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4 Things You Can Do While Waiting to Buy a Home

September 20th, 2018 · Mortgages

If you’re feeling wary about taking on a mortgage right now, you’re not alone. As reported by HousingWire, nearly one-quarter of Americans think high prices make this is a bad time to buy a home. On the flip-side, Yahoo Finance has good news on the same front – experts expect home prices to soften this year. While you wait, take steps to put yourself in the best position for buying a home when the time is right.

Why U.S. Homebuyers are Holding Out

Rising prices

As reported by MarketWatch, over the past year, the median home value has risen by more than 8 percent:

“The national median home value is now $217,300, an increase of 8.3% on the year and 8.4% above the bubble-era peak. In 21 of the nation’s 35 largest markets, the median home value is now at an all-time high.”

Why the price hike? It’s largely due to low inventory.

Rising mortgage rates

As though higher-priced homes don’t make affordability challenging enough, consider the impact of rising mortgage rates, too.

Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel Inc., told Yahoo Finance that “While the rate increases are currently nominal for Americans living paycheck to paycheck, it’s enough to sway a person’s decision to make that home purchase.”

Wages not keeping pace with inflation

It doesn’t help that inflation is growing at a greater rate than the wages of potential homebuyers.

According to Yahoo Finance, “When you adjust for inflation, wages haven’t risen in a decade, experts note. As the lack of inventory drives home prices up, affordability becomes an issue.

“Wages aren’t keeping pace and consumers are priced out of markets by 6% to 8% — depending on which home price index you look at, in terms of home values and wages.”

Fear of another housing bubble

As stated in the report cited by HousingWire, “We suspect memories of the house price crash 10 years ago are also playing a role in the relatively fast build-up in concerns over high house prices…. An understanding that house prices can quickly lose value is making Americans more cautious about buying a home.”

What to Do While You’re Waiting to Buy

1) Improve your credit
While you can buy a home with subprime credit, you’re much better-served taking the time to improve your credit score first. Otherwise, you’ll be looking at a much higher interest rate that will dramatically increase the cost of your loan.

To improve your credit before buying a home:

2) Do the math
How much home can you really afford? Use our mortgage calculator to figure your monthly payment – and overall loan cost – based on a specific interest rate.

3) Save your down payment
Aim for saving 20 percent for your down payment. Anything less than that may mean paying more, either in the form of higher interest or private mortgage insurance (PMI).

Fortunately, renting right now has its perks in this department.

As reported by MarketWatch, “The median rent nationwide only increased 1.3% over the past year to $1,440, marking the second straight month in which rent appreciation has fallen below the overall rate of inflation.”

In other words, as much as you may dislike renting right now, with rent appreciation falling below the rate of inflation, you’re in a better position to save more.

4) Educate yourself about mortgages
One of the biggest mistakes homebuyers make is going into the process unprepared. This not only means making uninformed decisions; it can also make an already stressful process even more challenging to navigate. So, do yourself a favor and make sure you can answer all the following questions before delving in.

Before You Buy

  • Do you know how to improve your credit first?
  • Do you know the best type of mortgage for you?
  • Do you know how to figure the real cost of your loan?
  • Do you understand underwriting guidelines?

After You Sign on the Dotted Line

  • Do you know how to pay off your loan early?
  • Do you know the alternatives to foreclosure?
  • Do you know how loan modifications work?
  • Do you know how to spot mortgage relief scams?

Find answers to all these questions (and more) in our comprehensive guide to mortgages.

While you may not love waiting to buy a home, it really is in your best interest. Take advantage of all these good things you can do in the meantime to put yourself in the best position once the time is right.

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8 Practical Ways to Keep Yourself Out of Debt

August 6th, 2018 · Debt Management

Debt is easy to get into and can be extremely difficult to get out of. Whether you have recently managed to pull yourself out of debt or are new to the wonderful world of budgeting and financial planning, here are several ways you can prevent getting into the debt trap:

Avoid Using Credit Cards

Owning credit cards is a blessing and a curse. On the blessing side, they are meant to give you instant access to money when you need it for big purchases or emergencies, and credit cards can help you build credit.  On the curse side, they can also be tempting to use for small everyday purchases and can rapidly add to your debt load.  In addition, you can hurt your credit by racking up large balances on your credit cards.

