maintenance

Should You Fix Up Your Car, Or Get a New One?

Emily Guy Birken — Fri, 06 Jul 2018 08:30:09 +0000

Your aging car's engine has been knocking loud enough that turning up the radio doesn't help anymore. You take it to your trusted mechanic, who gives you the bad news: One of your main bearings has worn out, and the repair will cost around $3,000.

Since you can't know for sure if this is just the beginning of your car's transition into a rolling money pit, or if the $3,000 repair will get you motoring happily along for another 50,000 miles, it can be nigh-impossible to figure out whether to stick it out with Old Faithful or cut your losses and buy a new car.

Thankfully, there are some guideposts that will help you to make this difficult decision. Here's what you need to consider if you are trying to decide whether to fix up your old car or get a new one.

Consider the age and safety of your ride

If you are still driving a car that emerged from the factory in the early-to-mid 1990s, you might want to factor safety into your decision of whether to repair or replace. Safety standards have grown and changed a great deal in the past 20 years, and upgrading your car to something that was built in this millennium could make a big difference if you were to get into an accident. This is especially true for anyone using an older car as a family vehicle. Newer cars have made it much easier to properly install car seats, for example, which can offer parents a great deal of peace of mind. (See also: 8 Common Car Repair Mistakes That Can Cost You)

Take rust seriously

According to automotive journalist Steven Lang, there is one type of car problem that indicates your automobile is ready for that big garage in the sky: "If the integrity of the car's frame has been compromised by rust, then you should plan on getting a new car."

While a little surface rust on a car's frame is not necessarily a big deal, your mechanic will let you know if the frame has rusted to the point where it has become dangerous to drive. "It's game over at that point," Lang states. "Cars cannot come back from that kind of damage." (See also: Bookmark This: Follow This Car Maintenance Checklist)

Find an online forum for your make and model

Even if you are not concerned about the safety of continuing to drive your aging car, you might still worry that a repair is just the tip of the iceberg, and that you'll continue throwing good money after bad if you head down this path.

While this kind of quandary was very difficult to figure out pre-internet, these days you don't have to decide what to do by yourself. Start by searching for an enthusiast forum online that is dedicated to your specific make and model of car. (Believe it or not, there are such groups for everything from Kia Sorentos to BMW E30 M3s — although the former are more likely to be "support groups" rather than enthusiast forums.)

Once you've found a forum, you can ask about the specific repair you are considering. It's likely that someone else has faced a similar problem on the same car, and they can let you know just how much more drive time their repair was able to buy them.

You can also use the forums to find out if there are common problems facing your specific car, as some cars have known issues that crop up as they age. These forums are also a great place to ask about recalls or other issues that you might not be aware of, especially if you bought your car used. (See also: Your Car Was Recalled. Now What?)

Determine cost vs. worth

So how do you know if the cost of a repair is worth it to you? For insurers, simple subtraction makes the decision easy. If the cost of a repair is higher than the Kelley Blue Book value of a car, the insurer will total the car. And if you are in a position to purchase a new car, this kind of simplified equation is helpful.

However, what a car is worth to you is not necessarily as simple as that. If you own your current car free-and-clear, and would struggle to take on a car payment, the determination of whether the cost of the repair is worth it becomes a little more difficult. A good rule of thumb in this situation is to buy a new car if the repair would cost more than one year's worth of car payments — but keep the clunker if it is less.

And don't forget the potential value of trading in your clunker, even if it needs a repair. It's tougher to sell or trade in a car in need of a major repair, but your old ride may still be worth something and can help you with the purchase of something newer or more reliable. (See also: 8 Questions to Ask When Buying a Used Car)

Answering the impossible question

You can never know for sure if you made the right call with this kind of repair-or-replace decision. But gathering all the information you can about your car's safety, its common problems, and its worth can help you to determine if a repair will serve you better than a new car.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Repairs That Aren't Your Landlord's Responsibility

Mikey Rox — Fri, 22 Jun 2018 09:00:22 +0000

One of the benefits of being a renter as opposed to being a homeowner is that the landlord is responsible for many costly home-improvement projects, like replacing a leaky roof or updating dying appliances. But not all domestic damage is his or her responsibility. What exactly are you on the hook for? Find out which home repairs are not your landlord's problem — and start saving up for them now.

1. Replacing light bulbs, batteries, and HVAC filters

The landlord can't control how much you run the lights, so replacing bulbs when they burn out is your responsibility. The same may be true for replacing batteries where necessary, including those in smoke and CO2 detectors, which should be outlined in your lease so that there's no confusion about who's supposed to keep up with home safety. Many leases will also require tenants to replace air filters in HVAC systems on a regular basis (ideally every three months, but landlords often supply the filters).

2. Unclogging backed-up drains that you caused

Here's what I've learned from personal experience: Don't put eggshells or potato skins in the garbage disposal if you don't know how to unclog the sink. Otherwise, it'll cost you a visit from the plumber, because this is definitely not your landlord's problem. Same goes for the toilet — you do the crime, you do the time. Unclog it yourself or call someone ASAP before the problem turns into more damage from overflowing water and other "stuff."

Practice other considerate grooming habits, too — like cleaning your hair out of drains to keep pipes in working order. If your landlord has to come over to do this for you, he or she has every right to tack an extra fee onto your rent that month.

3. Certain pest infestations

Assuming that you're moving into a rental unit that doesn't have any existing vermin problems (you should verify this independently before signing a lease; don't just take the landlord's word for it), you may be responsible for any rodent or bug infestations that occur after you move in. Be sure to check the terms of your lease as well as any state-specific laws regarding pests such as bedbugs.

Certain living habits, like leaving old food out or failing to regularly take out the trash, can attract ants, cockroaches, or even rats. If your landlord finds you responsible for the infestation, you will likely have to pay up to get rid of the problem.

Other bug or rodent infestations can happen naturally. Termites, for example, can infest any building regardless of your living habits. In this case, it's on the landlord to get an exterminator. (See also: 6 Cheap Ways to Get Rid of Household Pests)

4. Lawn care and snow shoveling at single-family homes

Unless your landlord has agreed to handle the mowing and snow shoveling in the single-family home you're renting, you'll need to get out there yourself. While you can let the lawn go for a little while, you're legally required to have your sidewalk shoveled within a few hours after a snowstorm ceases. Fail to do it and you could face fines from the city, which also will be your responsibility. If you live in a multiunit dwelling, however, the landlord generally takes on this responsibility him or herself or hires someone to do it.

5. Damage to property due to your negligence

Being a decent human being means taking responsibility for damage caused by your own negligence — accidental or not — and that of your family, friends, kids, and other guests you invite into the home. Your landlord is not responsible for anyone's carelessness; you can't punch holes in the walls during an argument and expect them to fix it. And please, don't lie to get out of whatever it is you or they did to damage the property. Be an adult, pay for the repairs, and move on (ideally with people who don't destroy things).

