4 Questions to Ask Yourself Before Leasing or Buying a Car

HowMuchCar

When you’re looking for a new car, it can be difficult to decide whether buying one outright or leasing one for a period of time makes more sense. It’s true that cars only go down in value the longer you own them, but there are still some solid arguments for owning one outright rather than essentially renting one.

Car-related decisions can be stressful, and there’s a lot you need to know before buying or renting, but don’t worry. If you’re in the market for a new car and aren’t sure which way to go, you can use the following questions to help you make the best decision for your situation.

Question 1: How Much Will I Be Driving This Car?

If you only need a car for weekend adventures and plan to use public transportation or to carpool during the week, then leasing might be the better option for you, if you can get a good deal. Most lease contracts come with stipulations on how many miles you can put on the car while you’re using it, but if you’re only using it for a few quick trips each week, you likely won’t come close to hitting that mileage mark. Still, you’ll want to pay close attention to that number if you do end up going for a lease. Always ask what happens if you go over the mileage count, since the penalties can be steep. On the other hand, if you have a lengthy commute to get to work and you need a reliable car to get you there—or you just aren’t interested in tracking miles—buying might be better for you.

Question 2: What Do I Plan to Use It For? 

You probably wouldn’t go into a car purchase intending to rough up the car, but stuff happens, so you’ll need to decide what you plan to use your car for to know if leasing is right for you. If you lease a car, the dealer generally allows normal wear and tear upon return at the end of your lease, but you’ll be charged extra if they think the car has been more weathered. Be sure to get the specifics from the dealership on what exactly they consider “normal” wear and tear, and if that doesn’t match your plans for the car—if you plan to off-road in the Colorado Rockies on most weekends, for example—it might be better to buy.

Question 3: How Long Do I Plan to Keep It?

One appealing thing about leasing a car is that most car leases end after three years—so you have the opportunity to upgrade to a new model every three years if you’d like. Of course you could buy a car and upgrade that way, but it can be harder to deal with the sale of a car than it is to just turn your lease back over to the dealer.

Question 4: How Much Can I Afford to Put Down?

Most lease agreements will come with lower down payments than buyer agreements have. In some cases, if you lease a car, you may even be able to negotiate with the dealer to skip a down payment altogether. (Keep in mind, though, that this will likely result in higher monthly payments.) Either way, if you really need a car now, and you don’t have the cash for a decent down payment, then going with a lease may put you in the driver’s seat faster than if you waited to buy a car.

Buying a car is a very personal decision, and whether you lease or buy will be determined by a number of factors. At the end of the day, buying a car is almost always the cheaper option if you need a car for the long term, but signing up for a short-term lease can be a solid option depending on your needs. Putting in a little bit of extra thought before searching for your next ride can ensure you make the right decision.

Whatever move you decide to make, be smart in how you approach car buying or leasing. Don’t forget that having good credit will improve your car-buying experience, so before you make car-related decisions, check your credit and see where you’re at. You can always check your credit for free at Credit.com.

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4 Reasons to Buy Your First Home in Your 30s

There are a few ways to expedite that down payment.

There was a time in my life when I thought I’d never own a home. As someone who had preferred life in big cities and prioritized travel above homeownership, the idea of settling somewhere permanently never really appealed to me.

Then I got married, then I got pregnant, and suddenly the idea of living in an actual home to call my own (with a little more space, to boot) became very appealing. By the time my husband and I closed on our first-ever home, I was 32 years old, and I’m so glad I waited until then to buy. Here’s why.

1. I Had Saved Enough for a 20% Down Payment

My husband and I were married almost three years before we bought our first house, which gave us plenty of time to start putting cash aside in a separate savings account—specifically for a down payment. That meant that we were able to put down 20% of our home’s overall value (the recommended amount), putting us in a good position for a low-interest mortgage loan.

You may not be able to sock away that much in cash by the time you’re ready to buy, but at least when you’re solidly in your 30s, you’re likely making much more than you were in your mid-20s. So you should be able to put down more than you could when you were younger. It should also be easier to refill your savings after spending that money.

2. I Knew Where I Wanted to Settle Down

Places I’ve called home include New York, New Jersey, Pennsylvania, Virginia, Florida, and Colorado, along with a few others. In other words, I had been around the block enough to know what I was looking for in a long-term home and a place to raise my family. As it turned out, Colorado was that place, and so far, it’s all I could have wanted and more.

3. I Was Secure Enough in My Career to Make Big Financial Moves

Because I’ve been freelancing successfully for the past few years, I’ve built up enough of a steady client base to feel financially safe as I took the plunge into homeownership. Buying a house is a lot more than forking over a down payment and paying a mortgage—utilities, homeowners association fees and insurance, and general maintenance and upkeep all add more weight on the monthly budget. By waiting until we were more settled in our careers, though, my husband and I felt more prepared for whatever our new house might throw our way.

