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Pre-Qualify Before Car Shopping

MoneyTipsYou may like shopping for a new or used car, but you will not like paying for it — especially when it comes to arranging the auto loan. The finance and insurance (F&I) office at the dealership is nobody's idea of a good time. How can you keep your time in the F&I office to a minimum? The easiest way is through pre-qualification for a car loan. Pre-qualification provides a solid estimate of the loan amount that you qualify for and the interest rates you will be charged through that institution. By pre-qualifying with a bank or credit union, you have an independent reference to compare to the financing offer from the dealership. The dealer will always prefer that you use their financing, because that's the more lucrative part of the auto business. Some car buyers simply agree to dealer financing out of convenience, others because they do not realize that they have alternatives, and still others because they incorrectly assume they can get the best interest rates from the dealership. In fact, rates are frequently higher with dealerships, and the alternatives are fairly simple with a bit of research. Keep in mind that advertised rates at dealers are only available to those with superior credit. If you have poor credit, it is even more important for you to pre-qualify to check your options. You can pre-qualify through your regular bank or credit union, which may offer you a discount for financing if you are already an account holder. Another option is through online sites such as Up2Drive, BlueHarbor, and Auto Credit Express. With poorer credit, pre-qualification through online sites may be your best option; some cater specifically to borrowers with lower credit scores. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. Armed with pre-qualification, you can ignore the financing element at the dealership and focus on the price, knowing what you can afford to pay. Look for vehicles slightly lower than the loan amount to allow for all taxes and fees. Dealers may attempt to beat your pre-qualification deal, or add other incentives to sweeten the deal. Be very skeptical of any other offers from the dealership that retain a higher interest rate than your pre-qualification terms. There are other advantages of pre-qualification aside from negotiation with the dealership. You also have a solid budget to keep you from being tempted to buy a more expensive car than you can realistically afford. You can go one step beyond pre-qualification with pre-approval. Pre-approval means that you are approved for a loan amount instead of an estimate. This process includes a more extensive credit check and proof of income. If you can pass the criteria, you have an even greater influence with the dealership. You can stand completely firm with the original pre-approval offer, the equivalent of a check in your back pocket. Pre-approval through a bank or credit union gives you the ultimate in flexibility, since that is good with any dealership. Pre-approval with any dealership limits you to buying at that dealership. If you are going through the pre-approval stage, you should be ready to buy; when you are just exploring options and unsure about a purchase, stick with pre-qualification. If you have a preferred lender and dealer in mind, check with the lender to see if they have a list of approved dealers, and that your dealer is on that list. For new cars, you simply negotiate the price with the dealer and let them make arrangements with your lender. Lenders may have other stipulations on used car loans, such as a secondary loan limit that applies only to used cars or limits on the age and/or odometer reading. Check on these restrictions if you are thinking about buying a used car. Pre-qualification/pre-approval is a powerful tool for you to use at an auto dealership. You do not have to settle for the dealer's financing, which is often a worse deal for you. It is a great feeling to go into a car dealership with the upper hand. Consider getting pre-qualified or pre-approved for your auto loan at a bank or credit union, and experience that wonderful feeling for yourself. If you are interested in a personal loan, visit our curated list of top lenders. Photo ©iStock.com/BariscanCelik Originally Posted at: https://www.moneytips.com/pre-qualify-before-car-shopping7 Keys to Buying a Used CarIs Your Car Dealer Financing Final?Online Car Loans 101

Why Are Millennials Avoiding Credit Cards?

