How to Pay Off Credit Card Debt Faster

I've received several questions from Money Girl podcast listeners about paying off credit card debt. It's a fundamental goal because carrying card balances come with high interest, a waste of your financial resources. Instead of paying money to card companies, it's time to use it to build wealth for yourself.

7 Strategies to Pay Off Credit Card Debt Faster

1. Stop making new card charges

If you're carrying card balances from month-to-month, it's essential to understand what it costs you. As interest accrues, it can double or triple the original cost of a charged item, depending on how long it takes you to pay off.

The first step to improving any area of your life is to acknowledge your mistakes, and financing a lifestyle you can't afford using a credit card is a biggie. So, stop making new charges until you take control of your cards and can pay them off in full each month.

As interest accrues, it can double or triple the original cost of a charged item, depending on how long it takes you to pay off.

Yes, reining in your card spending will probably require sacrifices. Consider ways to earn extra income, such as starting a side gig, finding a better-paying job, or selling your unused stuff. Also, look for ways to cut costs by downsizing your home, vehicle, memberships, or unnecessary expenses.

2. Consider your big financial picture

Before you decide to pay off credit card debt aggressively, look at the "big picture" of your financial life. Consider any other debts or obligations you should prioritize, such as a tax delinquency, legal judgment, or unpaid child support. The next debts to pay off are those already in default or turned over to a collection agency.

In many cases, not having a cash reserve is why people get into credit card debt in the first place.

Assuming you don't have any debts in default, focus your attention on your emergency fund … or lack of one! I recommend maintaining a minimum of six months' worth of your living expenses on hand. In many cases, not having a cash reserve is why people get into credit card debt in the first place.

3. Make more than the minimum payment

Many people who can pay more than their monthly minimum card payment don't do it. The problem is that minimums go mostly toward interest and don't reduce your balance significantly.

For example, let's assume your card charges 15% APR, you have a $5,000 balance, and you never make another purchase on the card. If your minimum payment is 4% of your card balance, it will take you 10½ years to pay off. And here's the worst part—you'd have paid almost $2,400 in interest!

4. Target debts with the highest interest rates first

Make a list of all your debts, including credit cards, lines of credit, and loans. Include your balances owed and interest rates charged. Then rank your liabilities in order of highest to lowest interest rate.

Getting rid of the highest interest debts first saves you the most.

Remember that the higher a debt's interest rate, the more it costs you in interest per dollar of debt. So, getting rid of the highest interest debts first saves you the most. Then you can use the savings to pay more on your next highest interest debt and so on.

If you have several credit cards, evaluate them the same way—tackle them in order of highest to lowest interest rate to get the most bang for your buck. And if a credit card isn't the most expensive debt you have, make it a lower priority.

In general, debts that come with a tax deduction such as mortgages, home equity lines of credit, and student loans, should be paid off last. Not only do those types of debt have relatively low interest rates, but when some or all of the interest is tax-deductible, they cost you even less on an after-tax basis.

5. Use your assets to pay off cards

If you have assets such as savings and non-retirement investments that you could use to pay down high-interest credit cards, it may make sense. Just remember that you still need a healthy cash reserve, such as six months' worth of living expenses.

If you don't have any or enough emergency money saved, don't dip into your savings to pay off credit card debt. Also, consider what you could sell—such as unused sporting goods, jewelry, or a vehicle—to raise cash and increase your financial cushion.

6. Consider using a balance transfer card

If you can’t pay off credit card debt using existing assets, consider optimizing it by moving it from higher- to lower-interest options. That won’t make your debt disappear, but it will reduce the amount of interest you pay.

Balance transfers won’t make your debt disappear, but they will reduce the amount of interest you pay.

Using a balance transfer credit card is a common way to optimize debt temporarily. You receive a promotional offer during a set period if you move debt to the account. By transferring higher-interest debt to a lower- or zero-interest card, you save money and use it to pay down the balance faster.

7. Consolidate your high-rate balances

I received a question from Sarah F., who says, “I love your podcast and turn to it for a lot of my financial questions. I have credit card debt and am wondering if it’s a good idea to get a personal loan to pay it down, or is that a scam?”

And Rachel K. says, "I love listening to your podcasts and am focused on becoming more financially fit this year. I have a couple of credit cards with high interest rates. Would it be wise for me to consolidate them to a lower interest rate? If so, will it hurt my credit?" 

Depending on the terms you’re offered, using a personal loan can be an excellent way to reduce interest and get out of debt faster.

Thanks to Sarah and Rachel for your questions. Consolidating credit card debt using a personal loan is not a scam but a legitimate way to shift debt to a lower interest rate.

Having an additional loan added to your credit history helps you build credit if you make payments on time. It also works in your favor by reducing your credit utilization ratio when you reduce your credit card debt.

If you qualify for a low-rate personal loan, here are some benefits you get from debt consolidation:

  • Cutting your interest expense
  • Getting a fixed rate and term (such as 6% APR for 60 months with monthly payments of $600)
  • Having one monthly debt payment
  • Building credit

A couple of downsides of using a personal loan to consolidate debt include:

  • Being tempted to continue making credit card charges
  • Having potentially higher monthly loan payments (compared to minimum credit card payments)

While it may seem counterintuitive to use new debt to get out of old debt, it all comes down to the interest rate. Depending on the terms you’re offered, using a personal loan can be an excellent way to reduce interest and get out of debt faster.

What should you do after paying off a credit card?

Credit cards come with many benefits, such as purchase protection, convenience, and rewards. Don't forget that they're also powerful tools for building credit when used responsibly. If maintaining good credit is one of your goals, I recommend that you keep a paid-off card open instead of canceling it.

You don't need to carry a balance from month to month or pay interest on a credit card to build excellent credit.

To maintain or improve your credit, you must have credit accounts open in your name, and you must use them regularly. Making small purchases charges from time to time that you pay off in full and on time is enough to add positive data to your credit reports. You don't need to carry a balance from month to month or pay interest on a credit card to build excellent credit.

To learn more about building credit and getting out of debt, check out Laura’s best-selling online classes:

  • Build Better Credit—The Ultimate Credit Score Repair Guide
  • Get Out of Debt Fast—A Proven Plan to Stay Debt-Free Forever

Source: quickanddirtytips.com

Trophy Apartment Once Owned by Composer Leonard Bernstein Asks $29.5 Million

An Upper East Side apartment that was once home to one of the most significant American cultural personalities of the 20th century has recently hit the market.

