The Money Advice You Always Needed

Sunday, May 31, 2015

5 Ways to Cut the Cost of Moving

It may be obvious that buying a house will be a very large — and expensive — decision. Even if you calculate your monthly mortgage payments, evaluate the overall price tag, factor in future maintenance and repairs, and consider any commute and renovation costs, you may forget a few things that can add up to more than a few (hundred) dollars. From closing costs to movers, you can end up spending more than you expected to in your first year of homeownership. Check out some tips below to help you keep those relocation costs down.

1. Plan Ahead

Getting organized before crunch time can help you save. Change your address with all of your creditors and the post office ahead of time so nothing important will slip through the cracks. A missed or late payment can do serious damage to your credit scores and will end up costing you in the form of higher interest payments down the line. (You can check your credit scores for free on Credit.com.)

It’s also a good idea to create a budget for all moving expenses so you can evaluate what other aspects of your lifestyle you can cut back on that month to help fund your relocation. It usually adds up faster than you think — so try not to leave anything (from truck rental and mileage charges to gas and electric setup) off your list. You may want to consider investing in movers insurance to protect your belongings. In addition, it’s important to secure all important documents in a safe place so they do not get lost during the commotion and you will have them whenever you need them.

2. Time It Right

The price of moving can vary greatly based on when you move and whom you hire. It’s a good idea to do some comparison shopping. Research a few options and get multiple quotes before you choose a moving company or truck rental. If possible, avoid moving in the summer, when it is most popular. Rates are lower between September and May when these companies are less busy. Similarly, you may find lower prices on weekdays as opposed to weekends and further from the beginning of the month when many rental leases change hands.

3. Mix DIY & Professional Help

Moving on your own is almost always the cheapest option. This requires more time and sweat, while calling in the professionals can make it easier. Of course, there are some options that combine the two. You can pack boxes yourself or even prep the furniture and just pay the movers to physically move your belongings between homes. You can move all the smaller items and boxes and hire movers for only the heaviest objects, like your couch, bed and dresser.

4. Come Prepared

When the movers or moving day comes along, it’s important to be ready. If not, you can end up paying the movers to watch you organize your things. Collect packing materials, like tape, boxes and bubble wrap as soon as you know about the move. See if there are old boxes available at work or your grocery store. Ask friends or neighbors if they can pitch in with the packing. By starting early, you can take your time and possibly even choose some things to sell or give away before the move. This way you de-clutter and don’t pay to move things you don’t want anymore. You may need parking permits or, if you live in an apartment building, insurance permits. It’s a good idea to get those ahead of time.

5. Get (Financial) Help

Track all your moving expenses so you can get some of the money you shell out back. If you are moving for work, ask your employer to cover some of the costs. Even if your employer will not pay for the expenses, you can deduct some of the costs on your income tax return. It can be a good idea to consult a tax adviser before the move and through your filing process to be sure you do this properly.

Related Articles

This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.

Should I Use My House to Finance a New Car?

Q. I need a car loan, and I’m thinking of using my home equity instead of taking a loan with the dealer. How can I decide which is a better deal?

A. There are pros and cons to every borrowing situation — including the strategy of using the equity in your home to buy a car.

People who use home equity lines of credit (HELOC) often make the choice because of the potential tax savings.

“The interest rates on home equity loans are often tax-deductible while the interest on a car loan is not,” said Kim Viscuso, a certified financial planner with Stonegate Wealth Management in Oakland, N.J. “This tax advantage is only beneficial to those taxpayers that itemize their deductions, and there may be limits if you exceed $100,000 on the loan.”

A HELOC functions like a credit card, Viscuso said. It makes a certain amount of credit available on an as-needed basis for a limited term then follows with a repayment period.

The interest rate on a home equity loan is probably going to be lower than that of a traditional car loan, but it will be variable after some period of time, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge, N.J. Although we have been in a period of very low interest rates for a long time, you need to consider the likelihood that the HELOC rate will probably increase over its lifetime, she said.

The potential for rising interest rates isn’t something to ignore.

What You’ll Need to Consider

A higher move for rates could force you to be make larger payments for the car down the road, Viscuso said. Also, if you decide to make interest-only or smaller payments on the amount borrowed, the repayment period could last longer than the life of the asset itself.

Choosing to borrow through a home equity loan can also be a cash-flow decision.

Mott said the option to repay on the interest might enable you to have a new car with lower payments, but you will still need to be in a position to pay off the loan when the term ends.