4. I Could Afford a House that Didn’t Need Much Work

While I can certainly tackle the occasional DIY project, I’m never going to be someone who wants to place hardwood or redo a bathroom. As such, waiting until I was in my 30s to buy my first house meant that I had the money to buy a home that didn’t need a lot of work. It was essentially move-in ready, which was exactly what I was looking for.

When’s the Right Time to Buy a Home?

Buying a home before you’re in your 30s certainly isn’t a bad thing, as long as you’re financially prepared to put down a sizeable down payment and to pay for the added expense that comes with it. For me, though, waiting just a couple more years until I was in my 30s proved to be invaluable, since I now feel as prepared as possible for whatever new financial responsibilities head my way.

Also, no matter how old you are, make sure you’ve had a chance to build your credit before you buy. Credit plays a big role in buying a home, so make sure yours is as good as possible before you start shopping for a loan and check it frequently.

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5 Signs It’s Time for a Credit Card Upgrade

Man use smart phone and holding credit card with shopping online. Online payment concept.

Like most financial things you’ll deal with in life, it’s a good idea to check in from time to time with your credit card to see how it’s working for you, or to see if there are better offers out there. If you’ve been a loyal customer for years and haven’t seen many changes to your card, you could be paying more for interest than you need to, or you could be losing out on other valuable services that other cards offer.

If it’s been a while since you checked in with your credit card, consider logging on to see if any of the following apply to you—and if you could do better.

1. Your Interest Rate Has Been High for Years

If you’ve been with the same bank or credit union for a while now, and you’ve been making your payments on time, it could be worth giving them a quick call to see if you can get your interest rate lowered. This is especially true if you tend to carry a balance on your card. Before calling, check around to see what other banks are offering by way of interest rates. Then if your bank balks at the idea of lowering your rates, you can let them know you’re ready to move on to a better offer.

2. Your Rewards Are Only So-so

These days there’s a card for every type of reward, such as travel, cash, groceries, and gas. If your card is only paying out meager dividends in this department (or worse, isn’t offering you anything at all for your monthly spending), it may be time for a change. Consider the rewards other companies are offering to see how your card stacks up, and consider making a change based on your needs.

3. The Online User Experience Isn’t Great

There’s no reason why your bank shouldn’t offer at least the bare minimum in online services, like the ability to transfer money seamlessly between accounts and to deposit checks through an app. Unless you love everything else about your bank and you aren’t really in need of these services, consider making a switch to a more user-friendly bank.

4. You Use the Same Credit Card for Personal and Business Expenses

Whether your business is super small (just yourself at a desk in the corner of your room) or you’re managing a couple of employees, it’s always a good idea to keep your business and personal expenses separate, especially when it comes to tax time. If you’ve been using the same credit card for all your daily purchases, think about applying for a new one that you’ll use strictly for business expenses, and try to find the best card for your business needs.

5. You’re Having Trouble Paying off a Large Balance

If you’re carrying a large balance on a credit card, even a card with a decent interest rate can be difficult to pay off. A balance transfer to a card with low or no interest will cost you a bit of cash upfront (usually up to 3% of the total transfer amount), but overall it could save you big in the long haul. Some credit cards offer good balance transfer options, but be sure to read the fine print before signing on the dotted line.

It only takes a couple of minutes to log on or make a call to your current credit card provider to ensure your card is meeting your financial needs and wants. If it turns out your card isn’t providing you with the best of the best, don’t be afraid to make a switch—there are too many good options out there these days to settle for less. Before you apply for a new card, you should check your credit to make sure you have the best chance of qualifying for a great card. You can check your credit score for free at Credit.com.

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How Long Does Negative Info Stay on Your Credit Report

business woman credit report

Your credit report offers valuable insight into your financial history and affects most of your financial future: everything from whether you get approved for a mortgage or other loan to what your credit card interest rate will be.

Negative information on your credit report can be detrimental for years, but it’s not always clear how long those inquiries and other negative information will stay on your credit report—and affect your score. The length and severity vary, but here are four common types of inquiries and how long they affect your credit score.

1. How Long Do Hard Inquiries Stay on My Credit Report?

What is a hard inquiry?

Hard inquiries are created every time your credit report is accessed by a business when you apply for a line of credit. For example, your credit would receive a hard inquiry when you apply for a car loan, mortgage, student loan, or credit card.

How long will hard inquiries stay on your report?

Inquiries remain on your credit reports for two years (24 months). However, hard inquiries impact your score for only the first 12 months. After that, they have no impact on your score.

How much do hard inquiries affect your credit?