MoneyTipsCredit card usage is dropping among the millennial generation. A surprising 67% of Americans between 18 and 29 years of age have no credit cards at all, according to a recent survey. That compares to only 45% of Americans between the ages of 30 and 49, and 38% of those aged 50-64 without credit cards. At 32%, even less Americans aged 65 and over are without a credit card. The 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act probably played some part in the decrease by making credit cards difficult to obtain for those under age 21. Whopping levels of student debt also play a role, as millennials are wisely afraid to add more debt to their loan obligations. Unemployment may be keeping some millennials from qualifying for credit, but others appear to be avoiding credit cards as a matter of principle. Given America's soaring credit card debt, that is a positive development… or is it? Consider some of the potential advantages of credit card use. Building Credit History – Without a credit history, lenders have no way to evaluate your risk when the time comes to buy a car, a home, or any other large purchase requiring a loan. You will be charged higher interest rates, as a result, until you prove your risk level is low. Purchase Protection – As opposed to cash purchases, credit cards offer protection against vendor fraud and stolen items. You also have means for disputing fraudulent purchases made in your name. Convenience – Credit cards are convenient and accepted at most vendors, whether brick and mortar or online. (Arguably, this is a negative if you have poor self-control.) Record of Expenses – Monthly credit card summaries provide you with a full record of your credit purchases. If you do not keep receipts or budget properly, these records are quite helpful to outline where your money is going. Emergency Reserve – Your credit limit serves as an emergency pool of funds for unexpected expenses such as an auto breakdown or an accident requiring medical care. Credit.com suggests that the average person without credit cards could pay almost $160,000 in extra interest over a lifetime when compared to the interest rates acquired through responsible credit card use. While there are many assumptions involved in that figure, the principle is sound. However, many millennials are putting more emphasis on the negative side of credit cards, such as these examples. Fraud/Identity Theft – Credit card breaches cause many headaches in disputing fraudulent charges and repairing the damage from lost personal information. Debit cards are less tempting as they are limited to the cash in your account, and your credit limit is probably higher than your bank account balance. Debt/Interest Rate – Credit card debt is usually the highest interest rate debt you will incur and if you charge more than you can pay off each month, debt can spiral to unmanageable levels. If you want more credit, check out CreditCards.org's list of low-interest credit card offers. Ease of Overspending – The flipside of the convenience advantages listed above. Poor Credit Scores – Just as you can build your credit history with responsible credit card use, you can damage it with irresponsible use. Having no credit history makes it difficult to qualify for loans and mortgages, but having a poor credit history increases those difficulties. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. The most responsible path is to use cards sparingly, pay them off in full each month, and stay at a small fraction of your credit limit (10% or less if possible). This strategy will give you the best credit rating without increasing your debt. Avoiding credit cards is advisable if you cannot use them responsibly. However, it is better to learn how to use cards sparingly and intelligently. The same properties that can cause you to run up credit card debt (such as lack of self-control, poor budgeting and overspending) are going to cause problems in other areas of life eventually. Once you get those habits under control, you may not feel the need to avoid credit cards. Photo ©iStockphoto.com/SIphotography Originally Posted at: https://www.moneytips.com/why-are-millennials-avoiding-credit-cardsDoes Your Credit Card Limit Measure UpWhat Happens When You Go Over Your Credit Limit?Higher Credit Limits Help Improve Credit Scores

Credit Gardening 101

MoneyTipsYou may be a whiz at vegetable gardening or flower gardening, but how are you at credit gardening? That may sound like you are buying plants on credit, but in this case, good credit is the product of your gardening. Instead of harvesting fresh vegetables or springtime flowers, your harvest will be an improved credit score. Your objective is to remove items that drag down your credit score — the "weeds" in your credit report — while taking care not to introduce any new items that can drop your score. For example, opening new lines of credit will typically pull down your score through hard inquiries for credit that require significant review of your income and debts. Just as with other types of gardening, credit gardening requires planning. Your credit score is most important right before making a large purchase such as an auto or a home, and by keeping your credit score at its peak, you can save hundreds or even thousands of dollars via a lower interest rate offer. Before beginning your credit gardening, make sure that your garden has no hidden errors that are unnecessarily damaging your credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. The service will allow you to check reports from all three major credit bureaus (Equifax, Experian, and TransUnion); that's important because any error could be unique to one agency. Be sure to dispute any errors in the report to clear your credit garden for planting. If you believe there is a mistake on your credit report, you can resolve it with a single click using our credit correction service. If you already have a variety of credit accounts such as credit cards and installment loans like a mortgage, your credit "seeds" have already been planted and your goal is to manage those accounts wisely until the next large purchase. However, if you are starting out with little credit or attempting to rebuild poor credit, you will need to plant some credit seeds by opening a few, controllable accounts. Secured cards backed by a cash deposit are an excellent form of seed credit, assuming that the card issuer reports activity to the credit bureaus. Gas station cards are also useful because they are frequently used but do not generally build up large balances. During the tending phase of your credit garden, you must be careful to manage your accounts wisely. Use all of your cards for small purchases each month to keep the accounts active and your overall credit utilization low. Make sure that you pay off all purchases on time and in full each month. This provides food for your credit garden by showing responsible use of credit. Meanwhile, the passage of time will eventually remove the negative events pulling your credit score down — weeding the credit garden automatically. Even though you may be tempted by promotional credit card offers or major deals on purchases during the tending phase, keep your goal of a higher credit score in mind. If you are not credit gardening toward a specific large purchase, it may help to set a time-related goal such as opening no new accounts for one year. This clears the path for future large purchases. After careful tending, it is time to harvest your new higher credit score in whatever way you see fit. Whether your goal is a great deal on a mortgage or auto loan, or simply to bask in the glow of a great credit score, it is time to enjoy the fruit of your efforts. If you want to see your credit report and credit score within minutes for free, try Credit Manager by MoneyTips. Photo ©iStockphoto.com/Saracin Originally Posted at: https://www.moneytips.com/credit-gardening-101How To Boost Your Credit Score Fast5 Credit Tips For New College GradsHow can I increase my credit score?