Credit is not free and should only be used when you absolutely need it. In order to avoid temptation and keep yourself from piling up debt, leave your credit cards at home when you are out and about during the day. If a situation arises where you think you need to use your card, you will be forced to go home and get the card, which may make you think twice before making the purchase.

If you are not able to pay off your balance each month, to keep your balances from growing, you need to make more than the minimum payment.  Studies have shown that for optimum credit scores, you need to keep your balance below 30% and preferably under 10%.  In addition, carrying a balance means that you are paying interest on your credit card debt, which is literally throwing your money away.  The money you pay in interest could go towards paying down other debt or go into savings.

Pay for College as You Go

Despite the high cost of college tuition, having a college degree is still an advantage in the working world.  Going to college is an important milestone in life that can open up career pathways and more earnings potential, but it can also leave you paying off a mountain of debt if you do not plan accordingly. Americans owe close to 1.5 trillion dollars in student loan debt.  The average student loan borrowers has $37,172 in student loans when they graduate, a $20,000 increase from 13 years ago.

How to avoid debt while you’re getting your education?  Student loans are much too easy to get, as credit requirements are often waived during the loan process.  Instead piling up student loan debt as convenient way to pay for college, look at other options you may have available:

  • Apply for as many college scholarships and grants as you can before heading off to college. There are many grants available for a variety of life circumstances; doing a little research can turn up hidden pots of money.
  • Instead of attending four years at a university, save money by attending community college first and then transferring credits over to a four year college. If I had to do it all over again, I would definitely have gone to a community college first before completing my degree at ASU.
  • Save up the money you need to pay tuition before you go to school. Delaying college is not necessarily a bad thing.  Some colleges are looking for students with practical life experiences in their college application process.  Many colleges are willing to accept a student who wishes to have a “gap year” in between high school and college.  This could be a prime way to get a job and earn the cash for tuition and expenses before entering school.
  • Get a job to earn tuition money while you are attending. I worked the entire time I was in college, and while it took me an extra 2 years to get my degree, I graduated with minimal student loan debt that I was able to pay off in 3 years.

The 30-Day Rule

Too often people make impulse purchases.  Indeed, merchants spend a lot of time, money and effort placing tempting “good deal” items at the right places their stores that trigger the desire to spend money on items they did not intend to buy when they entered the store.  Costco places a wide variety of items at the building entrance, which may or may not be the best deal for you.

I have what I call the 30-day rule when it comes to buying things.  Mastering the 30-day rule is a personal challenge in self-discipline that will save you lots of money and keep you from piling up debt. The 30-day rule simply means that if you find something you really want, wait 30 days before making the purchase. Oftentimes people will forget or change their mind if they do not make the purchase immediately. You will probably find that many items are not as interesting to you after time has passed. Before you make any non-essential purchase, wait for 30 days to see if you still want the item.

When I shop online at Amazon, I often leave items in my “wish list” or even in my shopping cart for an extended period of time before I buy.  I find many times that my desire to purchase the item was fleeting and I can just delete the items from my shopping cart with no pangs of remorse.

Complete a Spending Fast

A spending fast works much like a food fast you may complete for a diet plan or religious purposes. A spending fast is where you select a set amount of time and refrain from spending any money during that time period. You can complete a spending fast as often as you would like and can put all of the money you saved into a savings account. The more spending fasts you complete each month, the more money you can tuck away for emergencies or to pay down debt.

A good way to set yourself up for this is to anticipate your spending necessities like food, utilities, insurance, rent and car payments at the beginning of the month, then refrain from spending any more money for a week, as your expenses will already have been paid for this time period.   If you successful resist the urge to spend, try and put an amount equal to approximately what you would have spent towards other debt or savings.