6. Carpet cleaning and repainting

One of the biggest costs to landlords is replacing carpet ruined over time by tenants. I've seen some of this damage myself, and I'm frankly baffled by how disrespectful some people are and the lengths they'll go to try to skirt the cost of cleaning or replacing the carpet.

Repainting the walls their original color (if you've painted them) is also your responsibility. This should absolutely be a clause in your lease, but you should always contact your landlord before making any paint decisions. (See also: 7 Smart Ways to Get Your Apartment Deposit Back)

7. Pet damage

I once had a tenant who was not authorized to bring an animal into my shore rental, but did so anyway. When I questioned her about it, she denied it. I explained to her the strong smell of feline urine upstairs, at which point she revised her story to having a dog in the house briefly. I wasn't born yesterday, lady. The dog bit was a lie, too — but it didn't matter what kind of pet was in my house. It was unauthorized, and I passed the cleaning bill right along to her.

8. Misuse of appliances that cause them to malfunction

You break it, you buy it — that's the rule with appliances in your rental that you've damaged. Whether you've caused a dryer fire from neglecting to clean out the lint trap, burned out motors from working appliances too hard, or caused the dishwasher to overflow because you thought laundry detergent would work in lieu of dishwashing liquid (shout-out to my ex-husband), it's all your responsibility. If any appliance just stops working, however, it's probably on your landlord — so give 'em a call.

9. Holes in the wall from frames and shelving that you hung

Before you can get your security deposit back, your landlord will want to make sure a few tasks are completed, including patching up holes you've put in the wall from frames, shelves, and other damage you may have caused to the drywall and paint from adhesives. Skip out on it and you can kiss your money goodbye.

10. Anything else outlined in the lease

Read your lease closely before signing. Most issues of landlord/tenant responsibility are outlined in the document. Keep it on hand to go over again if issues arise so you can quickly determine whether or not the burden and financial responsibility falls on you. Once your signature is on the lease, you're legally bound to it. If you feel like something outlined should be the landlord's responsibility, discuss it beforehand to revise if necessary. After that there's no wiggle room — it's either your problem, or not.

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Red Flags to Look Out for When Renting Your First Apartment

Paul Michael — Fri, 25 May 2018 08:30:31 +0000

Are you ready to fly the nest? If it's time to find a new apartment, there are some things to look out for before signing a rental agreement. If you don't know what to be wary of, your first place could put you in financial jeopardy and even physical danger. These are the biggest red flags. (See also: 10 Questions to Ask Before Signing a Lease)

1. A limited selection of photos

If the ad for the apartment features just one or two photographs of the place, don't even bother making a call to see it. Landlords know that great photos help sell a place. It's the first thing any potential renter will look at, and they will scour them before looking at features and price. If there are just a couple of photos, perhaps blurry or only showing one room or the outside of the building, the landlord is hiding something. Either the unit is in awful condition, it's small and dark, or it's got other issues that he or she would rather not talk to you about until you get there; and that's when the hard sell begins. Don't see any place that doesn't show you all the interiors and exteriors in advance.

2. Bars on the windows

You may think it's good to have an extra layer of security, but let's be honest; bars mean trouble. Clearly the apartment is in an area rife with crime, and if the landlord has taken to adding bars to the windows, it's bad. The only reason bars are up is because it's a last resort to prevent break-ins, vandalism, and other crimes. If you see bars, don't even enter the building.

3. The rent is too good to be true

Landlords are in the business of making money. Whether it's just one person renting out one property, or a whole agency renting out hundreds of homes, the end goal is profit. So if you come across an apartment that is priced way under the going rate for that area, be afraid. Be very afraid. It could be a bait and switch, which is illegal — when you call, suddenly that apartment at that low price is no longer available, but there's a similar one that's way more expensive. Or, there's one that's the same price but has fewer rooms and is in an awful neighborhood.

Another reason could be that there is a major problem with the rental unit. For example, it's directly above a loud bar or restaurant, or it's near a high-traffic area that ensures you'll never get any sleep. The price may also be compensating for unusually high utility bills, pest infestation, or significant problems with the structure. The chances are, a super-low price is simply a worm on a hook, and you're the fish being reeled in. Don't bite.

4. Emails coming from different people

When you reply to an ad for an apartment listing, it's fairly common to get a few different reply addresses at first. One could be an auto-responder saying someone will be in touch, or it could come from a third party domain like Craigslist. However, if the email addresses keep changing, and the name of the person you're dealing with is also going through an identity crisis, you have a potential scammer on your hands. Take a look at the domain names, see if the person has a presence on LinkedIn, or if there is a legitimate website linked to that landlord or agent. If they're a ghost, you should steer clear of this property. And if the emails are filled with typos and other errors, that can also be a bad sign. (See also: 6 Ways to Apartment Hunt on Craigslist Without Getting Scammed)

5. The landlord or agent isn't available

If you're having trouble getting in touch with the landlord now, at a time when he or she should be extremely keen to talk to you, imagine how tough it will be when you're a tenant. At this stage in the process, you represent money. They want the apartment rented out, and to be making a profit ASAP. If your emails go unanswered for days, your calls go to voicemail, and you are having to play detective to get any kind of answers, this is not the place for you. It could be a scammer, it could be disorganization, or it could be laziness and apathy. None of these are qualities you want in someone who you'll be relying upon for repairs to the apartment and other issues.

6. Too many things are in need of repair

If you're walking around and everything looks good, but the door on the microwave is dinged up or loose, it's probably just an oversight or something the landlord intends to fix before you move in. Any good landlord will bring it up and assure you the repair will be made. If not, ask for it to be taken care of before signing the lease. However, if you see signs of neglect, and many items that look broken or in a state of disrepair, move on. If the landlord is showing you this, imagine what he or she is hiding from you? It also doesn't bode well for any repairs you may need once you're a tenant. (See also: 13 Things You Must Inspect Before Signing a Rental Agreement)

7. Some doors remain closed on the viewings

Yikes. If there are doors that are locked and the landlord won't show you that area, you have every right to be very suspicious. You're about to live here, and deserve to see every room. That means the closets, the attic or basement, the garage or storage unit, and even the crawl space if you desire. Some landlords will say that some rooms are off limits because they use it for storing maintenance supplies and other personal items. That needs to be considered in the lease, and should be accounted for in the price of the rent. But any landlord serious about his or her business will rent their own separate storage unit.

8. There are funky odors or stains

There's no excuse for this. An apartment should be made "view ready" by the landlord, and if it's not looking or smelling good, you're going to have issues. The biggest concerns are mold and mildew. If you're smelling that damp, musty odor it means the apartment could have some major issues with mold. This can cause structural damage and health issues. You should not be smelling any kind of cigarette smoke unless the listing says "smoking OK," which is rare these days. And look for stains on the walls or ceiling. If you see a fresh coat of paint on one small section of the apartment, ask about it. They may be trying to hide a problem.

