The market falls, your savings shrink. What’s an investor to do? Aaron Freeman / Money Talks News
Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend. In this episode of the Money Talks podcast, we’re tackling a real-life retirement situation, one you’ve likely experienced yourself: You open your 401(k) or other investment statement, and there it is — a shrinking balance.
If you are feeling stressed about money, Orman wants you to remind yourself that you are capable of handling your financial life. Here’s why this helps.
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Feeling financial stress is not uncommon. Whether you’re worried about your savings rate, your credit card debt, or how you’re going to cover all the bills, most people have something that causes them to feel a bit of concern when they think about their money.
Unfortunately, financial stress can paralyze you when it comes to improving your finances — or it could simply keep you up at night and hinder your quality of life.
If you find yourself worrying about your money and you wish you wouldn’t have to deal with these concerns any more, finance expert Suze Orman has some advice on where to start if you want to make a change.
Orman’s advice about where to start in reducing your financial stress may come as a surprise as she’s not focused on concrete actions you can take. Instead, she wants you to change your mindset.
“Reducing your financial stress starts with reminding yourself that you are strong, you are capable, and you have what it takes to build a more secure future,” Orman said. “That’s not me being a cheerleader. I believe with every ounce of my being that we all have it within us to be the ultimate caregiver who nurtures our own well-being, so we are happier, which also will help us better care for those in our lives who rely on us.”
Words of affirmation may not sound like the recipe for success when you’re struggling, but Orman’s advice is spot on. Convincing yourself that you are capable of handling your money is crucial if you want to stop worrying about whether you can save more, build wealth, and take control over building a secure future.
See, if you don’t believe you can make the financial decisions needed to set you up for success, this can destroy your motivation to form a plan and make the necessary lifestyle shifts that will eliminate your money stress for good.
While it may feel impossible, almost anyone can make and stick to a budget that prioritizes their financial goals if they want to do so and believe in their ability to make it happen. And the more you feel confident in your ability to take these crucial steps, the more excited you’ll be about getting started making a plan and sticking to it.
Of course, believing in yourself alone isn’t always enough to make a meaningful difference in your financial situation. And there are often systemic issues in place that can make it really difficult to improve your circumstances. For example, you may be making too little and paying too much for things like childcare and health expenses.
But, even in difficult situations, if you develop confidence in your ability to handle your financial life, you are more likely to be able to seek out and find the support, services, and techniques that can make a difference for you. So, give Orman’s advice a try and take the time to focus on your ability to improve your financial circumstances for the better.
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Your down payment might be the biggest sum you’ll have to shell out to get a mortgage loan. Learn why you may not want to put more than 20% down.
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There’s a lot to worry about in the process of buying a home. You’ll have to ensure all your financial ducks are in a row (because lenders will scrutinize your finances), find the right neighborhood for you, and save up a big enough down payment. Contrary to popular belief, you don’t have to make a 20% down payment on a home purchase, but it is recommended, so you can avoid paying for mortgage insurance.
Many people struggle with that last part, but you may be fortunate enough to have a nice chunk of savings, sufficient to cover not just 20% of the cost of the home you want to buy, but even more. If you’re planning to buy a $300,000 home and are sitting on $120,000 (or 40% of your home’s price) in savings, is it a good idea to roll all that cash into the purchase? Let’s take a look at some benefits and drawbacks of making a higher down payment.
First off, if you’re putting at least 20% down on your home purchase, you’ll be able to skip that pesky mortgage insurance. Mortgage insurance is protection for your lender, not you; it’s intended to help your lender make up the difference if you stop making your mortgage payments and it must take the home back and resell it at a loss on what you owe. If you’re putting 20% or more down, your lender can have a bit more confidence that you’ll make your payments, as you stand to lose a lot more money than if you only made, say, a 5% down payment.
Along the same lines, putting more money down is likely to make you a more favorable borrower in the eyes of mortgage lenders. You’ll be seen as less of a risk and might be more likely to be offered better interest rates. At a time when rates are up, this is especially important, because the more you pay in interest, the more expensive your home purchase will be.
