In my last article, we started talking about the personal finance rules of Thumb and we talked about the first five. Warren Buffet said, it is better to be approximately right than precisely wrong When it comes to financial rules of thumb it is more a matter of having been close to your financial goals than having nothing at all. Here are the last 5 financial rules of thumb you can consider. Student Loans The First Year Salary Rule A general rule is that you should not take more student loans than you would expect to make in your first year of employment. Up Side: this will ensure you will take up an amount that you will be able to pay back comfortably without too much strain. Downside: With the ever rising cost of education and also standards …show more content…
Home Ownership My dream house is one with a big backyard, with green carpet grass and definitely a pool and some place to host a barbeque for some friends during some public holiday or even some planned girls’ day. The 20% Rule According to this rule of thumb, you will need to have at least 20% as a down payment for your house. Up Side: this rule will ensure that you do not spend more on a home that you cannot afford. This will also lower your monthly mortgage contribution and it will also improve your chances of getting a home loan approved. Downside: It a very traditional approach to home ownership and it is a very safe bet as per some opinion. Others find that amount to be too much to save hence the goal might look too ambitious. In other cases, some will I as much as the house is an asset, you should not give up your liquidity or savings to have one. With all other reasons that we might have, the bottom line is, some might find this rule to be unrealistic. The Income Rule Under this rule for homeownership, do not buy a house that costs more than three years of your gross yearly income. What are the variations? Two years others two and a half …show more content…
Downside: If your job is not stable, this rule of thumb might not be as applicable as it does not consider the money you have in your savings especially should something interfere with your source of income hence this might make much sense if it is based on your net worth rather than your income. As a reminder these are general rules and are only here to help you give an approximate figure of how much money you will need when you will need to think about home ownership. There are other list of expenses and consideration you will need to take in to consideration before purchasing a home which we shall consider at a later
Along with scholarships, fellowships, and grants, student loans are an important method of financing post-secondary education. With tuition costs rising, more students are borrowing to pay for college education today. However, not all students realize the burden of paying back their student loans. Many are defaulting.
The trend for home ownership is down. Millennials, those born between 1980 and the early 2000s, are waiting longer before buying their first home. (Rent Jungle, 2015) For them, purchasing a home represents a much higher cost relative to income than it did in years past. To illustrate this point, in the 1970s, the cost of a house represented about 1.7 percent of annual income; today that figure is at almost 3 percent. (Rent Jungle, 2016) Single-family home prices are continuing to trend upward (Hanley Wood Data Studio, 2016), making home ownership an unaffordable option for
Never take out a loan for more money than you can reasonably pay back with your paycheck. There are many lenders that tend to offer more than what you 're asking since you 'll struggle to pay them right away. That means that can harvest more fees from you when you roll over the loan.
comes to buying a home, whether you are a first time home buyer or venturing into buying your
I also take my future into consideration, I would like to buy my own house in a near future but with property taxes so high I might not be able to afford a home right after college graduation.
Nothing can make you feel safer than owning a house, provided that buying a home will not result in financial problems of its own. Every year, a new wave of first time home buyers hits the trail in search of their humble abode. There are pros and cons to home buying. Certainly, there is the matter of timing and related financing programs.
middle of paper ... ... The important idea to remember is that you have to keep these costs in mind, or else you’ll be facing issues that you cannot overcome. Your budget should not be limited to buying a house alone, it should include a large margin for such additional costs.
This article explains how one should decide whether to buy a home or rent. Buying a home should be based on decisions of credit report, debt ratios, job stability or relocation, maintenance issues, and financial situation. It explains how not everyone should buy a house. Some people are actually better off renting.
Student loans are a well known access to go to college. Student loans have become easily offered at any financial aid sign up. That being said with all financial aid that is provided, student loans are easily to be picked for a support system. Some people agree that student loans are required to go to college. Even though people may agree that student loans are a way for students to attend college, you should not take out a student loan. The young people who are beginning their college life have trouble paying back all their student loans and drop out of school, don't get to enjoy their college experience, and even end up living with debt after they graduate college. There is a lot to know when starting college. That comes with many important decisions, whether to take out a student loan or not to take out
Schools have failed in the past due to the fact that money only goes so far in life. Whereas certificates
“About forty-one percent of borrowers fall behind on their student loan payments in the first five years of payment” (nytimes.com). Statistics also show that nearly thirty percent of student loan borrowers wind up dropping out of school. These facts help show that student loans are not a reward for you but are a burden. Student loans can be avoided by obtaining as many scholarships as possible, saving for college before you get there, and working to get money to pay cash for college.
Buying and owning your home is part of the American dream. Although the dream itself has since changed, the home still remains the main focal point. Today owning a home doesn’t necessarily mean a house. People now buy duplexes, cooperative apartments, and condominiums. For some families it could take up to a couple of generations before it’s able to have the capabilities of buying a home. To many people it means a certain achievement that only comes after years of hard work. It is a life altering decision and one of the most important someone can make in their lifetime. The reasons behind the actual purchase could vary. Before anything is done, people must understand that it’s an extraneous process and it is a long term project.
An option for individuals look are looking to buy property have the option to purchase a house. The advantages are: “pride in ownership, privacy, own land, tax benefits, fixed rate, security, and can renovate to their desire. The disadvantages are: less flexibility, mortgage has interest, more stress about money, requires down payments, closing costs, and moving costs, need to have a fixed income/stable income, and bank may take over house if payments are not made” (Zillow, May 12th 2012 ). Pride of ownership is advantage because it gives those individuals accomplishment feeling and shows their hard work paid off and do not have to deal with landlords anymore” (Free Advise Staff, unknown date). Privacy is another advantage because it gives the homeowners the freedom to do whatever they wish and not worrying that they will break the rules. Owning land is an advantage because “every time you pay off your mortgage individuals are gaining equity and increasing your assets” (Chapman’s lecture, unknown date). Another advantage is individuals will get a “tax benefit which will help pay off the interest of the mortgage and increases income” (Kirlew, Unknown date). Security is an advantage because in the “long run if some individuals want to have kids those individuals do not have to worry about moving each year, but instead helps their children grow up in a ...
Buying a home is more complex then most think. A purchaser of a home doesn't pay in cash when buying a house. If that were so, then nobody would be able to afford one. A potential buyer must get a loan. The bank doesn't lend their money to just anybody, so there are prerequisites before a buyer should consider buying a home. The potential buyer must have enough money for a down payment which is 3% to 20% of purchase price, a steady job with for at least two years or more, must have a decent credit score with at least a 640 or better. That is standard for the market. (1) The credit score is based on the FICO score. FICO stands for, Fair Isaac Corporation, a company that has been in business since the early 1950's and monitors consumers' credit ratings and put a scoring system on it. (2) Conventional loans are usually financed up to eighty to ninety percent with a down payment required of ten to twenty percent. The potential buyer must also have a debt ratio not exceeding 28/39 of their income. The first number 28 refers to your new mortgage payment that cannot exceed 28% for your gross combined income and 39 refers to your mortgage payment plus revolving and installment debt as well as taxes and insurance cannot exceed 39% of you total combined gross income (3).
That is a bit of an upsetting fact. I am going to look into how much I could save in loans by both getting another job this summer and by saving less money for spending throughout the year. By doing this I hope to not take out any loans next year and hopefully not have to take many loans in the years of college to follow