How to Budget for a Staycation and Enjoy a Low-Budget Break

Having a staycation rather than going on a typical vacation can save you a lot of money.

You don’t have to pay for a flight, a rental car or a place to stay. You won’t need to buy souvenirs and you can easily avoid all the typical tourist traps that encourage visitors to spend extra money.

But depending on what you decide to do during your staycation, you could end up spending a lot more than you ordinarily would in a typical week or weekend.

While it’s easy to just quickly throw together plans for a nice staycation, not preparing for it financially could mean you end up charging expenses on a credit card or pull money from your emergency savings.

That’s why it’s important to budget for a staycation.

How to Budget for a Staycation

Budgeting for a staycation is similar to budgeting for a vacation or any other savings goal.

First, you’ll want to think about your expenses. What do you plan to do during your staycation?

A staycation can be as cheap or as expensive as you make it. Will you stay at home, or do you plan on booking a room at a nearby boutique hotel for a change of scenery?

Will you cook your own meals, or are you thinking about eating out most of the time?

Do you have activities at home you can do, or will you be spending money on tickets to a nearby amusement park or a trip to the spa?

Make a list of all the expenses you anticipate. Don’t forget little costs like tipping your server when dining out or paying parking garage fees if you’ll be spending the day downtown.

Total up your expenses and compare it to what you’ve already budgeted for discretionary spending like dining out or entertainment. If your anticipated costs are less than that budgeted amount, then you’re ready to enjoy your staycation.

If your staycation costs are more, you’ll need to save up for the extra expense over time. Take your total and break the cost up over several weeks, putting money aside toward your staycation each week. This is called setting up a sinking fund.

Alternatively, you can re-examine your staycation plans and see where you can trim expenses so you don’t have to take as long to save up.

When creating your staycation budget, it’s good to include a little spending cushion to cover any last-minute expenses that come up — like treating yourself to dessert or going on a spontaneous day trip to a nearby town.

Having extra wiggle room in your staycation budget gives you the freedom to enjoy yourself without worrying about money.

Nicole Dow is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com

Which Debt Should You Pay Off First?

One of the most common New Year’s Resolutions is to pay off debt.

This is a worthy goal, but sometimes it can be difficult to know where to start. Without a plan of attack, it is easy to become discouraged in attempts to pay down debt.

Ordering your debts can help you create a plan that will allow you to get out of debt faster, saving money in the process.

Pay Off High Interest Debt First

Different types of debt come with different interest rates. Some kinds of debt naturally charge higher interest fees than others.

In order to be more effective in your efforts, it can help to take the principles of the debt snowball, and apply them to debts with the highest interest rate. (In the debt snowball, you pay the minimum on all of your debts, except one. You put an extra amount toward that one until it is paid off. Then, once it is paid off, you take the extra plus the debt’s minimum, and apply it toward the next debt on your list.)

The first type of debt you should get rid of is the payday loan. If you have a payday loan, you should get out from under it as soon as possible. These types of loans generally have annual interest rates that amount to more than 300%.

Car title loans also typically carry high interest rates. On top of that, payday loans and car title loans are likely to have a slightly more negative impact on your credit score than other types of debt.

After you get rid of the worst of debt — payday loans and car title loans — it’s time to tackle credit card loans.

Credit card debt usually has a relatively high interest rate, especially if you are paying a default rate that can be around 29.99%. Paying down your balance on revolving accounts like credit cards can also help you improve your credit utilization, improving your credit score.

Once your credit cards are paid off, you can start looking at your other debts. If you have a home equity line of credit that it near its max, it might not hurt to pay that down, since it is a revolving account.

However, if you have a debt with a higher interest rate (and one that doesn’t come with a tax advantage), such as a car loan, you might want to tackle that next instead.

Saving Your Mortgage for Last

While some might opt to pay down a home equity line of credit earlier on, it is important to seriously consider leaving your mortgage for last.

This is because a mortgage is often thought of as “good” debt (the debate over whether any debt can be good is something for another day). Plus, you are likely eligible for a tax deduction on the interest you pay. Besides, paying off your mortgage early is a proposition that can take years. Your morale will be improved if you pay off your other debts first.