Avoid Paying Mortgage Insurance Despite Low Down Payment

MoneyTipsIf you are stretching your funds to purchase a home with a minimal down payment, you are probably familiar with private mortgage insurance (PMI). It is generally required in any home purchase in which the down payment is less than 20%. PMI is insurance for the lender, not for you — it covers the lender for the increased default risk that you present. Typically, lenders arrange PMI through a third-party insurer. The premium is calculated based on a percentage of your loan amount and incorporated into your monthly payment. The PMI lasts until you no longer pose a heightened risk of default, usually near the 20-22% equity range. If you have a hard time accepting this approach, consider a variation of PMI offered through lenders. In this lender-based alternative, known as LPMI, the lender pays the PMI and passes that cost on to you through a higher interest rate on your loan and/or an upfront fee. LPMI often results in a lower initial monthly payment, which could make the difference in being able to afford your dream home. The main disadvantage of LPMI is that it cannot be cancelled. In essence, LPMI spreads out your mortgage insurance over the life of the loan. Typically, you are trading a lower initial monthly payment front-loaded with PMI for a higher monthly payment in later years. Depending on the interest rate, you may be paying a lot more over the long run — which is why most borrowers who expect to stay in their home for a considerable time opt for traditional borrower-paid PMI. LPMI does provide a tax advantage. Since LPMI is tied into the interest rate of your loan, it is also tax deductible because it is considered to be part of your tax-deductible mortgage payment. Traditional PMI is considered separate and not deductible as of this writing. The keys are the combination of interest rate, the size of the loan, and the time you expect to stay in the home. If the interest rate is low enough or you can lower the rate with some upfront fees, it may not matter that the LPMI lasts for the life of the loan. LPMI also makes more sense if you do not intend to stay in the home for a long enough time to reach the 20% equity point that would allow you to cancel traditional borrower-paid PMI. To find out if LPMI is a better option for you, work with your loan officer to do a direct comparison of your costs, both monthly and over the life of the loan. Regardless of the style of mortgage insurance that you choose, there are two ways to keep your premium as low as possible. Casey Fleming, Author of The Loan Guide and Mortgage Advisor at C2 Financial Corporation, explains: "Mortgage premiums today are very highly credit score driven, so the higher your credit score, the lower your premium will be with all other things being equal...[they are] also very dependent on your loan-to-value ratio and it's done in steps." Essentially, the higher your credit score and the lower your loan-to-value ratio is (i.e. more down payment), the lower your premiums will be. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. Of course, if you can afford to make a 20% down payment or more, PMI is not an issue. You may want to consider waiting until you can place 20% down to make your purchase, but in that case you risk missing today's relatively low interest rates — unless you can compensate with future improvements in your credit score. If you decide not to wait, work with your chosen lenders, and remember to consider PMI options as you shop around. Armed with a cost-benefit analysis, you will be able to make the best mortgage insurance choice to fit your needs. MoneyTips is happy to help you get free refinance quotes from top lenders. Photo ©iStockphoto.com/Bliznetsov Originally Posted at: https://www.moneytips.com/avoid-paying-mortgage-insurance-despite-low-down-paymentPrivate Mortgage Insurance 101MIP vs. PMIMortgage Insurance – What Is It?

