1. Know The Market

Today’s economy is not like it used to be. As little as 4 years ago, home sales were on the rise across most of the United States. General contractors were having trouble keeping up with the demand for homes, and the price of homes continued to rise. Investors were buying them two or three at a time, with the hopes that the economy would continue to thrive and they could sell their property for a lot more than they bought it for.

Then, in early 2006, with almost no warning, the housing market climaxed, leveled off, and started to drop. Housing prices slowly began to drop. . .and drop. . .and drop. Now it is 2010 and there are no signs of improvement. Since 1990, the Case-shiller index shows that the market has not declined until the market crash of 2006. That’s 16 years of steady increase. But now that’s in the past. We’re in the now. So what can we do about it?

2. Don’t buy a home for more than you can afford

Another first time home buyer tip is keeping your budget. Buying homes that are too big and too expensive is what got us into the housing market mess we’re in now. There are plenty of websites that will give you a free estimate on what you will pay monthly for your mortgage. If you are buying a home with your spouse, a good idea is to plan on spending the income of one spouse each month on the mortgage, which leaves room in case one of you loses a job or there are other unforeseen financial strains. Don’t forget about including taxes and homeowners insurance into your budget. Figure out how much you want to spend on a home, and don’t go over budget. Again, there are plenty of options in today’s market, so be patient.

3. Do Your Research

Buying a home is a major life decision, and it’s consequences will be lived with for a long time. Research the neighborhood surrounding your home. Talking to your future neighbors is a great way to find out about the neighborhood, crime rates, education, local government, etc. and most people are willing to talk. Think about how far away the mall is, if there’s a park nearby. If you see gang signs and graffiti on every corner, you may want to consider someplace else. Be patient. The right home will find you.

4. Buy A Foreclosed Home

One of the biggest causes of the housing crash was banks and financial institutions lending mortgages at 5 to 10 times the annual income of people. That means that if someone made $100,000 in a year, the bank would lend them $500,000 or even up to $1,000,000. Most people were okay with that, because if the market continued to rise, then their home would be worth a lot more than they bought it, and they would make money when they sold it. But when the crash hit, many people owed the banks a lot more than their homes were worth. People were simply walking away from their homes, and foreclosures rose rapidly.

When a home is foreclosed, it means that the owner rights are taken away from the owner and given to the lender (usually a bank), so that the lender can try and sell it and make back some of the debt that the owner has incurred. Lots of times these home go up for auction, and that is where first time home buyers can find a great home for thousands of dollars less than it is worth.

5. Don’t own the nicest house on the block

When buying a home, even in a down market, it’s important to remember that you will most likely not live in one place your entire life. Try and find a home in a nice neighborhood that is a little bit smaller or older than the majority of the houses around you. This will increase the value of the home, and give you some leeway in making improvements. Don’t get carried away, either. Keeping up with the Jones’ is not a happy way to live.

By following these first time home buyer tips, buying your first home will be a solid investment, and not a financial burden.

The question that hit our minds was about how legit and good these companies are. We checked out Bidsauce to find out.

When first landing on the page you notice that the site actually looks pretty clean cut and simple. Other sites we’ve seen are clustered and look like a ten-year old put them together.

We loved the design and the banner at the top, which displayed new facts and news updates.

One thing we noticed and haven’t seen anywhere else was the ad for a “guarantee”. We usually don’t like guarantees, because it means you’re dealing with risky business, but this one gave us a nice surprise. Apparently if you don’t win anything off of your first round of bids, they’ll give you that round of bids back for free. That’s pretty cool.

So far, we believe that penny auctions is a trend that will stick around for quite some time, but because of some great sites like Bidsauce, we aren’t too upset.

That said, learn here how to demolish your credit score so that lenders will not even consider you for the loan you want or need.

1. Making late payments is the number one way to lower your credit. It’s tried and true. Just ask the millions of Americans that habitually pay late- it can really sink you. Companies that determine credit scores, like FICO, generally give 35% of your score to payment history. This means that a person with an average score can lose about 80 points from one late payment.



2. Next, carry a giant balance on your credit card. This way, you’ll never be able to pay it off. As far as credit scores go, this one is sure to give you a drowning sensation.
3. Open or close a credit line. Doing these things make you appear risky or flaky. For one reason or another, creditors don’t seem to anchor an interest in high risk customers right now. This is a sure-fire way to dunk your credit and become less credible to lenders.
4. Finally, the single best thing you can do to crush your credit score is to default on a loan. Everyone loves a quitter. Companies, like FICO, who calculate your credit score for lenders recognize your “give up” attitude and pass along the cheery feelings by lowering your score for you.

