Refinancing Your USDA Loan Just Got Easier

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Refinancing Your USDA Loan Just Got Easier

If you live in a rural area, getting a mortgage through the U.S. Department of Agriculture could be a good way to save money on your home purchase. Qualifying buyers can get a USDA loan without having to put any money down. The Department of Agriculture is making these loans even more affordable for existing borrowers by lowering the cost of refinancing. If you bought your home through the USDA program, here’s what you need to know about its streamline refinance program.

Check out our refinance calculator.

Who Qualifies?

As of June 2, 2016, any homeowner with a direct USDA loan or a USDA loan guarantee could be eligible to take advantage of the USDA’s Streamline Refinance Program. Since 2012, the USDA has been testing out new refinancing rules on borrowers in certain states.

All USDA loans are subject to underwriting guidelines. But homeowners who have made at least 12 consecutive, on-time payments over the past year don’t have to undergo a credit check, secure an appraisal or be subject to a debt-to-income calculation (when refinancing for a 30-year term).

According to the Department of Agriculture’s estimates, the typical homeowner should expect to save approximately $150 a month once they refinance through the streamline program. Over the course of a year, that can add up to $1,800 in savings.

Related Article: What Is a Streamline Refinance?

Should You Refinance Your Mortgage?

Refinancing Your USDA Loan Just Got Easier

Just from looking at the numbers, you can see that homeowners can save money by refinancing. In the pilot program, some homeowners who refinanced were saving as much as $600 a month. That kind of reduction in your monthly mortgage payment could have a huge impact on your monthly budget.

But refinancing doesn’t make sense for everyone. If you’ve already paid down a substantial amount of interest on your home, refinancing may not affect your monthly payment that much. And keep in mind that not everyone can qualify for a refinance. You may run into issues if you’ve missed a payment in the past year, for example.

Try out our mortgage calculator.

Also, it’s important to remember that refinancing an existing loan into a new USDA loan doesn’t eliminate the private mortgage insurance premiums you’ll have to pay. USDA loans come with an upfront fee and a monthly premium, both of which are rolled into the loan. They’re added on to your monthly payment, so it’s a good idea to run the numbers to see how refinancing your loan might affect your payments.

The Bottom Line

Refinancing Your USDA Loan Just Got Easier

The USDA’s new refinance guidelines are designed to benefit lower- and middle-income homebuyers with high interest rates. While these changes might offer some homeowners the chance to save money, it’s best to consider the financial implications of refinancing before pulling the trigger.

Photo credit: Â©iStock.com/gradyreese, ©iStock.com/DragonImages, ©iStock.com/Izabela Habur

The post Refinancing Your USDA Loan Just Got Easier appeared first on SmartAsset Blog.

Source: smartasset.com

Zillow study illustrates home value disparity between races

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Typical values for Black and Latinx-owned homes still lag behind overall U.S. home values, but the gap is narrowing.

A new Zillow analysis shows homes owned by Black and Latinx households are worth 16.2% and 10.2% less, respectively, than the typical U.S. home. Homes owned by non-Hispanic white and Asian families, meanwhile, have typical values 2.9% and 3.7% higher than the typical U.S. home.

While inequity in home values continues to persist, the data show them steadily, albeit slowly, converging. Since homeownership is the single largest driver of wealth for many households, the value and appreciation of a home is extremely impactful for families.

Before the Great Recession, the gap between Black-owned home values and all home values was about 15%, but grew to 20% by March 2014. Similarly, Latinx-owned homes saw the largest home value gap in May 2012 at 14% — 2 percentage points larger than before the housing bubble. Now, nearly a decade later, home values for Black- and Latinx-owned homes are back at pre-bubble levels, and continue to narrow despite the current economic crisis.

One reason for the wide gap is that the housing bust hit communities of color especially hard. Subprime loans were targeted to take advantage of the most vulnerable communities, and the ensuing wave of foreclosures hurt homeownership and home values disproportionately for Black and Latinx homeowners. Fast forward 12 years, and homeownership rates and home values are still recovering for these communities. While home value growth turned positive for U.S. homes in August 2012, it took an additional two years for Black and Latinx homes to see this same growth.

“It has taken nearly a decade for the home value gap to return to pre-recession levels, but still, the gap remains very large,” says Zillow economist Treh Manhertz. “With Black and brown communities and jobs hit disproportionately hard in the pandemic, there has been reason to worry another dip may be on the horizon that could slow or stop the progress. However, this is not the case, as the same factors that widened the gap in the Great Recession are not surfacing this time. Thanks to rock bottom rates on the most secure mortgages, extended forbearance programs, and rising home prices, there are no signs of another widening of the gap coming this year. However, through these turbulent times, continued vigilance and targeted intervention by policymakers is crucial to keep the progress going for communities of color.”

Home value inequality varies greatly in different states and metropolitan areas. Large metros with the smallest spread between Black-owned home values are Riverside (1% value gap), San Antonio (3%), Las Vegas (3%), and Portland (4%). Among the most unequal are Detroit (46% value gap), Buffalo (43%) Birmingham (43%), St. Louis (41%), and Milwaukee (40%).

Black homeownership rates are also on the rise since the Great Recession, despite challenges for Black homebuyers to secure a mortgage. Telework has the ability to expand the opportunity for homeownership even further for Black and Latinx renters, providing the flexibility to own a home in a less-expensive area.

The post Zillow study illustrates home value disparity between races appeared first on RealtyBizNews: Real Estate News.

Source: realtybiznews.com

Fannie, Freddie Overseer Looks to End Federal Control Before Trump Leaves

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Mark Calabria, who heads the Federal Housing Finance Agency, testified before a Senate committee in June.Astrid Riecken/The Washington Post/Bloomberg via Getty Images

WASHINGTON—The federal regulator who oversees Fannie Mae and Freddie Mac is pushing to speed up the mortgage giants’ exit from 12 years of government control but has yet to reach an agreement he needs with Treasury Secretary Steven Mnuchin, according to people familiar with the matter.

Mark Calabria, a libertarian economist who heads the Federal Housing Finance Agency, has made it a priority to return Fannie and Freddie to private hands, a goal shared by Mr. Mnuchin. How that is done could affect the cost and availability of mortgages backed by the companies, which guarantee roughly half of the $11 trillion in existing home loans.

