5 Steps To Get Out Of Debt Fast

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Are you current in debt?

Do you consistently make payments on your student loans? Your car? Your furniture? Does it ever just feel like all of your money that comes in just immediately goes out again? If you are sick and tired of this phenomenon, then it’s probably about time that you get out of debt. Fortunately for you, I have the five steps that will get you out of debt fast.

1) Commit

I once heard a simple riddle about two frogs that resonated with me;

“Two frogs are sitting on a lily pad. One decided to jump off. How many frogs are left on the lily pad?”

Well, the answer is one of course…or is it? Just because the frog decided that he was going to jump off does not mean that he actually jumped off from that lily pad. So, quite likely there are still two frogs left on that pad.

The same is true for many of us as well. We decide to do something, and we really mean it, but quite often that task just never gets accomplished. In order to get yourself out of debt, you are going to need to commit yourself to getting out 100%. This alone will not get you out of debt fast though. There are still four other steps!

2) Find a Friend

While there are some truly stubborn individuals that have escaped debt without partnering up with anyone else, it is definitely easier to trudge through this journey with a like-minded individual. This could be your friend, your parents, your brother or sister; anyone that has been talking about getting out of the debt mess they are in. It can be difficult to find someone that will truly commit, but at the very least it will help you get started on your debt free journey.

3) Lower Your Expenses

Alright, now that you are committed and most likely have an accountability partner, it’s time to reduce your expenses so that you actually have a few bucks at the end of the month to put toward all of those debts!

The best place to start is by looking at your last few months of expenses (this should be easy to find through your banking transactions) and then creating a list with two columns, “Wants” and “Needs”. A need is something like heat, food, clothing, and your house payment. A want (that you are already paying for) is something like cable TV, cell phone service, lawn mowing service, eating at restaurants, vacations, and $100 haircuts.

Now, just because an item is listed in the “want” category doesn’t mean that you have to get rid of it. That is up to you to decide.

In addition to the list, you should also circle the items that you believe are costing you more money than they should. For instance, a car might be a necessity for you, but you don’t really need that brand new leased car that is sitting in your driveway. You might be able to get away with an older model Honda that still gets the job done.

Do your best to remove the unnecessary expenses and reduce the necessary ones.

4) Increase Your Income

This is a biggie. Yes, reducing your expenses does help tremendously, but there is always a limit that you are going to reach where you just can’t possibly save any more money. With income though, the sky is the limit.

To increase your income, you could find a part-time job, ask for a raise, or you could start a business of your own on the side. I decided to start a side gig three years ago and have earned over $40,000 with it. I was able to pay off all of my consumer debt and am now working to pay off my home loan!

5) Reward Yourself Along the Way

Paying off debt can be quite exciting at first, but after a while, putting an extra $300 toward a $35,000 debt just loses its luster. Sometimes it seems like your debt will never go away! In order to keep your hopes up and to remind yourself that you are making progress, it is important to set up little goals (with rewards) along the way.

When I was first starting to pay off my debts, I really wanted a Detroit Tigers baseball cap (the nice fitted ones, not the dufey looking ones with the strap) so I built it into my goals. I had $20,000 worth of debt and I told myself that if I would get this debt down to $18,000 by a certain date, then I would buy myself that hat! Well, long story short, I hit the goal and still have the hat today. It rejuvenated my spirits and made me want to keep paying down that debt to the next goal!

How about you all? Are you ready to pay off your debt fast?

Share your experiences by commenting below! 

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/c/c2/Running_Dachshund_at_the_beach.jpg

The Most Popular Way to Stay Broke

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Do you know of anyone that has voluntarily signed a piece of paper that will keep them broke for the next 30 years? I know it sounds crazy, but I have many friends that have done this very thing!

They get all jazzed up about how they can look important to others so they sign up for a 30 year debt that they can barely afford, which then keep them in bondage for much of their adult life. Is this the American Dream that all of us are searching for?

Buying the House of Your Dreams

I have a friend at work that was brought up in a poor home. Instead of being thankful for what he has today, he seems to be on a mission to separate himself from his past by buying up all the nice things he can today. Just a few months ago, he rolled up in a nearly-new Audi and was so proud of himself that he always parked it outside of the window near his desk, just so he could look at it every day.

Well now the Audi isn’t enough. He has moved onto bigger and better things. Yup, he is looking at purchasing an executive home that will likely keep him broke forever. This is how he described it:

“Take a look at this house, Derek. It’s a 5 bedroom, 4 bath executive ranch house in the wealthy side of town. Sure, money will be tight for the first couple of years, but both my wife and I expect to get promoted soon, so it will get easier and easier to pay the mortgage as the years pass by.”

My jaw almost dropped to the ground. First of all, he and his wife have only one child and could easily live in a 2 bedroom, 1 bath house that is less than a quarter of the cost of this “executive” home. Secondly, if they were to buy this house, they would have to watch their spending for the next 30 years! Their cash flow would be next to nothing, and unless the house increased in value they would not be able to sell it and would be forced to live there, continuing to make that monstrous mortgage payment. And, with a cash flow of less than $100 a month (or less after they pay all of their bills), they would not have any opportunity to invest in their future and will still be broke when they turn 60!