New credit—including inquiries and any new credit accounts—make up just 10% of your FICO score, and a single inquiry will likely drop your credit score by only three to five points. As long as you apply for credit only when you need it, this is one of the lesser hits to worry about

2. How Long Do Credit Accounts Stay on My Credit Report?

What is a credit account?Credit accounts refer to all of the accounts for which you hold credit, including credit cards, mortgages, and car loans. Credit scoring models like to see a healthy balance to the types of credit accounts (or “credit mix”) you have and can manage effectively. Negative information on a credit account includes late or missing payments.

How long will negative credit account information stay on your report?

Negative account information stays on your credit report for seven years from the date it was first reported as late. If you close the account, the entire account will be removed from your report after seven years. If the account remains open, the negative information will be removed after seven years, while the rest of the account information stays on your report.

Positive information, on the other hand, remains on your credit report indefinitely. If you close the account, positive information typically stays on your report for 10 years past the closing date.

How much do credit accounts affect your credit?

Your credit mix accounts for 10% of your credit score: a healthy mix means more points. If you don’t have many credit accounts or if you close your accounts, it could negatively affect your credit score.

Payment history accounts for 35% of your credit score, and making payments on time is the most important factor in determining your credit score: a single 30-day-late payment can drop a good score by 90 to 110 points.

Most lenders don’t report missed payments until accounts are more than 30 days past due, so if you can catch the missing payment in enough time, you might not notice a hit at all. Other lenders will let one late payment slide, especially if you’ve been a loyal customer for many years and have a good excuse for why you missed it.

3. How Long Do Collection Accounts Stay on My Credit Report?

What is a collection account?When you fall behind on making payments on an account, your debt could end up in the collection’s department of that particular company. That creditor may then sell your debt to a collection agency, which also reports it as a collection account. At this point, the original creditor that sold the debt should not continue to report a balance owed, but you should watch out for duplicate collection accounts.

How long will collection accounts stay on your report?

Collection accounts remain open for seven years plus 180 days from the date the account was delinquent leading up to when it was placed for collection. After that time, it must be removed regardless of when it was paid or when it was placed for collection.

How much do collection accounts affect your credit?

Understanding how collection accounts can affect your credit score is tricky. The most important factor that will affect your credit score when it comes to collections is how recently the collections occurred—the more recent the collection, the lower the score. Multiple collection accounts or lawsuits resulting in judgments can also lower your score. Unfortunately, settling or removing a collection may not impact your score positively.

While there’s no way to tell exactly how much a collection account will affect your credit score, it is one of the higher penalties, so the best course of action is to avoid having accounts sent to collection in the first place.

4. How Long Do Public Records Stay on My Credit Report?

What are public records?

Public records include any of your personal information that becomes public knowledge, including bankruptcies, tax liens, and judgments.

How long will public records stay on your report?

The type of public record will determine how long the information stays on your credit report.

Chapter 7, 11, and 12 bankruptcies stay on your credit report for 10 years from the date filed. Completed Chapter 13 bankruptcies are usually removed after seven years from the filing date.

Tax liens remain on your credit report for seven years from the date filed if they are paid, or indefinitely if they are not. If you qualify for the IRS Fresh Start program, you can request a paid or satisfied tax lien be removed from your reports.

Paid judgments remain on your credit report for seven years from the date filed, and unpaid judgments remain for seven years or the governing statute of limitations, whichever is longer. Since unpaid judgments can usually be renewed, these may remain on credit reports for a long time.

How much do public records affect your credit?

There is no way to know exactly how many points your credit score might drop with a public record on file, but the effect of public records on your credit report could be severe.

The best way to keep track of your credit reports throughout the year and to stay on top of any erroneous information is to monitor your credit regularly with Credit.com’s free Credit Report Card.

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What You Need to Know about Home Equity Loans

Mortgage concept by money house from the coins

A home equity loan is a method for borrowing money for big-ticket items, and understanding the facts about these tricky loans is crucial to helping you make the right decision for your finances.

If you’re considering taking out a home equity loan, here are 13 things you need to know first.

1. What Is a Home Equity Loan?

A home equity loan—or HEL—is a loan in which a borrower uses the equity of their house as collateral. These loans allow you to borrow a large lump sum amount based on the value of your home, which is determined by an appraiser, and your current equity.

Equity loans are available as either fixed- or adjustable-rate loans and come with a set amount of time to repay the debt, typically between 5 and 30 years. You’ll pay closing costs, but it’ll be much less than what you pay on a typical full mortgage. Fixed- rate HELs also offer the predictability of a regular interest rate from the start, which some borrowers prefer.

2. What Are Home Equity Loans Best For?

A home equity loan is generally best for people who need cash to pay for a single major expense, like a specific home renovation project. Home equity loans are not particularly useful for borrowing small amounts of money.

Lenders typically don’t want to be bothered with making small loans—$10,000 is about the smallest you can get. Bank of America, for example, has a minimum home equity loan amount of $25,000, while Discover offers home equity loans in the range of $35,000 to $150,000.