Completing the complex process before President Trump’s term ends on Jan. 20 is a long shot, and President-elect Joe Biden is considered unlikely to continue the effort. But Messrs. Calabria and Mnuchin could succeed in taking steps that would be difficult to reverse, such as significantly restructuring the government’s stakes in the firms.

The Treasury secretary must agree to any move to alter the terms of either the companies’ bailout agreement or the government’s stakes. One person familiar with the effort said Mr. Mnuchin is supportive of locking in a path to private ownership but mindful of steps that could disrupt the housing-finance market.

Mr. Calabria has met twice recently with Mr. Mnuchin to discuss an expedited exit of the companies from government control, most recently the week of Nov. 9, according to people familiar with the meetings, which also involved Larry Kudlow, the director of the White House’s National Economic Council. Mr. Mnuchin was noncommittal about the push, the people said.

Fannie and Freddie don’t make home loans. Instead, they buy mortgages and package them into securities, which they then sell to investors. Their promise to make investors whole in case of default keeps down the price of home loans and underpins the popular 30-year fixed-rate mortgage.

The government seized control of Fannie and Freddie to prevent their collapse during the 2008 financial crisis through a process known as conservatorship, eventually injecting $190 billion into the companies. In exchange, the Treasury received a new class of so-called senior preferred shares that originally paid a 10% dividend. It also received warrants to acquire about 80% of the firms’ common shares.

One option under discussion would entail a complex capital restructuring that would eventually reduce the government’s stakes in the firms. Such a move would be aimed at opening the door to new, private investment.

Still, it is a delicate issue because U.S. officials don’t want to cause investors to doubt the government’s backing of the firms, which have helped pin mortgage rates at record low levels during this year’s pandemic-induced economic slump. Moreover, it is politically sensitive because depending on the design, it could effectively move Wall Street investors ahead of taxpayers in line to receive any future profits.

As part of that set of decisions, Mr. Mnuchin would have to determine whether to write down the government’s more than $220 billion of senior preferred shares in the firms. Because those shares give the Treasury first claim on profits, private investors will have little incentive to take new stakes in Fannie and Freddie as long as they exist in their current form.

Such a move would likely push up the value of shares that investors acquired at fire-sale prices after the 2008 crisis. Some lawmakers are worried taxpayers would be short-changed.

In a letter to Messrs. Calabria and Mnuchin last month, Sens. Mark Warner (D., Va.) and Mike Rounds (R., S.D.) said taxpayers must be paid a fair market value for whatever stake they give up.

“Any other means of reducing their investment would be tantamount to a transfer of wealth from the taxpayers who stepped in to save [Fannie and Freddie] to private investors looking for a windfall,” they wrote.

It is unclear how seriously officials are considering another legal move that Mr. Calabria has raised in the past: an order formally ending the conservatorships but requiring the companies to operate with significant limitations on their businesses until they raise enough capital to operate independently through retained earnings and possible future stock sales. Supporters say the move would be akin to downgrading a sick patient from the emergency room to a regular hospital room.

One person familiar with the matter said the policymakers aren’t considering such an order, fearful it could upend markets.

Any single step, such as restructuring the government’s stakes in the firms, would normally require dozens of employees across the White House, Treasury and other agencies many months to complete, according to current and former government officials.

Industry officials warn that an abrupt overhaul to the company’s legal status could spook risk-averse investors in mortgage-backed securities issued by Fannie and Freddie, which are seen as nearly as safe as Treasurys.

“An end to conservatorship would be a material change from what we’ve had, and it will take time to explain to investors what risks do and do not exist,” said Michael Bright, CEO of the Structured Finance Association, whose members include investors in Fannie and Freddie securities.

In a sign that Mr. Calabria is eager to complete unfinished work quickly, the FHFA on Wednesday completed a rule requiring the companies to hold as much as $280 billion in capital once they exit conservatorship, up from $35 billion currently.

—Nick Timiraos contributed to this article.

The post Fannie, Freddie Overseer Looks to End Federal Control Before Trump Leaves appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

How To Avoid Being House Poor

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How Much Home Can I AffordEarlier this year, I published the post Is Being House Poor Limiting You? While no one ever thinks they will fall into being house poor, it does happen to some. Due to this, when asking yourself the question “how much home can I afford,” it’s best to think about ALL of the expenses that go into homeownership.

There are many “hidden” costs that go into homeownership that many do not think about when buying a home. While some homes may seem affordable, there are many factors and expenses to think about.

According to recent data from Zillow:

  • U.S. homeowners on average spend more than $9,000 per year in hidden homeownership costs and maintenance expenses
  • U.S. homeowners pay an average of $6,042 per year in unavoidable hidden costs: homeowners insurance, property taxes and utilities
  • U.S. homeowners pay an average of $3,435 per year in annual optional costs including house cleaning, yard care, gutter cleaning, carpet cleaning, and pressure washing.

That’s a lot of extra money each year that many homeowners do not realize that they may need to pay for.

By not knowing about these costs, a person may become stressed due to the amount of debt they may rack up from being house poor. It may also delay retirement, lead to a house being empty (there might be no money left to decorate), and more.

There are things you can do though so that you can make sure you don’t fall into a house poor situation, though. When pondering the question “How much home can I afford,” think about the many tips below.

 

Add up all of the costs.

Buying a home can easily lead to being house poor if you don’t do enough research. This can limit you because you may be even more house poor than you originally thought.

When some families buy a home, they don’t think about the total cost of homeownership. While you may be able to afford the monthly mortgage payment, you may not be able to afford everything else if you don’t do your research.

Before you say “yes” to a home, I recommend you add up all of the extra costs that you may have to pay for if you decide to buy a specific home.

Other homeownership costs include:

  • Gas. Many homes run on gas in order to have hot water, to use the stove, and so on.
  • Electricity. Generally, the bigger your home then the higher your electricity bill will be.
  • Sewer.  This isn’t super expensive, but it is generally around $30 a month from what I’ve seen.
  • Trash.  This isn’t super expensive either but it does cost money.
  • Water (and possibly irrigation).  Water bills can vary widely. I know many who live in areas where the average water bill is a few hundred each month.
  • Property taxes. Property taxes can vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may vary by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually and a difference of just $3,600 a year is $300 a month for life.
  • Home insurance. Home insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance as well as that can add up quickly depending on where you live.
  • Maintenance and repairs. Even if your home is brand new, you may have to pay for repairs, which is something that many don’t realize. No matter how old your home is, repair and maintenance costs will eventually come into play.
  • Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is in an HOA because the fees can be high and there may be rules you don’t like as well.
  • Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes but can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?