The Art Deco masterpiece at 895 Park Avenue was previously owned by famed composer and cultural icon Leonard Bernstein, whom music critics refer to as “one of the most prodigiously talented and successful musicians in American history”. In fact, this very property is where Bernstein — also a lifelong humanitarian, civil rights advocate, and peace activist — hosted an infamous “radical chic” party with and in support of the Black Panther Party back in 1970.

But its famous past owner is not the building’s only historical trait; built in 1929, it is designed in the classic Art Deco style, evoking New York City’s golden age glamour and sophistication. That, paired with its carefully preserved original architectural details (original wood-burning fireplaces and wide-plank wood floors) and panoramic Manhattan views make this residence a true gem.

perfect manhattan views from luxury apartment
Image credit: Warburg Realty

Clocking in at approximately 6,300 square feet, with an extra 700 square feet of private outdoor space, the 895 Park Avenue unit spans over two floors of the 21-story Upper East Side building. The entrance is through a private elevator landing which opens into a 34-foot grand gallery, further leading into the residence’s elegant formal living room, library, and dining room.

With 6 bedrooms and 6.5 bathrooms, the trophy apartment also comes with an enclosed solarium that’s bathed in sunlight and that, just like the rest of the rooms and outdoor spaces, opens up to picture-perfect views of the city.

beautiful solarium in Manhattan apartment
Image credit: Warburg Realty
Image credit: Warburg Realty
Image credit: Warburg Realty

A grand staircase leads to the lower level, which houses the 6 bedrooms, as well as a home office and laundry room. All but one of the bedrooms enjoys their own en-suite bathroom as well as significant storage space in the form of walk-in closets or dressing rooms.

Image credit: Warburg Realty

The building itself adds an extra note of sophistication and convenience; the full-service white glove co-op has a long list of amenities, including multiple doormen, an elevator attendant, health club, squash court, basketball court, and private storage units. Though location itself may be its biggest asset: 895 Park Avenue is located right in the heart of the Upper East Side, on the southeast corner of 79th street and Park Avenue, providing direct access to world-class dining and shopping.

Priced at $29.5 million, the elegant unit is listed with Bonnie Chajet, Allison Chiaramonte, and Tania Isacoff Friedland of Warburg Realty.

More luxury apartments

This $16M NYC Penthouse Has Unobstructed Views of Central Park and the Manhattan Skyline
Power Couple Loren & JR Ridinger Selling Palatial Unit in Jean Nouvel-Designed Building
These 5 Unique Listings Will Remind You of Everything that Makes NYC Real Estate Special
Former Home and Office of Marilyn Monroe’s Psychiatrist Listed for Sale in Manhattan

The post Trophy Apartment Once Owned by Composer Leonard Bernstein Asks $29.5 Million appeared first on Fancy Pants Homes.

Source: fancypantshomes.com

10 Things to Know About Living in Philadelphia

Wedged between New York and D.C., Philadelphia has long been one of America’s most overlooked and underrated cities. The Birthplace of America, Philly is the nation’s sixth-largest city and one of its top cultural, culinary, employment, sports, music and education destinations. It’s a fresh, cosmopolitan city, and living in Philadelphia means you have nearly anything you could imagine to do, eat, visit, see and cheer for.

Philadelphia is a unique and diverse city, much more than the Liberty Bell, cheesesteaks and Rocky. It’s an inviting, connected community compromised of nearly 100 distinct neighborhoods from the gleaming skyscrapers of Center City to the rowhouses of South Philly to the rolling estates of Chestnut Hill. Whether you’re packing up for your move to Philly or just considering a relocation to the City of Brotherly Love and Sisterly Affection, there are many wonderful things you need to know about living in Philadelphia.

1. Philly has a great climate if you like having four seasons

No matter which season you enjoy frolicking in, Philly is the perfect climate to experience all four seasons. Philadelphia is a temperate Mid-Atlantic city with the best of all worlds, just 50 miles from the Jersey shore and 70 from the Pocono Mountains.

Summers in Philly can be hot and muggy at the peak of the season, with average highs just under 90 during July. Winters are cold but not bitterly, with daily temps during the holiday season straddling the freezing line. Rain can be expected a quarter-to-third of the days each month, with about 20 inches of snow each winter.

septa train philadelphia

2. Commuting is relatively easy by car or public transit

Philly commuting is convenient compared to most of its Northeast Corridor counterparts. The average one-way work travel time is just more than half an hour, with more than 20 percent using public transportation.

For automotive commuters, Philly’s transportation network couldn’t be simpler. Interstate 95 lines the eastern edge of the city, the I-76 Schuylkill Expressway divides West Philly from the rest of Philly and I-676 (Vine Street Expressway) and US Route 1 (Roosevelt Boulevard/Expressway) run east/west through the city. Broad Street, America’s longest straight boulevard, forms Philly’s north/south backbone.

SEPTA operates a convenient public transit system, which includes a number of commuting modes. This includes the Broad Street Line subway and Market-Frankford elevated train, which travels north/south and east/west, respectively, 131 bus lines and eight light rail and trolley routes.

3. You have to learn how to talk Philly to live here

Every city in America has its own dialect quirks, but Philly has a language all its own every newcomer must eventually absorb. From your first “yo,” you’ll quickly learn every jawn (which can literally mean any person, place or thing).

“Jeet?” is what you’ll be asked if someone wants to know if you’ve eaten yet. They may want to share a hoagie (don’t ever say “sub”), grab pasta with gravy (tomato sauce) or a cheesesteak “whiz wit” (covered in melted cheese and fried onions). Wash it down with some wooder (what comes out of the sink) or a lager (ask for that and you’ll get a Yuengling beer).

Where are you going to go? Maybe “down the shore” to the Jersey beaches, out to Delco (Delaware County) or to Center City (never call it “downtown”) on the El (the elevated train). That’s where yiz (plural “you”) are headed.

And everyone loves talking about the “Iggles” (or “the Birds,”) the championship football team.

4. Philly is the City of Museums

More than any city in America, history lies down every street, many of which the Founding Fathers once walked. Independence National Historical Park, the most historic square mile in the nation, includes important sites like Independence Hall, Liberty Bell, City Tavern, Christ Church, Franklin Court and more.