“Keep in mind that the value of the car will continue to depreciate from the moment you drive it off the dealer’s lot and may have no salable value when it comes time to pay off the HELOC obligation,” she said. “If cash flow is an issue and the ability to make a balloon payment is going to be a problem, you may need to rethink the idea of a new car entirely.”

Another potential negative is that you will have to pay closing costs for the home loan, Mott said, so make sure you run the numbers so you understand the cost of borrowing for all your lending options.

Another disadvantage to using funds from the HELOC to purchase a car is that the borrowed funds are no longer available for other uses, Viscuso said.

“Many people use their HELOC for emergency situations,” she said. “If you eat up the funds by paying for a car, they may no longer be available for unforeseen future emergency situations.”

And finally, Mott said, if it turns out that the auto loan is a better option for you, make sure you shop around because the dealership’s offerings may not be the most attractive.

“If you have good credit and meet the qualifications, using a local bank, credit union or an online loan provider may get you a better rate and hence savings over the long term,” she said.

(You can check your credit scores for free on Credit.com to see where you stand.)

Related Articles

This article originally appeared on Credit.com.

This article by Karin Price Mueller was distributed by the Personal Finance Syndication Network.

How Your Fitbit Can Earn You Lower Rates

old people exercising

Your life insurance premium and health go hand in hand, but few companies offer you monetary incentives for improving your health. One company is rethinking life insurance and even going so far as to help policyholders track their daily health and fitness goals to help them reduce annual premiums.

John Hancock has partnered with Vitality to integrate wellness programs with life insurance policies to encourage customers to live better, more active lifestyles. The insurance company provides personalized health goals and free Fitbits to new policyholders. Customers who reach health milestones can earn discounts on their annual premiums, in addition to other rewards. Health insurance companies have been using incentives to encourage participants to develop healthy habits for years, but John Hancock is taking a new, more-involved approach.

Discounts for Healthy Living

Establishing Fitness Goals

After completing the insurance policy application process, John Hancock customers can complete an online assessment from Vitality Health Review to determine their Vitality Age. Your calculated age helps you gauge your overall health. This number might be higher or lower than your actual age. The average American, in fact, has a Vitality Age five years older than their actual age, according to a 2013 analysis by The Vitality Institute.

The Vitality Health Review takes your age, gender and body characteristics into account. You will also be asked to identify exercise patterns, eating habits and overall mental well-being. Your responses are calculated to produce a set of personalized health goals. With your Fitbit, you can then track your progress and report results to John Hancock.

Earning Vitality Points

A Fitbit is a wristband-like device that tracks your daily activity, food intake, weight and sleep patterns. Your personal fitness information can be tracked online to earn you “Vitality Points.” During the course of a year, the points you accumulate are calculated to determine your program status level. The healthier your lifestyle, the greater your status level and its associated discounts and rewards. You can earn additional Vitality Points in other ways, such as by:

Quitting smoking
Getting an annual health screening
Getting a flu shot

Rewards for Healthy Policyholders

As you accumulate Vitality Points, you can apply them to earn rewards and discounts from travel, shopping and entertainment partners. You can also shave up to 15 percent off you annual premium, depending on your policy.

Consider a 45-year-old couple of average health purchasing Protection UL with Vitality life insurance policies of $500,000. By establishing and maintaining healthy lifestyle habits, this couple can cut costs by more than $25,000 on their premiums by the time they turn 85 years old, if they achieve a certain status each year. The savings grow as they live longer.

Health Matters in Life Insurance

John Hancock’s life insurance program offers an innovative approach to getting people excited about healthy living. Traditionally speaking, the life insurance industry doesn’t have a reputation of being terribly interesting to the average customer. Insurance has one of the worst overall industry reputations out there. Only 36 percent of customers view the industry in a positive manner, according to a 2015 Reputational Quotient survey from Harris Interactive.

By incentivizing customers to live healthier lives, John Hancock can help lower payouts. A customer can benefit with rewards, discounts and a healthier lifestyle.

Americans are Unhealthy

Many American adults struggle to live healthy, active lifestyles. Approximately 60 percent of adults are either overweight or obese, according to a 2013 survey released by the Centers for Disease Control and Prevention (CDC). Another CDC survey of 77,000 adults found that:

1 in 2 Americans do not meet federal recommendations for aerobic activity and muscle strengthening exercise.
2 out of 3 Americans regularly drink alcohol.
1 in 5 Americans smoke.

The incentives offered by John Hancock and Vitality might be able to help policyholders lead healthier lives. With opportunities to save money and benefit from discounts, customers can see the fruits of their labor, even when they might not be looking in the mirror.

This article originally appeared on GOBankingRates.com: How Your Fitbit Can Earn You Lower Rates

This article by Laura Woods first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.