9. The tour is rushed and given at an odd time

If you have a landlord or real estate agent rushing you through the tour, or only letting you see the apartment at certain times of the day, you are being deceived about something. Maybe the neighborhood is noisy and dangerous after dark. It could become an all-night party zone. Or, you could get stuck next to horrendous traffic and transportation noises during rush hour. And if you're close to an airport, make sure the apartment is insulated from that noise or you'll regret moving in for the entire term of the lease.

10. You're asked to sign an incomplete agreement

Don't just walk away, sprint! A lease is a contract between you and the landlord, and your signature means you agree to whatever is on it. If the landlord or agent says certain items will be filled in later, you cannot trust what's coming. Maybe they tell you you're getting a discounted rate, but then change their mind. They may say they'll take care of all the utilities, but afterward change that. They may even add in that the security deposit is nonrefundable. When you sign a lease, everything should be completed, and there should be two identical copies — one for you and one for the landlord, each signed and dated by both parties. And if they say you'll miss out if you don't sign right now, it's a pressure tactic that can only lead to trouble. (See also: 10 Questions Landlords Can't Ask)

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

25 Money-Saving Strategies That Are Actually Hurting You

Dr Penny Pincher — Tue, 08 May 2018 08:00:18 +0000

Taking action to save money can be a great way to get your finances on track. But some of the ways we try to cut costs are actually harmful to our financial well-being. Here are all the money-saving strategies that can backfire on us.

1. Skipping college

College is expensive, so you may think the best plan of action is to skip it and save the money. That's the smarter move, right? Maybe not. Depending on your chosen career field, a degree can mean the difference of more than $1 million in income over the lifetime of your career. So while college is expensive, you'll also probably earn a lot more with a college degree, even considering the salary you miss out on during the years you are in school. (See also: My Kid Got Accepted to an Expensive Private College — Now What?)

2. Not participating in your 401(k) plan

Your paycheck is already hit with taxes, Social Security, FICA, and other expenses before you get your money. Your natural reaction may be to try to keep your paycheck as fat as possible by not contributing to your employer-sponsored retirement plan. In the long run, this move is almost guaranteed to backfire. Not only are you hurting your own financial future, but 401(k) contributions are tax-advantaged, and if you keep the money in your paycheck, you are more likely to spend it. (See also: 5 Dumb 401(k) Mistakes Smart People Make)

3. Buying food in bulk

Food waste is a big problem, and this can be exacerbated when you buy food in bulk. It can seem smart to load up with bulk food at low cost-per-pound prices, but how many pounds of oats are you really going to eat before they go stale?

4. Not investing in yourself

Reducing expenses is important to stay within your budget and move forward in your financial goals. But obsessing over saving money can result in missing out on opportunities to better your life or invest in yourself. For example, you might skip out on spending $400 for a new suit or $1,000 for career training that would help you land job that pays $20,000 more per year.

5. Deferring expenses

Sometimes getting by cheaply now results in big expenses down the road. For example, you could buy a cheap house with lots of serious issues and benefit now from lower payments, but you may end up pouring money into it later to keep it livable or to get the house in a condition so you can sell it. (See also: 23 Hidden Costs of Buying an Old House)

6. Buying minimal car insurance

You can save money on insurance payments every month by purchasing minimal car insurance. But if you have an accident that results in major damage or injury, minimal insurance could leave you with big bills and cost you more in the long run.

7. Saving to spend

It feels good to save up some money and watch your savings account grow. But if you are saving up a big pot of money with the sole intention of spending it, having funds in a savings account can actually result in spending more money, not less. Examples of this include saving up for expensive items that don't retain value such as a recreational vehicle or new car.

8. Doing-it-yourself

You can save a lot of money doing projects yourself instead of hiring a professional, but DIY projects still cost a lot of money for materials, not to mention time and effort. And if you do something wrong, you may need to hire a professional anyway to fix your mistake. Before you take on a project, make sure it is worth doing. (See also: How to Keep DIY Projects From Ruining Your Life)

9. Buying items on sale that you don't need

Buying things on sale can be a good way to save money, but this only works if you need the items in the first place and will actually use them within a reasonable period of time. If you buy stuff you don't need just because it's on sale — no matter how cheap it is — you are wasting money.

10. Skipping meals

Skipping meals occasionally can save you money on food. However, this savings can be offset by reduced productivity and by the potential for making poor spending and financial decisions while hungry.

11. Eating cheap food

Eating junk food such as soda, chips, and fast food will provide your daily caloric requirements for a minimal amount of money, but you are likely to end up overweight and miss out on key vitamins and minerals that you need to stay healthy. If you want to find affordable healthy food, check out this list of cheap foods that are packed with nutrition.

12. Using coupons

How did using coupons end up on a list of money-saving strategies that can hurt you? Stores give out coupons for a reason. They know that coupons can lead you to buy stuff you normally wouldn't buy, and that results in more profit for the store. Using coupons for items you would buy anyway makes sense, but resist buying extra items only because you have a coupon. (See also: The 6 Shopping Mistakes Keeping You From a Great Deal)

13. Ignoring home maintenance

Sometimes you need to take on home repairs right away to avoid expensive damage. If you notice water leaking from a roof, or a leaky pipe, you might think that ignoring the problem costs no money while calling in someone to make a repair could cost hundreds of dollars. While it is true that repairs can be expensive, ignoring routine maintenance can be even more expensive down the road if more extensive repairs are needed for cumulative damage.

14. Supersizing

Why not pay 49 cents extra to upgrade from a medium size drink and fries to a large? This "deal" feeds into temptation and poor impulse control, and again, paying extra for something you don't need or didn't originally want is not a way to save money. This strategy can hurt your waistline as well as your wallet. (See also: 7 Effortless Ways to Prevent Budget-Busting Impulse Buys)

15. Leasing a car

The monthly payments for leasing a car are often lower than for purchasing a car, so it might seem like you can save money by leasing instead of buying. The problem with leasing is that you make all of the payments on the vehicle during the time when it depreciates the most, but you don't end up owning the car at the end of the lease. You end up with nothing! If you purchase a car, you can pay it off and go for years without making payments after you own the vehicle. (See also: What You Need to Know Before Leasing a Car)

16. Making minimum payments on credit cards

When is it good to pay more than you are charged? When your credit card bill comes. Making minimum payments on a credit card seems like a way to spend the least amount possible, but interest charges pile up and it can take decades to pay off a credit card by making minimum payments. (See also: All the Ways Minimum Payments Are Evil)

17. Repairing old appliances and vehicles

You can often repair an old appliance or vehicle for less than the cost of replacing it, which can seem like a good strategy to save money. But if the repair cost exceeds the value of the item, you might come out ahead by replacing it, even if it costs more in the short term. Instead of sinking money into an older item that has a limited life expectancy and will likely need additional repairs soon, you can apply the money toward buying a newer item that should be trouble-free for many years.