If you worry about living on the edge, certain good behaviors like making on-time payments, taking out a small loan and paying it off and keeping a low balance, can get your score back up in the mid-600s or low 700s in a little over 2 years.

If managed well though, your credit can be one of your best assets. Your credit rating is like your financial resume that someone else writes for you.

You may not have the ideal financial history, but it’s always better to start being financially responsible sooner rather than later. So start now!

This means making payments on-time and being aware of where your money is going and how it is getting there. It’s your money, you need to be in charge of it!

Are taxes emptying your pockets?

Tax day is coming up quick, and the rush to get ready is beginning.  Everyone knows taxes can be very confusing to the average person – that’s why accountants get paid so much.  But there are some common misconceptions about taxes that could make a difference to you and your finances.  One of the biggest ones is tax brackets.

If you asked a random person out on the street what tax brackets are, they would probably say that the higher your income, the higher the percentage you have to pay in taxes.  That is partially true.  But because of this not-quite-accurate definition, many people misunderstand and say something like “I don’t want to have a higher income, because then I would be in a higher tax bracket.”  In fact, that is an awful strategy.

The way the brackets work is a little more complicated, but overall it costs less money than the previous definition would lead you to believe.  We have what is called marginal tax brackets.  This means that there are certain levels of income – kind of like platforms, or steps on a ladder.  The first “step” is at $16,700 right now.  All the money that you make below that amount is taxed at 10%.  The next “step” is $67,900.  All the money between $16,700 and $67,900 is taxed at 15%.  The money you earn that is higher than $67,900 but lower than the next step is taxed at the next highest percentage.  And the steps keep climbing.

This makes a big difference compared to the normal misconception.  For example, say that you make $16,701 in one year.  Under the first definition, you would have to pay 15% on all of it, which would come out to $2,505.15 total.  But under the marginal tax bracket, you would pay 10% on the first $16,700 (which equals $1,670) and 15% on the extra $1 (which equals 15 cents).  So instead of paying $2505.15 in taxes, you are only paying $1,670.15.  The marginal tax bracket system has saved you $835.

This system completely eliminates the need to stay under a certain tax bracket level of income.  Unfortunately, many people don’t understand, and their finances suffer because of it.  But now you know, and that fear of a “higher tax bracket” will never haunt you again.

That’s quite the turn-around. And thank goodness. If money is power, saving money is empowering.

Savings Starts Somewhere

Since keeping financial secrets from your spouse can be a recipe for disaster or the other D-word, it’s best to start on these basics together. Who knows? You could fall farther in love over your finances. He might even find your healthy savings account tantalizing, and she may think your financial confidence is devilishly attractive.

So, what can you do to be part of the savers? This is the first part of a 5-part installment on becoming a Savings Superstar. For a little sneak peak at the general advice, keep reading:

-Know your plastic personality.
-Don’t trust yourself to pay yourself first.
-Deposit your paycheck and other money to your savings account.
-Limit yourself to one ATM withdrawal per week.
-When you make a credit-card purchase, record it immediately.
-When you subtract a check from your account, round up the amount.
-Toss your spare change into a fun savings bank.
-Bag the savings from brown-bag lunches.
-Pay yourself after you’ve paid off a debt.
-Give yourself a cooling-off period.

Do you feel empowered yet?

The parents of a Northwestern student who just headed back from holiday received this letter: Dear Mom and Dad: Univer$ity life i$ $o wonderful! Cla$$e$ and $e$$ion are intere$ting, my cla$$mate$ are the be$t! But after $pending all my ca$h on Chri$tma$ pre$ent$, I am in a little need for $ome $pending money for book$ and $uch. But I don’t want to $end the wrong $ignal$ home.
Love
Your $on

Teach your kids how to work hard and responsibly manage their own money. It may be “unfair” while they watch their friends have everything handed to them, but in the end, any other treatment would be a disservice. It’s a lot easier to learn the value of hard work and the benefits of financial responsibility when they’re six instead of 26.

Plus, the relationship you share with your kids when they are young adults will be drastically different depending on their level of dependence on you.

And a skimpy pay check definitely hurts.

