How to Reduce Your Mortgage Closing Costs

We’re hoping to buy a house within the next year, so today’s post over a Wise Bread about mortgage closing costs was perfect timed!  There was some great information, including a few things I had never heard about.  Specifically, I’d never heard of “points/prepaid interest” in relation to mortgages–and according to this post, those are the single largest closing cost!  Check it out for yourself:

8 Ways to Reduce Mortgage Closing Costs

Should Personal Finance Be Taught in High School?

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I was reading this article about personal finance classes in Florida.  In Orange and Seminole counties, economics teachers will be required to include a unit on personal finance combined w/ lessons about supply, demand, and elasticity.  While I don’t think that’s nearly enough time devoted to the subject, it’s at least a start.

When I was in high school, we didn’t have anything of the sort—I remember learning how to balance a checkbook in my middle school math class, but that was the extent of the personal finance lessons.  There were so many things that I had no concept about (hence my steady ascent up Ol’ Student Loan Debt Mountain).

If I could write a curriculum for a personal finance class, here are the topics I’d be sure to include:

  • Budgeting
  • Balancing your checkbook
  • Using credit cards/debit cards/cash
  • Paying your bills (utilities, car, rent/mortgage)
  • Saving for goals (college, car, house, vacations, wedding)
  • Loans (student loans, car loans, home mortgages)
  • Career planning
  • Retirement/investing
  • Income taxes

What about you, readers?  Do you think personal finance should be taught in high school?  What lessons should be included?

Should You Lie to Your Kids About Money?

A recent blog post on Christian Science Monitor.com took a look at a 2012 Time Business article that claimed 77% of parents say that they are not always honest with their kids about money.  The two statistics that stuck out the most for me were:

  • Only half of all parents surveyed are willing to discuss saving and spending with their kids
  • A third avoid talking about the family’s finances at all

I’m only the mom of a dog, not mini-humans, so I can’t claim to have ever had to struggle with deciding what to tell my children and what to keep from them.  That being said, I grew up in a home with a lot of money tension.  It seemed as if we were “over budget” every month, and there was a cycle of spending and saving that was irregular at best.  We were told to “save our money” but never taught to save our money.

Guess what: your children will model what they see, not what you tell them.

I did the exact same thing that my parents did—I see my siblings doing it too.  We get it in our heads that we need to cut back on spending, but then we see a new dress.  Or a book we really want to read.  Or a movie we want to go see.  We start to lie to ourselves about how much we’re really spending.  We lie to ourselves about the vast difference between what we say our priorities are and what they actually are, based on the behaviors that we demonstrate.

I don’t believe that you need to tell your children everything.  It can cause unnecessary worry and if your family is in dire financial straits, it can be a huge burden for a child to shoulder.  Isn’t it important, though, to show your children how to handle that?  Maybe they don’t need to know the exact numbers, but what if you included them in family discussions about budgeting?  You’ll screw up—we all do.  You’ll make a stupid purchase or bounce a check.  So what?  Show your children how you live with the consequences of those mistakes and then show them how to make better choices in the future.

When they are adults, I guarantee your children will carry your lessons about budgeting and prioritizing with them as they face the realities of an uncertain job market and increased cost of living.  What a great gift to give your children.

Wedding Planning on a Budget

Weddings are expensive.  I have been to some really elaborate ones that were beautiful and entertaining…but very expensive.  I have friends who have taken out loans large enough to purchase a luxury car just to make sure their day was perfect, only to regret that decision during the subsequent 5-10 years of payoff.

When the Mister and I got engaged last year, we made three decisions: 1) we didn’t want a cookie-cutter wedding, 2) we didn’t want to go into any more debt, and 3) we wanted to pay for the entire thing ourselves.

We’re getting married at the end of November, and I’m happy to report that we will achieve all three goals!  How did we do it?

 

WE MADE A PLAN:

We had about a year between the engagement and the wedding.  We sat down and estimated all of the expenses (over-estimating for the expenses we were unsure about), and figured out the total amount we would need to pay for the wedding in cash.  We then divided the total by the number of months we had to save, and figured out how much we would have to throw in savings each month.  That number was added into our monthly budget.  Since I’m the budget nerd, I made sure I was sharing the number as it crept towards our goal—we were so excited when we realized we’d actually hit it!

 

WE WERE CREATIVE:

While our combined income is decent, it’s by no means amazing.  We are also still chipping away at our debt, and didn’t want to give up on that goal while saving for the wedding.  That meant that we had to get creative with the wedding—there’s no way we could afford all of the typical expenses.  Here are some of the biggest areas in which we were able to save:

Wedding dress: My mom is making it!  She’s a great seamstress and it’s going to be beautiful.  That being said, I understand not everyone is lucky enough to have a mama who is talented with a needle and thread!  There are so many other options though—find a friend who sews, or a local designer—or go secondhand!  There are a ton of places online to find dresses in perfect shape for a big discount.

Bridesmaid dresses: This isn’t actually something we would have paid for anyways, but I found a local designer who could custom-make dresses for each of the girls (based on a picture that I found) for less than the cost of a David’s Bridal dress.  The dresses look great!

Suits instead of tuxes: Rather than having the guys rent tuxes they’ll never wear again, we just told them to wear charcoal grey suits.  Most of the guys already own them, and those who don’t will be able to use them again in the future.  We didn’t give them a specific suit they needed to buy—as long as it’s dark grey, they can purchase whatever fits within their own budget.

Photographer: I asked around and found a friend of a friend who does amazing wedding photography.  Because I had been referred, she offered us the friends and family discount, which almost cut the cost in half.  We double lucked-out on this one, because the photographer has a friend who is a…

Deejay: Nicest guy ever, deejays weddings as a side gig.  He has all of the equipment and is charging us a fraction of the cost of other wedding deejays.