Make Spare Money in Your Spare Time

Instead of spending idle time reading old magazines, watching TV, or shopping, use your spare time making some spare money to save or indulge on the things you really want. You can take surveys and work on small tasks with a smartphone, create crafts to sell, or provide a service like mowing lawns or dog walking. Another good way to earn money is to write content for the internet.  Websites are always hungry for new content and you can sell your writing to blogs and article “farms” to earn a little extra money.

The money earned from these odd jobs can be used for fun activities so you are not dipping into your general fund or credit cards while indulging. Building savings to provide that little extra financial cushion is also a great benefit to moonlighting.  You just may find a passion for being an entrepreneur and start the next great business.

Avoid Loans

In my experience as a credit counselor, it seems like people want to fix their credit in order to get into more debt. The two most often cited reasons that I heard in my credit counseling days: the desire to purchase a car or a home.  Yes, they’re necessities of life and most people need a car, unless you’re living in a city with excellent public transportation, but buying a new car or leasing is not a good idea – ever.  You can get a newer car for a fraction of the cost of a brand new car without suffering the drawback of the instant depreciation that occurs when you drive a new car off the lot.   Even buying a home, which is considered an investment, can be a bad idea.  Home prices are approaching an all time high and making a purchase right now may not be the best course of action.

Try to avoid getting a loan for anything. You can save up for a new car, college, and home remodels. Loans are borrowed money that must be paid back, and you will almost always pay interest on money that you borrow. While it may not always be possible to avoid getting a loan, always consider other options before signing the contract.

Build a Solid Savings Account

Emergency expenses can take a bite out of anyone’s budget. Even if your car is running like a clock, if you need new tires, a new set can set you back hundreds of dollars. Many people, when faced with unexpected car repairs or medical expenses, opt to charge away on their credit cards, or worse yet, get a payday loan. Payday loans can charge interest rates over 100%, and severely cripple your ability to get out of a financial hole.

Building an emergency savings account is key for staying out of debt. An emergency savings account will ensure that you have money available to cover life’s unexpected expenses. While it may not be possible for you to save a large reserve of cash quickly, you should make it a point to at least save small amounts of money each time you get paid. Even if you can only afford to put $5 or $10 a week into your savings account, your savings account will grow over time.

Always Look For Discounts

The literature on the subject of budgeting fills library shelves, and while I’m not going to go into everything you need to become a budgeting and money savings champion, here are a few tips:

  • To maximize your savings on goods and services you purchase, always look for coupons, sales, and discounts before buying. It always pays to be a money conscious consumer, and the money you save on things you are going to purchase anyway will help you to be able to tuck money away for a rainy day or pay down existing debt.
  • Before signing up for cable, internet, or other services, be sure to ask about promotional deals for becoming a new customer. If you’re an existing customer, it might be worth a call to cancel these services to see what kind of deal you may get for continuing to be a valued customer.
  • Look for coupons before you head out to the grocery store, and always purchase everyday items when they are on sale.
  • If you are one of the millions of Amazon users, look to see if you can get items that are used instead of new, especially hard back books.

In Summary

Use these simple techniques to keep your financial portfolio clear of unnecessary debt. Getting into debt can be stressful and could actually have negative impacts on your health, well-being, and family life. Debt is very expensive: if you carry a credit card balance for months or years, you can wind up paying more in interest than the original charge for the item.  If you’re already living paycheck to paycheck, your ability to get ahead financially is going to be hindered by large amounts of debt.  For instance: if you are trying to buy a home, having too much debt can cause you to be disqualified from obtaining a mortgage.  By doing some careful planning now, you can avoid paying more money needlessly on burdensome debt and will have a financial cushion available when you need it in the future.