My Simple Lifestyle

Many people decide to live their life from paycheck to paycheck, just barely getting by. They assume that it’s the normal thing to do, so they just keep making those big purchases on credit and living in the moment. It might seem like they are having fun on the outside, but I’m sure there are many money arguments and escalating stress levels going on behind closed doors.

For me, I would much rather live in a simple house and have a large amount of excess cash each month. I can either chose to spend it or maybe I’ll invest it in the future. It’s my choice. But I won’t be bound to a hefty mortgage payment and car payments. These loans will only bring you down and keep you down.

My friend will be living in a large house and will be driving nice cars, but he will be working until he is 70 years old. I will be completely debt free by the end of this year in my 3 bedroom, 2 bath house and will likely have the option to retire by the age of 35.

How about you all? Which option would you choose?

***Photo courtesy of http://pixabay.com/p-31085/?no_redirect

Interested In Investing In Trust Deeds? Here’s What You Should Know

The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.

The loose lending practices of past years have resulted in many banks carrying large amounts of bad real estate loans on their books. In the attempt to unload foreclosed properties, banks are allowing these properties to be sold at bargain basement prices.

Real estate investors are purchasing these properties cheaply, rehabbing them if needed, and then selling them for a profit. Unfortunately, banks are reluctant to lend to these types of borrowers unless the borrowers and the properties they are interested in adhere to a strict set of criteria.

Trust deed investing allows investors to invest in these types of real estate loans without the assistance of the banks.

Trust deed investing, which is secured by physical real estate, provides a way for real estate investors to get the money that they need to purchase properties while funding investors earn an attractive return on their investment.

The Benefits To Investors

Investors can realize a number of benefits by investing in trust deeds. Many of the investments made in trust deeds are relatively short term, maturing in five years or less. Due to the scarcity of funding, the investment can be made at an interest rate much higher than the investor would get with a certificate of deposit (CD) or by purchasing municipal bonds. The borrowers are often willing to pay double digit interest rates for the loans because they plan to make much more on the sale than they are paying in interest for the funding.

When trust deed investments are structured properly, they can offer investors an attractive yield with a risk level that is relatively low. It is not uncommon for trust deed investors to earn annual returns in the high single-digits, which is paid in monthly installments. This makes trust deed investing a very favorable option relative to other investment options with similar risk profiles.

If the borrower defaults on the loan, the lender can foreclose on the property and sell it to recoup the investment, plus any past due interest. The key is to focus on investments that are sufficiently conservative, meaning that the value of the property is high relative to the amount of the loan. If the borrower defaults on the loan, the lender will not lose their entire investment.

Disadvantages To Investing In Trust Deeds

One of the biggest disadvantages to investing in trust deeds is that the investment is not liquid. You cannot quickly convert the investment to cash at need, like selling shares in a blue chip company or municipal bonds. At the onset of the investment, you need to go in understanding that you must stick with your investment until the borrower pays off the loan or until you have foreclosed and sold the underlying property in the case of a default.

It is important for the investor to do their research before they begin directly investing in trust deeds. The investor must take the time to review borrowers’ information, determine the merit of the deal, and perform due diligence on the property. Errors in documentation could mean that the investment you are pursuing is much riskier than it appears. Errors and misrepresentations could also result in litigation or other legal issues for the investor.

How To Invest In Trust Deeds

There are four main investment methods available when it comes to investing in trust deeds.

Some investors choose to personally source individual loans and lend money directly to real estate investors that are within their network. Other investors choose to purchase loans backed by real estate from brokers or invest in a fund that invests in trust deeds. The last method is for the investor to identify people who are directly investing in trust deeds as a group and invest along with them. Many individual investors opt to use funds and brokers because it gives them access to professional real estate investors that are investing on their behalf based on the specific investment criteria the individual investor has set.

Where To Find Trust Deed Investment Opportunities

LoanMLS (http://www.loanmls.com/) – LoanMLS is an online loan exchange that allows investors to search for various types of trust deeds investments, which may be for an individual loan or pools of loans and may be for any type of loan: residential or commercial, secured or unsecured. New trust deeds are listed on LoanMLS every day.

Federal Home Loans Corporation (http://federaltrustdeed.com/) – The Federal Home Loans Corporation services individual trust deed/mortgage loans of any size for brokers, lenders, institutions and private investors. Their comprehensive nationwide Trust Deed Loan Servicing solutions allows them to service fractionalized loans with ease using computer-driven computations.

Wilshire Finance Partners (http://www.wilshirefp.com/) – Wilshire arranges real estate loans secured by deeds of trust held by their investors on residential, multifamily, retail and commercial property located throughout California. The minimum investment is $50,000 for individuals, trusts and qualified retirement accounts.

American Private Money Group (http://www.americanprivatemoneygroup.com/) – American Private Money Group offers high-yield trust deed investments in properties in California to private individuals, corporations, pension plans, 401Ks, retirement funds, IRAs, Roth IRAs, Self-Directed IRAs, and SEP accounts.