Before paying off your mortgage early, make sure your other debts — including student loan debt — is paid off first. Pay off your student loan debt just before your mortgage, since it usually has a low rate and often has a tax deduction associated with it. (Although, starting in 2013 the deduction will be limited to the first 60 months of the loan.)

In the end, the way you order your debt pay off can make a difference in the amount of money you save in interest. Considering paying off high interest debt first.

Source: biblemoneymatters.com

My New Favorite Planner For my Money & my Life

This post may contain affiliate links. Please read my disclosure for more information.

Want a peek into my life? I am notorious for having a separate monthly and weekly calendar, notebook for to-do lists, meal planning, and grocery lists, and that’s just what’s at my bedside. I also have a scrap piece of paper with our debt pay off goals/progress and I am constantly scribbling on whatever I can get a pen on.

The Struggle is Real

And I’ve never been into big, beautiful, personalized planners. They sound nice, but with everything I’m trying to keep track of, I’d still need my scraps of paper to keep everything recorded.

But when Lauren Greutman posted about her new planner in one of my Facebook groups I wanted to do some research. Lauren is a best-selling personal finance author and mother of 4 who’s passionate about helping women gain financial freedom. And she designed a planner that helps them do just that.

The big difference between the Personal Finance Planner and others is its focus on specifically helping you get out of debt. So if you’re not in debt this may not be the most useful planner for you. If you are actively working to pay off debt and your entire schedule is affected by it, then this planner is going to answer some of your prayers.

When you purchase the planner Lauren walks you through how to use all the features in an eleven-minute video and you instantly have access to a private Facebook group of other people using the planner. Here are just some of the features Lauren includes in the planner.

Personal Finance Planner

Personal Finance Planner

Start/ Pick up Wherever You Are

Probably my favorite feature, the tabs of the planner are unlabeled. There are stickers in the back that you can label tabs to start on whatever month you want. Or if you get sidetracked and forget about the planner for a month, you can pick back up without wasting a single page.

Bill Priority Sheets for Irregular Income

If your income is different every paycheck it’s hard to know how to budget each month. Lauren has included 12 pages for you to list your bills in priority to determine what gets paid every month. She’s even included a list of budget categories and bills so you don’t forget anything. Think of it as a visual representation of your wallet, when the money runs out on paper you can’t spend it in real life.

Personal Finance Planner

Personal Finance Planner

Meal Planning and Shopping Lists for Every Week

I have been an advocate for meal planning and never shopping without a list since we started budgeting. Eating out and overspending on groceries are the #1 way to blow your budget. I always plan my list on spare notebook paper but the Personal Finance Planner has a little spot on every day to schedule a meal and the sheet next to it contains shopping lists for every day. While I’m not grocery shopping every day having a daily list will help me to not forget anything that’s recipe specific.

Pay off/ Financial Goals & a Debt Calculation Area

These pages speak volumes to the value of this planner. Every month you can go through these worksheets to establish, on paper, a purpose for the month. You can see concrete progress and reflect on setbacks. We do this verbally but having it visual is going to make it that much more fun.

11-01-16-02-23-59_planner8

11-01-16-02-23-59_planner8

STICKERS

I’m kind of a sticker nut. If it’s funny and sticks on something, I’m a fan. There are not only month label stickers in here but stickers to label your (included) cash envelopes, budget nights, and pay days.

I haven’t paid for any budget, money classes, or books to help me get out of debt. After 13 months of student loan payments behind me though, I am really excited to make this investment in my day-to-day debt crushing life.

For less than $65 (Which I hear is very good for a planner that does all this) you can get epic portable resources at your disposal that will help guide you over the next year. And it offers the convenience needed for people who don’t want piles of scrap papers littering their lives. If you’re interested you can get more info and pics here.

Disclaimer: This post contains affiliate links. Making a purchase using these links pays for what could potentially be my new planner addiction. Who knows?

Personal Finance Planner

Personal Finance Planner

Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com

Seven New Year’s Resolutions for First-Time Homebuyers

Perhaps the three most serious mistakes most first-time homebuyers make are failing to give themselves enough time to put together a down payment, failing to improve their credit and not paying down as much debt as possible before they start shopping for a home. These can take months to complete, and should they find their dream home, they won’t be in a position to make an offer or get a mortgage.