Saving on the Costs of Children

MoneyTipsChildren are treasures – but they are expensive ones. The latest USDA report on the costs of raising children to the age of 17 puts the price at almost $234,000 apiece accounting for inflation. As Sunday, July 23, is Parents' Day in the US, this is a good time to consider your total family income over that same period of time and how you can use that income most efficiently. Housing – Housing is the largest contributor to the costs of raising a child, and therefore is the place where you can make the most impact. You may think that you immediately have to upgrade your home when your family grows, but that is not necessarily the case. Upgrading just so your children can all have their own bedrooms, or just because you think that you should upgrade, is not a suitable reason. With an existing mortgage, focus on saving for future expenses and building your equity. If you are renting and planning to buy, wait until you have saved up a sufficient down payment and find an excellent deal on a home that fits your needs. Look for a rent-to-own arrangement if you want to buy a home ultimately but simply cannot afford it at the moment. In short, do not buy a house bigger than you need just because you want one. Your children’s needs take precedence, and the money you save on housing can be applied to future expenses such as higher education. MoneyTips is happy to help you get free mortgage and refinance quotes from top lenders. Child Care – Child care and education costs are tied for the second–largest cost component of child-raising. If you cannot afford traditional daycare and do not have a willing and able relative nearby, consider creative yet safe options. Examples include babysitting co-ops where the load is shared (or similar nanny-sharing concepts), and flexible work schedules that allow one parent to be home at all times. Do not assume that you do not qualify for assistance programs. Check with Benefits.gov, as well as your state and local Department of Children’s/Social Services, to see what programs are available. Education – Start saving for higher education early by putting away any small amount you can in a 529 savings program. The earlier you start, the more time your funds have to accumulate and relieve the pressure for scholarships or student loans to cover education costs. Food – Any parents of teenage boys are painfully aware of food costs. During their growth spurts, they are bottomless pits. However, you can encourage healthy eating habits and still keep food costs down even during that stage. Buying in bulk is an excellent method of keeping costs in check. Stores like Sam’s and Costco supply large quantities of necessities at a discount, and you are likely to have little waste at this point. Coupons can also save significant money on grocery bills. If you do not have time to clip and save, consider the newer coupon apps that allow you to search and download specific coupons to your smartphone (or computer printer, if you prefer). Check out our Coupons 101 article for more tips and details on the coupon apps available. If you have the space, growing your own food can be a great cost-saver, as well as providing chores for your children and helping to establish a work ethic. Besides, food just tastes better when you grow it yourself. Clothing – Your kids do not have to have the most stylish and trendy clothing, despite what they may tell you. Make sure your kids have adequate clothing, but there is no need to go overboard with designer clothes and overpriced athlete-endorsed sneakers. A funky used clothing store may satisfy your teenager’s tastes and your budget. Do not let child-raising costs frighten you. Children are worth every penny in the end, and then some… although there will be many days when you question that concept. Photo ©iStockphoto.com/fotostorm Originally Posted at: https://www.moneytips.com/saving-on-costs-of-childrenThe Costs Of Raising Boys Vs. Girls (Infographic)Costs of Being a DadCost of Raising a Child

