At the end of the day, those of us in the mortgage industry should really be educating these first-time buyers so they’re prepared once the moving truck is gone and so they’re budgeting for the one-time/first-time expenses, as well as monthly bills, that come along with being a new homeowner.
From a monthly perspective, if you’re moving from an apartment or condo, you may not have had all of your utilities set up in your name — some may have been included in your rent. Cable, water, electricity, gas, internet, garbage pickup, and pest services are all monthly expenses that you’re going to have as a new homeowner. Oh, and by the way, many utility companies will not set up these services unless you pay a deposit. Did you have these costs in your budget?
First-time purchases should also be budgeted for, considering some of them are big-ticket items. Do you have a lawnmower? You’ll need a gas can, along with a weed-eater of some sort, as well. Does your new home have a refrigerator or a washer and dryer? Chances are if you’re moving from an apartment, those appliances stay in the apartment and you’ll have to buy these items. If your home is newly built, you’ll need blinds for the windows, or some sort of window treatments — not just for the front-facing windows of the home, but for ALL windows. And trust me, you don’t want to be known as the house on the street using Star Wars sheets as curtains.
The bottom line: there’s more to purchasing that first home than just having the funds needed for closing and being able to afford the monthly loan payment. Make sure you’re ready so you don’t stress after the move. Homes are meant to enrich our lives, not to stress us out!