18. Hanging on to unneeded things because they are paid for

After you buy something, its value typically declines over time. This means that you will never be able to get your full money back by selling your things. So, you might decide to hang on to everything that you have paid for instead of selling it at a loss. This strategy may make financial sense, but you can end up with lots of clutter from things you don't use, and some items require costly maintenance. Even if it's paid for, if you don't use it, get rid of it.

19. Not boosting your productivity

For years, I used an old laptop that was barely functional. It took hours to accomplish things that should have taken a few minutes due to laggy performance and system crashes. I finally bought a refurbished laptop to replace my aging computer, and I was able to pay for it within a couple months due to increased productivity. (See also: How to Buy a New Computer Without Breaking Your Budget)

20. Skipping a worthwhile project to save money

Although it may seem like the best money strategy is to minimize expenses, sometimes you have to spend money to make money. For example, you could decide to skip the expense of seed packets, tools, and fertilizer to plant a garden. But a garden can pay for itself many times over with its produce. Plus you can reuse many garden tools and supplies for years after the initial purchase.

21. Skipping vehicle maintenance

You can try to save money by not getting regular oil changes and other routine maintenance on your vehicle, but this strategy will cost more than it saves. Keeping up with maintenance on your vehicle will extend its life, lower the likelihood of an expensive breakdown, and can make your vehicle run more efficiently so you reduce fuel costs. (See also: Bookmark This: Save Money With an Easy to Follow Car Maintenance Checklist)

22. Skipping vet appointments

Vet bills for routine vaccinations and checkups can be expensive, but skipping these appointments can be even more costly. Not taking pets to the vet regularly can result in more expensive treatments down the road, plus your pet's health can suffer. (See also: 8 Ways to Lower Your Vet Bills)

23. Wearing cheap shoes

A good pair of shoes is expensive, so why not save some money by getting cheap shoes instead? A good pair of shoes can last for years, while a cheap pair of shoes may only last a few months before wearing out. Buying a good pair of shoes can be less expensive in the long run, and you can walk all you want in comfort without getting sore feet or back pain.

24. Not having a comfortable bed

You can avoid some expenses for bedding through long-term couch surfing or by using a mattress forever even after it is worn out and no longer comfortable. But not getting a good night's sleep will lower your productivity and you are more likely to make poor spending and financial decisions when you have not gotten enough sleep.

25. Skipping medical and dental appointments

Visits to the doctor or dentist can be unpleasant and expensive, but you are better off taking care of your health the way you are supposed to. Failing to go for routine health screenings and teeth cleanings can lead to more expensive problems down the line. (See also: 8 Expenses You Should Never Cut)

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This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Signs Your Budget Needs a Makeover (And How to Do It)

Matt Bell — Tue, 24 Apr 2018 08:30:10 +0000

You've been trying to use a budget, but it isn't going so well. Don't give up just yet: Before you throw in the towel, see if any of the following five issues (and remedies!) might pertain to your situation. If so, a budget makeover may be in the cards.

1. You keep busting your budget

The first step in creating a budget is setting targets for each spending category — how much you'll save, give, and spend on everything from groceries to gifts. If you're new to budgeting, it's pretty common to get to the end of a month only to discover how drastically different your real-world spending is from your planned spending.

Don't despair. Either you set unrealistic targets, or there may be ways to better manage your spending. Very likely, making your budget balance will require some of both.

What to do? Give yourself some slack. See the first few months of using a budget as a time of learning. If you're tracking your spending for the first time, this is a great opportunity to find out how much you really do typically spend in each category. Don't beat yourself up about it; learn from it.

In some categories, such as groceries, there's a certain reality to how much it costs to feed a family your size. If you're a family of five, $400 a month for groceries probably isn't enough. In other categories, there may be opportunities to be more intentional and creative in finding ways to spend less.

Accept the fact that it usually takes several months to figure out realistic spending targets and build new money-saving spending habits. (See also: Stop Using These 5 Excuses Not to Budget)

2. You don't realize you're busting your budget until it's too late

A common budgeting mistake is only reviewing how you're doing at the end of each month. By then, it's too late for course corrections.

An important key to successful budgeting is managing to the numbers. That requires looking at how your actual spending compares to your planned spending throughout the month. Before heading to the grocery store, it helps a lot to know how much of this month's food budget you've already spent. If it's getting tight, you can focus on buying only the essentials.

It's the same with every category. Knowing where you are with your entertainment budget can help you make budget-appropriate plans for the weekend. Got plenty of room left? Make dinner reservations at that new restaurant you've wanted to try. Getting close to your limit? Rent a movie and stay in. (See also: 5 Common Budget Mistakes You Can Fix Right Now)

3. Maintenance and repair costs are busting your budget

Two expenses that commonly catch people by surprise are home maintenance or repairs and car maintenance or repairs. Many people don't even have these categories in their budget.

While expenses vary, depending on the age and condition of your home and car, some good general guidelines are to budget $75 per vehicle per month and $200 per month for your home. Some months, you'll spend far less in these categories, but some months you'll spend a lot more. Putting these amounts in your budget will help make sure you have money available when the need arises.

In those months when you don't spend your full budgeted amounts, you could let the money build up in your checking account. Or, consider them periodic expenses, as described next. (See also: Where to Find Emergency Funds When You Don't Have an Emergency Fund)

4. Periodic expenses are busting your budget

Everyone has expenses — sometimes, big expenses — that don't occur every month, but do occur sometime throughout the year. Examples include an annual life insurance premium, a semiannual vehicle insurance premium, vacations, and end-of-year holiday gifts. If you haven't planned ahead, they can really mess with your budget.

To avoid that, estimate how much you're likely to spend in each periodic expense category on an annual basis, divide by 12, and transfer the total of all such expenses into a dedicated savings account each month. That will help ensure the money is there when needed. (See also: Stop Making These 7 Basic Budget Mistakes)

5. Your spouse is busting your budget

With many couples, one person is usually more interested in using a budget than the other. It's OK for that person to take the lead in designing and managing the household budget. But some budget-minded spouses take this too far and leave their spouse out of all budgetary matters completely. That's a recipe for a busted budget, and probably a lot of arguments.

After all, how can a spouse who had no say in deciding how much to spend on groceries or clothing or anything else be expected to manage to those numbers? That's why it's important to make sure you're on the same page as your spouse. Work together to decide what financial goals to pursue and how that translates into monthly spending priorities. (See also: How to Put Your Spouse on a Budget Without Ruining Your Marriage)

Wrapping up

Budgeting is not a perfect science. Goals and circumstances change, so build in some flexibility and grace, and give it some time. Expecting to hit some snags along the way can help you stick with your budget long enough to get it running smoothly.

