October 2015 - WiseDollar

Archive for October 2015

5 Reasons Why You Shouldn?t Buy a House

October 28, 2015 Wise Dollar Real Estate 3 comments

When you seek out financial advice, one of the first things you are likely to hear is that you should buy a house. While that is certainly good advice for many people, and there are a number of benefits to home ownership, there are some drawbacks as well. Buying a house is not the right choice for everyone, so carefully consider all of your options before picking the right path.

Following are five reasons why it might not be a good idea for you to buy a home at this time.

You May Be Moving

This should be obvious, but it doesn?t make sense to buy a house if you are going to be moving sometime in the near future (within a couple of years). In fact, even if you might move sometime soon, you would be better off to wait on buying a house until you can set down roots. The financial advantages that are available by buying a home don?t start to show up for several years, so purchasing a house only to turn around and quickly sell it is something that won?t be worth your while.

Out Priced by the Market

Simply put, you might not be able to afford a suitable house in the region where you want to live. While you may be able to find several rental options that suit both your needs and your budget, you may not be as lucky when it comes to buying a home. Take some time to review the market conditions near where you wish to live to determine if buying a house is even feasible at this time.

Prefer the Renter?s Lifestyle

Owning a home is fundamentally different than renting. As a renter, you usually just call the landlord when something breaks down. As a home owner, that responsibility falls on you. It will be up to you to either fix the problem yourself, or hire a professional who can do the work for you.

There is more responsibility that goes along with owning a home ? some people enjoy that challenge, while others do not.

Limited Funds for Down Payment

In recent years, the need for a sizable down payment has increased in the mortgage world. Gone are the days of zero-down loans, so you will need to have plenty of cash saved up in order to write that big check when closing comes around.

If you don?t feel comfortable laying out a large portion of your savings in order to make a down payment, you may be better off renting until you are in a position to make the down payment without draining your entire bank account.

You Love Where You Live

If you are currently renting, and you are happy with your accommodations, why make a move? Buying a house is a good financial choice for many people, but that doesn?t mean that it is the only way to be smart with your money. If you are happy with your life as a renter, look for other investment options?to grow your money over the long run.

What are your thoughts on the idea that “everyone” should buy a house? What other instances will buying a house not be a good choice? When did you by your first house?

Additional resource: If you?re looking for an easy way to stay on top of all your finances so as to know whether or not you?re ready to buy a house, check out my favorite tool ? Personal Capital. Completely free, it allows you to track your spending, monitor your bank and investment accounts and watch your net worth grow plus many other tools.?

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Photo courtesy of: tkoch

Why You Shouldn’t Fall for “Christmas Skip-a-Pay” Ploys

October 26, 2015 Wise Dollar Debt 6 comments

As I walked down to my mailbox last week I was expecting to get the usual: junk mail and maybe a bill or two. The end of the month is approaching and that usually means getting all my statements and bills for the following month. (Yes, I’m old-school. I like getting paper statements in the mail.)

After sorting through and initially tossing out junk mail and adding a bill to my bill pile, I saw an envelope hand-addressed to me from my local credit union.

“That’s weird,” I thought as I proceeded to open the envelope. That’s when I discovered the latest money-making ploy the local credit union has come up with – “Christmas Skip-a-Pay”.

Here’s what the “friendly” letter said.

“Tis the Season for Christmas Skip-a-Pay! If you qualify, you can have extra money to spend on your Christmas shopping. Upon request, you may skip your November or December loan payment(s) for one month.”

Sounds great, right? Who wouldn’t want more money for Christmas shopping!

That’s when they hit you with the fine print:

“This agreement extends the repayment period of your loan(s). The finance charge will continue to accrue on your unpaid balance from the time of your last payment. Total interest paid on the loan may be greater than was originally disclosed to you.”

Later on they also state that there is a maintenance fee of $10 per loan for every loan you decide to skip a payment on.

The low price for getting some extra money?to spend on Christmas is $10 up-front, a longer loan term, and paying extra interest. What a service!

The sad part is, I actually thought about applying for half a second.

I thought I could apply the money from my “skip-a-pay” toward my high interest credit card debt instead. If I were to exercise the stone cold willpower it takes to do that with the “extra money” I had from skipping a payment, I could possibly end up saving money.

Luckily, common sense and the super-nerd in me who would’ve had to calculate to the penny how much I’d save (or not)?kicked in and I ripped the flier in half. (Then I taped it back together so I could write this post.)

I’m really glad I didn’t fall for this trick, although I’m sure many people will as it seems like similar programs are offered across the country. It’s bad enough if they fall for it with one loan one year, but I’m sure there are many who will apply for the program for multiple loans every year the program is offered.

Let’s think about the costs of skipping a payment.?If you have a five year loan and you participate in this program every year, you’ll have spent an extra $50 on the maintenance fees, plus the extra money on interest for the payments you skipped, and your loan term will be extended by at least an extra five months past the date on your original loan agreement.

