These points are essential topics to cover with your manager when you hope to relocate. fizkes / Shutterstock.com
Editor’s Note: This story originally appeared on FlexJobs.com. If you’re a remote worker, there may come a time when you need or want to relocate. Whether it’s for personal reasons or because you want to be closer to your company’s main office, it’s essential to have a discussion with your employer about your plans. Many employers are not licensed to employ workers in every state.
Proving your financial readiness to a lender may be harder without a traditional job. Read on to learn how a bank statement loan can help you buy a home.
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Now really isn’t an ideal time for anyone to buy a home. We’re still stuck with stubbornly high mortgage rates — as of this writing, the average rate for a 30-year fixed-rate mortgage loan is 6.71%, per Freddie Mac. And to make matters worse, the supply of homes to buy is still lacking, meaning you’re likely to find a lot of competition if you’re trying to buy.
If you’re a self-employed borrower, the troubles might not end there. Getting a mortgage when you work for yourself is more complicated than if you have a traditional job, and there are a lot more hoops to jump through. Let’s take a look at a type of loan that can help, as well as some tips to help you get in the best position possible to buy your dream home.
If you’re a small business owner, full-time freelancer, or are otherwise self-employed, you’ll be asked to provide a lot of documentation to prove your earnings if you opt for a conventional or government-backed mortgage loan. Plus, instant online loan pre-approval might not work for you.
You’ll likely be asked to supply 1099s, bank statements, and a few years of tax returns. It’s also best if you have at least two years of self-employment under your belt, so you can make a case that your income has been steady and will remain so going forward. Remember, a mortgage lender needs to see that you’ll be able to pay back the loan you’re taking out, which will likely be the largest amount of money you’ve ever borrowed.
If you’re lacking that steady two years of self-employment, your income varies widely, or you have another more complicated income situation, you may want to seek out a lender that deals in stated income mortgage loans. These include bank statement loans. For a bank statement loan, you’ll be asked to provide 12 to 24 months’ worth of bank statements. This will give the lender a fuller picture of your finances.
These loans are likely to be more expensive than a more standard mortgage, though, with higher interest rates, so it’s especially important to shop around to get the best possible rate you qualify for.
Regardless of whether you opt to run the gauntlet of documentation you’ll need for a conventional mortgage loan, or decide to shop around for a lender that offers bank statement loans, there are a few moves you can make to ensure your home-buying adventure is as painless as possible.
Build your credit: The higher your credit score, the more attractive you will be as a borrower, regardless of your income situation. A high credit score shows lenders that you manage credit responsibly. So pay off debt, go through your credit report for errors, and renew your commitment to making on-time payments.Save a robust down payment: The more money you can put down on a home loan, the less of a risk you’ll be to a lender. Plus, you’ll save money on mortgage insurance if you can put at least 20% down.Shop around (and shop around some more): If you have a unique employment situation, you can likely expect a wider range of mortgage quotes when you look into pre-approvals. So talk to as many lenders as you can, and consider asking self-employed friends who own homes which lenders they used.
Buying a home isn’t easy for anyone these days, and it’s likely to be even harder if you don’t have traditional W-2 income. Consider a bank statement loan and follow the above tips to make the process as smooth as possible.
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ETFs make investing easier for me, even though I know how to pick stocks. Read on to learn more.
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When I first started buying stocks in my brokerage account, I was admittedly quite nervous about it. Back then, I didn’t know as much as I do now about investing. And even though I was willing to put in a lot of research, I was afraid of making a bad call.
Now, years later, I can say that although I did make my share of bad calls, I’m generally happy with my portfolio, and that I’m way more comfortable with the idea of choosing stocks individually. I know what financial details to focus on when choosing stocks, and I also know not to get too hung up on dividends (a mistake I’ve fallen into in the past).
But even though I feel I’m well-equipped to hand-pick stocks for my portfolio, there are times when I’ll decide to load up on shares of a broad market ETF instead. Here’s why.
When you invest in ETFs, or exchange-traded funds, you’re basically putting your money into a collection of stocks rather than individual ones. If you buy shares of an energy ETF, for example, you’ll effectively be investing in multiple energy stocks. If you buy shares of a healthcare ETF, similarly, you’ll become the proud owner of different healthcare stocks all packaged into a single investment.
The nice thing about ETFs is that they don’t tend to require nearly the same amount of research as buying individual stocks. That’s because you’re not analyzing companies one by one. You’re simply looking at the ETF’s strategy and performance, and then making the decision as to whether it should have a place in your portfolio or not.