7 Benefits of Opening a Credit Union Credit Card

credit card

You probably enjoy the convenience of having a credit card, but do you also enjoy the high interest rates and fees charged by many credit card companies and banks? Probably not. While you might expect to pay a price for the convenience of not needing to carry large amounts of cash in your wallet or purse, your credit card rates and fees shouldn’t be draining your finances.

If your credit card is costing you too much money, there is a cost-effective alternative for you that you might enjoy more than a big bank. It’s called a credit union, and these institutions have been growing in popularity over the years. According to the Credit Union National Association, membership reached 100 million in June 2014, with about 2 percent increase each year.

Why You Should Consider a Credit Union Credit Card

Like banks, credit unions offer a variety of credit cards, including secured credit cards, travel cards, cash back card and rewards credit cards. But when you get a credit union credit card, you’re not only getting the card — you’re getting the numerous perks that come with belonging to a credit union. Below are seven ways you can benefit from a credit card with your local credit union.

1. You’re a Member-Owner

When you join a credit union, you become a member-owner, not a customer. Whereas banks typically have the goal to make profits, a credit union works with the interests of its members in mind. Also, you can vote for board of director members and other elected officials. Whether you have an account of $100,000 or $1, you have these privileges as a member-owner.

2. Fewer Fees

Along with lower interest rates, credit unions tend to offer lower fees in general — including credit card fees. Sure, an annual fee might be worth the expense for some credit cards, but who really wants to pay balance transfer, foreign transaction and cash advance fees? Alliant Credit Union’s Platinum and Platinum Rewards credit cards do not charge balance transfer fees, and PenFed’s Travel Rewards American Express Card does not charge a cash advance fee or a foreign transaction fee

3. Lower Interest Rates

Compared with large banks that offer credit cards, credit unions generally have lower interest rates. For example, Los Angeles Federal Credit Union’s Cash Back Visa credit card offers a 0% introductory APR for the first 12 months. After that, the card boasts variable interest rates as low as 8.99% APR. Capital One’s Quicksilver Rewards credit card has a 0% introductory APR as well; however, the variable APR ranges between 12.90% and 22.90% after the period is over.

4. Emergency Cash Availability

Emergencies happen to everyone, and many credit unions offer members credit cards that can help them when they’re in a financial bind. Erin Lowry of DailyFinance wrote she got a PenFed Promise Visa Card — which boasts no annual, balance transfer, cash advance, late or over-credit-limit fee, as well as no penalty APR — in case of emergencies. “Credit cards are not the ideal way to manage your debt,” she wrote. “But sometimes you need to make a payment quickly and don’t have time to shop around for the cheapest alternative.”

Read: 5 Ways to Build an Emergency Fund in 5 Months

5. Extensive Surcharge-Free ATM Network

Credit unions might have had difficulty competing against the large number of bank ATMs, but there are now tens of thousands of ATMs in the CO-OP network. Many of these ATMs are surcharge-free, and the credit unions often offer to reimburse any fees you might incur when you use other institutions’ ATMs.

6. You Get Second Chances

According to CreditCards.com, credit unions tend to be more willing to give second chances to their members. So if you apply for a credit card or loan and get denied, a committee of employees and members might review your application again to see why you got turned down.

Keep reading: How to Get a Credit Card After Being Rejected

7. You Can Enjoy the Credit Union’s Other Services

If you become a member at a credit union by getting a credit card, there’s a good chance you might be able to qualify for its other services and products. With lower rates on loan and higher rates on savings, you might be interested in getting an auto loan or savings account with the credit union in the future. If so, you could end up saving (and earning) a lot of money during your time with the credit union.

Is a Credit Union Right for You?

Although credit unions provide a variety of perks, there are a couple of factors you’ll want to consider before becoming a member and applying for a credit card. For example, a small credit union might have less credit card options when compared with a national bank, like Bank of America or Wells Fargo. Also, if you’re the type of person who prefers visiting brick-and-mortar branches, you might have a hard time finding a credit union branch when you’re traveling out of town.

Choosing a credit card can be a hard decision. As important as fees and rates are, you also want to be able to trust your financial institution. Before deciding on a credit card, make sure you check out what your local credit union has to offer.

This article originally appeared on GOBankingRates.com: 7 Benefits of Opening a Credit Union Credit Card

This article by Bill Pirraglia first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.

What Is a Home Equity Line of Credit?

home equity line of credit

Home equity lines of credit are convenient ways for homeowners to finance spending or consolidate debt. They offer significantly larger credit limits than regular credit cards, which can give borrowers greater flexibility and spending power. However, a HELOC may not be the right way to borrow against your home. Read more about HELOCs and home equity loans to learn which option is best for your needs.