Many buyers also not give themselves enough time to make a budget for the purchase, including down payment and closing costs and a budget for monthly living expenses afterward to determine what they can reasonably afford. Before they can realistically house hunt, they will need to decide on a list of “must-haves” that includes location, find an excellent real estate agent and find a lender.

If 2020 is to be the year you want to become a homeowner, here are seven New Year’s resolutions that will help you not only buy your first home, but be able to do so comfortably and happily.

Resolution #1. Save for a Down Payment and Closing Costs

Unless you are a veteran who qualifies for a VA mortgage, which requires no down payment, you will need enough cash on hand for a down payment and closing costs. A recent survey found that nearly half of millennial renters who want to become homeowners have not saved a penny towards a down payment, even if you choose a 3% low down payment loan like those offered by Fannie Mae and Freddie Mac, you are going to need $6,000 for a down payment on a $200,000 home. Most young families will need six months or more to save that much. A few lenders offer “zero down” mortgages to first-time buyers, but only to borrowers with excellent credit.

Photo of cheerful loving young couple using laptop and analyzing their finances with documents. Look at papers.Photo of cheerful loving young couple using laptop and analyzing their finances with documents. Look at papers.

Some first-time are turning to their families for gifts to get them over the down payment hump. These must be gifts, not loans. But lately, the “bank of mom and dad” has been drying up. In 2019, 17.4% of millennials were expecting support, down from 19.1% in 2018. Those who expect help in 2019 are expecting less ($8,928) than they did last year ($9,878).

If you haven’t started saving yet, reduce your living expenses as much as you can and put away as you can with every paycheck. Pay yourself first to make sure you are putting away enough to reach your goals. Don’t save cash by using your credit cards to pay living expenses. You will quickly increase your debt load, which will lower your credit rating. You will also increase your debt-to-income ratio, which could kill your chances of getting a mortgage. Even if you do get approved, you will be offered a higher interest rate.

Closing costs like title insurance, appraisal, settlement fee, home inspection, and lenders’ expenses are beyond your control and are required to be paid at settlement. Most closings these days take place six weeks or so after the seller accepts your offer. Closing costs are generally 5% of the home price, but they vary significantly by state. Here’s a state-by-state list of average closing costs in 2018.

Resolution #2. Reduce your Debt

Lenders look at debt-to-income ratios to see if you will have enough each month to handle a mortgage payment in addition to your monthly debt payments. Your debt-to-income ratio is the of all your monthly debt payments divided by your gross monthly income. The average debt-to-income ratio (DTI) for all recently approved mortgages is 24/37.

You can improve your DTI either by making more money or paying off some of your debt. Review your current debt load and pay off those that have the smallest balances.

Resolution #3. Improve Your Credit Rating.

Your credit score and credit history will also determine whether or not you will get a mortgage and how much interest you will pay. Lenders to whom you apply will pull your credit and carefully review your record. The average credit score for all mortgages is currently about 736.

Credit scores change every month, and you should monitor yours and review your credit history on each of the three major credit bureaus: TransUnion, Experian, and Equifax. If you need to improve your credit, then it should be at the top of your resolution list to do so– here are some tips on improving your credit. Like saving for a down payment and reducing your debt, it takes months to improve your credit. However, you can keep working on your credit until you find a house to buy and apply for a mortgage.

Resolution #4. Get Pre-approved by a Lender.

When you’ve done the best job on your credit and debt, ask a lender to pre-approve you before you to home shopping. With a pre-approval in hand, you will be in better shape to make an offer. If your credit or DTI continues to improve, you may be able to get a new pre-approval for a larger loan.

Resolution #4. Decide Where You Want to Live.

It’s no secret that first-time buyers are facing the worst affordability crisis in decades. Supplies of all homes improved slightly last year, but most economists don’t expect it to get much better and hotter markets may have even fewer homes than last year. Unfortunately, smaller starter homes popular with first-time buyers are harder to find than larger homes.

deciding where to buydeciding where to buy

Inventories and prices vary greatly. Larger coastal metros are the most expensive, but properties in smaller cities are generally more affordable.