I like the idea of broad market ETFs — specifically, S&P 500 ETFs. The reason is that these ETFs basically give you a ton of diversification without having to do a lot of work.
In fact, over the past 50 years, the S&P 500 index has delivered an average annual return of 10% before inflation. If you were to put $2,000 into an S&P 500 ETF, sit back, and do nothing, in 50 years, you’d be sitting on about $235,000, assuming that same 10% return.
You might snag an even better return on an individual stock you hold for 50 years. And that’s why I insist on owning shares of the different companies I think are winners. But I also like the idea of falling back on ETFs in case some of my picks end up being losers. It’s happened before, and it could certainly happen again.
If you’re comfortable with the idea of hand-picking stocks, then you may not feel so compelled to put money into ETFs. But it never hurts to buy them in conjunction with individual stocks. And if you’re not confident in your ability to choose stocks individually for your portfolio, then it definitely pays to fall back on ETFs for the peace of mind alone.
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I won’t hire a financial advisor to help with my finances. Read on to learn why I handle this task on my own.
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There are many financial advisors out there that will help with different aspects of your financial life. I would never work with one.
While I appreciate getting professional advice in some situations, there are three big reasons why I am simply unwilling to pay a financial advisor for any advice.
I am very adverse to paying fees for money management advice. That’s because I’ve seen the damage that fees can do to a brokerage account balance.
When you’re talking about a long time horizon, even a small fee can make an outsized impact. For example, say you invested $20,000 and earned a 10% average annual return over 20 years. With a 2.5% fee, your returns would total $84,957 but with a 1.5% fee, you’d end up with $102,238 in returns.
I do not want to end up missing out on a ton of money that I could have saved, invested, or done other things with it because of the fees I had to pay an advisor. And this is true regardless of how the advisor assesses their fees (some advisors ask clients to pay a flat fee and others take a percentage of money being managed).
Frankly, I don’t want to pay any money for financial advice, though, because I feel like the entire purpose of learning to be better at managing money is to have more of it — and paying someone else to do it for you leaves you with less in the end.
There’s another really important reason why I don’t feel like paying a financial advisor makes sense for me. In my opinion, managing money really is not that complicated. In fact, you can be successful at it if you do a few very simple things:
Spend less than you earn (by making a budget)Avoid high-interest debt (like credit card debt)Keep your fixed expenses (including housing) below 50% of your household incomeInvest in simple, proven investments like an S&P 500 fund.
There is pretty much nothing a financial advisor is going to tell me beyond these steps that’s going to help me end up with more in my checking account.
I don’t want or need a professional to tell me how to cut my spending because I know what I most and least value so I can decide for myself where to splurge and where to save. There’s also no reason to get professional help deciding how much to invest, since there are simple calculators online that can help me figure that out.
And, as for investing advice, it’s been proven time and again that passively investing in index funds usually provides more consistently good returns than actively picking investments. So, why would I pay someone for potentially worse performance?
Finally, the last big reason I don’t want to pay a financial advisor is that no one is going to understand my money goals or priorities as well as I do. So, rather than spending money and taking the time to explain everything to an advisor, I feel like I’m better off just making a financial plan on my own.
Now, if you’re very overwhelmed with how to manage your funds, you may feel like hiring an advisor is worth it. But, before you do, make sure you understand how they charge, what total fees you’ll pay, and what exactly they’ll do for you that you can’t do on your own.
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Both the Dollar Tree and Costco have great deals on many items. But, find out which products have me sticking to the Dollar Tree to purchase.
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Both the Dollar Tree and Costco can be great places to shop. Both stores allow you to take it easy on your credit cards by offering great deals on personal care products, household items, food, and more.
But, there are certain items that I always opt to purchase at the Dollar Tree instead of Costco. That may be because the Dollar Tree has a better selection, lower prices that are easier on my bank account, or both.
Here are five specific things that I stick to the Dollar Tree for, instead of buying at my favorite Costco store.
Dishes and glasses are items I always get at the Dollar Tree instead of Costco. The main reason is that the Dollar Tree has a great selection and much better prices.
At Costco, the dinnerware and glassware comes in at a much higher price than at my local dollar store. The store’s cheapest set — a 12-piece porcelain one — is $29.99 and it’s just plain basic white. That comes to about $2.50 a piece. I can get much nicer stuff at the Dollar Tree for $1.25 per item.
When it comes to party items, the Dollar Tree actually has a better selection than Costco. Costco offers a few theme paper plates but doesn’t have great options for napkins, tablecloths, balloons, and other decor.