Below is a breakdown of what a home equity line of credit is, how you can qualify for one and what typical terms look like.

What Is a HELOC?

A home equity line of credit is similar to a second mortgage, in that the homeowner borrows against his existing mortgage. The equity in the home is used as collateral for the new line of credit, and the borrower can borrow from it for the life of the loan or any other predetermined term.

The line of credit is used like a credit card, with a determined credit limit based on the amount of equity in the home, and a variable interest rate that may fluctuate with the market or with the outstanding balance. When you borrow from your line of credit, you are required to make payments based on the loan agreement. As you repay what you borrowed, your available credit revolves, and you can continue to borrow.

A HELOC is different from a home equity loan, which has set terms, a fixed interest rate, and a consistent payment each month. The lump sum is paid off over the term of the home equity loan, and the amount you can borrow is capped at the loan amount, i.e. the credit does not revolve. A HELOC offers much more flexibility than a home equity loan but may also cost more in interest if rates fluctuate.

How to Qualify for a HELOC

Why you are borrowing is a determining factor when choosing between a HELOC and a home equity loan. A home equity line of credit is best for homeowners who know they will need to continually borrow, such as make tuition payments or funding a long-term remodel.

To qualify, you’ll need to meet the specifications set by the bank, credit union or other lender. Typically, lenders are looking for candidates with a low debt-to-income ratio, consistent employment history and other proof of financial stability. Here are some things you’ll need to make it through the approval process:

Substantial Equity

Most lenders will look for borrowers who have at least 80 percent loan-to-value on their home, meaning that at least 20 percent of the mortgage has been paid off or the home value has increased 20 percent since the home was purchased. The credit limit will be based on the amount of equity in the property. Homeowners might be able to borrow up to the 85 percent of the home’s value.

Read: 4 Creative Uses for a Home Equity Line of Credit

Low Debt-to-Income Ratio

Debt-to-income is the ratio between recurring monthly debt payments and monthly income. If the ratio is appropriately low, lenders are confident in the borrower’s ability to afford the HELOC payments. Expenses that will be factored include mortgage payment, potential HELOC payment, loan interest, property taxes, homeowner’s insurance, and mortgage interest, plus other living expenses and financial obligations like alimony and child support, student and car loan payments, and credit card payments. The overall total of expenses should not be higher than 36% of your pre-tax income.

A Good Credit Score

Your credit score is an indication of your payment history and general credibility as a borrower. The higher your credit score, the more trustworthy you are to lenders. The credit score helps lenders determine how much of a risk they are taking by lending to you, and the lower the risk, the more likely you are to benefit from the lowest interest rates and best terms.

Consistent Employment History

Proving a steady employment history will help assure lenders that you will be able to afford payments on the HELOC. You’ll be asked to provide W-2’s and at least one pay stub. If you’ve been employed less than two years with your current employer, you may be asked to provide additional information.

Restrictions, Requirements and Downsides

It’s not as easy as it looks. Depending on your terms, there may be different restrictions, requirements and downsides in acquiring a HELOC. You’ll likely pay a pretty penny to secure a HELOC, including appraisal costs, an application fee, closing costs and other fees. Other stipulations:

You might not be allowed to rent your property as long as the HELOC is open.
You might have to withdraw within a certain amount of time or meet minimum withdrawal requirements.
While it’s easy and convenient to access the funds, it can also be easy to borrow too much at once, leaving you with a hefty bill to pay all at once.
The lender may freeze, reduce or demand full payment of the loan amount.
Your line of credit may expire with the loan term, which means if you had a large outstanding balance, you may have to pay it.

Not all lenders and loans have the same terms, so be sure to ask questions and compare your options to be sure you’re getting the conditions that work best with your lifestyle and budget.

This article originally appeared on GOBankingRates.com: What Is a Home Equity Line of Credit?

This article by Tess Frame first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.

Saturday, May 30, 2015

4 Housing Costs That Could Go Up

One of the nice things about living in the same place year after year is the consistency: You know the best routes home from work, how to prepare the place for seasonal weather changes, where everything belongs and how much it costs to maintain everything.

At the same time, the comfort of familiarity isn’t immune to change, and there are plenty of things about your housing situation that can change, even if you keep the same address. To avoid the shock of a sudden increase in housing expenses, anticipate these common shifts and re-evaluate your budget on a regular, frequent basis. If you’re planning to buy a home soon, this calculator can help you figure out how much house you can afford to help you budget from there.