You could have just taken on a short-term side hustle to make extra money, or planned ahead with your budget to help you pay for Christmas gifts instead. If you stick to your Christmas budget, neither of those options will end up costing you extra money or extending the amount of time you are in debt. That sounds like a way better deal to me.

Have you ever heard of a program like this? Did you ever fall for it? How are you going to pay for extra expenses this holiday season?

Photo courtesy of: jkrebs

Choosing Between Numismatic Gold Coins and Gold Bullion Coins

October 22, 2015 Wise Dollar Investing No comments

What?s so great about gold? Consider the fact that all the gold that has ever been mined throughout history just amounts to 174,000 metric tons and you?ll probably already have an idea about how rare it is. If you think that still sounds a lot, just imagine all this gold being able to fit inside a cubic structure with sides of just 20 meters. Visualize all the gold?in family heirloom pieces, in jewelry, in coins, in the gold bars held within the vaults of central banks, and in Olympic medals and other such tokens created since the dawn of civilization?and imagine all of these being able to fit within such a small space.

The fact that gold is rare is a major contributor to the value that people ascribe to it. However, its beauty is also a major contributor to its popularity. Gold is highly lustrous, and it is also very resistant to corrosion and oxidation. If your family were to keep your gold coins for many generations, these coins won?t rust, tarnish, or discolor. This quality of intransigence is what makes gold an attractive medium for store of value.

In the modern world, gold remains synonymous with wealth, even though it has long been replaced by fiat money as the preferred medium of exchange. But gold can be more valuable than paper currencies in that it can better survive the effects of economic uncertainties and inflation. Whereas the purchasing power of the dollar and many other currencies has declined dramatically since the post-World War II years, gold?s purchasing power has tended to remain stable throughout history.

Although we often consider gold as a commodity, it is actually more like a currency?an asset that can act as a repository of wealth. It can provide a measure of stability when nations or individuals experience monetary crises.

Should you buy gold bullion coins or numismatic coins?

Buying gold coins is one of the easiest ways to own physical gold, but you have to familiarize yourself with the product options available to you. If you are new to the gold trading business, you?re likely to hear about gold bullion coins and gold numismatic coins all the time.

Gold bullion coins are minted in standardized weight classes and purity. Most of these bullion coins have purity that is equivalent to or above 900 parts per thousand. Their weights, on the other hand, are set at multiples or fractions of the troy ounce. For instance, the American Gold Eagle coin is available in 1/10 troy ounce, 1/4 troy ounce, 1/2 troy ounce, and 1 troy ounce weight variants.

This uniformity in purity and weight makes bullion coins an ideal option for people who are planning to buy gold for wealth diversification, as a store of value, or to serve as hedge against inflation and currency devaluation. Bullion coins are easy to sell because buyers are thoroughly aware of the specifications of the products they intend to buy.

The valuation of numismatic coins, on the other hand, is a bit more complicated. Unlike bullion coins, numismatic coins have what is known as ?numismatic value,? which is above and beyond the base value of the coins? gold content.

Imagine an ancient coin that is nowhere near as pure in terms of gold content as modern coins. Even though this is the case, this old coin?s value can be several times greater than that of a modern gold coin because of its historical significance or because of its rarity. If the coin were found as part of a shipwreck of a famous mariner, for instance, its association with the historical figure and the important event would likely contribute to that coin?s price.

Because external variables can have a great effect on the value of numismatic coins, they are usually purchased by experienced individuals. Nevertheless, independent companies that have extensive knowledge about such products can also perform the necessary appraisal of the coins before selling them to buyers.

Whether you intend to buy gold bullion coins or numismatic gold coins, always make sure to purchase only from trustworthy dealers. For your safety, check if your chosen dealer is accredited by organizations like the Better Business Bureau (BBB), the Business Consumer Alliance (BAC), the Industry Council for Tangible Assets (ICTA), the Numismatic Guaranty Corporation (NGC), and the Professional Coin Grading Services (PCGS).

Have you ever purchased gold coins? Do you use gold for building wealth?

Photo courtesy of: Johanna84

4 Money Mistakes and How to Avoid Them

October 21, 2015 Wise Dollar Money Management 4 comments

Nobody likes to waste money. It is hard to make enough money to pay for all of the needs of yourself and your family, so wasting money just means you will have to work that much harder to make ends meet. Therefore, avoiding basic money mistakes is something that you should always have near the top of your priority list.

After all, saving money is just as good as making money, so sidestepping the common mistakes on the list below should leave you in a better overall financial position.

Paying Unnecessary Interest

Sometimes, you can?t avoid paying interest. For example, the interest on your home mortgage is basically unavoidable. Most people don?t have the cash to simply buy a house without taking out a loan, so you aren?t going to be able to steer clear of interest charges in this case.