Related: Home Buying Tips You Need To Know Before You Buy

 

Buy for less than what you are approved for.

Many potential homeowners are approved for home loans that are somewhere around 30% to 35% of their salary before taxes.

That’s a lot of money. This amount is before taxes as well, which means that your actual monthly home payment would be a significant portion of your take-home income each month. Many who buy at the full approval amount cannot afford their homes due to the fact that it is such a significant percentage of what they earn.

If you don’t want to be house poor, then you should make sure to buy a home that is less than what you are approved for. You should also add up all of the costs of owning a home and make sure it is an amount that you are comfortable with.

Related posts:

  • Renting Out A Room In Your Home For Extra Money
  • How To Live On One Income
  • Ways To Make An Extra $1,000 A Month

 

Have an emergency fund.

An emergency fund isn’t just to protect you from your job. They also exist to help you in case something goes wrong with your home.

Your roof could spring a leak, a tree may fall on your home, a pipe may burst, there may be an electrical problem and more. Homes have many things that go into them and you never know if something may need to be fixed.

By having an emergency fund, you will have a fund that will help you if something were to go wrong. It will be you be more prepared so that you don’t have to take on any debt in order to help pay for an expense.

What would you say to someone who asks “How much home can I afford?” Do you know anyone who is house poor?

 

The post How To Avoid Being House Poor appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

Top 5 Tips for Keeping Senior Care Costs Low

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Top 5 Tips for Keeping Senior Care Costs Low

Caring for an aging parent or friend can be expensive. But when you know that someone needs assistance, it’s hard to avoid offering to help. While there’s nothing wrong with providing a relative or confidant with financial support, you don’t want to lose sight of your own financial goals. Here are five strategies that you can implement to keep senior care costs low.

Find out now: How much life insurance do I need?

1. Invest in Long-Term Care Insurance

As an extension of health, disability and life insurance, long-term care insurance provides coverage for nursing home care, home health care and other services that meet the daily needs of elderly individuals. While long-term care insurance isn’t cheap, purchasing it may be worth it if your older family member or friend can’t qualify for Medicare and doesn’t have enough savings.

It’s best (and more affordable) to sign up for long-term care insurance before chronic or debilitating conditions surface. Just be sure to read the fine print and compare benefit options before picking a policy for you or your loved one.

2. Make Your House Home-Care Ready

Top 5 Tips for Keeping Senior Care Costs Low

Installing a walk-in shower or stair lift when you’re healthy may seem crazy. But making your home more accessible may pay off, especially if it eliminates the need for you to move to a special facility when you grow older.

Some states and nonprofits offer loans and grants to help low-income elderly individuals make modifications to their homes. So that’s something to consider if you need help covering the cost of your renovations.

Related Article: Do Wealthy Investors Need Long-Term Care Insurance?

3. Look Into Government Programs

The federal government offers some programs that make senior expenses less expensive. For example, your loved ones can apply for traditional Medicare. If they need help covering additional costs, they can consider enrolling in a Medicare Advantage or Medigap plan.

Depending on your loved one’s situation, they may be eligible for Medicaid. They’ll have to meet certain financial qualifications. But if they qualify, Medicaid coverage can lower the cost of their healthcare.

4. Compare Care Options

Top 5 Tips for Keeping Senior Care Costs Low

If you need a professional to help care for your elderly relative, you may need to look beyond nursing homes and assisted living facilities. It’s a good idea to take the time to visit different adult care facilities and meet with independent caregivers, home care agencies and home health aides. That way, you can compare a range of costs and services.

Even if you have elderly family members who can live alone, they may need companionship. If you have a busy schedule, you may be able to find a virtual caregiver online who can support your older loved one.

Related Article: 4 Financial Emergencies That Could Derail Your Retirement

5. Claim as Many Tax Breaks as Possible

If you choose to take care of an aging parent or relative on your own, you’ll need to make sure you’re financially prepared to assume that responsibility. Fortunately, there are tax breaks for individuals who serve as caregivers. For example, you may qualify for the Child and Dependent Care Credit.

Final Word

Caring for an older family member can place a big strain on your budget. That’s why it’s important to make the most of any resources and programs that can lower the cost of senior care.

If you’re concerned about your ability to cover your own healthcare costs in the future, you’ll need to make saving for retirement a priority. And it doesn’t hurt to make an effort to stay healthy to reduce your chances of contracting a serious illness or disease.

Photo credit: ©iStock.com/monkeybusinessimages, ©iStock.com/phillipspears, ©iStock.com/adamkaz

The post Top 5 Tips for Keeping Senior Care Costs Low appeared first on SmartAsset Blog.

Source: smartasset.com

How to Make Better Financial Decisions

by Posted in Budgeting, Money Management, Money Tips, Personal Finance Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Woman learning how to make better financial decisions

A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:

Concurrently: Saving for two or more financial goals at the same time.

Sequentially: Saving for one financial goal at a time in a series of steps.

Each method has its pros and cons. Here’s how to decide which method is best for you.

Sequential goal-setting

Pros

You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It’s also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.

Cons

Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that’s time that interest is not earned.

Concurrent goal-setting

Pros

Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.

Cons

Funding multiple financial goals is more complex than single-tasking. Income needs to be earmarked separately for each goal and often placed in different accounts. In addition, it will probably take longer to complete any one goal because savings is being placed in multiple locations.

Research findings

Working with Wise Bread to recruit respondents, I conducted a study of financial goal-setting decisions with four colleagues that was recently published in the Journal of Personal Finance. The target audience was young adults with 69 percent of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans.

Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…,", “after I [action],” and “as soon as…,” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others.

The top three financial goals reported by 1,538 respondents were saving for something, buying something, and reducing debt. About a third (32 percent) of the sample had outstanding student loan balances at the time of data collection and student loan debt had a major impact on respondents’ financial decisions. About three-quarters of the sample said loan debt affected both housing choices and retirement savings.