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This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Added Costs That Come With a Bigger House

Kentin Waits — Thu, 01 Mar 2018 09:00:06 +0000

Like most things in America, the size of our homes is expanding. According to data collected by Zillow, the median size of a detached single-family home has grown 24 percent since the late 1990s (from 2,100 square feet to about 2,600 square feet).

The trend isn't surprising. After all, bigger, better, more is part of our national identity — along with reality TV, free refills, and sweatpants that look like jeans. However, if you're thinking about buying a bigger home, proceed with caution. The added expenses go far beyond a steeper mortgage. Here are the extra costs that come with a bigger house.

1. Property taxes

There's usually a correlation between home size and home value. And since more valuable homes are assessed higher property taxes, expect to pay more. While tax rates vary by jurisdiction, most homeowners pay about 1.2 to 2 percent of the property's assessed value in taxes each year.

2. Homeowners insurance

Again, assuming that larger homes are worth more, expect your insurance premium to grow with the size of your space. Though there are many variables and deductions, plan on paying about $4 in premiums for every $1,000 in appraised value. For example, a home that's worth $200,000 could be insured for approximately $800 annually. (See also: 7 Other Kinds of Insurance You May Need to Buy for Your Home)

3. Utilities

Don't forget about those frigid winters and sweltering summers. With more space to heat and cool, your utility costs are likely to rise. Before you buy, have your real estate agent ask the current owners what they typically pay for electricity and gas during peak months. This will give you an idea of how much you can expect to see those costs jump. (See also: 34 Smart Ways to Cut Your Electric Bill)

4. Maintenance and lawn care

Larger houses are usually situated on larger lots, and that equates to higher landscaping and lawn care bills (or more time and more tools if you do it yourself). Additionally, maintaining a larger home can be more expensive — think more rooms to clean, more windows to wash, and more exterior surface to scrape and paint. Be ready to commit a significant portion of your days or your dollars to keeping the new place looking sharp.

5. Repairs

What grows with the size of your home? Your repair budget. More bathrooms mean more toilets to back up and more dripping faucets to fix. Have a foundation problem, electrical issue, or a roof to replace? Get ready to upsize your spending. (See also: 10 Simple Household Repairs Every Frugal Person Should Master)

6. Furnishings

Unless your style is "empty chic," more house means more square footage to furnish and decorate. Artwork, window treatments, rugs, sofas, and beds (oh my!) — they can all add up to a few thousand dollars in no time.

7. Expectations

A curious thing happens when people move into larger homes: It's expected that they'll entertain more, host holiday parties, and serve as the hub for every family gathering. All that merriment costs money. Whether those ballooning expectations are internal or external, plan on adding a few extra bucks to the "entertainment" column of your budget.

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This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Your Car Was Recalled. Now What?

Paul Michael — Thu, 22 Feb 2018 09:30:05 +0000

If you feel like you hear about car recalls constantly, you're right. In 2016, there were almost 53 million recalls, according to Roadshow by CNET. And although we're only just into 2018, Cars.com reports some 50 million Takata air bag inflaters are currently under recall. With car parts constantly being tested and updated, you're bound to get a recall letter yourself at some point. But what should you do when you are on the recall list? (See also: Bookmark This: Save Money With an Easy to Follow Car Maintenance Checklist)

First, there's no need to panic

You're driving along in your car, maybe getting groceries or picking the kids up from school, when you hear the news on the radio — XYZ automaker is recalling four million cars. You have that car, and it's only natural that it scares you a little. After all, your car is not only your primary means of transportation, but if something is wrong with it, could your life be in danger? Fortunately, probably not.

Most recalls are minor, and have very little impact on the way the vehicle operates. If it's a voluntary recall from the manufacturer, it's likely not a big issue. If the NHTSA (National Highway Traffic Safety Administration) gets involved, it could be more serious. And although a recall is only issued when it is a safety hazard, those risks can be very small.

Find out exactly what kind of recall has been issued

As soon as you get the chance, call your local dealership or check the internet and find out what kind of recall has been put in place. It could be something as simple as a software update. Maybe one particular part has broken on some models, and the manufacturer is replacing them all as a precaution (most err on the side of extreme caution rather than risk a lawsuit).

You should have also received a letter or email from the manufacturer, and you can verify your issue by typing in your VIN (it's on the driver's side dashboard) to a site like NHTSA.gov, Safecar.gov, or Cars.com.

Read what's detailed in the recall notice

The chances are that you'll be notified about the recall in several ways, including local and national news reports, a call from the dealership, email, and a physical letter. The letter and email will highlight several factors about the recall, and will include:

a complete description of the defect or issue.
what you should look for to see if your car is already experiencing issues.
the dangers the defect presents.
what the manufacturer will do to resolve the problem.
how long you can expect the repair to take.
the name and address of the nearest approved repair facility.
contact information should you have additional questions.

Find out if the recall is covered by the warranty or manufacturer

A lot of people assume that the recall is covered. After all, the manufacturer made the mistake, so shouldn't they pay for the repair or replacement? Timing is a big factor in the answer to that question. As DMV.org points out, there is a 10-year window for recalls. That means 10 years from the original purchase date of the new car, not 10 years from the day you bought it. So if you bought it used when it was 11 years old, you're not within the recall window.

If you aren't covered, you have to weigh the time and expense of the repair against the seriousness of the issue. For example, if it's a faulty wiper blade motor and it hasn't failed you yet, maybe wait until it starts giving you issues. A recall doesn't mean the part is guaranteed to break.

Make an appointment with an approved garage

If the recall affects only a small percentage of cars, you likely won't have an issue finding an appointment time. In many instances, active recalls are checked when you bring your car in for an oil change or tire rotation, and can often be repaired during that appointment.

However, if it's a large recall, or requires a specific part, call ahead and make an appointment for that specific issue to be repaired. This will give the service manager time to order the parts needed to complete the recall. While the majority of recalls can be dealt with quickly, some can have the local garages backed up for months. Hopefully, you can still drive the car safely until then.

If the car is unsafe to drive, make arrangements until it is repaired

Most of the time, the recall isn't going to make the car undrivable or unsafe. However, if the issue poses a serious risk to you and your family, are you really expected to drive it until the repair can happen? In some instances, the waiting list is long. What do you do for transportation?

In some cases, the auto manufacturer may offer to pay for a rental vehicle to customers affected by the recall. However, this varies from case to case, and in some instances it's possible you will have to cover the cost of a substitute vehicle while your recalled car is waiting for repairs.