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Credit Repair Cost: What You Can Expect and What You Can Avoid

February 20th, 2018 · Credit Repair

Credit Repair Cost: What You Can Expect and What You Can AvoidIf credit repair cost has you thinking twice about the process, get ready to feel much better about it. When you repair your credit yourself, the expense is far more manageable than you might think. Though there are costs ranging from the price of postage to paying off debt, you do not need to pay for credit repair services or some other things associated with the process. Get the facts about expenses you can expect and ones you can avoid.

Costs you can expect

Mailing credit repair letters

If you have bad credit, it is because of negative listings on your credit reports. So, a critical step in the credit repair process is identifying these negatives and doing what you can to address them through credit repair letters. In some cases, this may mean having an inaccurate listing removed. In other cases, it may mean negotiating a settlement for old debt.

We have free templates you can tweak to your specific circumstances, so you need not pay anyone to write these letters for you. In fact, the only cost associated with this step is the price of printing out the letters and mailing them to the appropriate recipients.

It is recommended that you send your credit repair letters via Certified Mail with Return Receipt so that you have proof of when they are received. This comes to a total of $6.67 per letter. That’s $3.45 for Certified Mail, $2.75 for the Return Receipt (green card you get back confirming when they received it), and $.47 for the regular cost of first class mail. Add $.21 for each additional ounce added by supporting documents.

As for the type of credit repair letter you use, it will depend on the nature of the listing, but common examples include:

*Note, the credit bureaus offer online credit dispute options. Don’t do it. Mail your letters so that you create a paper trail.

Find links to other credit repair letter templates here.

Paying down debt

The amount you owe represents 30 percent of your FICO Score. This includes:

  • How much you owe on all accounts
  • How much you owe on different types of accounts
  • Credit utilization ratio on revolving accounts (e.g., credit cards)
  • How many accounts have balances
  • How much you still owe on installment accounts (e.g., mortgage, auto loan, student loan, etc.)

This makes it very important to pay down your debt as soon as possible.

Your financial situation will determine just how aggressive you can get with paying down this debt. Obviously, you want to make all of your installment loan payments as agreed and stay current on your credit cards. Beyond that, though, you should use the debt snowball or avalanche method to pay off outstanding credit card debt completely.

Once you’ve returned your credit card balances to zero, keep it that way. This is not to say that you shouldn’t use your credit cards; only that you should only charge as much as you can afford to pay back right away. And, at the very most, you should never use more than 10 to 30 percent of your available revolving credit at a time.

Settling old debt

Collections and charge-offs for unpaid debt are among the most damaging of listings you can have on your credit reports. Fortunately, it is possible to negotiate a pay for delete, which means exactly what it sounds like: in exchange for paying what you owe, they remove the associated listing from your reports.

Just one note of caution.

Before you pay any debt to a collection agency, request debt validation and, if it’s several years old, check the statute of limitations first.

If the debt cannot be validated, you are not responsible for it and the associated listing must be removed from your reports. If the statute of limitations has expired, you are not responsible for it, but it will still stay on your reports for up to 7 years. If you are nearing those 7 years, it may be better to wait it out rather than pay the debt.

Learn more with our comprehensive collection of articles on DIY debt settlement.

Getting a secured credit card

Addressing negative listings on your credit reports is only one part of the repair process. Equally important is adding positive credit that will help raise your score. One good way of doing that is through the responsible use of credit cards.

Unfortunately, when you have bad credit, it often comes on the heels of having your credit cards cancelled and charged off. In this case, you may not have any credit cards to use responsibly…and you don’t have the good credit to qualify for one. This is where secured credit cards can be so helpful.

You don’t need good credit to qualify for a secured credit card. What you need is the ability to pay a security deposit that is usually equal to the line of credit they extend to you. After using it responsibly for 12 to 18 months, you will likely be eligible for an upgrade to a regular credit card, at which time your security deposit will be reimbursed.

Get tips on applying for a secured credit card and how to use it wisely.

Managing credit freezes

After all the hard work of repairing your credit, the last thing you want is for an identity thief to come along and undo all of your hard work. Thus, the importance of credit freezes to keep anyone from opening an account in your name.