The Norris Group (http://www.thenorrisgroup.com/) – The Norris Group offers high-yield trust deed investments to private individuals, corporations, pension plans, 401Ks, retirement funds, IRAs, foundations, endowments, Roth IRAs, Self-Directed IRAs, Charitable Remainder Trusts (CRTs) and SEP accounts. The Norris Group is a California Department of Real Estate licensed Broker (DRE License 01219911) and has brokered more than $250 million dollars of loans since 1997.

Crawford Real Estate Services (http://www.crawfordinvestmentco.com/) – Crawford is a Trust Deed Investment Company (TDIC), fully licensed by the California Bureau of Real Estate, with a 55-year history of investing in Southern California communities. They only accept investors that are California Residents.

So, what do you all think? Have you or anyone you know ever invested in trust deeds? Does it sound like something you’d be potentially interested in? Why or why not?

Share your experiences by commenting below! 

Why You Should Never Go Broke to Buy a House

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

It’s almost the American Way, going broke to buy a house.

After all, a house is the biggest of all purchases, and it takes just about every nickel that you have in order to make it happen. However, as common a practice as it may be closing broke can be a complete disaster from a financial perspective.

You’re better off to buy a little bit below your means, and make sure that you have some money saved up after you close on the house. Being broke is never a good state of affairs, and it can be even worse immediately after purchasing a house.

There may be major expenses right after closing

Whether the house that you buy is existing or brand-new, you can virtually predict that there will be one or more major purchases necessary after the closing. Often, it turns out to be a repair issue that did not turn up in a home inspection. It can also be a condition that wasn’t obvious at the time of purchase because the house was brand-new.

Whatever the cause, the may cost you a couple thousand dollars or more to remedy the problem. In other situations you may need to purchase a major appliance or system component. This can be anything from a new refrigerator to replacing the air-conditioning unit in the house.

You have to be prepared for this kind of outcome by having some extra money saved up after your closing.

Owning a house makes emergencies more likely

You know how everyone one tells you that you need to have an emergency fund? If that is true when you are renting an apartment, it’s doubly true when you own a house.

Every house, no matter how old, has repair and maintenance needs. Some properties, even new ones, can turn out to be certified money pits. For example, though it may not seem obvious at the time of purchase, you can find out that a brand-new house has water drainage problems that needs to be repaired. Didn’t see that coming!

And on an older house, the number of emergencies can increase exponentially. A leaky roof, wood rot, drainage problems, or backed up pipes are hardly uncommon. You’ll need to have money at all times in order to deal with these problems as they arise. This is even more true if you’re not the type who can handle repair and maintenance issues on your own, and you need to rely and paying outside services.

“You can’t eat a house”

A lot of people are so enchanted with the idea of finally owning a home, that they convince themselves that nothing else matters. I don’t care as long as I have my house! But that thought will do you little good if you have other expenses apart from the house itself – and you will.

Though owning a house can make excellent sense from a financial standpoint in the long run, it’s important to understand that a house is not liquid. This is especially true when you first take ownership of the property, since there is no equity to borrow against. If money is tight for you to buy a house, it will be even tighter after the closing. You’ll need to have extra money to cover any needs that you may have – anticipated or otherwise. If all of your money is tied up in the house, you’ll have a big problem – or a series of them.

Creating destructive patterns

The general thinking when buying a house is that you buy on a shoestring, and your financial situation will improve as time goes on. That’s typically true – your income rises and your expenses begin to settle down into a predictable pattern.

But sometimes the situation goes in a different direction. Sometimes you develop a pattern of “buying for the house”, always thinking that things will get better at sometime in the future. If you start getting used to not having money and using credit lines every time you need any, you could be setting up lifelong patterns that can land you in the poorhouse sooner or later.

Ironically, too much optimism when buying a house can set you up for just such an outcome. You could develop the “buy now, pay later” mindset, always thinking that the tight money situation you’re in now is only temporary, and that things will get better in the future.

They may, but it’s always best to not make assumptions.

Being broke just feels bad

As happy as you might be at the prospect of owning your own home, being broke has a way of throwing cold water on your celebration. Yes, you have your home, but if you don’t have money for an occasional dinner out or trip to the movies, or if you constantly find yourself borrowing from Peter to pay Paul that good feeling that comes from homeownership could start to get older in a hurry.

If you really want to enjoy your new home from the get-go, plan on having some money set aside for contingencies, emergencies, and extras after the closing. Going broke to buy a house – common that it is – is vastly overrated.

How about you all? How much of your monthly income generally goes towards paying for your house? Are you comfortable with the amount that you’re paying?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/danmoyle/5634567317/sizes/n/

Retirement Has Nothing to Do With Age

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

A few days ago, my boss suddenly realized that one of our coworkers was retiring. He looked around at everyone and quickly said, “Retiring? I didn’t realize he was that old!” For an intelligent man that does well in his director level position, my boss made it very clear that he has absolutely no clue what retirement really is or how to get there.