Actionable steps

Based on the findings from the study mentioned above, here are five ways to make better financial decisions.

1. Consider concurrent financial planning

Rethink the practice of completing financial goals one at a time. Concurrent goal-setting will maximize the awesome power of compound interest and prevent the frequently-reported survey result of having the completion date for one goal determine the start date to save for others.

2. Increase positive financial actions

Do more of anything positive that you’re already doing to better your personal finances. For example, if you’re saving 3 percent of your income in a SEP-IRA (if self-employed) or 401(k) or 403(b) employer retirement savings plan, decide to increase savings to 4 percent or 5 percent.

3. Decrease negative financial habits

Decide to stop (or at least reduce) costly actions that are counterproductive to building financial security. Everyone has their own culprits. Key criteria for consideration are potential cost savings, health impacts, and personal enjoyment.

4. Save something for retirement

Almost 40 percent of the respondents were saving nothing for retirement, which is sobering. The actions that people take (or do not take) today affect their future selves. Any savings is better than no savings and even modest amounts like $100 a month add up over time.

5. Run some financial calculations

Use an online calculator to set financial goals and make plans to achieve them. Planning increases people’s sense of control over their finances and motivation to save. Useful tools are available from FINRA and Practical Money Skills.

What’s the best way to save money for financial goals? It depends. In the end, the most important thing is that you’re taking positive action. Weigh the pros and cons of concurrent and sequential goal-setting strategies and personal preferences, and follow a regular savings strategy that works for you. Every small step matters!

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Want to know how to allocate savings for your financial goals? We’ve got the tips on how to make financial decisions so you can be confident in your personal finance! | #moneymatters #personalfinance #moneytips


Source: wisebread.com

15 Of The Best Money Books For Young Adults – Learn How To Live The Life You Want

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Are you looking for the best money books for young adults?

best money books for young adults

Today, I want to talk about the best money and life books for new high school graduates, college graduates, and other young adults. These would be great for graduation gifts, or just for yourself!

I wasn’t always good with money when I was younger. I bought more clothes than I needed, financed a new car, spent a lot going out to eat, and spent a lot of money on things I didn’t need. It took me several years to realize how my spending habits were affecting the rest of my life.

I think this is fairly common when you’re younger, and there are lots of great financial books for young adults that can help you understand how money works and how to prepare for the future. 

The best money books for young adults explain personal finance topics like saving, investing, making more money, and more. And, reading them when you’re young can help you get on the right track with your money from a young age. 

Rather than spending years playing catch up with your money, you can get started on a great path now. 

I often get questions from young readers who are looking for help with their money, and I also get questions about how to help a young person with their money. These books are a great gift for yourself or someone you know.

For me, I love to give books as gifts, especially personal finance books for high school and college graduation gifts. And the best money books for young adults on this list make for great gifts – I’ve even given some of these books as gifts.

If you want to change your life, then I recommend that you start reading personal finance books. Yes, money is not everything, but improving your financial situation can help you gain control of your life.

Related: 6 Simple Steps That Will Teach You How To Write A Check

There are many different books listed below, so you will be sure to find at least one or two that meet your needs.

The best personal finance books may help you learn how to:

  • Understand basic financial concepts in an easier way
  • Reach financial independence or retire early
  • Take on your own yearlong shopping ban
  • Deal with and pay off debt
  • Better manage the 168 hours a week you have
  • Become more confident
  • Invest for your future
  • Choose your own dreams and adventures
  • Find the best path to pay off your student loans

And more!

Here are 15 of the best money books for young adults.

 

1. Broke Millennial

Broke Millennial was written by Erin Lowry, and is a must-read for young adults. She makes the topic of money entertaining, fun, and relatable for young adults. You won’t be bored with this money book!

Erin gives readers a step-by-step plan to stop being broke, and she discusses many topics, from tricky ones like how to manage student loans, how to discuss money with your partner, and more.

Please click here to check out Broke Millennial.

Another one of the best money books for young adults is Broke Millennial Takes On Investing. Erin recently published this one and it’s a great read, as it covers the topic of investing without making you feel dumb.

 

2. Work Optional: Retire Early the Non-Penny-Pinching Way

Work Optional is another one of my top picks for best money books for young adults, as it was written by one of my favorite writers, Tanja Hester. This personal finance book will show you how to reach financial independence so that you can live the life you want. 

I know retirement feels very far away when you’re younger, but this book explains how early retirement is a possibility if you start saving money now. Yes, retiring before the traditional age of 65 can happen, and it starts with the kind of guidance you’ll get in this book.

Please click here to check out Work Optional: Retire Early the Non-Penny-Pinching Way.

 

3. The Year of Less by Cait Flanders

If you’re looking for one of the best financial books for graduation gifts, check out The Year of Less by Cait Flanders. In this book, Cait writes about her yearlong shopping ban which will inspire you to simplify your own life and address your relationship with material possessions.

Cait talks about how for a full year, she only bought groceries, toiletries, and gas, and how it impacted her life. This is a great read for young adults as it is so easy to get into a spending cycle when you get your first real job and start earning larger paychecks.

Please click here to check out The Year of Less by Cait Flanders.

 

4. Dear Debt

Dear Debt was written by Melanie Lockert and focuses on people’s relationships with debt in a funny and endearing way.

Dear Debt is a must read for anyone who has debt or is taking on debt. Melanie shares her personal experience paying off $80,000 of student loan debt, how it affected her mindset, and more. This is one of the best money books for young adults because it’s a personal story about overcoming debt. There’s also tons of great money advice that will help others overcome the debt that may be holding them back.

Please click here to check out Dear Debt.

 

5. 168 Hours: You Have More Time Than You Think

Do you ever wish that you had more time in your week?

This book, written by Laura Vanderkam, focuses on helping people manage their time better so they can focus on what really matters.

Laura writes about tips and tricks to live a more efficient life. She teaches you how to prioritize things in your life, from how to get enough sleep every night to finding time for hobbies you’ve been wanting to try. You will learn how to use your 168 hours a week to make your life better, as you’ll learn many great life-changing strategies.

Please click here to check out 168 Hours: You Have More Time Than You Think.

 

6. How to Win Friends and Influence People

How to Win Friends and Influence People was written by Dale Carnegie in 1936 and has sold over 15,000,000 copies worldwide. This is one of the most best-selling books ever, and for good reason!