If you can put a lot of money down, you might also be able to swing a shorter mortgage term. While the 30-year fixed-rate mortgage is something of an American institution, it’s certainly not your only option to buy a house. If you can comfortably afford (meaning, you’re paying less than 30% of your income toward your housing costs) larger mortgage payments, that bigger down payment could make it feasible for you to get a 15-year fixed-rate mortgage instead. That means paying less interest on the loan.
All of that sounds pretty great, right? Well, not so fast. If you’re intending to use your $120,000 as a down payment and that represents all your cash savings, you might regret tying up all your money this way. Homes aren’t a liquid asset the way cash is. This means that if you had some kind of catastrophe and needed money in a hurry, you’d have to sell your house. And this isn’t always a guarantee — if mortgage rates are up, as they are now, buyers might be thin on the ground.
For that matter, you might want to do other things with some of that cash. When you’re dreaming of buying a home, it’s easy to get carried away focusing on it, and not stop to consider other financial goals you might have. Should some of that cash go into your IRA account, for example? And you don’t just have to think about the distant future when weighing your options. It would stink to sink all your cash into a jumbo down payment for your new home and then be unable to afford repairs on it, or even some lovely new furniture to fill the space you now have to call your own.
If you’re fortunate enough to have a big down payment fund, why not consider making a slightly larger down payment (say, 25%, which would amount to $75,000 on a $300,000 home), and hanging onto the rest of that cash? You’ll still likely qualify for a decent mortgage rate (especially if you have good credit), avoid mortgage insurance, and be left with money to cover surprise repairs and meet your other goals.
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Want to boost your savings by $100 this month? Read on to see how.
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With inflation surging these days, putting any amount of money into your savings account can seem like a tall order. And while $100 may not change your life, it might make you feel better about your overall financial picture. With that in mind, here are some steps you can take to boost your savings by $100 this April.
April is a popular time to focus on spring cleaning. So as you go about the process of clearing out your closets, basement, and garage, take inventory of the things you don’t need — and find a way to sell them so you can pocket some cash.
One idea is to hold a yard sale later in the month, where people from the neighborhood can come look at your belongings and hand over cash on the spot. For items of higher value, like electronics, you may want to look at options like listing them for sale on eBay. You might also try posting pictures of some of your bigger-ticket items on your social media pages and seeing if you find any local buyers.
April is a good time to start focusing on landscaping. After all, the weather’s nice and cooperative without being too hot. But if you normally hire a landscaping company to do your spring gardening, you may want to rethink that this month.
Hourly rates for a landscaper generally range from $50 to $150, according to Angi. So if you’re looking to save $100 this month, getting your own hands dirty and cutting back on a single hour of professional landscaping might do the trick.
Food costs are way up these days thanks to inflation, so you may be racking up higher credit card bills than you’d like in the course of feeding your family. If you’re eager to save yourself $100 this month, be strategic about how you shop.
First, take inventory of your fridge and pantry before you hit the supermarket so you don’t end up buying things you don’t really need. Next, plan your meals ahead of time around sales and specials so you can benefit from limited-time discounts.
Also, think about where you shop. Some people are quick to write off dollar stores because they assume the quality of food there is sub-par. But actually, if you stop into your local dollar store, you may find plenty of brands you recognize on the shelves — at a lower cost than what your regular supermarket charges.
Along these lines, it could pay to shop at discount grocers such as Aldi to save money on food. Aldi tends to stock its own house brands, though, so if your family is picky, this may not be a good fit. But if you really don’t care who produced your pasta or cereal, you might enjoy some nice savings.
At a time when inflation is such a problem, banking an extra $100 this month could do a lot for you. It pays to think about the different steps you can take to carve out more savings, because small additions to your bank account could go a long way over time.
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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.The Motley Fool has a disclosure policy.
Stay hydrated and save money with these alternatives to single-use water bottles. Added bonus: It’s great for your wallet, too. IKO-studio / Shutterstock.com
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Here are some quick ideas to erase unnecessary expenses, reduce the necessary ones and fatten your retirement savings. YoloStock / Shutterstock.com
Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend. Doesn’t it feel good to see your hard work pay off and your savings finally growing faster than your waistline? Whether you’re approaching retirement age or already in it, it’s important to cut back on unnecessary expenses…
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