3. What Is a Home Equity Line of Credit?

A home equity line of credit—or HELOC—is a lender-set revolving credit line based on the equity of your home. Once the limit is set, you can draw on your line of credit at any time during the life of the loan by writing a check against it. A HELOC is similar to a credit card: you do not need to borrow the full amount of the loan, and the available credit is replenished as you pay it back. In fact, you could pay back the loan in full during the draw period, re-borrow the total amount, and pay it back again.

The draw period typically lasts about 10 years and the repayment period typically lasts between 10 and 20 years. You pay interest only on what you actually borrow from the available loan, and you usually don’t have to begin repaying the loan until after the draw period closes.

HELOC loans also sometimes come with annual fees. Interest rates on HELOCs are adjustable, and they are generally tied to the prime rate, although they can often be converted to a fixed rate after a certain period of time. You are also often required to pay closing costs on the loan.

4. What Are Home Equity Lines of Credit Best For?

Home equity lines of credit are best for people who expect to need varying amounts of cash over time—for example, to start a business. If you don’t need to borrow as much as HELs require, you can opt for a HELOC and borrow only what you need instead.

5. What Are the Benefits of Home Equity Loans and Home Equity Lines of Credit?

Beyond the access to large sums of money, another advantage of home equity loans and home equity lines of credit is that the interest you pay is usually tax-deductible for those who itemize deductions, the same as regular mortgage interest. Federal tax law allows you to deduct mortgage interest on up to $100,000 in home equity debt ($50,000 apiece for married persons filing separately). There are certain limitations, though, so check with a tax adviser to determine your own eligibility.

Because HELs and HELOCs are secured by your home, the rates also tend to be lower than you’d pay on credit cards or other unsecured loans.

6. What Are the Disadvantages of Home Equity Loans and Home Equity Lines of Credit?

The debt you take on from a HEL or HELOC is secured by your home, meaning your property could be at risk if you fail to make the payments on your loans. You can be foreclosed on and lose your home if you’re delinquent on a home equity loan, the same as on your primary mortgage. In the case of a foreclosure, the primary mortgage lender is paid off first, and then the home equity lender is paid off out of whatever is left.

If your home’s value declines, you may go underwater and owe more than the house is worth. The rates for HELs and HELOCs also tend to be somewhat higher than what you’d currently pay for a full mortgage, and closing costs and other fees can add up.

7. How Do I Determine My Equity?

If you’re interested in learning how to qualify for a home equity loan, first you need to determine how much equity you have.

Equity is the share of your home that you actually own, versus that which you still owe to the bank. If your home is valued at $250,000 and you still owe $200,000 on your mortgage, you have $50,000 in equity, or 20%.

The same information is more commonly described in terms of a loan-to-value ratio—that is, the remaining balance on your loan compared to the value of the property—which in this case would be 80% ($200,000 being 80% of $250,000).

8. How Do I Qualify for a Home Equity Loan?

Generally speaking, lenders will require you to have at least an 80% loan-to-value ratio remaining after the home equity loan in order to be approved. That means you’ll need to own more than 20% of your home before you can even qualify for a home equity loan.

If you have a $250,000 home, you’d need at least 30% equity—a mortgage loan balance of no more than $175,000—in order to qualify for a $25,000 home equity loan or line of credit.

9. Can I Get a Home Equity Loan with Bad Credit?

Many lenders require good to excellent credit ratings to qualify for home equity loans. A score of 620 or higher is recommended for a home equity loan, and you may need an even higher score to qualify for a home equity line of credit. There are, however, certain situations where home equity loans may still be available to those with poor credit if they have considerable equity in their home and a low debt-to-income ratio.

If you think you’ll be in the market for a home equity loan or line of credit in the near future, consider taking steps to improve your credit score first.

10. How Soon Can I Get a Home Equity Loan?

Technically, you can get a home equity loan as soon as you purchase a home. However, home equity builds slowly, which means it can take a while before you have enough equity to qualify for a loan. In fact, it can take five to seven years to begin paying down the principal on your mortgage and start building equity.

The normal processing time for a home equity loan can be anywhere from two to four weeks.

11. Can I Have Multiple Home Equity Lines of Credit?

Although it is possible to have multiple home equity lines of credit, it is rare and few lenders will offer them. You would need substantial equity and excellent credit to qualify for multiple loans or lines of credit.

Applying for two HELOCs at the same time but from different lenders without disclosing them is considered mortgage fraud.

12. What Are the Best Banks for Home Equity Loans?

Banks, credit unions, mortgage lenders, and brokers all offer home equity loan products. A little research and some shopping around will help you determine which banks offer the best home equity products and interest rates for your situation.

Start with the banks where you already have a working relationship, but also ask around for referrals from friends and family who have recently gotten loans, and be sure to ask about any fees. Experienced real estate agents can also provide some insight into this process.