Nearby in Old City are the National Constitution Center, Museum of the American Revolution, Betsy Ross House, the first U.S. Mint, Elfreth’s Alley and National Museum of American Jewish History.

But Philly offers so much more, including world-class museums dedicated to art, culture, science and education. In the Parkway Museum District, must-visit attractions include the Philadelphia Museum of Art (and the Rocky steps), Franklin Institute Science Museum, Barnes Foundation and Rodin Museum.

Elsewhere around the city are amazing spots, including the Mummers Museum, Academy of Natural Sciences, Magic Gardens urban mosaic, Mütter Museum of medical oddities, Eastern State Penitentiary and even the Museum of Pizza Culture.

Philly cheesesteak

Photo courtesy of Michael Hochman

5. Philly cuisine is much more than cheesesteaks

Sure, everyone loves cheesesteaks and every Philadelphian has their favorite steak joint. But Philly also claims a slew of other iconic dishes.

Hoagies are a party staple, but many swear by the roast pork sandwich, with provolone and sautéed broccoli rabe, as the city’s signature sandwich. Philadelphians eat 12 times as many pretzels as the average American and you’ll find soft pretzels in the Philly figure-eight style on every corner.

Breakfasts wouldn’t be Philly without scrapple or pork roll, two pan-fried pork-based dishes. And dinner can include tomato pie (cheeseless rectangle pizza on focaccia served at room temperature), Old Bay-flavored crinkle-cut crab fries or snapper soup, which is exactly what you think it is.

For dessert, grab a “wooder ice” (kind of like Italian ice but not) or a Tastykake (more of a lifestyle than a snack food line).

And Philadelphia isn’t just for casual eats — some of America’s greatest restaurants live here. Israeli spot Zahav was named Best Restaurant in the country, and Pizzeria Beddia the Best Pizza in America. Other award-winning spots abound, including South Philly Barbacoa, vegetarian destination Vedge and 20 restaurants citywide from decorated chef Stephen Starr.

But all cross-sections of Philadelphians can agree on one thing — everyone loves Wawa, more of a culture than a convenience store, with more than 40 locations throughout the city.

6. Philly is the best music city on the East Coast

There would be no American music without Philadelphia. The city is home to one of the nation’s greatest music histories as the birthplace of Philadelphia soul, American Bandstand, Gamble & Huff and “Rock Around The Clock.” Artists hailing from Philly span the spectrum from Hall & Oates, Chubby Checker, Patty LaBelle, Boyz II Men and Will Smith to The Roots, Meek Mill, Diplo, Dr. Dog, War On Drugs, Kurt Vile, Dead Milkmen and Joan Jett.

Philly is also one of the best cities in America to see and hear live music, with a slew of iconic music venues of every size. Music pours nightly out of legendary clubs, such as Milkboy, Johnny Brenda’s, Boot & Saddle and Kung Fu Necktie, concert halls like The Fillmore, Union Transfer, Theater of Living Arts and Tower Theater and outdoor amphitheaters with stunning vistas BB&T Pavilion and Mann Center.

7. Philly is one of America’s great college towns

Philadelphia is one giant college town. There are more than 340,000 college students living in Philly spread across nearly two dozen four-year campuses. Thanks to college sports, Philly’s top five major universities (that make up the Big Five) are nationally known and include Temple, St. Joseph’s, La Salle, the University of Pennsylvania and Villanova (which actually sits outside the city).

University City in West Philly is home to Penn, as well as Drexel and the University of the Sciences. And scattered elsewhere around the city are historically-black Lincoln University, Chestnut Hill College, Thomas Jefferson University (on two campuses), Pierce College and Holy Family.

There are also a number of creative and performing arts schools in Philadelphia, including the University of the Arts, Art Institute of Philadelphia, Pennsylvania Academy of the Fine Arts and Curtis Institute of Music.

Phillies

Photo courtesy of Michael Hochman

8. Sports are life in Philly even if we like to boo

You may have heard. In Philadelphia, we love sports. Unlike cities like New York or L.A., Philly has just one team in each of the major sports, so every fan is on the same page. Except for college basketball where the city is divided among a half-dozen Division I programs.

Philadelphians bleed team colors and everyone from every walk of life pays attention. Often, the city’s collective mood is based on yesterday’s result. So, if you want to walk into nearly any conversation in Philly, be sure to know the Birds’ playoff chances or who your favorite Flyer is. But Philly fans don’t take lack of hustle or effort lightly, and a subpar performance will bring out the notorious boo-birds.

9. The cost of living in Philly is pretty good

As the sixth-largest city in the nation and keystone of the Northeast Corridor, you’d expect Philly to be expensive. Actually, it’s pretty average. The overall cost of living in Philadelphia (as of Q1 2020) is just 110 percent of the national composite. Compare that to its neighbors like New York (246 percent), D.C. (160 percent) and Boston (148 percent). In fact, Philadelphia’s cost of living is cheaper than many major cities like Denver, New Orleans, Miami, San Diego and Baltimore.

The same goes for housing, as well. Philadelphia is only 13 percent over the national index average for housing costs, much more affordable than other East Coast cities and metropolises around the country like Phoenix, Dallas and Portland. For renters, an average Philly one-bedroom leases for just $2,127 a month (compared to the national average of $1,621), just a pleasantly-surprising 17th most-expensive in the nation, cheaper than Sacramento, Boston, Seattle or Oakland.

10. Philadelphia is one of the great American cities

Philadelphia is a beautiful, friendly, progressive city for anyone moving here or just thinking about it. It’s a hub for technology and finance and home to a dozen Fortune 500 corporations.

It’s a retail center with high-end city malls, vintage and boutique shopping corridors and Jewelers’ Row, the oldest diamond district in the nation. It’s a haven for those seeking outdoor adventure, including massive Wissahickon Valley and Fairmount Parks. And a destination for family fun at spots like the Please Touch Museum and America’s oldest zoo. It’s even one of America’s most walkable cities.

Living in Philadelphia

Philly is a great place for lovers of music, beer, history, shopping, sports, theater, coffee, biking, art, dining and more. Whatever your passion, you’ll find it living in Philadelphia.