Retirement is Not About Age

Frankly, I couldn’t believe that my boss made that statement, but even more to my surprise many of the people around us nodded their heads in agreement, and this guy (that was retiring) was easily 60 years old! Heck, what if I walked into the office at age 30 and announced that I was retiring? Most people would probably think it was a joke. But retirement has absolutely nothing to do with age!

Many people believe that once you turn 65, it’s time to retire. You can collect your full Social Security payment and you have a few aches and pains, so it must be time to retire. Hold on, not so fast. What about that mortgage payment on your $275,000 house? And how about that leased car in the driveway – your Social Security check won’t be able to cover that. Just because you’re 65 years old does not mean that you can automatically retire. As with most these days, you might have to work a couple more years to make ends meet before you get the luxury of quitting your job.

In other words, retirement is not at all about age. It’s about your finances.

Retirement is About the Dollars!

Earlier in this article, I said something about retiring at age 30. Do you believe that that’s possible? You might not know anyone that has done it, but what if I had created a popular app for the iPhone that had millions of downloads? I might have $7 million in the bank from this successful venture (I don’t by the way….yet), so why wouldn’t I be able to retire? I mean, I could withdraw $200,000 a year from my lump sum and it would still easily increase in value! Yup, I could easily retire for the rest of my life on $200,000 per year.

Since I am not an app writer and cannot think up addictive games in my spare time, I am trying a more conventional route: real estate. I am currently paying off my own house so that I can quickly purchase other properties with cash (for a discount of course – that is the beauty of cash) and rent them out for a tidy yearly profit, all while continuing to work my full-time job to fund the next house. Because I live very inexpensively, I can save up enough money to buy one house each year. Here is my schedule of planned purchases:

• 2016: Purchase rental property #1. Earn $850 per month
• 2017: Purchase rental property #2. Earn $1,700 per month
• 2018: Purchase rental property #3. Earn $2,550 per month
• 2019: Purchase rental property #4. Earn $3,400 per month
• 2020: Purchase rental property #5. Earn $4,250 per month

At this point, I would be earning $51,000 per year on top of my full-time job income. I will be 35 years old. It wouldn’t take much more of this to retire would it? In just a couple more years, I would have over $1,000,000 worth of homes and could generate an income of over $80,000 per year. Not too shabby huh? And I didn’t even have to be 65 years old to do it.

How about you all? Do you know of anyone that retired young? How did they do it?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/paulodonnell/5052028917/

Turning Your Job Into An Investment

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Job insecurity has become a way of life in recent years.

Even if you’re doing a good job, it’s sometimes not enough to keep you from facing a layoff. The only security any of us have anymore are the skills that we have – the talents and abilities that give our work value to our employers. That being the case, you can turn your job into an investment by actively working to improve your skills, and to build new ones.

This is more important than it’s ever been. Unfortunately, employers no longer train their employees. This is because training costs money, and in the cost cutting mania that has overtaken the American workplace, there simply seems to be no time or money for it. To keep your skills sharp, you have to invest some time – and maybe even a little bit of money – making it happen on your own.

Resolve to spend some outside time on job improvement

Most of us have more time on our hands than we realize. The “problem” is that much of our non-working hours are filled with watching TV, web surfing, “staying connected” on cell phones, or participating in extracurricular activities.

What if you were to devote three or four hours out of that time to either improving an existing work-related skill, or developing a totally new one?

Considering that most people are unwilling to make this kind of investment of time and effort, doing so could put you on the cutting-edge of employment skills.

Develop a set of skills that you would like to either improve on or build from scratch, and then begin budgeting the time that you will need – out of your leisure time – to learn them. Sure, you need time to deal with the stress of the work week, but giving yourself an upper hand with new skills might go a long way toward relieving work stress by itself.

Learn what you can about the Big Picture in your field or industry

A lot of people come into work, do their job, and then go home. They don’t concern themselves with what’s going on in the Big Picture. From an employer’s standpoint, the Big Picture is anything that affects the environment that the business operates in. This can include economic conditions, regulatory environment, market preferences, and competition.

By spending some time educating yourself on these issues, you can develop a birds-eye view of your company’s business, and see it the way your employer does. Even more important, if you can begin developing work-related strategies that are consistent with those big picture issues, you can rise up above the rank-and-file in your company. Think of this as the skill of awareness.

Take a course or two

If there is a specific skill that you think is critically important either to your ability to retain your job, or to be promoted, consider taking a course in that subject that will help you to acquire the skill.

They’re all kinds of skills that you can develop that can help you with this. For example, a public speaking course can help you be better speaker, and maybe even to lead meetings and other group sessions. This will position you as a leader, not the least of which because most people are deathly afraid of speaking before groups.

Taking a course in a job specific computer program or application can also increase your value to your employer, or even to future employers. Businesses today are all about technical skills, and the more you can acquire, the more valuable you will be to your employer.

Acquiring skills on the Internet

Not all skills require a classroom setting. You can use the Internet to learn all kinds of new skills. This can include researching those skills and finding out where you might be able get online training. But you could also check out YouTube and see if there any videos posted that will help as well.