Stay vigilant

Drive the car and see if everything feels the same as it did before you took it in to be repaired. If you have issues, or something else has come up that wasn't there before the recall, contact the repair facility and voice your concerns.

Even if everything turns out great, that does not mean you are free and clear forever. There may be other recalls issued during the time you own the car, and you should make a point to check in with the NHTSA periodically to ensure your car is not part of a different recall. Parts fail. Problems happen. Be vigilant.

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8 Questions to Ask When Buying a Used Car

Emily Guy Birken — Thu, 01 Feb 2018 09:30:14 +0000

Buying a used car can feel a little like a crap shoot. Is the car you have your eye on really worth the thousands you're going to spend on it? Or will you find it's held together with Band-Aids and twine after driving it off the dealer's lot?

But buying a used car doesn't have to be nerve-wracking or expensive. You just need to know what you should be asking throughout the process. These eight questions can help you to find an affordable used car that will keep you on the road for years to come. (See also: Could You Put Away a Million Dollars by Driving a Used Car?)

Questions to ask yourself

Before you even start debating the relative merits of a sedan versus an SUV, you need to ask yourself some important questions. These are going to be the basis of your used car purchasing decision, so don't think you can skip over them to get to the part where you're salivating over pictures of cars online.

1. How much work am I willing to do to get a deal?

When you buy a used car, you can spend money and save time by making a purchase from a reputable local dealer — or you can spend time and save money by buying direct from a local private seller. And whether you purchase from a dealer or a private seller, you can often find better deals if you broaden your search to include nearby cities.

This is why it's a good idea for you to recognize whether you have more time or more money at your disposal. If you know that you are not willing or able to devote a great deal of time to your search, you might not find the best price possible. And if you don't have a great deal of money to spend, your search might take longer while you try to find the right price.

2. What is my budget?

Whether you plan to pay cash for your used car or you expect to take on an auto loan, you need to start with a good look at how much car you can afford. According to the 2017 Edmunds Used Vehicle Market Report, the average price of a used car was a whopping $19,189 in 2016.

If you don't have the full cost of your new-to-you car saved up, make sure you have calculated the monthly cost of financing the vehicle. For instance, let's say you have $4,000 set aside to put down on a $19,000 car. A 48-month loan of $15,000 at 3.24 percent interest will cost you $334 per month.

Of course, your monthly car payment is not the only cost associated with buying a car. You will also need to calculate your insurance costs, since different vehicle models can have different insurance premiums. In addition, different vehicles can require varying levels of maintenance and the cost of parts, labor, and repairs can be higher or lower depending on which car you choose.

Taking the time to figure out your car shopping budget, as well as your insurance and maintenance budget, can help you zero in on the right make and model for your finances, even before you start looking for the specific car you want to buy.

3. How will I finance this purchase?

If you are planning to take on an auto loan, don't wait until after you've found the car you want to get your financing in place. Whether you are purchasing a car from a dealer or a private seller, having your financing secured ahead of time gives you an important bargaining chip. You will be empowered to negotiate with the seller in the same way that a cash buyer could. You will not be stuck with the terms offered by the dealer's financing options, and you will make it clear to a private seller that you are a motivated buyer.

To find the right loan, you can shop around among banks and credit unions for the best rates and terms. Doing this ahead of time will also allow you to make rational decisions that aren't motivated by lust for a particular vehicle that is calling your name.

Question to ask the internet

Now we get to the fun part. You've figured out your budget, so you can start looking online at local (or not-so-local, if you're willing to travel for a deal) used cars for sale. But rather than just make a list of possibilities in your price range, don't forget to do a little research on the particular makes and models that you are planning to test drive.

4. What are common problems with this make and model?

Automotive engineers and manufacturers are not perfect, which means there can be common problems with certain models that are predictable if you know a little about the brand. For instance, Honda Accord V6s released between 1999 and 2004 have a widespread transmission problem that often requires an expensive transmission replacement. While not all common problems are as costly as this one, it is always a good idea to know as much as possible about the known complaints about your potential purchase before you even go for a test drive.

If Google is not coming up with answers, consider finding a car enthusiast forum for the particular make and model you're looking to buy. Ask these friendly folks for some insight.

Questions to ask the seller over the phone

At this point, it's tempting to just go test drive the cars on your finalist list. But before you do this, you should pick up the phone and have a conversation with the dealer or seller. Here are some questions you can ask to help you narrow down your search before committing to a test drive:

5. Can you tell me about any recent maintenance or repair?

A used car has a history, which means there must have been some maintenance, and possibly some repair. You want to find a seller who is able to tell you what kinds of maintenance and repairs were recently done. If the seller claims that the 10-year-old vehicle you're interested in has needed nothing but oil changes, that could be a red flag, particularly if you know what common problems crop up on that make and model.

You should also consider pulling the car's history report from Carfax or Autocheck. That way, you can double check that the maintenance and repairs the seller claims to have done match up with those documented on the vehicle history report. (See also: How to Buy a Used Car Without Getting Ripped Off)

6. Can my mechanic look at the vehicle before I make my final decision?

If the answer is anything other than yes, hang up the phone and move on.

Questions to ask your mechanic

Once you've narrowed down the options, it's time to let your trusted mechanic give it a once-over. Since your mechanic may not feel comfortable just giving you a thumbs up or thumbs down, here are two questions to ask to help you decide if the car is right for you:

7. Did the owner do a good job of maintaining this vehicle?

A well-made car that was poorly maintained may be a worse bet than a mediocre car that was lovingly maintained. Your mechanic will be able to tell you if the previous owner stayed on top of necessary regular and irregular maintenance.

8. Did the previous owner use cheap parts or good parts?

Not all car parts are created equal. A previous owner who did repairs with low-quality, cheap parts may have done a disservice to the car (and the next owner). Other than taking the car completely apart, there will be no way to know if all replacement parts were high-quality — but asking if the easy-to-check parts are good quality can be a decent indicator that the previous owner took good care of the vehicle.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Hidden Costs of a Luxury Car

Toni Husbands — Tue, 23 Jan 2018 10:00:06 +0000

You've seen the commercials: an oversized, red bow atop a shiny new luxury car in the driveway. You can all but imagine the new car aroma wafting while an exuberant recipient jumps for joy in his or her jammies.

Luxury cars make a statement. They say something about the owner's arrival into a land of accomplishment. They stand out in a sea of moderately priced alternatives. Heck, they just look better. But, they can also have you scrambling to stay on top of your finances.

Even if you've absorbed the sticker shock and accepted that a new luxury car will cost you more than the comparable non-luxury model, there are other hidden costs that can transform that new car smell into a rotten stench of budget overrun. (See also: 10 New Car Costs the Dealer Is Hiding From You)

Everything costs more with a luxury car. Do your homework before signing on the dotted line.