Location: We found a place where we know the food and drinks are great, and there is no site rental fee.  We also chose not to go the typical beef/chicken/fish route for food—instead we selected a buffet option with food that people actually want to eat (chicken wings, anyone?  We do live in Buffalo, so that was a must).

Save-the-Dates/Invitations: There are some really awesome websites for these.  I used WeddingPaperDivas.com for the Save-the-Dates and Minted.com for the invitations.  Both turned out perfectly and I was able to find coupon codes that knocked a big chunk of the cost off each.

Cake: Instead of a big, dry wedding cake (or a crazy expensive delicious one), we’re doing a small cake just for us, and tiered display of donuts for the guests.  Jackpot.

Florist: I asked around about this too, and was directed to a local guy who doesn’t even have a storefront.  Apparently he does floral arrangements for some of the local elite and gets all of his business from referrals.  His work is gorgeous and very reasonably priced—I never would have found him without asking.

There are a number of other small ways in which we’ve saved money—coupons and sales for centerpiece stuff, creating the programs ourselves, foregoing favors and instead giving a donation to a local charity (with a small note to each guest).

——————–

I am SO glad we figured out the costs ahead of time—having a concrete goal in place made it easy for us to stay within the budget.  We knew exactly how much we could spend, so that forced us to be creative where we could.  The best part?  Our wedding will be very “us” and we can enjoy it, knowing that when we wake up on our first morning as husband and wife, we won’t have another $30,000 in debt staring us in the face!

Walden on Wheels

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I learned about this book the other day while listening to the radio.  I haven’t finished it yet, but have found it to be so relevant to my struggles with student loan debt that I wanted to help spread the word!

Here’s a brief synopsis:

Ken Ilgunas graduated from the University at Buffalo with $32,000 in student loan debt.  To get out from under that mountain, he worked a series of odd jobs in Alaska (including night cook and tour guide in a town with a population smaller than a typical college class). Determined not to go further into debt when he entered graduate school at Duke University, he secretly lived out of a van- on campus- while working on his graduate degree.

Although I haven’t finished it yet, I highly recommend this book to anyone who is struggling with debt.  Not only does Ilgunas discuss his own (albeit extreme) how-to strategy for paying off debt, I like that he went deeper.  I’m finding that he’s putting words to some of the emotions that I’ve felt about student loan debt–about how ridiculous it is that a bank would let an 18-year-old sign off on a double-digit loan, or how we all go into college believing that we’ll graduate and immediately make enough money to quickly pay off those loans.  He’s brutally honest about how paying off debt is an exercise in complete frustration at times, but a complete victory at others.  He’s also pretty funny and self-deprecating, which just makes the book fun to read.

A Little Student Loan Payoff Inspiration

I’ve been having trouble lately keeping my eye on the debt-reduction ball.  I haven’t made any huge spending mistakes, but the debt feels overwhelming sometimes.

When I start getting down about being in debt, I try to find stories from people who have conquered or are in the midst of conquering their own.  I found this one tonight, and regardless of what your financial burden is, I hope you find it as helpful as I did:

My Student Loan Story: How I Paid It Off In a Year

Tell Your Tax Return Where to Go

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It’s everybody’s favorite time of year–tax time!  Oh, how I dislike doing my taxes.  I do love the return, though.  I was thinking about my return over the weekend, and all of the things I could do with it, namely–purchasing some new clothes for work, since a lot of mine are starting to look worn.

The problem with waiting a few months to do my taxes is that it inevitably leads to ideas of grandeur about what I can do with my return. In reality, the return is much smaller than I want it to be, and it doesn’t stretch nearly as far as I’d like it to.

I thought I’d offer a few suggestions for how to handle your tax return.  These are pointers than help me spend it wisely, as opposed to blowing the whole thing and having nothing to show for it. 

#1: Don’t spend it before you get it

I almost fell into this trap.  While walking around the mall with my fiance over the weekend, I saw shoes, belts, bags, and clothes and thought, “Oh…that sure would make me look like a professional lady.  Maybe I’ll just purchase it now and deduct the amount from my return.”  Dangerous road, professional lady…dangerous road.  Instead, always, always, wait until the money is in your account.  Don’t put yourself in the hole before you even get the money.

 

#2: Make a plan

This isn’t rocket science, nor is it very time consuming.  When you don’t make a spending plan, though, you risk spending your money on things that aren’t very important, and that aren’t aligned with your financial goals.  Tell your return where to go.  Figure out what debts or needs could use it the most, and if you don’t have debts or needs, put it in savings.

If you are one of the lucky few with no debts, no needs, and a lot of savings, then enjoy making yourself look like a professional lady (or man), or do whatever you want with it.  I have a sneaking suspicion that most of you aren’t in that position though, so make that plan.

For instance, I know that as soon as my return is in hand, I need to purchase tires for my car, purchase a wedding gift for my sister, and the balance will go to my student loans.  Goodbye, new wardrobe!

 

#3: Don’t forget where it came from

This is your hard-earned money, not a nice gift that the government is sending you.  Your tax return is money that you have loaned to the government (and they don’t even pay you interest on it!)  Don’t treat the money as a gift; treat it as a paycheck, and spend and save accordingly.

 

Haven’t done your taxes yet?

If you are an individual or family with a combined 2012 income under $57,000, you may be able to file both your state and federal returns for free, using this: http://myfreetaxes.com/ (Disclaimer: I am not qualified to give tax advice, nor am I affiliated with myfreetaxes.com.  This site was recommended to me by my cousin, and I found it to be a very easy and free way to do my taxes.)