Sometimes all you need is a working knowledge of the given skill – you don’t necessarily need to be an expert. Even more important, is the ability to take a given skill and find a way to efficiently apply it to your job. If you happen to stumble across a new skill that can help your company – but that your company is unaware of – you can also position yourself as an innovator.

It’s mostly a matter of being out and about, and willing to experiment with what’s out there. In this way you virtually win by default, because most of your coworkers aren’t going there.

Invest in relevant software

Think of a common software application that’s important in your business, where you may want to position yourself as an expert. Identify what that software is, buy copy of it, and spend your spare time not just learning it,but mastering it!

In virtually every company, there are people who know how to use software programs. But there are very few people who are experts in the application, who know the specific nuances that can help the employer. By spending some off-hours time working with a software application, you may be gaining the kind of knowledge that will make you indispensable to your employer.

Never overlook the obvious when it comes to software programs There are common applications, such as Excel, PowerPoint and various graphics programs, where you can position yourself as an expert. If you can find ways to take these common programs and use them in a way that will provide tangible benefits for your employer, you could become one to go-to people on the job.

Take a parallel part-time job

Sometimes the best way to learn a new skill is baptism by fire – that is, you just have to get out there and do it. One of the best ways to do it is through a part-time job. Considering that most employers frown on their employees taking positions with direct competitors, you’ll probably be better off to try to find part-time work for a company that is in a related business, but is not a direct competitor

And since part-time work is generally more casual than full-time, you’ll probably have a better opportunity to learn the skills from the ground up.

Certain skills simply lend themselves better to hands-on experience. Sales is an excellent example. If you think that developing sales skills will help you in your job, or make you more valuable to the employer, consider taking a part-time sales position, and see where it leads.

You may even find that the more casual atmosphere of a part-time position makes it easier for you to learn a new skill, particularly one as challenging as sales, if you’ve never done that kind of work before. Since you won’t be relying on the sales income, you will be able to master the skills under less stressful circumstances.

Turning your job into an investment is all about building a portfolio of skills. The more that you have, and the better you are at them, the higher your market value will be – either to your current employer, or to a new employer in the future.

How about you all? Have you invested your personal time and money to gain valuable skills for your career? How so?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/eflon/4541692312/sizes/n/

3 Hobbies That Are Fun, Trendy, And Won’t Break The Bank

The following post is by MPFJ staff writer, Catherine Alford. Cat is a freelance personal finance writer who blogs at www.BudgetBlonde.com. 

I was thinking the other day that I really don’t have a hobby anymore.

I danced for over 20 years growing up and taught ballet as one of my jobs throughout college. It was such a big part of my life that definitely slowed down when I moved out of the country and of course, had two kiddos.

I’ve been thinking I want to take a dance class soon. After all, that’s a lot of my parents’ dollars plus such a long time to train and build technique for it to go to waste. There are many dancers still performing at age 30 so there’s no reason why I can’t get back into shape and at least take a ballet class. Plus, I still have about 10 pounds to go to be back at my pre-twin weight so the exercise won’t kill me.

I find it interesting that it took me this long to realize that for my whole life, I really haven’t had that many outside activities since I didn’t play sports or bake or do anything except go to dance class 4-5 times a week. So, as an adult I might expand my horizons a bit more in addition to getting back into one of my passions.

So, in honor of branching out and doing more fun things outside of work, here are a few hobbies that are fun and trendy and if done just right, won’t break the bank:

Biking

One mistake that many people make when they become interested in biking is buying a really expensive bike to start out with. They get excited after watching the Tour de France and decide that they will become the type of person to ride 100 miles every weekend.

I definitely admire anyone who takes on this challenge (after all, Jacob is a huge biking fan and raises money every year with it!) However, my biggest advice is to start off slowly. That’s how you can make sure that biking won’t break the bank. Borrow a friend’s bike for the first few weeks to see if you like it and want to stick with it. Purchase a used bike off of Craigslist that’s nice but not a $600 brand new one just to get a feel for it and see if you enjoy it.

You can also buy an inexpensive bike at a big box store and try riding it around your neighborhood. If you find that you ride your bike often and enjoy it, then save up and make the investment for an expensive bike later. However, as far as casual hobbies go, this one is quite inexpensive once you get past the cost of the bike. If you become a more serious biking enthusiast though, the gear and the bikes can definitely add up.

Cooking

My husband absolutely loves to cook. I always tell him it’s the main reason I married him since I am not too skilled in the kitchen. Cooking is the best hobby to start right after you get married because typically you get a ton of cooking gadgets as wedding presents. This helps to cut down on the upfront costs.

Now, ingredients can get pretty pricy too especially if you have to buy a pinch of this or a pinch of that so if you are on a tight budget, just pick one meal every week that you’re going to experiment with for fun. It helps if you choose ingredients that will overlap with other things you want to cook that week. For example, this week I am making a tuna salad and an Asian salad that share 3-4 of the same ingredients. This helps me not to waste food and to have two things I enjoy without buying extra food at the store.

Essentially, with enough careful planning, cooking can be a rather inexpensive and fun hobby for anyone.