Men More Likely Than Women To Ask For Financial Advice

MoneyTipsWe all have heard the cliché that men never ask for directions. That may or may not be true on the road, but a new survey refutes the stereotype with respect to finances. A recent survey by Country Financial finds that in a wide range of basic financial topics, men are more likely to ask for help than women are. Overall, 19.5% of survey respondents had never sought financial advice at all – but 23.6% of all female respondents reported never seeking financial advice as compared to 15.2% of men. Out of the financial categories listed in the survey, the one topic women sought advice on the most was retirement planning (37%). Given that women on average live about five years longer than men and earn less money (approximately 83 cents for every dollar that men earn), retirement planning should be even more important to women – but men still had a higher overall rate of asking for retirement advice (45.2%). The discrepancy in asking for advice holds across other categories such as taxes (42.1% for men, 33.9% for women), insurance (39.0% to 26.9%), estate planning (25.4% to 12.9%), debt management (20.4% to 15.8%) and non-retirement investments (30.1% to 24.1%). Why would men seek advice more often than women would? Perhaps women simply don't need as much advice. Women tend to be better at relationships, and according to Leisa Peterson, Certified Financial Planner and Life Coach at WealthClinic, people should consider that "their relationship with money is actually really similar to their relationship with other people." A Vanguard study from 2016 partially backs up this premise, finding that working women were saving between 7% and 16% more than men depending on their income levels. It's possible that women prefer to do their own research with available sources and take time to reach their own conclusions, while men just want to get to the answer as quickly as possible. Regardless of your gender, there's no harm in asking for financial advice from a qualified source. Financial Educator and Author Tiffany "The Budgetnista" Aliche explains: "The number one piece of advice I can give someone with financial problems is 'Ask for help'...Just like you wouldn't set your own leg if you broke it, don't fix your own money by yourself if you have not been educated in how to do so." Where should you go for education and advice? Internet resources are abundant, as are financial planners. However, there are alternatives. For those struggling to make ends meet, "I would always recommend a non-profit credit counseling agency," advises April Lewis-Parks, Director of Education and Public Relations at Consolidated Credit. "They will give you a range of options. Everybody's situation is different." It makes sense to do initial research on your desired topic using Internet resources. Not only can you find advice on any financial topic for free, you can also do research on any financial planner or non-profit counseling agency that you plan to use. With a greater baseline understanding of the topic, you can more easily understand the counselor's advice – and also get a feel for advice that seems questionable enough to seek a confirming opinion. Maybe you fit into this data profile and maybe you are an exception – but in either case, it's simply common sense to fill in gaps in your financial education by asking for advice from a trusted source. Don't be afraid to ask for help on retirement planning, investments, or any other important financial topic. As for directions to the nearest gas station, ask someone or use your phone! Let the free Retirement Planner by MoneyTips help you calculate when you can retire without jeopardizing your lifestyle. Photo ©iStockphoto.com/Juanmonino Originally Posted at: https://www.moneytips.com/men-more-likely-than-women-to-ask-for-financial-advice/731Women and RetirementFinancial Decisions: Men Vs. WomenAverage Social Security Payments Are Lower For Women Than For Men

Today's Headlines: Where's The Wage Growth?