This weather would probably look less dreary if you know that you have a little extra saved up. Generally knowing that you’ll still be able to make all the bills lets a forced (and unpaid) vacation look a little more relaxing.

Certainly if you’re sick and away from work for a few days, an emergency savings fund could be a better spoonful of sugar than any over the counter medication.

Imagine a sore throat, stuffy nose, congestion headache, and lower back pains when you’re worried you won’t make the bills on time. Now picture your same sick self with the knowledge that you’ve prepared for a situation like this.

Good personal finance before a crisis makes an unexpected situation less stressful and more manageable when it hits.

Don’t put off getting started. Even if you pack a peanut butter and jelly sandwich once a week and save the $10 you would have spent on lunch that day, you will be saving $40 a month or $480 a year. (That should cover a trip to the dentist.)

Unexpected expenses can be taken care of with an emergency savings fund.

• Trim nonessentials from your budget. Stop paying for premium cable, daily mocha lattes and brand name food and clothing and you could save as much as $1,600 in one year.

• Consider getting a part-time job. Even if it is three to four hours a week at night or on the weekend, the extra income could go a long way to creating that cushion you need.

• Give the $5 bill saving plan a try. For those folks who use cash regularly, this plan involves keeping any $5 bills that you receive throughout the day and week and placing them into savings rather than spending them. A conservative estimate of savings using this plan would be $20 a week or more than $1,000 a year.

• Save half of all ‘extra’ money. When you receive a raise in pay, place half of your new earnings into savings.Have the money deducted automatically from your payroll and placed into your savings account, and you will never miss it. Likewise, save half of any tax refunds or an inheritance.

• Continue to make your car or other loan payment after you have paid off the balance due.Put the money into savings each month just as if you are continuing to pay the note. It takes discipline to accomplish this, but I assure you, if you don’t put the money in savings, it will get spent. To convince yourself to stick to your savings plan, think how nice it will be when the car needs service and you have the funds to pay for it with no additional interest charges tacked on to the total.
  

  After the work is done, reward yourself!

• Include saving for something fun once you reach your goal. After you reach your emergency savings goal of three to six months of living expenses, you will have developed the habit of saving. Continue to save, only this time for something fun. The dream vacation to Disneyland you never could afford, a European vacation … you get the idea.

This is a trick that can help you break the habit of relying on  credit cards or raiding your savings account whenever a big annual or semi-annual expense comes up. Set up several high-yield savings accounts with one online bank and arrange for automatic deposits into those accounts on a regular basis.

If you automatically save a little money on a regular basis, it doesn’t take much to build up a good stash for when your big expenses come due. For example, if you arrange for a mere $25 a month to transfer from your checking account into your holiday gift fund each month, that’s much easier to manage than coming up with $300 all at once come December.

TRICK #8: Set long-term goals with a buddy.

One of our biggest enemies when it comes to making financial decisions is our short-term memory. We get impatient when our investment balances don’t grow as quickly as we’d like, or our friends seem to be having more financial success than we are. Or we just get tired of scrimping and saving and get the overwhelming urge for a splurge.

Getting a buddy for setting goals makes you responsible financially to more than yourself.

Keep your long-term goals in focus. Define your goals early on — such as saving for a down payment, starting a retirement fund or taking an annual vacation. Then set up plans to reach them and be sure to discuss your progress regularly. Having that accountability with someone (a spouse, best friend, family member, etc.) helps motivate you to stay on track.

TRICK #9: Ignore your annual raise or year-end bonus.

Expecting a raise this year? Pretend you’re not. By keeping your standard of living the same and not increasing your spending with each bump in pay, you can pocket the extra money and use it to reach your goals. The same goes for that year-end bonus or tax refund.

It only takes a few extra bucks to start your emergency savings, begin investing or pay extra toward your credit card debt. You could even use the money for something fun. Start stashing it in a vacation savings fund so you can afford to have a real travel adventure next year instead of the old crash-on-Mom’s-couch getaway.

TRICK #10: Give yourself a raise.

Not getting a raise this year? Take matters into your own hands. You could get hundreds of dollars added to your take-home pay each year simply by telling Uncle Sam not to take so many taxes out. Most of us give the government too much upfront — that’s why we get tax refunds in the spring.

Take back your money and use it throughout the year instead to help you make ends meet, boost your emergency savings or start investing for your future. All you need to do is file a new W-4 form with your employer to adjust your “withholding.”