Reading

I love to read and have ever since I was a little kid. I find I go through phases though where I read a ton and fly though a whole series in one month and then go a few months without reading anything except blog posts. For those times when I am really into reading, I always like to borrow books from the library, rent audio books, or use some of my iTunes credit to download a book for free. It’s an easy and fun way to escape or learn something new that can be a completely free hobby!

Of course, along with the hobbies above, there are those hobbies that will probably always be pretty expensive like learning to play a musical instrument, scuba diving, flying planes, deep sea fishing, etc. Even scrapbooking and crafting can add up significantly if you purchase all of those products consistently. Of course, all of these are great if you have the budget and the time. However, if you are looking to start a casual and fun hobby that’s not too expensive, try out some of the ones listed above.

How about you all? What are some of your hobbies? Are they expensive?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/pixietart/4184841/in/

The First Step You Need to Take When Buying a Home

The following post is by MPFJ staff writer, Grayson Bell. Grayson, who runs the finance blog Debt Roundup, is a fan of personal finance, brewing beer, and working on cars.

There are so many things to think about when buying a home.

The process is very involved and it takes a lot of work to get through it. Having gone through the process myself quite recently, I have a few words of advice, but also something you should do before you even go through everything.

The reason buying a home is such an involved process is due to how much information needs to pass through different companies. All of your information is verified, then verified again. But, here is the first step you should take when you want to buy a home.

Can You Truly Buy a Home?

Many professionals tell you to check your credit before you buy a home. I do think that is sound advice, but you really need to do something else first. You need to understand if you can truly afford to buy a new home. You need to create a budget for all the costs necessary to obtain and close on a new home, along with moving in and any repairs.

It costs money to obtain a mortgage, so why not create a home buying budget before to see if homeownership is attainable?

If you can get the costs associated with this process together, then you will have a better picture of your financial situation. Here are some of the costs that come when buying a home.

• Credit Report Pull – This fee is paid at closing, but it costs money for the lender to pull your credit report to see if you can qualify for a mortgage. It might range from $25 to $50 depending on the lender.
• Due Diligence Fee – This is not required when you put an offer in on a home, but more and more sellers want to see it. You can choose the amount, but a go-to is around $250. This money shows the sellers you are serious about your offer. The due diligence period gives you time to get an inspection, home appraisal, and find out if you can afford the home. If you pull out of the contract during this period, the sellers keep the money. If you reach closing, this fee is credited back to you.
• Earnest Money – Your earnest money is paid to an escrow account, which is then paid toward your mortgage when you close. You do have to give it upfront though. This fee is typically around 1% of the sales price. If you are buying a $200,000 home, then you should think about giving $2,000 in earnest money.
• Down Payment – This is going to be the biggest expense. You should see if you can afford to make a 20% down payment on the home. If you can’t then you will have to pay PMI (private mortgage insurance) until you have 20% equity in the home. If you have a down payment, then the lender knows you are serious about buying the home and your financials can support the home purchase.
• Home Appraisal – The lender requires a home appraisal. This shows the home price is justified by the value. Appraisal costs differ by region, but it can average around $450. This fee comes back to you in the form of a credit at closing.
• Home Inspection – Some lenders require a home inspection, while others do not. A home inspection is recommended as it can uncover potential issues with the home. Having one done by a licensed inspector can also give you the ability to request repairs from the sellers. Inspection fees vary by region and services provided. They also range based on square footage. A typical fee might start at $350, but others services will add to the price, such as tests for radon , water quality, asbestos, lead, septic systems, and more. These tests can be pricey.
• Additional Inspections – If your regular inspector uncovers some issues, they may tell you to call a licensed specialist. If you have plumbing issues, then a licensed plumber should come out and look at the issue. While you can ask the sellers to pay for these extra inspections, they are not required to do so.
• Closing Costs – Most lenders have a cost to process your loan. These are called closing costs. You can try to get the seller to pay for them, but if you can’t, then you have to come up with them. They can range from $1,500 to $4,000 and they need to come with you to closing.
• Wire Transfer Fees – When you need to pay for closing costs, most title or attorney offices like to get wire transfers. These cost money, averaging around $25. It might not be much, but it does cost money.
• Moving Supplies – Moving is expensive. It costs money to pack your items up. If you don’t have a way to get free boxes, then you will need to pay for them, along with tape and packing materials. Depending on how much you need to pack, these supplies can be costly.
• Moving Truck/Hiring Movers – Hiring movers is going to cost money. They are not cheap and sometimes you get what you pay for. If you want to move yourself, then you will probably need to rent a truck. These are available from places like U-haul. You should compare the costs along with time involved to deal with moving and add up how much these two options will take.
• Repairs/Painting – Once you move into your new home, you will probably want to make some changes. From painting, replacing floors, and doing minor repair work, these all cost money. Paint can be very expensive depending on the size of the home and who much you actually want to paint. If you have to make repairs, can they be done on your own? Do you need to hire a professional? These move in expenses can add up to quite a lot.

As you can see, there are a lot of costs associated with buying a home. These can lead to thousands and thousands of dollars, which you need to come up with in order to close on a new home. If you don’t properly budget for these items and any unforeseen ones, then you could have a hard time paying for the transaction.

