When people come to me for mortgage advice, its sometimes because bills have become harder and harder to manage. Recent new articles show people are more likely to use coupons and discount stores during tight financial times, but is this really the best route to go?
Here are a couple steps you can do to keep the wolves from the door:
1) review all credit card and bank purchases and see what you are spending your money on. If you can, add up the purchases and divide them into categories to see what you spend your money on. You may be able to change your spending habits, by seeing the price affect on your bottom line.
2) review your monthly bills - Cell phones, cable and extras are, well extra. These are a great place to save big money fast. Switch to basic cable if you cant live without it! Switch to a pay as you go card if you cant live without your cellphone! BUT dont pay $100s of dollars you dont have on these luxuries~! AT some point you need to decide if you want your house or "desperate housewives"!
3) coupons - the danger of discounts is that you can save so much, you actually will go broke. Saving 20% on an item is not as good as saving 80% because you didnt buy the item. Discounts can make us think we are saving, when really, the store just got our money...and now its gone. I am not saying dont use coupons, but buying 10 boxes of an expensive cerial because it is on sale, may not be as good as 1 box of what you usually get.
4) Credit cards - This can be really fun. See the 1 - 800 number on the card? Call it and ask the question "Is this the right card for me?" This is a great way to get introductory rates and shift balances from expensive cards to cheaper cards. If the operator does not help you, start quoting the rates of the junk mail you recieve from another credit card company! That usually gets their attention. Beware the yearly card fees, insurance fees etc... ask them to waive them...you never know.
5) Mortgage - your house mortgage is the cheapest money you will ever borrow...but a couple things can make your house mortgage an anchor. Amortization, the number of years to bring the mortgage to $0 - banks, parents and friends may tell you that having a small amortization number is a good thing, but if you cant meet your bills if crisis hits, then your LOW amortization can lead to disaster. I suggest choosing a longer term amortization and picking a lender which allows extra payments each year - in the end, you get the same result. Payments, accelerated biweekly payments look great on paper, but again, in tight financial times, the extra cost can be a burden. If you face some financial hardship, get back to MONTHLY payments right away - dont wait till there is a problem. Refinance, rewriting your mortgage can get you a lower payment, get your amortization back to maximum and get you some extra cash. There are costs associated - legal, penalty and other...but these costs are tiny compared to losing your house.
6) Grow a garden - tomatoes are expensive to buy, but easy to grow. If you want to start small, get a cherry tomato plant and begin to enjoy fresh picked vegetables for free. Carrots, lettuce and peas are some other popular garden plants which are easy to grow. Start small and build up as you get used to how the plants grow.
Feel free to add your own money saving advice on the comment sheets.
Best regards
Steve
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