1. Rent or Mortgage Payment

Your rent is subject to change as the landlord or property manager sees fit, depending on the terms of your lease and the tenancy laws in your state. Even if the rent has been consistent for a few years, don’t be surprised if it goes up, because it happens often. When you find out the rent will increase, do your research: First, check your lease and local laws to make sure the increase is legal, and if it is, consider negotiating. If you’re a good tenant who always pays on time and requires little attention from the property manager, you may be able to minimize the increase.

Mortgage payments can go up too, if you have an adjustable-rate mortgage. The interest rate will be fixed for a period of time (depending on the type), after which the rate will reset periodically — for example, some types adjust as frequently as every month — and affect your payment.

2. Property Taxes

Homeowners may see their property taxes increase for a variety of reasons, often because of government budget shortfalls where they live. These taxes are based on your property value, so as the assessed value of your home changes, either because of market shifts or improvements you’ve made to your home, your tax liability will also change.

3. Utilities

Depending on what part of the country you live in, you may be all too familiar with fluctuations in utility costs. Climate has a lot to do with it, whether you’re constantly changing your temperature control as the four seasons come and go or if you only get a few months of the year when you’re not blasting the air conditioning in your home in the desert.

On top of meteorologic changes, you have to anticipate economic ones. For example, the price of heating oil soared in late 2013 and early 2014, significantly increasing the heating bills of homeowners in the Northeast, where the largest concentration of oil-heated homes in the U.S. reside.

You also have to think about any special discounts you may have had that are expiring. Oftentimes, when you set up a new Internet package, you get a promotional monthly payment for the first year of service, and when that’s over, you have to pay the “normal” rate.

4. Insurance

Any significant value changes you make to your home or the possessions inside it could affect how much insurance coverage you need and, as a result, your insurance premium. Don’t forget to update your insurance, either, because if you’ve fitted your place out with a bunch of fancy new gadgets that weren’t included in your initial insurance estimate, you may not have what you need to replace them if something happens.

Re-evaluating even the most consistent expenses in your budget is an important exercise in maintaining overall financial stability. When you’re not prepared for your living expenses to increase, you strain your resources and may possibly go into debt to make everything work. Racking up debt and damaging your credit score will just make the frustration of surprise expenses worse, so prioritize preparedness. You can see how your debts are affecting your credit by checking your credit scores periodically — which you can do for free on Credit.com.

Related Articles

This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.

How to Make the Most of a Job Loss

Whether you want to call it being let go, terminated, canned, sacked or flat out fired, losing your job rarely feels good. But instead of getting lost in emotions of frustration and depression, it’s a good idea to try to take control and spin this into a positive situation. It’s important to give yourself time to accept your situation as you prepare to move on.

1. Talk It Out

Allow others to help. Seek a friend, business associate, family member or even career coach to be your point person as you move from one phase to the next. They can be a mentor or just a sounding board, but should help you stay motivated.

2. Develop a Search Plan

It’s probably not a good idea to wait around for the next job offer to magically appear. Instead, be proactive, develop a plan and start searching. You may want to increase your networking online and in person while searching for jobs. It’s important to have realistic expectations about what the next job might be and what type of position will make you happy. This can be the chance to find a boss or company that better fits your needs and professional style.

3. Get Yourself Prepared

Beyond getting in touch with old employers or co-workers to help you on the search, it’s a good idea to get your paperwork prepared. Update your resume and portfolio, making yourself a more attractive potential employee. Write personalized cover letters and follow up with thank-you notes after interviews. It’s a good idea to also check in on your finances, check up on your insurance, think about adjusting your retirement payments and apply for government benefits if you qualify. You can create a budget for the time you are unemployed where you are really prioritizing your spending carefully.

Some employers do credit checks as part of the application process (they’ll always notify you before the do so), so take a look at your free annual credit reports to see if there are any negative marks you may need to be prepared to explain. You can also get a free credit report summary every month at Credit.com.

4. Stay Active

It can be a good idea to create a regular exercise plan during this time of unemployment. This can provide some structure in your day so you can get to those to-do and to-apply lists. Exercise is also a natural depression fighter and can get you out of the house and feeling accomplished. Eating healthy will further encourage a positive attitude and high energy level.

5. Explore Alternative Options

If you aren’t exactly excited about getting back into the work force, there are other options. You can look for part-time or consulting work and give yourself time to try some passion projects or focus on a hobby. This could also be a good opportunity to try something new — from traveling or launching a business to investing in further education or trying out a major career switch.

While an unexpected job loss can be devastating at first, there are ways to turn it around and get a fresh start you may not have even realized you wanted or needed.

Related Articles

This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.