Make Your Budget First

You should take time in the beginning to put together a detailed home buying budget. Call around to get mortgage quotes and ask how much they charge for closing on a loan. You should also ask how much it costs to pull your credit and get a home appraised. You don’t need to have a home picked out yet, as they probably charge a flat fee.

The items listed above should be included in your budget. Check around your area to see what the range of prices are. Shop around and then put the average in your budget. You should also include a miscellaneous category, which can help you cover unexpected costs that arise. There will probably be costs involved which I didn’t cover, but that is due to so many different loan types.

So before you jump feet first into the home buying process, make sure you can afford to get involved. A lot of money will be moving hands, so you should always make sure you have enough to cover it, along with extra to keep you financially secure. If you can’t pay for these cost, then home buying might not be for you at this moment. Wait until you can easily cover the related costs and it will make the process much smoother.

How about you all? What was the first step you took when taking the plunge on buying a home? Did you first look at houses from a personal perspective, or did you first consider the finances?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/86530412@N02/7932571974/sizes/l

Encourage Your Teens to Develop Their Own Jobs This Summer

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

The worst job I ever had was when I was 16 and worked at McDonald’s.  One manager was only 19, and he routinely became super stressed.  (Think Bridezilla of McDonald’s.)  I was often booked double shifts on the weekend, working from 5 a.m. until 8 or 9 at night.

I did make money,  but I didn’t learn anything.  Every task a worker had to do was carefully orchestrated and scripted by McDonald’s, even to the way the condiments were to be placed on the burger.

My son is going on 10 now, so he won’t be getting a job anytime soon, but when he does, I don’t want him to get a job working at a restaurant or fast food joint.  Instead, I want him to get a job that will teach him skills and increase his chances of making a livable income when he graduates. 

If you’re a parent of a teenager who wants to work a summer job this year, encourage them to avoid the typical teenage jobs and instead find one that will help them succeed later in life.

Let Them Help in Your Business

If you own a business, consider letting your child work for you.  (Assuming you and your child get along and can work well together.)

I recently listened to a speaker who owns a company teaching parents and children how to develop better relationships.  He goes around the country speaking, and he also has informational CDs that he sells on his website.  Starting when his son, Casey, was 14, Casey had the job of receiving the shipments of CDs, unpacking, and inventorying them.  When he was a bit older, he started traveling with his father.  Now that he’s 20, he regularly goes on stage with his dad and also presents.

Not only is he helping his father and earning money that way, but he’s learning so many skills that will suit him in any job he pursues–business management, public speaking, etc.  Who knows, he may one day take over the business from his father.

Likewise, Dave Ramsey is grooming one of his daughters, Rachel Cruze, to take over part of his business when he retires.

Of course, you don’t have to have a business that makes millions of dollars or requires you to travel throughout the United States to have your child help you.  I’m a freelance writer and virtual assistant as well as a blogger.  When my son is old enough, if he has an interest, he could learn how to keep the books for me (since my bookkeeping is relatively simple) or he could learn how to do the behind-the-scenes work on my blog.  Even having him go through my many e-mails I receive every day and deleting the spam or non-important messages would be a great help.

If you have a business, there is likely a task your child could help you with, if you’re open to it.

Let Them Create Their Own Business

As parents, I think one of the best things we can do is teach our children how to have an entrepreneurial spirit.  Before the age of regular fast food and restaurant visits which spawned so many mindless fast food jobs, kids used to get their own paper route, or babysit, or mow lawns.

While finding a paper route now might be hard, teens could certainly babysit or offer lawn maintenance when they’re off for the summer.

When I attended a community college, one young man in my class had started cutting neighbors’ lawns when he was 14.  His business grew so much that by the time he was 19 and in class with me, he was working full-time, owned a business truck and equipment, and had two part-time employees under him.  This gig could have easily turned into his career.

Of course, teens have many options available to them beyond the traditional teen entrepreneur jobs.  If your teen is skilled on the computer, he could land a job as a programmer, website developer, blogger–the list goes on and on.

Many of these jobs offer lucrative pay, and with a bit of intuition, skill, and training, your child could make a nice income this summer while learning entrepreneurial and personal skills.

Even better, many of these jobs that teens create for themselves are mobile.  The 14 year old who starts an Etsy business can easily move that growing business with her when she goes away to college.  Rather than working in the college cafeteria, she can continue to grow her business and make a good side income to help pay her way in college.

How to Get Your Child Started on an Entrepreneurial Job Path

If you and your child would like to avoid low paying, low skill developing restaurant and retail jobs, there are some steps you can take to find the best job for your child:

1.  Determine what your child likes to do and what interests her.  Perhaps have her fill out a list of things she likes to do and then see what jobs she could create that are related to her interests.  You may even have her take a personality test to see what areas she is strongest in.  Is she a people-person extrovert, or is she an introvert who works better in solitude, for example.