By contrast, Dollar Tree has tons of choices including things like dinosaur and mermaid themed plates, napkins, and decor. And while its prices may be a little more per-plate than Costco’s, the reality is I don’t really need 100 Let’s Party paper plates as I’m very unlikely to have a party with that many people invited.
Costco has a lot of storage bins — probably more than the Dollar Tree offers. But their prices are quite a bit higher. A set of six fridge bins, for example, is a shocking $59.99 — $10 per bin! By contrast, the Dollar Tree’s bins are $1.25 per bin, so I’d much rather pay the lower price even if I may not have quite as many options.
Costco’s sponge options are limited and the sponges it does have for sale are almost $0.60 for each one. At the Dollar Tree, I can get a six-pack of scrubbing sponges for $1.25 which is about $0.21 per sponge. Since I toss my sponges out pretty regularly because I’m kind of grossed out by the whole concept of sponges sitting around (even after being dishwashed), I want to pay rock-bottom prices for them.
Finally, I prefer the toy aisle at the Dollar Tree to Costco’s offering. Costco has fancier and more expensive toys, but the Dollar Tree has cheap ones. Since my kids are still at the age where their attention spans are approximately eight seconds long, I’m much better off letting them pick a bunch of little Dollar Tree items to play with rather than one big Costco splurge.
For each of these items, shopping at the Dollar Tree simply makes more sense for me. You may have different items that work for you — but the important thing is to really compare all your options, including thinking outside the box for where to buy, rather than assuming your Costco membership will always offer you the best deals.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.
Sometimes, you just don’t need a credit card, but letting it go dormant can have consequences. Find out what happens if your card remains inactive for months.
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Most Americans only have one or two credit cards, according to The Ascent’s recent credit card survey. But there’s a substantial minority who hold onto four or more cards. When you have that many, it’s possible that you may not use them all each month.
Charging nothing to a credit card for a month or two probably won’t change anything for you, but if you go several months without using a card, you can expect the issuer to take notice. Here’s what could happen.
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Most credit card issuers will overlook a few months of inactivity, but if you go six months to a year without charging a single item to your card, the issuer will likely cancel it for you. Each company sets its own rules for how long it will wait before it cancels an inactive card. If you have any questions about the rules for your card, you can always reach out to the issuer and ask.
If the company doesn’t close the account altogether, it could lower your credit limit. You may be able to reverse this by reaching out to the company and asking it to restore your previous limit, but this is up to the credit card company’s discretion.
A reduced credit limit or closed credit card will affect your credit score — specifically, your credit utilization ratio. This is the ratio between the amount of credit you have available to you and the amount you use every month. For example, if you have a card with a $10,000 limit and you charge about $2,000 to the card, your credit utilization ratio for that card is 20%.
Ideally, you want a credit utilization ratio that’s above zero, but less than 30%. This shows that you’ve borrowed money in the past and have been able to pay it back without too much difficulty. A higher credit utilization ratio indicates that you might be living beyond your means. That’s why it reduces your credit score.
When you close a credit card on your own or the bank does it for you, your credit utilization ratio automatically goes up because you now have less available credit. It’s not unusual to see your credit score take a dip in this situation, but it may not be the end of the world.
Sometimes, closing a credit card can be a smart move. For example, if the card charges an annual fee that’s costing you more than you earn in rewards, it probably doesn’t make sense to hold onto it. Closing it might cause a temporary drop to your credit score, but as long as you don’t close any other cards for at least six months and your overall credit utilization ratio remains under 30%, it probably won’t affect you too much.
You may not be able to stop your credit score from dropping following an inactive credit card closure. But there might be some things you can do to ensure that this doesn’t hurt your credit score too badly.
First, review your credit utilization ratio across all your other cards. Take a look at your ratio on each card individually as well as overall. Whenever possible, try to ensure that this remains under 30%. If it’s not, you may have to charge more to certain cards and less to others or reduce how much you put on your credit cards overall.
Another way to reduce your credit utilization ratio is to pay your bill twice per month. The credit card companies only report your balance to the credit bureaus once per month. So making a payment halfway through the month and again at the end makes it appear as if you only charged about half as much as you actually did to your card that month.
You could also see about increasing your available credit by either opening a new credit card or raising the limits on your current credit cards. But you should only do this if you feel fairly confident that you’ll be approved. When applying for new credit, lenders do a hard inquiry on your report, which also drops your score by a few points. But this won’t matter if you’re approved for a higher limit and your credit utilization ratio drops significantly.
And if you’d like to avoid this whole issue altogether, make sure you charge a few small items to each of your credit cards at least every few months. This could prevent your card issuer from canceling your account or reducing your available credit in the first place.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
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