This book will show you how to approach situations differently, become more confident, and get people to like you. This is one of the best money books for young adults that people of all ages will benefit from, because this book is all about living a happier and more successful life at any age.

Please click here to check out How to Win Friends and Influence People.

 

7. Quit Like A Millionaire

Quit Like A Millionaire was written by Kristy Shen and Bryce Leung, who are well-known people in the FIRE community. And, if you’re not familiar with FIRE, it stands for Financial Independence Retire Early. Everyone approaches FIRE differently, but the point is to stop letting money hold you back from living the life you want.

Kristy retired early at the age of 31 with a million dollars, and has a very inspirational story. In this book, she explains how that was possible and how it can be a reality for you too. This is a great guide on how to save more money, retire early, and live the life that you want.

In this book, you’ll learn a step-by-step guide on how to reach success, whatever that may mean for you. This is a fun and inspirational book that will open you up to new possibilities and opportunities.

Please click here to check out Quit Like A Millionaire.

 

8. Get Money

Get Money is a book by Kristin Wong, and it’s an engaging read that will teach you how to manage your money.

Kristin gives you a step-by-step personal finance guide that will show you what you need to do in order to stop letting money control your life. You will learn how to create a budget, pay off your debt, build a better credit score, negotiate, and how to start investing.

Please click here to check out Get Money.

 

9. Financial Freedom: A Proven Path to All the Money You Will Ever Need

Financial Freedom was written by Grant Sabatier, who decided that he needed to change his life by learning how to make more money.

Here’s a bio I found about Grant to show you how awesome he is!

“In 2010, 24-year old Grant Sabatier woke up to find he had $2.26 in his bank account. Five years later, he had a net worth of over $1.25 million, and CNBC began calling him ‘The Millennial Millionaire.’ By age 30, he had reached financial independence. Along the way he uncovered that most of the accepted wisdom about money, work, and retirement is either incorrect, incomplete, or so old-school it’s obsolete.”

In his book, Grant writes about how to reach financial freedom through steps such as building side hustles, traveling the world for less, building an investment portfolio, and more. 

Please click here to check out Financial Freedom.

 

10. The Simple Path To Wealth

The Simple Path To Wealth was written by JL Collins, and it’s one of the most popular and best money books for young adults that’s available.

Collins writes about many important financial topics in his book, such as how to avoid debt, how to build wealth, what the 4% rule is and how to use it to your advantage, and more.

This is an easy book to read, and it makes complicated personal finance topics much easier to understand. Many people have said that JL Collins is the reason why they were able to retire early, thanks a lot to his website and book.

Please click here to check out The Simple Path To Wealth.

 

11. Student Loan Solution

Student Loan Solution was written by David Carlson, and it’s a great book for anyone who has student loan debt.

Student loans can be extremely difficult to understand, as there is so much different terminology as well as different ways to pay them back (such as loan forgiveness, consolidation, and so on). This book explains a 5-step process that will help you to better understand your student loans, the best ways to pay them off, and more.

Please click here to check out Student Loan Solution.

 

12. The Millionaire Next Door

The Millionaire Next Door is another classic personal finance book, and it was written by Thomas J. Stanley.

In his book, he writes about the common traits of those who are wealthy, and how the wealthy can be even someone such as your neighbor, even though you might not realize it. This book shows readers that anyone can retire with wealth, not just your traditional multi-millionaires living in huge mansions with airplanes.

This is one of the best finance books for graduation gifts because it will make you rethink what it means to be rich, which is important to understand from a young age.

Please click here to check out The Millionaire Next Door.

 

13. The Infographic Guide to Personal Finance: A Visual Reference for Everything You Need to Know

The Infographic Guide to Personal Finance, written by Michele Cagan, is one that I learned about from my readers. What’s great about this book is that it gives you a visual guide to important personal finance topics, and many people learn better from visuals.

This book is different in that it is full of infographics, which make it fun and easy to read. You will learn how to find a bank, build an emergency fund, how to pick health and property insurance, and more.

Please click here to check out The Infographic Guide to Personal Finance.

 

14. Choose FI

Choose FI was written by Chris Mamula, Brad Barrett, and Jonathan Mendonsa. These guys are behind one of my favorite Facebook communities, Choose FI, and they explain how to reach financial independence and retire early. 

While retiring early may seem out of reach if you’ve just graduated, this book teaches you how to “choose your own adventure” and improve your financial situation.

Please click here to check out Choose FI.

 

15. I Will Teach You To Be Rich

I Will Teach You To Be Rich was written by Ramit Sethi and is a excellent book for beginners. It would make a great gift for a recent high school or college graduate.

Ramit’s I Will Teach You To Be Rich is packed full of great lessons, and it is written in a fun way. He covers the basics of personal finance such as budgeting, saving money, investing, and more.

Please click here to check out I Will Teach You To Be Rich.

What do you think are the best money books for young adults?

The post 15 Of The Best Money Books For Young Adults – Learn How To Live The Life You Want appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

I taught English in China to pay off my student loans

by Posted in Debt, DIY Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Hello! Here’s a guest post from a reader, Nick. Nick was feeling stuck a few years ago and wasn’t making progress on his student loans. He ended up researching a lot about salaries and the cost of living for English teachers in China and realized that he would be able to save far more money in China than back home. Even without teaching experience, and still living very comfortably, including taking vacations, it has been easy for him to save $20,000 in a year. For him, it had a huge impact on his life and financial freedom. Enjoy his story on how to teach English in China below!

I taught English in China to pay off my student loans #teachenglish #movetochina #makeextramoneyIt must have been about 4.5 years ago. I remember walking out of an interview in Chicago feeling completely dejected.

The interviewer mentioned the salary, and along with it, how most new hires take on a second job during the weekend. 

I wasn’t expecting to find an amazing job, but this was just too much. None of my past decisions looked particularly good on a resume. I had just returned from a 3.5-year stint traveling around Latin America while earning a very modest living playing online poker.

But, I was burnt out, making no progress on my student loans, and realizing it was time to get a normal job. I was actually really excited to do so but job hunting was incredibly frustrating and when I realized how little money I’d be earning, I began looking for alternative options. 