And with a head start on what’s listed here, you’ll be welcomed with open arms and find out quickly why we’re known as The City that Loves You Back.

Rent prices are based on a rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory of one-bedroom apartments. Data was pulled in October 2020 and goes back for one year. We use a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
Population and income numbers are from the U.S. Census Bureau. Cost of living data comes from the Council for Community and Economic Research.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.
Header image courtesy of Michael Hochman.

The post 10 Things to Know About Living in Philadelphia appeared first on Apartment Living Tips – Apartment Tips from ApartmentGuide.com.

Source: apartmentguide.com

What to Expect in Apartment Living in 2020

As the Bob Dylan song goes, the times, they are a-changin’, and that couldn’t be truer than for apartment living.

Renting used to be a lower rung on the ladder as you climb toward the American dream — owning a single-family home in the suburbs. But as homes increase in cost and competition, renting is on the rise.

According to Harvard’s Joint Center on Housing Studies 2017 rental-market report, the number of high-income households (earning at least $100,000) renting their homes rose by 6 percent from 2005 to 2016. As a result of this increase, apartment complexes have added more amenities to appeal to the influx of renters. The same study found that in 2016, 89 percent of new apartments offered in-unit laundry and 86 percent provided swimming pool access.

This is only the tip of the iceberg. Today’s apartment complexes are not what they used to be, and apartment living is significantly nicer and more desirable than it was just 10 years ago. Here’s what you can expect for modern apartment living in 2020.

1. High-end amenities

indoor pool

Forget the bare-bones coin-operated laundry room and trash dumpster in the back parking lot or basement. According to NMCH’s 2018 Consumer Housing Insights Survey, 83 percent of adult and millennial renters said it was important to have an apartment that offered convenience and flexibility. Additionally, fast internet access, technology, and green initiatives are now considered must-haves for modern apartments.

To keep up with the competitive rental market, apartment complexes are upping the ante when it comes to amenities. In-unit laundry and pool access are quickly becoming par for the course, while many luxury complexes offer trash collection and recycling programs, high-speed internet, fitness centers, eco-friendly rooftop gardens and communal spaces, such as BBQs and theater rooms. These amenities make it easier to enjoy life at home and to entertain friends and family, just as one would if they owned a single-family home.

2. Online communication with apartment management

Speaking of convenience, flexibility and technology, many modern apartment complexes simplify the tasks that were previously pain points of renting — namely, rent payments, maintenance requests and apartment management communication. A number of complexes are capitalizing on technology to streamline these tasks.

For example, rather than having to mail a check each month, platforms like RentPay allow renters to automate their rent payments and pay via credit card or electronic check. Even if a landlord doesn’t accept electronic payments, RentPay prints a physical check and mails it directly to the landlord each month.

Additionally, it’s becoming more common for larger apartment complexes to offer an online portal or website for easier communication with apartment management, from submitting maintenance requests and asking questions to renew leases and sign contracts. This saves renters significant time and money.

3. More emphasis on safety and security

keypad

In the past, one of the downsides of renting was security. With people constantly going in and out of the building or complex, it seemed as if anyone could walk in. With so many technology advances this past decade, in terms of access and price, it’s easier for complexes and renters to invest in security.

Many of today’s complexes offer gated access to the parking lot, codes for elevator access and security key fobs to all points of entrance. Some even offer enhanced security within the individual units, like video doorbells and camera security systems.

If your building doesn’t offer in-unit security features, there are multiple home security options available that are non-intrusive, as far as security deposits and installation are concerned. Simply plug in the device and monitor your apartment from your smartphone. Many systems are easy to pair with indoor security cameras and other alarms for additional safety.

4. Smaller space

While apartments are getting smaller in square footage due to space constraints and population growth, architects are getting smarter with layout designs to maximize every inch of a room. For instance, micro homes, the tiny house equivalent in apartment form, are as small as 350 square feet but make use of movable and folding furniture so it can serve as an entertaining space by day and bedroom by night.

Open floor plans are still popular and, while they can at first seem daunting to decorate, they offer the most options for room layouts. And thanks to more furniture companies starting to specialize in small home living, it’s much easier to find compact couches and dual-purpose furnishings that go beyond the futon.

Popular home stores like Pottery Barn, CB2 and IKEA offer couches, tables and other items designed specifically for small spaces. While it’s becoming harder to find spacious apartments, complexes are making up for it with communal spaces for entertaining.

Apartment living has changed for the better

If you’re looking for a place to call home, apartment living may be the perfect solution. The evolution of apartments in the past decade means they’re a favorable housing option for a variety of lifestyles — in both urban and suburban settings.

Lush amenities, online communication, security measures and optimized floorplans have helped renting become a more comparable alternative to buying. You can enjoy the in-unit laundry, entertainment amenities and peace of mind without worrying about the costs or inconvenience of maintenance tasks.

The post What to Expect in Apartment Living in 2020 appeared first on Apartment Living Tips – Apartment Tips from ApartmentGuide.com.

20-Year vs. 30-Year Mortgages: Get a Lower Rate?

20-Year vs. 30-Year Mortgages: Get a Lower Rate?

It’s time for a new mortgage match-up.

Since paying down the mortgage early seems to be so en vogue these days, it makes sense to compare “20-year mortgages vs. 30-year mortgages.”

The most common type of mortgage is the 30-year fixed. It amortizes over 30-years and the mortgage rate never changes during that time.

Each mortgage payment is the same every month, so there isn’t any fear of interest rates resetting higher and pushing a homeowner toward foreclosure.

It’s also very affordable relative to other loan programs because of the ultra-long amortization period. Pretty straightforward, right?

For this reason, it holds a near-90% share of the home purchase market, and accounts for over three-quarters of all home loans, including refinances. It is the gold standard.

This simplicity and safety explains its popularity, but that doesn’t mean it’s the perfect home loan.

After all, they take a full three decades to pay off, and with first-time home buyers sometimes entering the market between the ages of 30 and 40, one could easily carry their mortgage into retirement.

Fortunately, there are other options with different loan terms to consider.

How a 20-Year Fixed Mortgage Works

20-year fixed mortgage

  • Just like the more common and popular 30-year fixed mortgage
  • The interest rate never changes during the entire loan term
  • But the 20-year mortgage term is a full decade shorter
  • This results in less interest paid in exchange for a higher monthly payment

The 20-year fixed mortgage is a pretty simple loan program, just like it’s much more popular cousin the 30-year fixed.