MoneyTips So Much for Economic Theory How does one accurately predict the future when long-held standards change? Economists must grapple with this challenge when trying to predict relationships between jobs, wages, and inflation. Standard economic theory dictates that as unemployment drops — and fewer workers are available to fill positions — wages should rise as employers compete for the services of remaining workers. Inflation should rise as a result. However, our post-recession economy defies that pattern. Are we in a new economic paradigm, where traditional economic rules may be set to join traditional political rules in America's collective trashcan? Perhaps – or there may simply be other factors we have not been considering. Jobs Strong, Wages Weak Aside from occasional monthly anomalies, job growth has been relatively strong. According to the Bureau of Labor Statistics (BLS), America's unemployment rate was at 4.4% in June, well below the 5% generally considered full employment. Unemployment has been at 5% or below since September 2015, and May's value of 4.3% was the lowest since May 2001. The U-6 unemployment rate, which includes "marginally attached workers and those working part time for economic reasons," is also at pre-recession levels. BLS reported that 222,000 jobs were added in June, and the April and May estimates were increased by 47,000 total jobs. The unemployment rate ticked up slightly because opportunity is bringing more workers back to the job market. While job growth is substantial, wages are stubbornly refusing to follow the playbook. Average earnings in June increased to $26.25 per hour, a 2.5% increase over the previous year. That's a fairly typical 12-month wage increase since the beginning of 2015 – an improvement over the general 2% annual increase between 2010 and 2015, but not by much. The average inflation rate since 2009 is well below 2%, a value consistent with low wages. In an economy that is approximately 70% driven by consumer spending, sustained economic growth requires that workers have sufficient discretionary income. Is our slow recent wage growth just an artifact of a long recovery from a deep recession, or are there more fundamental forces at work? That is subject to debate among economists and policymakers. Maybe It's Productivity Despite the rosy unemployment numbers, the labor pool still contains slack – as millions of "discouraged workers" have exited the labor force in recent years. Economy watchers such as Sean Stannard-Stockton, CFA of Ensemble Capital, view these people as a hidden segment of the unemployed. Economists in this camp contend that the recovery still needs to absorb more workers before traditional economic rules kick in. Other suggestions include that of Cathy Barrera, Chief Economic Adviser at ZipRecruiter, who believes that the larger pool of young workers with limited or no experience allows employers to select these lower-wage workers and train them in lieu of raising wages for others. Government policy also plays a role. The Federal Reserve's policy on interest rates has fostered slow and steady growth in order to prevent inflation from rising – yet inflation has been running at or below the Fed's 2% target for years. To dig deeper, it helps to look at the labor market from a productivity viewpoint. A report from the Economic Policy Institute (EPI) notes that from 1948 to 1973, changes in productivity and hourly compensation were well correlated. That relationship split in 1973 with the cumulative changes in productivity far outpacing compensation, a trend that continues today. EPI suggests lack of compensation equality as a major factor. Increased automation also plays a role, as far fewer people are required in many industries as compared to 1973. EPI's main point is that much of the income created by increases in productivity is not making it back to the average worker – it's either going to capital improvements or to compensation at the highest levels. An analysis by Neil Irwin of the New York Times echoes this point, although Irwin detects a slight change over the last few years. Irwin notes that while wage growth seems weak, workers are actually taking home a greater slice of the income gains given equally weak gains in productivity over the last few years. Irwin suggests this may reflect minimum wage increases and Obama-era government efforts to benefit front-line workers. In essence, we've seen a very slight shift in the productivity and compensation patterns. The issue must be addressed by both increasing growth and finding ways to get a larger share of that growth into worker's pockets to perpetuate the cycle. While labors' slice of the pie is increasing, it hasn't increased by much in historical terms – and the overall pie isn't growing fast enough to feed all the new workers coming to the table. The Takeaway While it appears traditional economic relationships between unemployment rates and wages don't apply at present, you are more likely concerned about the effects on your own employment situation. Regardless of the macroeconomic situation, you can improve your chances of maximizing income by making yourself as valuable as possible in your existing job and planning for your next one – whether it's with a same employer or a different one. If one of the underlying problems is a mismatch between your skills and available jobs, lay out a plan to improve those skills over the coming months (or years, if required). Which job are you targeting? Do you need more specific training? Is a new college degree required? It won't be easy to execute this plan, but few worthwhile things in life come easily. If you are content where you are, that's great – not many workers have their dream job. Just don't forget to ask for a raise occasionally, and make sure that the quality and quantity of your work merits one. Also make certain that you are preparing sufficiently for the next phase of your life. Let the free Retirement Planner by MoneyTips help you calculate when you can retire without jeopardizing your lifestyle. Photo ©iStockphoto.com/TheaDesign Originally Posted at: https://www.moneytips.com/todays-headlines-wheres-the-wage-growth/224Costs Rising, Income FallingToday's Headlines: Frustrating GDP NumbersWages For Top Earners Growing