Somewhere along the way, I had heard about teachers in Asia making good money and motivated by the frustration of the job search, I began looking into it more seriously.

After spending countless hours reading online, I ended up settling on China as that seemed to be where it’d be easiest to save the most money. 

I’ve since been in China for four years, paid off my student loans, and finally feel comfortable with my finances. 

Without a doubt, moving to China isn’t for everyone or even most people. However, for those that are a little bit adventurous, not opposed to working as a teacher, and want to save money fast, it’s an option worth considering. 

It’s not at all difficult to save $20,000 per year, without needing to be particularly frugal, and still have plenty of vacation time. 

Related articles on how to make extra money:

  • 12 Work From Home Jobs That Can Earn You $1,000+ Each Month
  • 30+ Ways To Save Money Each Month
  • The Best Online Tutoring Jobs

How to start teaching English in China.

 

The demand for teachers in China

Chinese parents spend an average of $17,400 per year on extracurricular tutoring for their children. 

More than 60% of students receive tutoring outside of school at an average of six hours per week and English is among the most popular subjects for after school tutoring. 

While these numbers look insanely high from my Midwestern American point of view, it barely scratches the surface for the demand for English tutoring in China. 

In fact, English is a required subject in Chinese schools. Private schools often take this a step further, with many classes and programs taught exclusively in English. Meanwhile, the online tutoring industry has created lots of opportunities to teach English online. 

Chinese parents are obviously willing to pay for English education. This demand for English teachers becomes even more apparent when you consider just how huge of a country it is. With a population of over 1.3 billion people, there are 32 cities with more people than Chicago. 

 

The requirements to be an English teacher

It’s not difficult to become an English teacher in China. The huge demand has made for relatively lax requirements. These are…

  • A bachelor’s degree
  • Two years of work experience
  • 120 hour TEFL certificate
  • Clear criminal background check
  • Pass a health check
  • Native English speaker

The bachelor’s degree doesn’t need to be in any specific subject, nor do the two years of work experience. The 120-hour TEFL is easy and pretty cheap to do online. 

Of course, having these doesn’t necessarily mean you’ll be able to get a great job right off the bat. Some of the best schools will have a very rigorous hiring process. However, even a standard first job in China can allow you to save a lot of money. 

 

The types of English teaching jobs in China

Most foreign teachers in China come to teach English. However, there are other opportunities as well, such as with teaching sports, a specific subject, or as a homeroom teacher who teaches a variety of subjects. 

There’s a wide range of salaries and teaching environments, with the main positions being in kindergartens, public schools, international schools, training centers, and universities. Salaries, working hours, and work environment can vary quite a bit depending on the type of school.

Additionally, the chosen city will have a large impact on your life with bigger cities paying more but also having a higher cost of living. ESL Authority has a good breakdown of the different salary ranges for different school types and locations. 

My teaching experience in China has exclusively been in Beijing at two public schools and one international school. I’ll share a bit about my experiences and salary at these schools. 

 

Teaching at a public school in China

Public school teaching jobs typically focus on oral English, meaning you’ll help students with their speaking and listening comprehension. The class sizes tend to be quite large. I often had 30-40 students in a class and would see each class only a couple of times per week, while often teaching multiple classes and different grade levels. In a given week I’d see 200-300 students. 

At the public schools I taught, I earned around $1,600 per month, which included a round-trip plane ticket to America, and housing. A typical schedule for public schools would be Monday-Friday, from 8 am – 4 pm, with 16-20 classes per week, with each one lasting around 45 minutes. There would be a lot of down-time during the day which I used to study Chinese. 

Many public schools, but not all, will let foreign teachers leave if they don’t have classes. Both public schools I taught at while in Beijing allowed me to leave when my classes were finished, which meant I’d often be done for the day around 2 pm. 

Vacation time is very generous, exceeding 3 months for summer and winter vacation, plus all of the national holidays during the year. Both public schools I’ve taught at allowed foreigners to finish the semester earlier and start later than their Chinese counterparts which makes sense as foreign teachers aren’t usually responsible for grading homework or preparing exams. 

The salary at public schools is more than enough to live comfortably and save quite a bit of money. Still, many teachers use their substantial free time to teach extra on the side with private students or at training centers. Doing so can be quite lucrative with an average rate of around $30 per hour. 

Having said that, it’s not exactly legal to teach with a different school than the one that sponsored your visa. If you got caught, it could get you in trouble and you could have your visa canceled and your time in China cut short. But, it’s one of those things that nearly everyone does and almost nobody gets in trouble for. So, if you choose to teach on the side, you should be aware of the risks. 

It isn’t difficult to teach an extra six hours per week during the ~8 months of the school year. This would earn an extra $5,760. Teaching 20 hours per week during 2 months of the summer/winter vacation would earn an extra $4,800. Combining these with the public school salary would make your yearly after-tax income $29,760 – with housing already paid for.

Plus, you’d still have close to two months’ vacation throughout the year. 

While I didn’t keep good track of my earnings and expenses while teaching at the public schools, these numbers are very close to my own experience. 

 

My experience teaching at an international school in China

If you’re more interested in teaching a subject like history or math, as opposed to English, an international school would be your best bet. 

These are the schools where wealthy Chinese and expats typically send their children to study. Teaching positions at some of the better schools can be very competitive, often requiring a teaching license, graduate degree, and a number of years of experience. Of course, those who qualify for these positions will earn higher salaries. 

However, a large number of international schools don’t have any additional requirements for teachers above the bare minimum required to teach in China. 

The work at these schools can be very demanding, much like teaching in America would be, requiring things like communicating with parents, creating exams, giving and grading homework, and plenty of meetings. Vacation periods are typically shorter than those for public school teachers. Likewise, working hours may be from 8 am – 5 pm, but most international school teachers will find themselves with very little downtime throughout the day. 

On the plus side, class sizes are generally much smaller and salaries higher. While teaching at an international school, I earned around $2,800 per month or $33,600 per year after taxes, with housing and a round-trip plane ticket included. 

However, due to the shorter vacations and more tiring day-to-day work, I didn’t have any interest in tutoring on the side. 

 

What does a typical budget look like for an English teacher?

This can be hard to say as everyone has a different lifestyle and things they’re willing or not willing to spend money on. I’ll share my budget below. 