If you live in a high priced market, is relocating a possibility? Could you find an excellent job in your field or work virtually? If so, you might surf locations that appeal to you. Check out prices and the supply of affordable homes. You might be surprised at how much reasonable some markets are.

If relocating isn’t in the cards, try to enlarge the areas you would like to live in your current metro. The larger the area you consider, the more listings you will find. If you are moving from an urban rental to am exurb, you might a longer commute will make to become a homeowner faster than staying where you are,

Resolution #5. Make a Realistic Budget for Living in the Home You Buy.

Nearly two-thirds, 68%, of millennial homeowners said they had regrets about their home purchase, and 18% cited unexpected maintenance or hidden costs as their greatest pain point, a Bankrate survey found last year.

Your monthly mortgage is just one of several costs of homeownership. Many first-time buyers fail to plan for insurance, maintenance, taxes, utilities and homeownership association fees are some of the expenses that can strain your family budget. When you decide to make an offer on a home, ask your home inspector for rough estimates of significant repairs or upgrades you will have to make soon. (Better yet, ask the seller to lower the price of the home to cover major expenses, or require him to make the repairs himself). Plan to set aside 1% to 2% of the value of your home each year for upkeep. These expenses, as well as your monthly mortgage payments, will increase with the cost of the home you buy.

If your budget comes in at a level for more than you can comfortably afford, you will have to reduce your mortgage and the amount you can spend to purchase a home.

Resolution #6. Stick to Your Budget.

By making a good budget and sticking to it religiously will save your family from years of living “house poor.” Promise yourself and your family that you will stick to your budget. Don’t assume that the maximum amount that a lender will lend you is the maximum you can afford. His number does not take into account all the expenses you have listed in your budget. It’s merely a number based on your credit score, your debt and don’t get caught in a bidding war for your “dream house” and offer more than you can afford. You may lose the deal but find another house next week that you will like just as much and can also afford.

Resolution #7. Don’t Give Up Easily.

There is no question that these are tough times for first-time buyers. A recent survey found that 12.3% of millennial renters who would like to become homeowners have given up homeownership and plan to rent forever.

After you have given your best effort and can’t find the right house at a price you can afford by the late summer or fall, this might not be your year. Pack it in until 2021. As you continue to save, improve your credit, and reduce your debt, you will be in a better position to buy a home.


Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

Source: homes.com

December 2016 Budget

This post may contain affiliate links. Please read my disclosure for more information.

Are you ready for this?

We paid $5,000 of our student loan debt in one month.

That’s crazy even for us! We were able to do this for two reasons: the budget and some discipline.

UPDATE: As of August 31, 2017 Travis and I are STUDENT LOAN FREE! We paid off $77,646.54 in 23 months!

We never have the perfect budget. In the 14 months we’ve been doing this we’ve always had to tweak here and there to make it work but paying off our student loans is the priority and that puts all spending into perspective. Over the last

Over the last year we’ve built discipline, it didn’t happen overnight. (It didn’t even happen in the first 3 months.)

We went really ambitious last month because we are committed to having my student loan paid off by Christmas. That means December is going to be another $5,000 loan payment to finish it off.

(Spoiler alert, we did it!)

Real great timing right? But we’ve decided our goals are more important than Christmas crap and the best gift we can give each other is financial freedom.

I did surprising well staying within budget this month, we went over on eating out (like every month) but made up for it in spending less on groceries. I also budgeted $100 for Black Friday shopping and spent a whopping $43, $20 of which was online.

It wasn’t because I didn’t find things I liked, I did. But I’ve been more passionate lately about conscious consumption.

I want to make sure the items I purchase have purpose and are good for the environment.

To do this I ask “do I already have one?” “Can I have something better later if I pass on this?” and “Is this going to improve my life?”

So let’s dive into December’s budget. It’s going to look even slimmer than November’s:

EveryDollar

EveryDollar

You can also see we’re able to put $5K toward the loan because we have $7200 net coming in and we’ve spent time and attention to keeping our standard of living to $1200 per month.

You might think, “of course, they can do that with over 7 grand coming in.” But if you’re not in the same financial state as us (ie. taking extra jobs to boost our income) you can still examine your budget and make cuts.