Caring for Your Parents as They Age

MoneyTipsSunday, July 23, is Parents' Day, which was established when President Clinton signed a Congressional Resolution into law in 1994 to recognize, uplift, and support the role of parents in raising children. At some point when those children are grown, however, it often becomes their responsibility to care for their aging parents. It is an uncomfortable discussion, but an important one – what sort of financial obligations will you have in caring for an elderly parent, and consequently, how does that change your retirement plans? You cannot answer the second question without fully addressing the first. It is important to have an honest discussion with your parents about their wishes – and financial capabilities -- for their senior years. What sort of care are they comfortable with? Do they want to pass assets on to heirs or liquidate them for their own needs? If they do not have basic paperwork set up such as wills, power-of-attorney, and a healthcare proxy, try to convince them to address this immediately. Next comes the most awkward part – the financial discussion. Ask your parents for permission to go over their net worth, debts and monthly payments, insurance (health, life, homeowners and auto) and income with them. This is important for two reasons: combined with their wishes, this tells you how much financial support you may need to provide, and their income will determine eligibility for tax credits and dependent status. Make sure you have covered all sources. It is easy to forget about safe-deposit boxes, life insurance policies, or similar items. Also, consider their Medicare/Social Security situation to make sure they are taking full advantage of their benefits, and whether supplemental health or long-term care insurance makes sense for them. Make estimates conservative (high on debt/expenses and low on income). If you run into complex estate issues or investment considerations, you may want to consult with a financial planner and/or an elder law specialist. It is also worth visiting www.Govbenefits.gov and similar websites to check for assistance programs for which your parents may qualify. At the end of this awkward conversation (or two), hopefully you will have a good idea of what financial burden you will have. As for the effect on your investments and retirement accounts, consider the following: Budget – Assuming you are adding a new running debt to your budget to care for your parents, can you absorb this without affecting your investments and retirement plans? Try to cut back on expenses before dipping into assets (see below). When your parents pass, keep the expenses low and direct some of those funds toward "catch-up" contributions to your existing IRA's, or consider starting a Roth IRA if you do not have one yet. Assets and Liquidity – If most of your assets are in retirement programs, eldercare bills could put you in a cash crunch. You may have to reduce retirement contributions for a bit and send them into more liquid, lower-return investments. You can borrow against a 401(k) program in some cases, and withdraw IRA contributions for an effective 60-day interest-free loan, but these are short-term solutions. Try to avoid cashing in a 401(k) or an IRA and incurring early withdrawal penalties – especially an employer-matching 401(k). Tax Considerations –There are three primary tax benefits of caring for an elderly parent – claiming them as a dependent (if you can), itemized medical deductions and the Child and Dependent Care tax Credit. See our article "Tax Benefits of Caring for an Aging Relative" for details. Make sure no resources are being left on the table (unclaimed benefits or programs), do what you can through reducing other expenses, and leave any effect on your retirement plans as the last resort – first minimizing contributions if you can, borrow if you must, but never cash in. You owe your parents the best retirement that you can afford, but don't shortchange your own retirement in the process. Let the free Retirement Planner by MoneyTips help you calculate when you can retire without jeopardizing your lifestyle. Photo ©iStockphoto.com/yacobchukOriginally Posted at: https://www.moneytips.com/caring-for-your-parents-as-they-ageHow Supplemental Insurance can Help You7 Top Retirement Roadblocks80 is the New 60

Millions Of First-Time Homebuyers Kept Out Of Market

MoneyTipsFirst-time homebuyers are an extremely important part of the housing market. Without new buyers in the housing market, owners of existing starter homes have nobody to sell their home to and therefore cannot afford to buy a larger home. The effects ripple through the entire market and stifle growth. A new study by Genworth Mortgage Insurance focuses on first-time homebuyers and their relationship with the housing market dating back to 1994. By Genworth's definition of first-time homebuyers (those who have not owned a home in any of the prior three years, the same definition used by the Department of Housing and Urban Development), 3 million first-time homebuyers have been excluded from the housing market thanks to the effects of the housing crisis of the last ten years. The loss of potential homebuyers plays a significant part in the slow recovery from the subsequent recession. The study found that from 1994 to 2016, first-time homebuyers accounted for 45% of mortgage originations, averaging annual sales of 1.8 million single-family homes. In the last ten years that encompass the housing crisis and the recovery, the number of first-time homebuyers averaged 1.5 million annually and bottomed out at 1.2 million units in 2011. The aforementioned 3 million potential homebuyers were squeezed out of the market thanks to tightening credit, increasing student loan debt, and other recessionary factors. Government lending programs and homebuyer tax credits began to revive the first-time homebuyer market starting in 2008, providing the low down payment loans necessary for many new consumers to enter the market. Since then, credit has loosened further and the release of pent-up demand has sent first-time home purchases up to pre-recession levels. Sales to first-time homebuyers hit 2 million in 2016 – the highest level since 2006. Now that supply is back, demand is a problem. There are too few starter homes to meet demand, and prices are rising significantly as a result – thus the new surge in first-time homebuyers may be cut short. What do you do if you are ready to enter the market, but rising prices threaten to put a home out of your reach? You do want to act soon if you can to take advantage of low interest rates, as the Federal Reserve has clearly stated that they intend to keep raising rates. However, it's important not to stretch beyond your means. Author Jordan Goodman, known as "America's Money Answers Man," explains the drawbacks: "The biggest mistake people make when they are buying their first home is underestimating the expenses involved. You really have to be realistic because what happens is if you get into a house and you owe, it's sucking you dry ... the house owns you, you don't own the house." Set a realistic budget projecting your first couple of years of home ownership, including all the expenses like insurance, taxes, and maintenance. Put in a contingency percentage to account for emergencies, and then see how much money you have left for a down payment and monthly expenses. Honestly assess if you are buying more house than you need, even within the range of starter homes. If you truly can't afford to buy now, set a plan to reach a new down payment goal for the future. Put yourself in a position to take advantage of fluctuations in the market – because eventually, you will find the house you want at an irresistible price. Then you can join the surge of first-time homebuyers, doing your part to drive the housing market in particular and the American economy in general. MoneyTips is happy to help you get free mortgage and refinance quotes from top lenders. Photo ©iStockphoto.com/llhedgehogllOriginally Posted at: https://www.moneytips.com/millions-of-first-time-homebuyers-kept-out-of-market/855Today’s Headlines: Housing: Supply Down, Prices Up Today's Headlines: Credit Scores Drop For Mortgage RefinancesToday's Headlines: Housing Market: Good Or Bad From Your Perspective?