Housing and Healthcare – $0/mo – In China, especially in the bigger cities, rent would make up the largest portion of a budget. Fortunately for foreign teachers, most schools include housing or a housing allowance. Housing would typically be a one-bedroom apartment, which may be on or off-campus, depending on the school. Some teachers may choose to add some of their own money to the housing allowance so that they can stay in a nicer place. But, I’ve been happy with the provided accommodation and didn’t pay any extra.  Health insurance is also provided and many schools have gyms on campus that you can use for free. 

Food – $350/mo – You can spend a lot of money on food or not much at all, depending on your preferences. Cheaper meals can be had for under $3 but you could easily spend $30 on a meal if you choose to go to fancier places. It also depends on how much you cook vs eat out and whether you like buying imported groceries. Most schools will offer free lunch to their teachers. Even so, I tend to spend quite a bit on food but am cheaper in other areas, so my food budget would be something like:

Groceries: $150

Restaurants: $200

Entertainment – $100/mo – Being the old man I am, I rarely go out for drinks at bars and my preferred entertainment is also the cheaper kind – hanging out, eating, and playing games with friends. Still, my wife and I will go to the occasional show. 

Transportation – $60/mo – Public transportation in China is fantastic and a single trip on the subway or in a bus can cost less than 50 cents. Shared bikes are everywhere and extremely cheap. Even using Didi, the Chinese version of Uber, is very affordable.  This is another area where I spend more than necessary, often taking a Didi out of laziness when there are cheaper options. 

Utilities – $15/mo – I think most schools typically pay for household utilities, like electricity and water. At least, the schools I worked at did. So, the only expense here is my phone which is on a pay as you go plan.

Travel – $250/mo – Living in China and working as a teacher opens up lots of travel opportunities, both within China and around Asia. Unfortunately, although plentiful, teacher’s vacation time is usually during national holidays when the cost of tickets is a bit higher.  Still, I tend to go on at least one international trip a year and also like to travel within China. Plus, almost every school also provides a round-trip ticket to your home country. If I were to guess, I probably spend around $3,000 per year on travel. I know people who spend much more and others who spend much less, so this cost will depend a lot on each individual’s preferences. 

Miscellaneous – $50/mo – These are other expenses such as buying household appliances, clothes, and other random things. I’m not a big shopper, but random things do come up. 

Total Expenses – $825/mo or $9,900/year

Although I’m conscious of my spending, I wouldn’t say that I’m especially frugal while in China. Far much less than I’d be if I were still living in Michigan. 

Some people might consider my spending extravagant while others might think I’m cheap. For me, it’s a good balance of comfort and enjoying my lifestyle with saving for the future. 

 

How much money can you save teaching English in China?

In my experience, I earned between $29,760 and $33,600 per year with expenses around $9,900 per year. This led to savings between $19,860 and $23,700 per year. Unfortunately, I didn’t track my exact earnings and spending each year, but these ballpark numbers are pretty accurate. 

It’s not particularly difficult to save $20,000 in a year of teaching in China while still living comfortably, traveling, and leaving yourself with enough free time to pursue other interests.

Plenty of people save more than this each year. There are also opportunities to increase your earnings as you gain more experience. 

However, like most places, life can be as expensive as you make it. If you’re bad with money back home, it’s unlikely you’ll suddenly become good with money by moving abroad. In fact, the money may disappear even faster than it would back home as there are lots of exciting ‘once in a lifetime’ opportunities. 

But, if you’re somewhat frugal and work fairly hard, you’ll have no problem saving a lot of money. 

 

How to find a job teaching English in China

There are tons of websites with job listings for English teachers in China. I can’t comment on most sites as all the jobs I found started with a search on the eChinacities job board. 

The start of your job search can be a bit overwhelming, especially if you’re still not sure where you’d like to live in China. This isn’t helped by the fact that a lot of recruiters will earn more money if they can get a teacher to accept a lower salary. 

I’ve known teachers that came to China and received terrible salary packages, earning less than half of what a typical salary would be and with an apartment far from the school. These people tended to not do enough research beforehand and accepted the first offer they received.

I would strongly recommend talking with lots of recruiters before accepting any position. Be sure to ask tons of questions, and be willing to say no to a jobs that don’t fit your criteria. There is no shortage of opportunities, so be patient when looking for your ideal position. 

Before accepting any position, be sure to do your due diligence on the school.

Most schools are fine and professional, but there are some sketchy ones. You won’t always find much information online about the school, but if they’ve done shady things in the past, you’ll probably see people talking about it.

Asking to speak with any current or former teachers can give you a bit more insight into the school as well.

 

Final thoughts on teaching English in China

Not everyone will be excited to live in China and I can understand that. It’s far from home, the language is difficult, and many people have a negative perception of the country. 

However, I’ve really enjoyed my life here and the experience has been exceptionally positive. Sure, there are small annoyances, but these will happen anywhere. Plenty of people worry about air quality, and while still not great, it has been improving every year. 

Beijing is extremely modern with no shortage of interesting and unique things to do. Moving here has been one of the best decisions I’ve made. 

I came here with only a few thousand dollars in the bank and what felt like an endless pit of student loan debt. In only a few years, I’ve been able to completely turn around my finances, pay off my loans, and save up a nice nest egg. 

I know that it’s not for everyone, but if you’re open to new experiences, can see yourself enjoying teaching, and want to save a lot of money, moving to China to teach English is an option worth considering. 

Nick Dahlhoff is an English teacher living in Beijing. Since moving there in 2016, he’s paid off his student loans, studied Chinese, gotten married and started a blog. At All Language Resources, he tests out lots of language learning resources to help language learners figure out which resources are worth using and which ones are better off avoiding. 

Would you take a job in another country to pay off your debt? Would you start teaching English in China?

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You CAN Reach Retirement! Avoid These Top 5 Retirement Mistakes

by Posted in Debt, Mortgage Tips, Retirement Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

retirement mistakes

Wondering what retirement mistakes will ruin your retirement? Here are the biggest retirement mistakes we all make.

Have you ever checked in to see if you are on track for retirement? I know this can feel like a daunting task, but preparing yourself for retirement can help you save more and avoid common retirement mistakes.

For some, retirement means quitting their job after 40+ years, but it can also mean working towards early retirement, in your 20’s, 30’s, 40’s, and so on.