In the wake of the Equifax hack, it is recommended that you keep credit freezes on your credit reports indefinitely. The cost of this varies. Placing the freeze is free if you are a victim of identity theft. Some states also offer free credit freezes under certain circumstances. Otherwise, you should expect the cost of a freeze to range from $3 to $15, depending on where you live.

Just keep in mind, this is per freeze, which you will need to place with all of the credit bureaus, including Equifax, TransUnion, Experian, and Innovis. Note, however, you can place a free credit freeze on your Equifax credit report until June 30, 2018).

In addition to the potential cost of placing the freeze, you may also need to pay to have it lifted when you want to apply for new credit. Because the freeze not only prevents other people from opening credit in your name; it prevents the same for you, too. The only way around it is a temporary lift, which you may have to pay for, too.

Costs you can avoid

Paying for credit monitoring

Keeping an eye on your credit is an important part of the credit repair process from beginning to end. You not only need to see your credit reports in the beginning, to know what needs to be addressed. You also need credit monitoring to track how well your credit repair efforts are working. Beyond that, credit monitoring should continue once your credit is improved so that you can act quickly to address errors or identity theft so as to minimize future credit damage.

Fortunately, credit monitoring isn’t something you need to pay for. Yes, there are plenty of companies out there that will charge you for it – including the credit bureaus – but as long as you know the right places to look, you can get the job done for free:


The law entitles you to see your credit reports for free every 12 months. The place to make this request – of Equifax, TransUnion, and Experian – is

2) Credit Karma

There are numerous sites out there that monitor aspects of your credit for free. Unfortunately, your use of these sites is limited if you have credit freezes on your credit reports; many simply will not work if a credit freeze is in place. Credit Karma is an exception.

To sign up for Credit Karma, you will have to temporarily lift any freeze you already have in place so that it can be granted access to your credit. But once the sign-up process is complete, you can reinstate the freeze and Credit Karma will be able to continue monitoring your credit for you.

This free monitoring includes access to your TransUnion and Equifax credit reports, as well as the VantageScores based on these reports.

3) Experian CreditWorks Basic

Since Credit Karma only monitors TransUnion and Equifax, you’ll need something additional for Experian. Fortunately, Experian has its own free monitoring option – CreditWorks Basic, which allows you to see your Experian credit report every 30 days.

4) Credit card issuers

Many are including credit scores in customers’ monthly statements. If you’re not sure whether your credit card issuer does this, or you don’t know where to find your score, give them a call and ask.

The only time we recommend you paying for credit monitoring is if you are getting ready to make a big purchase, on a house or car, for example. In those cases, it’s a good idea to pay to see the specific FICO Scores lenders will see when making those decisions. In those cases, consider the FICO Score 3-Bureau Report ($59.85 for one-time access) or FICO Ultimate ($29.95 a month).

Paying a credit repair company

There is nothing that a credit repair company can do for you that you cannot do for yourself. They do not have special relationships with creditors, or collections agencies, or credit bureaus. What they do have are fees – money you could be putting toward paying off debt instead.

That said, if you have zero interest in learning how to repair your credit on your own, you may be considering a credit repair company anyway. At the very least, do your homework first. Get the facts about what to expect from a credit repair company, including how their fees work.

Paying a debt relief company

As with credit repair companies, there is nothing a debt relief company can do that you cannot do yourself. Learn how to DIY.

Paying for credit counseling

While credit counseling agencies do have services you can pay for, they also have plenty of free help that won’t cost you a thing. Any reputable credit counseling agency will offer a free initial consultation, free information and resources, and free workshops and classes.

It’s only if you set up a debt management plan through them, or seek bankruptcy counseling, that a credit counseling agency will charge you. And these are both options that should only be entered into after considerable deliberation.

The best way to minimize credit repair expenses?

Do your homework and do it yourself. Sure, it may feel overwhelming and intimidating at first. But credit repair is actually pretty straight-forward. It’s just a matter of delving in and committing yourself to the process. This comprehensive guide will walk you through it every step of the way.

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