However, with something like a credit card, you should avoid paying interest at pretty much any cost. Using credit cards?can be an effective financial tool, but not if you are spending hard earned money each month on interest.?A simple way to get around this is to only use your credit card when you know where the money is going to come from.

Not Contributing to Retirement Account

If your employer offers a retirement account that they will match up to a certain contribution each month, you should absolutely take advantage of that opportunity. Contribution matching is basically free money, even if you don?t have access to that money right away.

Do your best to contribute the maximum matched amount from each paycheck so you can build a nice retirement account with some help from your employer. If you don’t have access to a 401(k) through your employer, find an online brokerage?that meets your needs and start saving for retirement.

Paying for Bank Services

There is simply no need to pay for basic bank services like a checking account in this day and age. If you can?t find a bank to give you free checking, shop around?or look for a local credit union that you can join. There are tons of options available today which will provide you with great banking services for free, so don?t waste any of your money on fees.

Switching banks is typically a quick and easy process, so don?t continue to pay extra charges just because you are too lazy to switch. Make sure not to count out online banks either, such as Discover Bank. If you have little need to go into a physical branch it can be a great way to get your banking needs met plus get a higher rate on your savings.

Out of Control Food Budget

Spending too much money on food is one of the fastest ways to blow through your monthly budget. At the end of the year, you just might be shocked to see how much money you actually spent on food ? and how much of it was wasted.

Most people could improve their food spending in two ways. First, reduce the number of times you go out to eat. That doesn?t mean you can never go out to a restaurant, but try to cut back and save it for special occasions. Also, shop smarter so you have less food waste at home. Even just by using those two tips, you can slash your food spending and have more money left in the bank at the end of the month.

What are some other common money mistakes you see being made? What money mistakes have you been guilty of in the past? What mental tricks do you use to help you make better money decisions?

Photo courtesy of: Olichel

Pay Off Debt Faster With These 5 Simple Tips

October 19, 2015 Wise Dollar Debt 4 comments

Paying off?debt is hard work. It can be a long process in which you have to practice self-control 24/7 so you don?t overspend your budget or give in to impulse purchases?you don?t really need. Trust me!

Luckily even after you?ve mastered the basics, like having a budget and tracking your spending, there are some things you can do to help you pay off debt faster. Here are five simple tips you can implement to help you pay off debt faster.

Choose a Repayment Plan to Pay off Debt

Instead of paying off debt all willy-nilly without a plan, you should choose a debt repayment plan so you know what you should be focusing on whenever you make payment toward your debts. There are several popular repayment plans to choose from, like the debt snowball, the debt avalanche and more.

The key here is to make sure you pick the plan that works best for your mindset and your situation. You can also consolidate your debt through Avant?or Payoff?to significantly reduce your interest rate and thus save you considerable money.

Make Extra Payments Often

When I first started side hustling to make extra money?for debt, I?d wait until the end of the month to apply any extra payments on my debt. Often by the time the end of the month came around, I?d already found other ways to spend that ?extra? money instead of putting it toward my debt. I?d end up spending it on extra meals out with friends, or on other fun, but unnecessary things.

When you are in debt, especially high interest consumer debt, you need to get out as soon as possible. One way to help you make extra payments toward your debt instead of wasting your extra money is to make the extra payments often.

Start making extra payments online whenever you have a surplus in your account and you?ll have paid off the next debt on your list in no time!

Stay Focused

Make a goal poster, a debt progress graph, or some other visual reminder to help you stay motivated and on-track with your debt repayment progress. Paying off debt is hard, so having a visual reminder of why you are making sacrifices is key to helping you stave off debt fatigue.

Earn More Income

I kind of touched on this one already, but one way to pay off your debts way ahead of schedule is to find ways to increase your income and put the extra toward debt. You might be able to increase your income by asking for a raise, getting a part-time job, or starting a small business in your spare time. Side hustles?have become very popular amongst those working hard to get out of debt.

Challenge Everything!

Thanks to my friend J$ from Budgets Are Sexy, we?ve come up with this last one, Challenge Everything! By challenging every expense in your budget you are likely to come up with some extra money that you can put toward your debt.

For example, if you cancel your TV subscription or negotiate a lower cell phone bill, you can put that extra money toward your debt every single month. There are many options to do both, often with little sacrifice on your part. You can switch to Republic Wireless, for example, and get a cell plan for as $5 per month.

Some of these tips might not sound like they?d make too much of a difference, but even paying an extra $5 perweek toward your debt because of some of these methods adds up to be $260 over the course of a year.

Have you used any of these tips to pay off debt faster? What other ways can you think of to help you get out of debt faster? How do you motivate yourself when trying to pay off debt?

Photo courtesy of: Markgraf-Ave

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