When reading articles like this we click for the big numbers but the real advice is to think in percentages.

Making 5% changes every month can change your life. Every little move in the right direction is worth it. And don’t feel that just because your numbers can’t be as big as some random person’s with a blog on the internet that you can’t start right now. Everyone starts somewhere, so start where you are and nowhere else.

Onward,

EveryDollar copied November’s budget to December and we tweaked accordingly. I’ve tried multiple budgeting apps and the manual entry of EveryDollar works best for us. If you like your transactions automatically updated I highly recommend Personal Capital. It has a beautiful mobile interface and people who use it regularly have nothing but good things to say.

While we’re not exchanging gifts (besides the cereal I’m wrapping and giving Trav for Christmas) we aren’t total Scrooges. Any gifts we do buy we’re buying with gift cards we already have. Hence no gift budget.

We cut eating out down to nothing this month. I already have it spent because we’re going out to a fancy [for us] dinner dessert when we pay off my loan. So stoked for that. And I have given myself a small personal fund because I’m going out of town for a wedding.

And here’s another kicker,

this is the last month I will pay on my student loan.

Did you just read that!? I just scheduled my second-to-last payment on my loan and the one after is going to be the whole shebang. I plan on recording it via Facebook Live so make sure you like my Facebook page to join in the celebration. I’m taking suggestions on how to celebrate. 😉

Paid off Debt

Paid off Debt

Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com

5 Ways to Clean Up Your Budget and Get Back on Track

Remember your budget?

You know, that spreadsheet that’s been collecting dust? That app you haven’t logged into in months?

If this sounds like you, your budget could use a little attention.

Don’t just spend the spring deep cleaning your house and purging your closets. It’s a good time to clean up your budget too.

Spring Clean Your Budget in Just 5 Steps

Here are five steps to refreshing your money management system. No rubber gloves or disinfecting spray required.

1. Wipe Away Unnecessary Expenses

Tidy up your spending habits by purging wasteful expenditures, like that gym membership that you never use or that free trial you forgot to cancel.

Scan your bank statements from the last several months to identify recurring costs to get rid of. While you’re at it, keep an eye out for other problem areas in your budget, like repeated impulse buys at your favorite store.

2. Update Your Spending Limits in Each Budgeting Category

A budget is not a static system. The spending limits you set when you first started your budget may not fit your life today.

Go through all your budget categories and see if your spending projections align with your actual spending. For example, if you’re exceeding your spending limit for groceries every month, it may be time to make an adjustment to your budget. You may have been underestimating your spending all along.

3. Make Sure Your Spending Matches Your Values

You work hard for your money, but it’s easy to let cash slip through your fingers without a second thought.

How you spend your disposable income — what’s left over after bills and necessities — should reflect what’s important to you. Values-based budgeting is a money management approach that factors that in.

Take some time to reflect on your spending and determine whether or not it aligns with your values. Adding room in your budget for fun money will make you more likely to stick to your money management plan.

4. Consider Switching to a Different Budgeting Method

There’s no one right way to budget. If you’ve been struggling, switch up your approach.

The zero-based budgeting method is great for people who want to keep close tabs on every dollar spent, while the 50/30/20 method corrals your spending into three broad categories.

You can ditch monthly budgeting with a paycheck budget or spread your expenses out more evenly with the half payment method.

The calendar method helps you stay on top of upcoming expenses and payment due dates. The cash envelope system prevents people from swiping their debit cards past their spending limits.

You might even find success combining a few budgeting methods, like this woman did.

5. Get Help to Maintain Your Budget

Cleaning up your budget is the first step. After that it’s all about maintenance.

The right tools will help you keep your finances organized. A budget binder stores all your important documents in one place — stuff like your spending log, your debt tracker and a calendar of your upcoming bill due dates. You can purchase pre-made binders or DIY your own.

If you prefer an app over the pen-and-paper approach, there’s a plethora of options available. Check out this list of our favorite budgeting apps.

Having an accountability buddy will help you stick to your financial goals long after the season’s changed. The Penny Hoarder Community is a great place to connect with like-minded budgeters. Find a money buddy there who won’t let you slack the next time you want to ignore your budget.

Nicole Dow is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com