Insurance

Insurance is one of the not-so-sexy must-haves that every buyer must reckon with after leaving the car lot. As you would expect, a fender bender with your shiny new luxury mobile will cost more to repair. The insurance company will pass the cost along in the form of higher premiums.

Just how much your insurance costs rise depends on your new car. Let's compare a top-of-the-line Toyota Camry to an entry-level luxury model, the Mercedes C300. A fully loaded Camry in Chicago tops out at $33,000 according to TrueCar.com. Slide into an entry-level C-class Mercedes, standard frills only, starting with a $40,000 price tag.

A quick search on InsuranceQuotes.com shows that as a married woman in her 40s, I would pay $1,500 annually for the typical Toyota Sedan insurance premium. By comparison, I would fork out a whopping $2,689 a year to ensure my new hot Mercedes. That's an additional $1,189 a year, an 80 percent increase, to ride in style.

Gasoline

Fuel costs are another ongoing expense to calculate when considering a luxury car. Luxury cars, with their massive engines, are built for performance, not fuel economy. That's why premium fuel is required to keep these marvels humming. The national average for regular gas prices is $2.48 per gallon, according to AAA. That average jumps to $3.01 for premium prices.

In Illinois, we have the honor of paying even more for gas. Premium prices are currently an average $3.37 per gallon, while regular fuel costs around $2.62 per gallon. So my fuel costs on average per year will cost $1,800 annually for the Mercedes vs. $1,500 a year to drive a Camry, according to a calculator on FuelEcomony.gov.

Maybe you're not bothered by an additional $300 in fuel costs. We're not done yet.

Maintenance and repairs

Repairs will also cost you more for luxury models. The parts are more expensive. Technicians have to be specially-trained to work with the complicated gadgets. Even if you opt for non-dealer mechanics, repairs will undoubtedly add to your cost of ownership as the car ages. Non-luxury cars need maintenance, too, but repairs and upkeep are cheaper.

Toyotas are famous for their new car care programs. Toyota purchases include ToyotaCare, which covers factory-scheduled maintenance costs for the first two years or 25,000 miles. Your oil changes, tire rotations, and brake inspections are covered.

Mercedes, on the other hand, offers a prepaid maintenance package starting at $769. According to MBUSA.com, the Mercedes-Benz website, the package will save you 30 percent on routine maintenance costs over three years compared to paying as you go. This one-time fee covers the car for three years or 30,000 miles.

Once these new car protections expire, the difference between maintenance cost grows. YourMechanic.com ranks the cost to maintain all of the major car brands. Mercedes, not surprisingly, is one of the most expensive cars to maintain — right after BMWs — at nearly $13,000 over 10 years. A Toyota should cost only $5,500 to maintain over 10 years. In annual terms, the Mercedes costs $750 more than the Toyota to maintain. (See also: 6 Cars You Can Drive (Almost) Forever)

Depreciation and taxes

No one walks into a dealership and wonders how much depreciation will impact their cost of ownership. Maybe we should. This hidden cost impacts your car's resale value. Luxury car values continue to drop after standard car depreciation rates tend to level off. (See also: 3 Reasons Why You Should Never Buy a New Car)

The higher cost of maintenance and repairs has a lot to do with that. Think about it. Someone buying your used luxury car is taking on an expensive bill with their new-to-them car purchase. It will cost you more, in terms of lower resale value, to sell your car when you're ready to upgrade.

Kelly Blue Book has a handy tool that will allow you to compare a car's depreciation as a portion of the total five-year cost of ownership. Our Mercedes in this example would lose $27,000 by year five, versus a $16,700 loss for the Camry.

In the end, you may still decide you want the cush Mercedes over the practical Toyota. Either way, go into your decision with your eyes wide open about ongoing costs and total cost of ownership. (See also: Could You Put Away a Million Dollars by Driving a Used Car?)

Sales taxes are another consideration. State taxes vary based on your location, but given the higher purchase price of the Mercedes, you'll pay more taxes on it, too.

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This article is from Toni Husbands of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Yes, You Still Need an Emergency Fund in Retirement

Dan Rafter — Wed, 17 Jan 2018 09:00:06 +0000

You know how important it is to build an emergency fund while you're working. But here's what you might not know: You need to keep that emergency fund well-stocked with savings even after you retire.

An emergency fund might be even more important once you leave the working world. You won't have a regular salary to fall back on in retirement if an unexpected expense pops up. One costly car repair or medical bill can set you back and cause a lot of financial problems.

While you're working, you should keep anywhere from six months' to a year's worth of daily living expenses in this fund. That way, if you lose your job, you'll have money available to pay your daily living expenses while you search for a replacement. You need to do the same during your retirement.

How an emergency fund changes in retirement

Social Security payments often complicate the emergency fund equation in retirement. That's because you are guaranteed these payments each month. When you're working, there is always a danger that you'll lose your job and your paycheck will disappear. That won't happen with your Social Security benefits. An emergency fund won't ever have to replace this source of income.

By the time you reach retirement, you should also know how much other income you can rely on each month. Most of this will probably come from the retirement savings you've built up over time. You should have created a retirement budget listing how much money you'll have available each month when factoring in withdrawals from these savings and Social Security payments. (See also: Here's How You Should Budget Your Social Security Checks)

What you might not be as certain about are your monthly living expenses. Retirement isn't cheap, and that's where an emergency fund comes in. This liquid savings can help you cover unexpected emergencies that could otherwise break your monthly budget.

The challenge, of course, is in estimating how much you should keep in that fund at any given time. There is no magic formula. And how much you'll need depends largely on your health and your housing situation.

The costs of retirement

The most recent Merrill Lynch Finances in Retirement Survey says that the average cost of retirement is $738,400.

A good chunk of that cost can be attributed to health care. A recent report from Fidelity found that a healthy 65-year-old couple retiring in 2017 could expect to pay $275,000 throughout their retirements in health care and medical expenses. That figure is rising, with the number 6 percent higher in 2017 than it was a year earlier. (See also: Here's How Far $1 Million Will Actually Go in Retirement)

The challenge with health care costs is that you can't control them. You might be healthy when you hit retirement, but there's no guarantee that your health won't decline. Without an emergency fund to cover unexpected medical bills, you risk wiping out a huge chunk of your retirement savings that may be budgeted for other things.

Then there's housing. You might have paid off your mortgage and plan to remain in your home. That's ideal … for now. As you age, you might need assisted living, which certainly isn't inexpensive. And if you enter retirement with a monthly mortgage payment, that can be a huge expense.

Even if you do live in your current home without a mortgage payment, you can still expect to pay for property taxes, repairs, and maintenance. And if your home has aged along with you, chances are it may take some extra TLC (and cost) to be maintained. (See also: 9 Unexpected Expenses for Retirees — And How to Manage Them)

This is why it's so important to maintain an emergency fund in retirement. Much like when you were working, your goal should still be to keep that fund stocked with enough to cover six months' to a year's worth of daily living expenses in case the worst should happen.