They’re actually no different other than the fact that the mortgage term is 10 years less.

Both come with an interest rate that never changes during the loan term, making it a safe choice for someone fearful of a rate adjustment on an ARM.

The borrower who opts for a 20-year fixed also gets to pay off their home loan a decade earlier.

Aside from owning your home much faster, you’ll also save on interest over the shorter repayment period.

Another benefit is that the interest rate is sometimes a bit cheaper as well, which results in a one-two punch.

20-Year Mortgage Loans Can Save You a Lot of Money

20-year fixed

  • It’s not very economical to pay back your mortgage over 30 years
  • Some will even argue that 20 years is too long as well
  • You pay a ton of interest over such an extended period of time
  • But not everyone can afford the higher monthly payment tied to shorter-term mortgages

When it comes down it, 30-year mortgages have some serious drawbacks, with the most obvious one being the long amortization period.

They also come with the highest interest rates relative to other loan programs. Yes, you pay a premium for the convenience of a fixed interest rate over three decades.

And since the mortgage takes so very long to be paid off, a lot more interest is paid and it takes forever to build home equity.

Think of it this way. If you borrowed money from a friend and asked to pay it back over 30 years, they would probably say no. Only mortgage lenders seem willing to do this.

If by chance they agreed, they’d want to charge you a higher rate of interest. And because you’d be paying it back so slowly, you’d pay a lot more interest over that time.

Assuming your loan amount is large, perhaps a jumbo mortgage, it could be the difference of many thousands of dollars versus a mortgage with a shorter term.

Consider a Shorter-Term Mortgage Like the 20-Year Fixed

  • A 20-year fixed greatly reduces the amount of interest due
  • And results in a home that is free and clear 10 years earlier
  • The monthly payment may not even be much more expensive
  • Perhaps just 1.2 to 1.3X that of a 30-year fixed depending on rate

So what are homeowners to do? Well, the most common solution to this ”problem” is to look at a shorter-term home mortgage instead, such as a 20-year loan.

While the 15-year fixed is the most common alternative, it comes with its own drawback, namely a much higher monthly mortgage payment that most home buyers can’t afford, especially first-timers.

In other words, not every homeowner can just say, “I want to pay my mortgage off faster” and switch to a 15-year fixed or 10-year fixed mortgage.

It gets very expensive. Nor can most first-time home buyers qualify at the higher payment.

Fortunately, there are mortgage product options in between, with the most common being the 20-year fixed mortgage.

A 20-year mortgage sheds 10 years off the typical loan term, and results in much less interest paid throughout its duration. The mortgage payments are also relatively manageable.

Tip: There are 20-year FHA mortgages and VA loans available if you don’t have a lot of down payment money but still want to pay your mortgage down fast.

Let’s look at an example of the 20-year fixed to illustrate the savings:

$200,000 Loan Amount 30-Year Fixed 20-Year Fixed
Mortgage Rate 4% 3.75%
Monthly P&I Payment $954.83 $1,185.78
Payment Difference $230.95
Total Interest Due $143,738.80 $84,587.20
Interest Difference $59,151.60

20-Year Mortgage Rates Are Cheaper

  • You should receive a lower mortgage rate if you opt for a 20-year fixed mortgage
  • How much lower will vary by bank/lender and how much you shop around
  • Expect a discount somewhere around .125 to .25% vs. the 30-year fixed
  • But be sure to put in the time comparison shopping

As you can see from the example above, 20-year fixed mortgage rates aren’t much different than 30-year fixed mortgage rates, though the 20-year mortgage does tend to price a little bit lower than the 30-year fixed.

That lower interest rate can save you even more over the shorter term of the 20-year loan.

Overall, I’d say that 20-year mortgage rates price about a .25% below a comparable 30-year fixed. So 3.75% instead of 4%, or 3.5% instead of 3.75%. You get the idea.

It does depend on the bank or credit union in question. Some may price the loan products fairly similarly, with the only difference reduced closing costs (or fewer discount points).

They’re definitely going to be higher than rates on a 15-year fixed, but you should save some money versus the 30-year fixed.

Of course, you have to consider your property type, credit score, down payment/home equity, other various borrower attributes, and whether we’re talking about conforming mortgages or jumbo mortgages.

Anyway, in our example above the homeowner with the 30-year mortgage pays about $230 less each month, despite the higher mortgage rate. Yes, their monthly mortgage payment would be significantly lower.

But the 20-year fixed results in interest savings of nearly $60,000 over the life of the loan! This borrower would also own their home free and clear an entire decade earlier.

Doesn’t 20 years sound a lot more reasonable than 30? You can actually see the light at the end of the tunnel and pay off the mortgage before your hair turns gray.

This shorter term can be pretty beneficial, especially if you plan to retire soon and anticipate being on a fixed income.

Or if you want to build equity and buy a move-up property in the near future, using the proceeds for the down payment.

The 20-year fixed is also a good alternative because you won’t break the bank making your mortgage payment each month.

It’s a nice middle ground between 30 years and 15 years, and highlights the importance of comparing mortgages across the whole spectrum.

But again, the monthly payment will be higher than the 30-year payment, which could stretch you thin or limit what you can afford if you’re buying an expensive home.

Tip: When obtaining a mortgage pre-qualification, ask your loan officer if you make enough to support 20-year fixed payments. Or simply do the math yourself with the help of a mortgage calculator.

Go With a 20-Year Fixed Mortgage to Stay on Course

  • If you have a 30-year mortgage and want to refinance to a lower rate
  • Consider switching to the 20-year fixed instead of getting another 30-year term
  • This way you won’t restart the (amortization) clock on your mortgage
  • You can save even more interest and pay off your home loan a lot faster

If you’re currently in a 30-year fixed, and don’t want to reset the mortgage clock during a mortgage refinance, consider a move to a 20-year fixed to stay on course without even paying more each month.

For example, if you’ve already been paying down your mortgage for five years, you won’t necessarily want to take on a fresh 30-year mortgage if your goal is to pay off your loan.

Because mortgage rates are so low at the moment, you may be able to refinance from a 30-year to a 20-year fixed mortgage and still lower your monthly payment.