I know that’s not for the “average” American, but by avoiding some of the retirement mistakes I will talk about today, you can start preparing for retirement at any age.

Related: How To Save For Retirement

The thing about retirement is that sadly many out there are not saving enough money. In fact, according to Zacks Investment Research, 72% do not save enough for retirement each month.

Also, according to surveys done by Bankrate, 20% of people aren’t saving any money, and 61% of Americans have no idea what they will need to save for retirement.

These numbers are very alarming.

Saving money in general is an important thing to do, but if you don’t want to work for the rest of your life, saving for retirement should be something that you are thinking about. And, I believe that saving for retirement is possible if you start working towards it and avoid retirement mistakes when it comes to planning and saving.

While many believe the economy ruins their chances for retirement, in reality most retirement mistakes come from specific beliefs people have about retirement. Some of these beliefs come from expectations of what their budget will be during retirement, that they can rely on their pension or social security, and more.

There are many reasons for why a person might not be saving for retirement, and by looking at the various retirement mistakes you might be making, I feel that more people can be aware of and overcome their retirement preparation problems.

Here are five retirement mistakes and how they might be hurting your chances for retirement:

 

1. You ignore saving for retirement altogether.

Many people skip out on saving for retirement for several reasons, including:

  • Believing you don’t have enough money to save for retirement.
  • Thinking that you’re too young to care about retirement or that it’s too late to start.
  • Relying too much on pensions and social security.

No matter how young or how old you are, you should be saving and preparing for retirement. You never know when you will need it, and I am all for a person being in charge of their own retirement plan instead of relying too much on other sources of retirement (such as relying on social security 100%).

Millennials are especially at risk and according to an article by Business Insider, a shocking 40% of millennials have nothing saved for retirement. This is a scary number because these people will all have to retire one day and I’m not sure what they will do when the time comes.

But, it isn’t just young people who aren’t saving for retirement. Bankrate found that only 60% of people aged 45-54 have some type of retirement savings. You can read more crazy retirement statistics here.

It is important to realize that part of the reason for these low savings rates is that many are currently living paycheck to paycheck, which makes it hard to even approach saving for retirement. Fortunately, you can start investing with very little money, and you can learn how to start investing for beginners if you are wanting to start planning for retirement.

There is never a bad time to start saving for retirement, and you can correct this retirement mistake by starting today.

Side note: I highly recommend that you check out Personal Capital if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation. You can connect your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. And, it’s FREE!

 

2. You take on debt for others and don’t think about your future.

I talked about this topic in the post Should I Ruin My Retirement By Helping My Child Through College? This is a hard thing for a lot of parents especially as student loans are out of control, and I am hearing from parents nearly every week saying that they cannot afford to retire because they are paying for their child to go to college.

If this is your situation, I want you to STOP making this one of your retirement mistakes. Unless you are on track for retirement, I honestly think you need to seriously start prioritizing your future. Your child will be fine without your monetary support.

There are lots of ways to support your child through school that don’t involve leveraging your future for their education. You can help them find a job, find scholarships, be an emotional support, and more.

You can take out loans for college, but you cannot take out loans for retirement.

 

3. You think you’ll never have to retire.

Recently, I read an article about someone who made hundreds of thousands of dollars a year, had a monthly budget of around $30,000 (yes, MONTHLY!), and yet hardly saved anything. This person said they didn’t really feel the need to save for retirement because they enjoyed their job so much. That’s just crazy!

See, even wealthy people make retirement mistakes.

Assuming you will love your job forever can be a huge mistake. While it’s great that you love your job now, it’s hard to judge what you will love decades down the line.

Also, you never know if something will come up in the future that will completely prevent you from working, such as a medical issue or some sort of major life change. Beyond realizing that you will need to prepare for retirement, an emergency fund should be something you already have or are working on – emergency funds are there to protect you from the what-ifs.

Related articles:

  • Everything You Need To Know About Emergency Funds
  • Is A Credit Card Emergency Fund A Smart Idea?

 

4. You miscalculate how much money you’ll spend in retirement.

For some reason, many people just assume they will spend less money in retirement, but that is not always the case.

While you might find some ways to save money on things like commuting expenses, work clothes, lunch if you weren’t bringing it, you will probably experience a very similar budget to the one you had while working.

You are still going to spend money on housing (even if you pay off your home completely, you will still need to pay property taxes, utility bills, etc.), food, clothing, entertainment, and so on.

Many retirees also take up new hobbies or activities. And, some retirees just have more time to pursue things they’ve already been doing, which can add up to a lot of extra expenses.

Plus, medical expenses may come up, you might decide to travel more, and like I said, the truth is that retirement spending is not usually much different than what you are currently spending.

Some make plans to become super frugal after they enter retirement, but life doesn’t always work out so perfectly. To make sure this isn’t one of the retirement mistakes you are making, I recommend starting to cut down your budget now.

By living frugally before you retire, you will be able to save more, will have less expenses going into retirement (the less money you spend, the less you need in the future), and you might even reach retirement sooner. Really, if you cut your spending now and become more frugal, you will be used to living with less. I’ve been living a more frugal and minimalist lifestyle since we moved onto our boat, and it can be a life changing thing.

 

5. You use your retirement funds for expenses other than retirement.

This is one of the worst money mistakes out there, and unfortunately many young people are making it. I’ve actually heard far too many stories about people taking money out of their retirement funds in order to pay for a vacation, a timeshare, pay off low interest debt, and more.

When preparing for retirement, this is a HUGE mistake.

While I don’t know everything about taking money out of retirement funds, I do know that this can usually hurt you more in the long run. Taking funds out of a retirement account can lead to large penalties and paying extra towards taxes.

The other thing about saving for retirement is that the longer you have funds invested, the more you will have for retirement. Compound interest is a powerful thing, and if you are taking money out of your retirement account it means that you don’t get the full benefit of it.

You should always just use your retirement funds purely for retirement. If you are struggling with debt or need help differentiating between wants and needs, it’s time to make a change. Don’t wreck your future by making this huge retirement mistake.

What retirement mistakes have you seen? Do you think you will have enough money to retire and how are you preparing for retirement? What age do you expect to retire?

The post You CAN Reach Retirement! Avoid These Top 5 Retirement Mistakes appeared first on Making Sense Of Cents.

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