If you’re unsure of where to start, here are a few options to review:

  • Lending Tree works with qualified partners to find the best rates and offers an easy way to compare lending options.
  • Discover offers home equity loans between $35,000 and $150,000 and makes it easy to apply online. There are no application fees or cash required at closing.
  • Bank of America offers HELOCs for up to $1,000,000 on a primary home, makes it easy to apply online, and offers fee reductions for existing bank customers, but it has higher debt-to-income ratio requirements than many other lenders.
  • Citibank allows you to apply online, over the phone, and in person for both HELs and HELOCs. It also waives application fees and closing costs—but it does charge an annual fee on HELOCs.
  • Wells Fargo currently offers only HELOCs with fixed rates, but the bank offers discounts for Wells Fargo accountholders, as well as reduced interest rates if you cover the closing costs.

13. How to Apply for a Home Equity Loan

There are certain home equity loan requirements you must meet before you can apply for a loan. For better chances of being approved for a loan, follow these five steps:

  1. Check your current credit score. A good credit score will make it easier to qualify for a loan. Review your credit report before you apply. If your score is below 620 and you’re not desperate for a loan right now, you may want to take steps to improve your credit score before you apply.
  2. Determine your available equity. Your equity determines how big of a loan you can qualify for. Get a sense of how much equity your home has by checking sites like Zillow to determine its current value and deducting how much you still owe. An appraiser from the lending institution will determine the official value (and therefore your equity) when you apply, but you can get a good sense of how much equity you may have by doing a little personal research first.
  3. Check your debt. Your debt-to-income ratio will also determine your likelihood of qualification for a home equity loan. If you have a lot of debt, you may want to work on paying it down before you apply for a home equity loan.
  4. Research rates at different banks and lending institutions. Not all banks and lending institutions require the same rates, fees, or qualifications for loans. Do your research and review multiple lenders before starting the application process.
  5. Gather the required information. Applying for a home equity loan or line of credit can be a lengthy process. You can speed things up by gathering the necessary information before you begin. Depending on which lending institution you are working with, you may need to provide a deed, pay stubs, tax returns, and more.

If you need a loan to help cover upcoming expenses, make sure you’re prepared. Check out our Loan Learning Center for more resources on the different types of loans available.

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Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.

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6 Signs It’s Time to Revisit Your Budget

Have a student loan? You'll want to read this.

Having a budget is a great start. But life will always throw you changes, and with those changes comes the need to revisit—and perhaps reallocate—your budget. Maybe you recently got a raise, moved to a more expensive apartment, or bought a pet. All of these things would require a change in your monthly financial planning.

Besides those obvious changes, here are six other signs that might mean it’s time to check back in with your budget and recalculate so that it’s working optimally for you.

1. You Have Only a Few Bucks Left at the End of Every Month

If you’re barely scraping by each month with the budget you currently have, it’s probably time to revisit your plan.

How to Fix It: Unless the situation is dire, you can likely pad your budget by cutting back on your spending in certain areas, like groceries, entertainment, or gym memberships. If you are having trouble paying your bills, have no emergency savings, and are also in debt, it might be time to consider something that will save you even more each month—like getting a roommate, moving to a cheaper place, or giving up your own car for public transport.

2. You’ve Never Increased Your Retirement Investments

If you started saving the minimum for a 401(k) match at your company, that was a good way to get your feet wet. But if you’ve had a few raises since then, it’s time to increase what you’re putting away in your retirement accounts as well.

How to Fix It: Chat with your HR representative to see when and how to up your 401(k) contributions. If your company doesn’t offer a retirement plan, fear not: there are plenty of additional ways to save for your future. Evaluate how much you can and should save for retirement, and consider opening an individual retirement account (IRA).

3. You Can’t Come Up with $1,000

If you wouldn’t be able to come up with $1,000 if you needed it, at least take heart in the fact that you’re not the only one. According to a recent poll, two-thirds of people in the US would struggle to gather that amount. But now that you know you aren’t alone, it’s time to fix it.

How to Fix It: Putting money into an emergency savings account every month is a great way to ensure you have money to cover yourself if something bad happens in the future. Experts recommend having at least three to six months’ worth of expenses saved up in an account especially for emergencies.

4. You Aren’t Saving for Any of Your Future Goals

If you’re paying off your monthly bills, travel when you’d like, and even have a bit of an emergency savings started, that’s all good news. If you haven’t thought further down the line, though, now’s a good time to start figuring out how those goals could fit into your budget.

How to Fix It: First, determine the timeline for your goals. If you think your goal of buying a house or starting a freelance business is at least five years down the road, consider a Certificate of Deposit (CD), an account that often provides a higher rate of return than standard savings accounts but that requires you to keep your cash in the account for a certain period of time. If you might need access to your cash faster than a CD would allow, shop around for a savings account with the best rate.