Also keep in mind that there are other loan types outside the 15, 20, and 30-year options.

Some banks even allow you to choose your own mortgage term, whether it’s a 17-year fixed or a 24-year fixed.

So be sure to look at all available home loan options to determine which makes the most sense financially for your unique situation.

Also ask yourself why you want to pay the mortgage off sooner rather than later. There may be a better place for your money.

Read more: 30-year fixed vs. 15-year fixed.

Don't let today's rates get away.

Source: thetruthaboutmortgage.com

25 Things You Should Never Buy — and What to Buy Instead

25 Things You Should Never Buy — and What to Buy Instead
Unhappy shopper
Take A Pix Media / Shutterstock.com

American consumers are swimming in sea of products. Any need, want or whim can be met with a quick trip to the mall or click of a keyboard.

In this retail wonderland, it’s easy to make a few mistakes.

We’ve all fallen victim to aggressive marketing and been lured in by budget-busting convenience products, impulse buys and things that simply don’t make sense. (That reminds me, does anyone want a gently used Shake Weight?)

If you want to save money, it’s time to become a more intentional consumer. Following is a look at some of the things you should never buy — and what to buy instead.

1. Flushable wipes

Yevhen Prozhyrko / Shutterstock.com

Marketed as a step-up from toilet paper, adult wet wipes are another product innovation that we didn’t need.

Besides being far more expensive than traditional toilet paper, these “flushable” wipes are anything but (pun intended). They’re nonbiodegradable and wreak havoc on plumbing and sewer systems, as we report in “9 Things You Should Never Flush Down a Toilet.”

The bottom (ahem) line? Save your money, save your pipes and stick with traditional toilet paper. If you just can’t live without a moistened wipe, consider a toilet tissue spray. Amazon has multiple options to choose from.

2. Baby shoes

Mom and baby
Julia Zavalishina / Shutterstock.com

I get it: Baby shoes are adorable. Their cuteness factor ranks right up there with puppies in Halloween costumes. But since babies don’t walk, investing in fabulous footwear for them doesn’t make sense.

Instead of buying those itty-bitty Adidas, direct that money toward something with real traction. Invest in a college savings plan, buy a savings bond or stop by our Solutions Center and find a great savings account to open in your baby’s name.

3. Bottled water

nenetus / Shutterstock.com

According to the Mayo Clinic, bottled water and tap water generally are comparable in terms of safety.

If you’re concerned about the purity of your local tap water, invest in a faucet-mounted or under-sink filtration system, or a simple pitcher filter. Any of these options is far more convenient than lugging home cases of bottled water every week from the store.

And by keeping a few reusable water bottles on hand, you can still stay hydrated on the go.

4. Natural diamonds

Couple Engagement
YAKOBCHUK VIACHESLAV / Shutterstock.com

Diamonds have an undeniable emotional appeal. And couples are willing to pay up for these symbols of love.

But thanks to new technology, lab-grown diamonds might give natural stones some serious competition, since they cost as much as 50% less.

Make no mistake, these stones are nothing like the much-maligned cubic zirconia. In fact, they’re so similar to mined diamonds that gemologists often have a difficult time distinguishing the two, as we report in “3 Reasons Lab-Grown Diamonds Are Better Than the Real Thing.”

Lab-produced diamonds are also more environmentally friendly than mined diamonds, and you won’t have to worry about whether you unwittingly bought a conflict diamond.

5. Scented trash bags

SpeedKingz / Shutterstock.com

Garbage stinks. Literally. But scented trash bags aren’t the answer.

Instead of eliminating odors, they mask them with artificial — and often overpowering — scents. The result? Your trash can smells like a weird potpourri of garbage, pumpkin spice and vanilla.

Skip the expensive scented bags and buy basic can liners or reuse plastic grocery bags.

To eliminate bad smells, try this DIY solution: Fill a disposable coffee filter with baking soda, tie it shut with a twist tie or dental floss, then place in the bottom of your trash can. This homemade sachet will absorb odors for weeks.

6. Retail-priced greeting cards

birthday cards
Niloo / Shutterstock.com

I prefer to skip greeting cards altogether and make a good old-fashioned phone call to the person I’m thinking of. If that’s not your style, consider some other budget-friendly options:

  • Cheaper retail cards: Dollar stores have a decent selection of cards for — you guessed it — $1 or less.
  • Thrift store cards: Many thrift shops offer single and bulk greeting cards at amazing prices. A little shop near me sells individual cards for only 10 cents.
  • DIY cards: Get creative and make your own greeting card. As always, Pinterest has loads of great ideas to get you started.
  • E-cards: Send a free digital card using a service like Ojolie or Open Me.

7. Class rings

Margaret M Stewart / Shutterstock.com

During my senior year of high school, choosing and comparing class rings was the social activity of the year. But if you ask me where that $250 ring is today, I couldn’t tell you.

Class ring manufacturers rely heavily on peer pressure and sentimentality to market their wares. In exchange for hundreds of dollars, unwitting students get a bit of gold, a glass “gem” and a few weeks of giddy anticipation. But these expensive souvenirs become irrelevant in a matter of months.

If your graduate is open to the idea, suggest marking the milestone a different way. Plan a celebratory dinner, coordinate a day trip or purchase something that will make the next phase of life easier — maybe a new laptop or down-payment on a good used car.

8. Mr. Clean Magic Erasers

Bykfa / Shutterstock.com

If you’ve ever used one, you know that Mr. Clean Magic Erasers live up to their name.

These wondrous little sponges are pure magic — and at $6.99 for a box of nine, they can even make your money disappear!

To avoid washing your hard-earned cash down the drain, there are generic versions of this miraculous household helper.

Skip the brand-name markup and look for any melamine sponge. Amazon has multiple options for a fraction of the price. You might even find some at your local dollar store.

9. Keurig cleaner

Coffee mug
Anutr Yossundara / Shutterstock.com

From coffee pod organizers to customized scoops, Keurig coffee makers have spawned an entire industry of peripheral products.

Cleaning doesn’t have to be complicated or expensive. A 1:1 ratio of vinegar and water will clean single-cup and multi-cup coffee makers for pennies.

In fact, the many uses of vinegar will amaze you. It’s one of the most versatile and cost-effective products in your house, as we illustrate in “27 Money-Saving Ways to Use Vinegar in Every Room of Your Home.”