Americans More Worried About Vacation Than Retirement Savings

MoneyTipsOf course, you need a vacation. You've worked hard and you've earned the time off – but is that upcoming vacation more important than your retirement savings are? A new survey by Country Financial suggests that right now, your vacation is more important to you. The findings of the Country Financial Security Index® suggest that Americans do worry about being able to afford retirement, but that worry is not great enough to spur them into action. Shorter-term concerns tend to take precedence. Two-thirds of survey respondents said that current events in America make them concerned about their future financial situation, while almost one-third worry that they will need either to delay retirement or simply not retire at all. This should spur people into more comprehensive retirement planning, but the survey found that 51% of respondents do not include any consideration of retirement plans in their long-term financial goals. Perhaps our definition of long-term really is not as long as it should be. When respondents were asked about their concerns for the future given their current financial situation, only 32% mentioned adequate savings for retirement. That came in fourth, behind affording unexpected expenses (44%), affording health care costs (41%), and taking a desired vacation (36%). Attaining a desired lifestyle and making monthly payments were right behind at 28%. The survey highlights an enduring trait of Americans – being more concerned about the here and now than planning for tomorrow. It takes discipline and planning to achieve a comfortable retirement. Do you have that discipline? If not, why not start to gain that discipline today by creating a budget that can help you to achieve all of the things on your list? An income surplus is necessary to build an emergency fund for unplanned expenses and health care costs, as well as building retirement funds. Start by assessing all your expenses with a critical eye. Think of them in terms of value. Are you getting the full value out of a daily stop at your local coffee shop, or could you simply make coffee at home? How much would you save in a year, and would that money be put to better value elsewhere? Keeping track of all your expenses for several months , no matter how small, will help you find places to gain early "wins" in your quest for savings, and build momentum for an overall improved budget. With your expenses clearly outlined, you can break them down into "needs" and "wants", helping you to establish proper priorities while removing temptations in your budget – and, if you're being honest with yourself, you probably already know which expenses you can reduce or eliminate. Leave yourself some small discretionary funds, because you won't stick to a budget that is too severe – just make sure that you are getting value for your purchases. Your improved budget should include a certain percentage of your income going to establishing an emergency fund and contributing to retirement, even if that percentage is very small. The important part is to establish savings as a habit. Direct deposits and alternate accounts that are devoted directly to retirement savings and/or emergency funds can help. If you don't see those funds in your take-home pay, you won't be as tempted to spend them on a short-term purchase that provides less long-term value. Saving is a mindset, whether it's for retirement or any other purpose. Proper budgeting and planning can give you the framework and motivation necessary to meet your goals. In the end, isn't it worth less of a vacation now in order to have an easier time during your more permanent vacation, aka retirement? Let the free Retirement Planner by MoneyTips help you calculate when you can retire without jeopardizing your lifestyle. Photo ©iStockphoto.com/davidfranklinOriginally Posted at: https://www.moneytips.com/americans-more-worried-about-vacation-than-retirement-savingsHow to Start Saving for RetirementFamilies Not Saving Enough For RetirementHow Much Income Will You Need For Retirement?
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