5. You Use Your Credit Card More Than You’d Like

If you find that you often have to use your credit card to pay for things each month and then can’t pay off your bill, that likely means your budget could use a little rejiggering.

How to Fix It: Try going on a “cash diet” for a month to see if that curbs your overall spending. Going on a cash diet means taking out money from the ATM at the beginning of the month and using only that to pay for your expenses; when you run out, you’re done spending for the month. If trying a cash diet doesn’t work, consider a complete budget overhaul to help you make it through the month with more ease.

6. One Gift Purchase Throws Your Whole Month Out of Whack

Birthday parties, weddings, and housewarmings are meant to be fun events, but they’re more stress than necessary if you don’t have the cash to cover all of the expected gifting that goes along with them.
How to Fix It:
Instead of getting thrown off monetarily every time you have to buy someone a birthday or wedding gift, start a savings account specifically for those purchases. As the holidays approach, now might be a good time to siphon off a little extra cash into a new savings account each month so that by the time December rolls around, you won’t need to use your whole entertainment budget on gifts for other people.

Evaluate your current budget for these six signs and implement our recommendations to keep your spending healthy and your wallet happy. If you still need some help cleaning up your budget, visit our Personal Finance Learning Center for additional tips and tricks.

Image: Geber86

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4 Surprising Expenses I’ve Had Since Becoming a Mom

There are several cards that can help you afford the various expenses that go along with parenthood.

When I was single and kid-free, I could spend my money as I pleased. While I’ve always been relatively responsible with my cash (retirement and emergency savings have always been important to me), back in the days before my daughter was born, there were a lot more dinners out, extravagant travels, and fun household items being purchased than there are now.

These days I’ve found that I’m still spending money on the things that matter most to me, but my priorities have shifted since having my daughter. Here are some common items I’ll regularly pay for now—some of which have surprised even me.

1. A Meditation App

Why I Need It: As a working mom, I’m not the best at always scheduling in workouts or showers. But I know I can find 10 minutes in my day to meditate. Taking just a couple minutes out of each day to do this helps clear my head and keeps me grounded to make it through the rest of my day-to-day business. You don’t have to be a mom to benefit from meditation, though—it can help reduce stress, improve concentration, and may even slow aging. . . . Who doesn’t want that?

How to Budget for It: Type “meditation” into the search bar on iTunes or the Google Play store, and you’ll get more results than you’ll know what to do with. Most come with free trials, which provide a great way to try out a few and find one you like. I used the free version of Headspace for months, and it worked just fine.

If you’d prefer to buy an app that offers more guidance but can’t swing the full price, try signing up for newsletters from the app you like and wait for an introductory or sale offer to come along. Most are pretty inexpensive, though, and you could easily cover the cost by forgoing a latte or two over the course of the month.

2. Organic Food

Why I Need It: While I would never consider myself a foodie, these days I’m much more careful about what I buy at the grocery store because I care about what I’m putting in my daughter’s body. I don’t mind the benefits for myself, either.

How to Budget for It: While it’s true that buying organic could drastically increase your grocery budget, you don’t necessarily need to buy everything organic. Focus on the dirty dozen (or food items for which pesticide content tends to be highest), and go from there if you still have room in your grocery budget.

You may want to check out weekly ads from local markets that stock organic produce—a coupon or two could bring the price down to much more affordable levels, especially on produce that’s in season.

3. Priority Seating on Flights

Why I Need It: Traveling with a child is stressful, to say the least. I’ve found that it can be a little less stressful with the right seating, though. For most flights that means dishing out a little extra cash to pay for the bulkhead seating, which gives us more leg room and space. On airlines like Southwest that board by group and don’t give passengers seat assignments, you may have to pay for early boarding. Paying to board early means I get to pick where we sit, which is essential to everyone’s comfort.

How to Budget for It: On most flights, children under two who sit on your lap during the flight fly for free, so my advice is to take advantage of that while you can. I also suggest remaining loyal to one airline, if possible, and making the most of either their credit card or rewards system to book flights, or else signing up for a regular credit card that offers great miles.

4. Regular Haircuts

Why I Need It: While regular haircuts were never a part of my life before now, these days I find that adding even the smallest amount of effort to my personal appearance helps me feel refreshed, and a good haircut can always do that.

How to Budget for It: Depending on where you live, paying for haircuts every few weeks can really add up. Since I’ve decided to make this part of my regular routine, I’ve opted to find a place that doesn’t charge me an arm and a leg but still does a good job. It helps that I already have a little wiggle room in my budget from other things I’m not spending on these days, like dinners out and lots of travel.

Becoming a mom is one of the best things that’s ever happened to me, and it has affected my outlook on everything, including what I value enough to spend money on. Paying just a little bit extra for the things mentioned above helps me feel healthy and happy—and you really can’t put a price tag on that.