10. Paper plates

RosieYoung / Shutterstock.com

Using paper plates for every meal in order to avoid washing dishes is a growing — and slightly disturbing — American trend. Sure, doing dishes isn’t my favorite activity, but neither is budgeting for disposable dinnerware every month.

So, how do you solve the daily dish dilemma? Buy some inexpensive plates and bowls that are easy to clean. (Hint: Avoid anything white.)

Then, get the whole family involved in after-meal cleanup. Assign each person a task, like clearing the table, washing or drying. At the same time, listen to music together, share details of your day, and make plans for tomorrow.

It may sound corny, but the job will be quick and nearly painless. Even better? You save a few trees and spend less “paper” on paper.

11. Electric can openers

Venus Angel / Shutterstock.com

Electric can openers may be necessary if you suffer from arthritis or another dexterity-limiting condition. But for most people, they’re conveniences that become very inconvenient when the power goes out.

Free up some valuable countertop space and save money, too. Skip the electric models and buy a well-made manual opener.

Though I’m a fan of vintage Swing-A-Way openers, OXO Good Grips makes a reliable, easy-to-use product.

12. Expensive wedding dresses

Wedding couple
Alex Andrei / Shutterstock.com

Few events in life spark emotional spending the way a wedding can, but it’s important to realize the day is about the shared experience, not the price of the dress.

Don’t stress your new marriage with wedding dress debt. Consider buying a pre-owned gown at a consignment shop, choosing a less formal dress from a discount store like T.J. Maxx or exploring other ways to pay less for your wedding dress.

13. Flossers

Dan Race / Shutterstock.com

Sometimes, a product innovation is more hype than substance. Handled flossers are a perfect example.

Though great for teaching kids how to floss, these devices are far more expensive than spooled floss, which is also better for the environment.

14. Sandwich bags

Laura Riquelme / Shutterstock.com

Isn’t buying something designed to end up in the trash the very definition of throwing your money away? It’s time to embrace a greener and more economical alternative to plastic sandwich bags.

Instead of paying for an endless stream of disposable plastic, invest in few reusable containers. Plastic, glass and even stainless steel options are available. Because these containers generally have air-tight seals, your food is likely to stay fresher. And washing is a snap.

15. New cars

Soloviova Liudmyla / Shutterstock.com

I’m not sure who said “never buy a new car if you want to be a millionaire,” but it’s an adage I live by.

You’ve heard the figures before: According to Carfax, new cars depreciate 20% in the first 12 months of ownership and roughly 10% in each of the four years thereafter.

Why buy anything that’s worth 20% less the minute you take it home? Let someone else shoulder the burden of that first big drop in value. Buy used instead.

By following a few basic steps to buying used, it’s possible to find a reliable vehicle that’s still under warranty, has excellent safety ratings and gets decent gas mileage.

16. Instant microwaveable rice

DONOT6_STUDIO / Shutterstock.com

Sure, precooked rice in a bag is quick and convenient, but it comes at a steep price.

Why pay several times more than you need to for a pantry staple? Stick with traditional rice — it’s incredibly simple to prepare. And if you have an electric steamer, you can set it and forget it.

17. Paper towels

Couple using paper towels
LightField Studios / Shutterstock.com

I know — suggesting that busy families forgo the convenience of paper towels borders on blasphemy. But there’s logic behind it.

Let’s assume you buy paper towels for the bargain price of $1 per roll. If you use two rolls a week — not unrealistic — you’ll spend $110 a year on something that’s just thrown away.

What’s a practical alternative? Hand towels. Change them often, wash with bleach and voila! You’ve done a solid for your budget and the environment.

18. Mass-produced souvenirs

Paris travelers
Song_about_summer / Shutterstock.com

When I was a kid, my parents planned elaborate two-week-long vacations each year. By age 12, I had a box full of refrigerator magnets, keychains and little metal nameplates. Though these items felt meaningful at the time, I seldom thought about them once the vacation was over.

Instead of loading up on tchotchkes when you travel, invest in new experiences.

Indulge in the local cuisine, plan outdoor adventures and connect with the people who make the place special. The best souvenir is returning home happily exhausted with a suitcase full of wonderful memories.

19. Subscription boxes

tommaso79 / Shutterstock.com

While streaming music and video subscriptions can often be more economical than buying or renting, subscription boxes — think meal kits, wine, shaving supplies and pet supplies — are often a slow-bleed on budgets.

Here’s the problem: Subscription box services charge us to deliver goods on a regular basis — whether we need them or not. And since payments are made via credit card or automatic deduction, we hardly notice.

Don’t need another box of razors right now? Too bad. You got it, and you’re paying for it.

Instead of signing of up for yet another thing-of-the-month, buy what you need as you need it. Better yet, stock up on items you know you’ll use at discount retailers or when the items are on sale.

20. Pre-cut produce

A senior couple cuts vegetables for a salad while cooking a meal in their kitchen
Prostock-studio / Shutterstock.com

Every processing step added to the sale of produce increases its price. Sure, pre-cut carrots, diced onions and shredded cabbage look enticingly convenient when you’re exhausted and hungry, but you’ll pay heavily for all that pre-prep.

According to a comparison done by Vice, the average consumer could save $100 each month by skipping all pre-cut and prepackaged produce. That’s some serious cabbage.

Lettuce (sorry) explore another way: Buy fruits and veggies whole and reserve about 30 minutes after shopping to wash, chop and store enough produce for several days. Seal everything in airtight containers and pop in the fridge.

21. Gym memberships

A woman exercises with dumbbells
goodluz / Shutterstock.com

Joining a gym always seems like a great idea at the time, but then life gets in the way.

When you factor in driving to the club, changing, showering, dressing and driving home, there’s not much time left for working out. Perhaps that’s why Americans waste $1.8 billion on unused gym memberships each year.

Thankfully, there are many ways to burn calories without the gym. Remove a few of the logistical hassles by investing in at-home exercise equipment.

Quality used equipment can often be found on Craigslist, Facebook Marketplace and even secondhand shops for a fraction of the retail price. Short on space? Some machines fold up for easy storage under the bed or in a closet.