2.  Have him take courses, if necessary.  If your child wants to create a computer programming job, maybe he first needs to take a course or two.  Or, if he already has an idea for a business based on a skill he has, he may want to learn more about running a business.  (This can often be done entirely online.  For instance, the Small Business Association offers a 41 minute online course, “Young Entrepreneurs:  An Essential Guide to Starting Your Own Business.”

3.  Launch the idea, and don’t be afraid of failure.  Your teen may worry about failure, which is natural.  As long as she isn’t investing a great deal of money, let her understand that failure happens.  You might remind her of how many times famous people like Abraham Lincoln and Thomas Edison failed before they obtained success.

If your child fails, that may just be because she hasn’t hit upon the right business idea yet or because her business model needed to be tweaked.

4.  Grow the business slowly.  Many adults fail at business because they try to grow their business too quickly and spend too much money.  Encourage your child to grow his business slowly and to stay out of debt.  For instance, if he is starting a lawn mowing service, let him “rent” your mower and pay a small fee until he’s saved enough money from his jobs to buy his own equipment.

Most teens are out of school for the summer now and have time on their hands.  Rather than encouraging them to get jobs at the local mall or restaurants, where they will likely learn and earn very little, encourage them to develop their own jobs.

Learning to develop their own jobs and find a need in the community that they can fill is an invaluable skill, which will serve them well throughout their career lifetimes.   Plus, the real world skills they learn working for themselves can be used for the rest of their lives.

How about you all? When you were a teen, did you work a traditional job as I did, or did you create your own entrepreneurial job?  What will you encourage your children to do?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/76657755@N04/

Modern Dating: How Much Should it Cost?

The following post is by MPFJ staff writer, Catherine Alford. Cat is a freelance personal finance writer who blogs at www.BudgetBlonde.com. 

I know I am a “boring” married person, but I have several good friends who are still living it up with the single life. They always have the most interesting dating stories and mishaps, and time after time, I’m so surprised at how much dating has changed in the past 10 years.

First and foremost, I was really surprised to learn about the high cost of online dating websites. Did you know that some of them can cost in excess of $50 a month for a membership? Many of my friends have membership at multiple dating sites just to get the full spectrum and access to the biggest amount of people. Some of them have found their spouses this way. Some of them have found really strange people who touched their hair awkwardly for two hours straight. It really just depends, and more often than not, they have stories of dating gone wrong than dating gone right.

Who pays?

One of the biggest complaints I’ve received from my friends is that many of the people they date disagree on who should pay for meals. Many women I know were disappointed because they were expecting the man to pay for a meal and they didn’t. I’ve also had male friends of mine be disappointed because they tried to be polite and old fashioned and pay for a meal, only to be greeted with a date who refused their generosity.

This is a complicated topic and one that I’ve written about many times before. I said it then and I’ll say it now: I’m really glad that I stopped the dating game 10 years ago when I met my husband. I’m just way too introverted to deal with the awkward back and forth that seems to happen every time the bill comes for a meal. If it were me trying to date now, I’d probably spaz out and ask to meet at Starbucks and try to get there early to buy my own coffee. See, it’s a good thing I got married when I did! I’m so bizarre with this type of thing!

Does it need to go in a budget?

I have a really awesome male friend who is trying to meet someone right now online. He goes on about 2-3 dates every month and always does it big. He’s so sweet and generous and typically spends $100 on his dates because he chooses nice restaurants or does dinner and a movie. If you think about it, that can run him about $300 a month! Sometimes he goes on second dates and sometimes he doesn’t, but he’s really old fashioned and always puts his best foot forward.

I’ve tried to tell him that maybe he should start off small with a coffee date, but he always aims to impress. At that rate, though, he needs to make dating a part of his budget. Regardless of how much money you make, $300+ a month on nice dinners out is a pretty significant number, and it’s something that needs to be carefully thought out and planned for. Otherwise, if you haven’t met “The One” in 6 months, you would have spent close to $2,000 trying. At that amount, online dating becomes more of an expensive hobby than a way to meet the right person.

Is it an investment?

Online dating really is so interesting. Don’t you wish you would have thought to start a dating website a few years ago? The marketing really is flawless. Is there really a price you can put on getting the opportunity to meet your one true love?

It makes sense why my friend spends so much money every month trying to meet someone. He has the idea that if he stops now, “The One” could have been the next woman he took out to dinner. So, he keeps trying month after month and the online dating websites keep providing new women in his area that share the same interests as he does.

I think I’ve mentioned before that I met my husband on Facebook, so I definitely believe that you can marry someone you met online. The big difference in my story, though, is that Facebook is free! It didn’t cost me a dime to meet my husband. However, if I had met him on an online dating website, would I have considered the expensive monthly fee the best investment I’ve ever made? Maybe so.

Ultimately, one could argue that there is no limit to the amount modern dating should cost if you meet the right person in the end. However, I would urge anyone who is dating online to take a step back and really think about the cost. Are there other ways you can meet someone that are free? Is it taking over your life or is it just a casual thing you check from time to time?

These are all interesting things to think about and of course, we welcome your opinion on this in the comment section below! So, how much do you or did you used to generally spend on dates?

***Photo courtesy of https://www.flickr.com/photos/stevendepolo/3354726208/