If you’re new to the world of parenthood and are still working out finances, it may be worth looking into credit cards that cater to new-parent needs. Just make sure you’ve checked your credit report before applying, which you can do for free at Credit.com.

Image: monkeybusinessimages 

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3 Common Alternative Investments: Are They Worth It?

Get your stocks and bonds on.

Whether you’re a novice at investing or have been day-trading your own stocks for years, you’ve probably heard about alternative investments. You might even be curious about whether or not they’re worth buying. If you want to be a savvy investor, you need to learn about alternative investments.

Alternative investments are anything that doesn’t fall under the category of stocks or bonds, says Molly Stanifer, CFP, a financial adviser with Old Peak Finance. This includes anything from gold and real estate to curios and collectibles. Fun though it might be to start buying up real estate in the name of your portfolio, the question remains: is it worth it?

Stanifer walks us through three common alternative investments to explain a little bit more about whether or not you might want to buy them.

1. The Investment: Gold

The Rundown: A few years back it seemed like every red-blooded American was running out to buy gold, and Stanifer even saw this within her own realm of work. “In 2008–2009 when I was working at a retail brokerage company, I heard a lot of interest in gold,” she said. “A very small minority of clients were investing heavily in it—often indirectly with a fund that invested in futures contracts—but gold was certainly something people liked to talk about.”

Is It Worth It: Stanifer says she’s a big believer in diversification and owning everything in the broad market; however, your investment in any commodity, including gold, should never equal more than 3% of your portfolio. “If you choose to own more than 3%, you are communicating that you value gold higher than the broader market does,” she says. When it comes to gold, it’s ultimately best to think of it this way: gold is only a small fraction of precious metals, precious metals are a small fraction of commodities, commodities are a fraction of alternative investments, and alternative investments should be a small fraction (if any part at all) of a diversified portfolio.

2. The Investment: Real Estate 

The Rundown: In the past few years, Stanifer has heard more and more buzz when it comes to purchasing real estate as part of a diversified portfolio. This attraction makes sense, given the explosion in popularity of house fixer-upper shows and how fun and quasi-easy they make the whole process appear.

Is It Worth It: If you’re thinking about using real estate as a way to diversify, you may want to think again. Stanifer says that most investors have enough exposure already if they own one home. “Most people that own a house will already have more real estate exposure than the broad global market,” she says. Keep in mind also that there are a lot of additional expenses that come with real estate, like repairs, maintenance, utilities, and taxes, all of which may decrease the overall value of your investment opportunity.

3. The Investment: Curios

The Rundown: Most collectibles will probably not react to price in the same way or at the same time as stocks and bonds, which adds diversification to a portfolio. “But accessibility and liquidity should also be considered,” Stanifer adds. “Stamps and other collectibles are not traded as often as stocks and bonds, and when things are traded more often, there is less variation in price. As far as accessibility goes, once a rare object is discovered, there could be additional costs to get it and store it.” 

Is It Worth It: If you get enjoyment out of collecting things like stamps and coins, then the investment may be worth it to you. Keep in mind, however, that barriers and small market demand make collectibles an inappropriate investment staple, says Stanifer. In other words, if you like collecting for the hobby of it or if you expect to hand these items down to kids and grandkids, go for it—but you shouldn’t expect to get rich off your stamp collection.

Ultimately, your investments are your choice. But whatever you choose to back, make sure you’re investing in your future. Diversify your portfolio, use credit cards intelligently to build your credit and increase your buying power, and regularly check your credit report.

Image: POMPIXs 

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6 Surprising Travel Expenses to Watch Out For

Here's how to get the most out of your next getaway.

I love to travel. From the Blue Lagoon in Iceland to the Great Barrier Reef in Australia and the Colosseum in Rome, there’s no adventure I would turn down. In the past, I’ve mostly been able to travel by saving up for trips and finding good deals online. But even with all the planning and research that has gone into my excursions, I have often been surprised by certain expenses that crop up.

The following are six of the costs that surprised me the first time I encountered them. Be aware of these on your upcoming trips so you can plan for them in advance.

1. Vaccines

A few years ago, my husband and I traveled to South America for six weeks. From the tours we’d take to the places we’d stay and the travel expenses between countries, we had everything planned and accounted for—or so we thought.

While we knew that we’d be required to get certain shots for our trip, we didn’t anticipate that those vaccines wouldn’t be covered by our health insurance and that we would have to pay out of pocket for them. The extra $700 we had to pay really put a dent in our budget. Learn from our mistake and remember to think about what additional health costs might be associated with a trip so you can account for that in your planning as well.

2. Travel Insurance

As I’ve gotten older, I’ve come to see the wisdom in travel insurance more and more. Life can certainly throw you curveballs, and when you’ve plunked down hundreds (or thousands) on a trip, it could be worth the added cost to know that you’re covered. Travel insurance can reimburse your expenses if for some unforeseen reason you can’t actually go on your trip or, worse, if something should happen to you while you’re traveling.