22. Dryer sheets

wavebreakmedia / Shutterstock.com

Dryer sheets are coated with stearic acid or other fatty acids, CNET reports. In the heat of the drying cycle, these acids melt and coat the fibers of your clothing to increase softness and decrease static cling.

But dryer sheets have a few unintended consequences. The acids also:

  • Make towels less absorbent over time.
  • Reduce the wicking effect of activewear.
  • Make some pajama fabrics less fire-resistant.

Wool dryer balls are a safe, reusable alternative to dryer sheets. You can find them in many grocery stores and online.

In a pinch, aluminum foil reduces static cling, too. Just crumple a strip of foil into a ball about the size of a tennis ball and toss it into the dryer with your laundry. You’ll be surprised by how well it works.

23. Purebred pets

pet sitting
Josep Suria / Shutterstock.com

Because they lack genetic variation, purebred pets are prone to multiple health challenges. According to the nonprofit PETA, purebred dogs are often susceptible to a wide range of problems, such as skin allergies, heart valve defects and glaucoma.

Besides the higher upfront cost of buying an exclusive breed, owners will likely have to shoulder a hidden cost: expensive vet bills to manage chronic conditions.

Instead of buying a purebred pet, consider adopting a rescue from your local shelter. Generally, adoption fees are nominal when compared with the prices breeders charge.

Though these rescue animals may not have the noble lineage of a purebred, they’re in desperate need of a loving home and, I believe, never forget the second chance they’re given.

24. Checked baggage

Vietnam Stock Images / Shutterstock.com

While technically not something you buy, airline fees for checked baggage are still budget-busters. According to Kayak, some airlines charge up to $80 for a traveler’s first checked bag, and rates may increase for each additional piece checked.

If you’re tired of this “gotcha” fee, invest in a well-designed, small, soft-sided bag and versatile clothing items. You can travel in comfort with only a carry-on.

I’ve been doing it for years, and Money Talks News founder Stacy Johnson details his own secrets in “Ask Stacy: How Can You Go to Europe for 10 Days With Just a Carry-On?”

Besides being a money-saver, single-bag travel is a smart strategy. When you have no luggage to reroute, gate agents might be more likely to work with you on last-minute flight changes. Even better: No more fighting crowds at the baggage carousel.

25. Ringtones

online
pickingpok / Shutterstock.com

Paying for a ringtone? Really? Every purchased ringtone should start with a melodic “cha-ching” — that’s the sound of money leaving your wallet.

My 6-year-old smartphone came with 35 ringtone options. I picked the least offensive option and never thought about it again.

Select a factory ringtone or for more options, download a free ringtone app like Zedge or Audiko.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

5 Unconventional Ways to Build Credit

5 Unconventional Ways to Build Credit
Young couple moving in into new apartment


oneinchpunch/Getty Images

The worst part about building credit? The nagging pressure to put all your expenses on credit cards to build that glowing credit score.

Yes, making timely payments on traditional loans and credit cards is the most common way to prove you’re fiscally responsible. But what if the temptation to spend plentifully with plastic — and the likelihood of forgetting about the eventual bill — is just too great?

There are options available to the credit-averse. You just have to know where to look — and be willing to try a few unconventional methods to build credit without a credit card.

These five strategies will help you get started.

1. Take Out a Credit-Builder Loan

Credit-builder loans allow you to take out a loan to increase your credit score. Instead of paying back cash you’ve already received, the lender will typically put the amount of your loan into a certificate of deposit (CD) account for one year. Each month, you pay a portion of the loan amount plus an interest fee. When the loan is paid off at the end of the year, you can unlock your CD and take out the cash, along with the interest that accrued.

There’s an initial fee, and you can expect a monthly interest rate of 10% to 15%. But those extras may be worth it in exchange for the payment history you’ll build up over the course of the year.  

At The Penny Hoarder, we interviewed a man who saw his credit score jump 22 points in the first month after he signed up with Self Lender, an online credit-builder loan provider. In five months, his score went from 495 to 640. Another Self Lender user saw her credit score rise 100 points over the course of a year.

Beyond online services, you can also check your local community bank or credit union to see if it offers credit-builder loans.

2. Have Your Rent Payments Reported to Credit Bureaus

Rent typically doesn’t get reported to credit bureaus, but you have a few options to request that it gets tracked. After all, it’s probably the biggest bill you pay each month.

Ask your landlord to report your monthly payments through a service like RentTrack, Rentler or Cozy. You pay your rent through an electronic portal, and when you pay your rent on time, it automatically gets reported to all three credit bureaus.

Some of these companies allow you to pay your rent without even involving your landlord. If you sign up for RentTrack, the site will send your landlord a rent check on your behalf.

You can expect to pay a fee for the convenience. For instance, RentTrack charges $6.95 per rent payment. Meanwhile, Rentler’s online rent payment takes a $1.95 fee if you’re paying from a bank account. Pinch runs as an app for Androids or iPhones, and mails your rent check for free.

3. Become an Authorized User (on Someone Else’s Card)

This method requires teamwork with someone you trust. Credit card users can request that an authorized user be added to their account. This added user gets their own card and can make purchases just as the account holder can.

But be careful: If the account holder doesn’t pay the bill, your score will suffer alongside theirs. Plus, you might not be able to remove yourself from the account, so you have to be willing to team up for the long haul.

Want to build your credit without the temptation of using a credit card? Ask the account holder to keep your copy of the credit card. Out of sight, out of mind.

4. Get a Secured Line of Credit

Yes, you’ll have to use plastic to build credit with this method. But unlike a regular line of credit, this credit limit requires you to put down cash. Secured credit cards usually come with lower interest rates because you’ve already handed over collateral.

Solid secured credit cards report your payment, balance and other relevant behavior to credit bureaus. Be sure to shop around for a secured line of credit. Some charge exorbitant fees or neglect to mention that they don’t report your on-time payments to the credit bureaus.

5. Set Up Automatic Payments on Everything Else

Bills like car loans or student loans get reported to credit bureaus, so take note of those due dates. Bills like utilities and cell phones don’t get reported unless you don’t pay. If those bills go to collections, you’re likely to see your credit score drop.

Set up automated payments to reduce your risk of forgetting about your bills as an easy backstop to protect your finances.

Lisa Rowan (@lisatella) is a senior writer at The Penny Hoarder.

Source: thepennyhoarder.com