Start by checking with your credit card company to see what coverage is offers (some will cover your nonrefundable flight fees if you have a good reason for not being able to fly, for example), then consider outside insurance as well.

3. Tips

There’s so much more to tipping than you might expect. For starters, not all cultures expect consumers to tip for all types of services. Do a little research ahead of time to determine whether tipping is a custom in the countries you are traveling to, and be prepared with cash if you’ll need it. If you’ll be traveling to a country where tipping is part of the etiquette, then it’s best to think outside the box for this practice as well.

For example, it’s a given that you would tip your waiter and cab driver, but don’t forget about hotel staff, the captain of your ship, the sommelier, or the skycap at the airport

4. Taxes

A little bit of tax here and there on things like souvenirs, food, and drink can add up, but what you should really take into consideration is the additional taxes that come with hotel charges and flights. Even small tax percentages on large price tags can really add up quickly, so it’s best to be prepared for these in your travel budget.

5. Resort Fees

Some resorts and hotels (particularly fancy ones) charge additional fees for certain services—things you might not expect unless you read the fine print. I’ve seen hotels charge for Wi-Fi, newspapers, use of the gym or other recreational facilities, cribs, even extra sheets. The best way to be prepared for this is to make sure you read everything before paying to stay somewhere, and never be afraid to call if you have any additional questions.

6. Foreign Transaction Fees

Most credit and debit cards charge a foreign transaction fee every single time you use your card in another country. These fees typically range from 1% to 3%. If you’ll be traveling internationally, you may want to pick a credit card that doesn’t charge foreign transaction fees.

Watch out for these six tricky travel expenses, and you’ll be better able to stick to your travel budget. And if you’ve worked out your budget but you’re still not sure exactly how you’ll actually pay for things once you’re on your trip, we can help you determine the best ways to pay for your travel expenses, too.

Image: anyaberkut

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Buying a Home? Ask Your Partner These 4 Questions First

Row of colorful garden homes with two stories and white pillars in suburban neighborhood of Fayetteville, Arkansas

Buying your first home is incredibly exciting, but there’s also more than a little bit of stress that comes with it. A house is a big purchase, and it brings a whole host of new hurdles beyond the initial price tag.

If you’ll be purchasing your first house with your significant other, one way to avoid some of that stress is to have a few important conversations before you even start your house search. Based on my experience buying a house with my husband, these are a few of the questions I’d suggest chatting about before you set out to find your perfect pad.

How Long Do We Plan to Live There?

You don’t have to set an exact time frame on your house purchase, but it’s a good idea to see if you’re both on the same page before you find a place to live. You should try to stay in the home at least until you hit your break-even year to recoup the purchasing costs. And depending on where the house is located, that could be several years down the road.

To determine whether you’ll be able to make that much of a commitment, have a frank conversation with your partner about your plans in the coming years. Do you see yourself building a family in this house? Are you both happy in your current jobs, or do you foresee a job search in the future that could make for a long commute? Life throws curveballs, of course, but talking about these things ahead of time will help you narrow down the type of house you both want based on your future goals.

How Much House Can We Afford?

This is one of the most important questions you should discuss with your significant other before buying a house. It’s not uncommon for people to get approved for mortgages with monthly payments that would, in actuality, be very hard for them to afford. Only you and your partner know how your finances work out on a monthly basis, so sit down and have a solid look at everything to fully understand how much money you can put toward a mortgage each month and still feel comfortable. You may also want to consult with a financial adviser together.

Keep in mind that putting down less than 20% of your overall home cost at closing will likely mean that you’ll have to pay private mortgage insurance (PMI) on top of your monthly mortgage fee. Luckily, there are plenty of resources out there to help you determine an affordable down payment, as well as tools to help you figure out how much house you can afford.

Are We Looking for a Fixer-Upper?

Some people prefer a house they can add their own touches to, while others would rather walk into a house that’s perfect for them without having to change a thing. Talk about this before your house hunt so you’ll know whether or not you’re both willing to put in the effort (and money) for any necessary updates if that’s the route you decide to go.

How Will We Save for Miscellaneous House Expenses?

When you own your own home, there is no end to the list of things you’ll spend money on. From leaks and cracks to peeling paint and clogged gutters, it seems like there’s always something that needs fixing. Of course, some of those things can usually wait, but in order to fix larger issues—especially those that need urgent attention, like plumbing problems—you’ll need an immediate flow of cash. Chat about how you plan to pay for surprises that crop up, and if you don’t already have an emergency savings account, start one today.

After you’ve talked over these four critical questions with your significant other and come to a decision that makes you both happy, it’s time to start looking. And when you’re ready to make an offer, check out our Mortgage Resource Center for more information on how to take that next big step.

Image: BlazenImages 

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