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7 Reasons You Need to Downsize

Mikey Rox — Wed, 22 Nov 2017 09:30:10 +0000

It can be a tough decision to leave your home, especially if you've worked hard for it or it's the residence you've always dreamed of owning. But for many people, downsizing isn't so much of an option as it is a financial necessity. And if any of these situations apply to you, it may be time for you to do the same.

1. You're house poor

You're house poor if all of your income is going into your home (your mortgage payments, maintenance, property taxes, and utilities), leaving you with very little money to do anything else.

This isn't only problematic from a quality-of-life standpoint (would you like to go on vacation anytime soon?), but also from a debt-avoidance perspective. You're one small financial crisis away from throwing your whole world out of whack. If you can't seem to save any money because your home is eating it up as fast as it comes in, it's time to investigate other options — like finding a less costly place to live. (See also: 8 Signs You're Paying Too Much for Your Mortgage)

2. You're ready to retire

If you've lived in your home for many years and you've kept up on maintenance, chances are you're looking at a decent payout if you decide to sell. Real estate prices are on the uptick again, and you aren't required to pay capital gains tax on the first $250,000 of your home sale if you're single, or $500,000 if you're married. You must have owned and lived in the home for more than two years to take that exemption.

If you got a late start to retirement savings or had to dip into that fund along the way, downsizing could be exactly what you need to set yourself up for financial success in your golden years — or at least very least, avoid poverty.

3. Your kids have flown the coop

Your decision to have children naturally dictated the type of accommodations you needed, but once they're out of the house, what's the point of paying for all the rooms that no one is using? If your kids give you grief for putting their childhood home on the market — a reason that many aging parents give for staying put when they should move on — suggest that they pay a portion of your mortgage. They'll see things your way soon enough. (See also: 7 Money Moves to Make as Soon as the Kids Move Out)

4. You want a change of scenery

Nobody enjoys moving, but we all need a change of scenery every now and then. In fact, that's all the reason you need to pack up and start fresh someplace new. If you're fed up with the cold weather, head someplace warmer. If you don't like the noise of the city, set up shop someplace quieter. You only live once — and the clock is ticking.

5. You want more time on your hands

Even small single-family houses require a lot of attention. From maintenance to regular cleaning, a one- to two-bedroom home can easily zap a daytime's worth of hours from your week. Less space demands less of your attention, and that all adds up to more time for yourself.

6. You want a lower mortgage

You don't have to be house poor to want a lower monthly mortgage payment. In fact, having the lowest mortgage payment possible while still maintaining a quality of life that satisfies you should be the goal for everyone. Sell the money pit and find something cheaper — then treat yo'self for being so savvy with your cash.

7. Your health is declining

If you're getting older and you live in a house with a lot of stairs and levels, it's important to consider the future and how your home fits into that. Do you want to spend money that you may need elsewhere to outfit your home to accommodate your needs as you age? It's an option, but not a cheap one. Your best bet may be to spend that money on a ranch home or a retirement or long-term care facility where you and your family will have more peace of mind. Plus, at the latter, you'll make new friends and play bingo. I'd like to move in right now.

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5 Common Budget Mistakes You Can Fix Right Now

Matt Bell — Fri, 10 Nov 2017 08:00:06 +0000

As a volunteer "budget coach," I've reviewed lots of people's budgets over the years. No two are exactly the same because people have different incomes, fixed expenses, priorities, and more. That's to be expected. When it comes to budgeting, there's no such thing as one-size-fits-all.

However, there are also certain approaches to budgeting that make cash flow management easier and more effective no matter your unique circumstances. Unfortunately, the use of these approaches is all too rare. As a result, here are five of the most common mistakes I see in people's budgets. (See also: 10 Dumb Little Budgeting Mistakes You Need to Stop Making Today)

1. Not budgeting based on gross income

It's relatively common to find budget recommendations based on net income — what's left after all the withholding (for taxes) and transfers (for retirement plan contributions) are taken care of. The thinking is that net income is the money that's available to you so that's what you should base your budget on.

However, gross income is the purest, most complete view of your income. I prefer to use it as the starting point because some of the withholding and transfer categories are manageable.

Take taxes, for example. About 80 percent of taxpayers got a federal tax refund this year and the average amount was $2,851. That's a lot of money you might have preferred going home in your paycheck. If you typically get a big refund, estimate how much you really should have withheld by using the IRS withholding calculator. You should also talk to your human resources department about having less withheld.

Retirement plan contributions are also manageable. Listing how much you contribute each month can serve as a helpful reminder to think about whether you're contributing enough. Today, when so many workplace plans automatically set employee contribution levels — and with the default amount usually set at a low 3 percent of salary — it's especially important to consider whether that's enough.

2. Not putting first things first

Budgeting isn't just about putting all of your monthly income and expenses down on paper. It's about guiding your use of money in a way that enables you to live within your means and pursue the priorities that are most important to you.

One reason so many people struggle to build an emergency fund or invest for the future is they haven't made those items priorities. It helps a lot to design your budget with saving, investing, and if this is important to you, giving, at the top of the outgo section.

List them first on your budget and subtract them from your income before setting your allocations for housing, transportation, clothing, and all the rest. Trying to take care of these priorities with money that's left over after lifestyle spending usually leaves you with nothing to save, invest, or give. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

3. Not budgeting for home and car maintenance

One of the best ways to keep your overall housing and transportation costs down is to keep your home and vehicle maintained and to make repairs on a timely basis. That will be a lot easier if you allocate money for those purposes in your monthly budget.

When it comes to homeownership, it seems there's always something in need of attention — from a squeaky door to a leaky faucet to a furnace that doesn't light. Depending on the age and condition of your home, $200 per month is roughly the right amount to budget for maintenance and repairs. If you own a condo or townhome, you should be able to budget less. Make sure you know what you're responsible for and what your association is responsible for.

With vehicles, $75 per car per month is about right, but again, it depends on the condition of your vehicle. (See also: Bookmark This: Save Money With an Easy to Follow Car Maintenance Checklist)

You won't spend these full amounts every month, but some months you'll spend far more. During months when you don't spend your full home or vehicle maintenance and repair budget, don't spend that money on something else. Let it build up, either in your checking account or in a savings account designated for periodic bills and expenses.

4. Not budgeting for periodic bills and expenses

When my family used to live in the Chicago area, I'll never forget the first property tax bill we received. I thought maybe one of our kids had been kidnapped and this was a demand for ransom. Property taxes in Chicago are extremely high.

That's an example of a periodic bill or expense — a cost that doesn't occur every month, but that needs to be paid at some point each year. If you don't plan ahead for these big, irregular expenses, they can be real budget busters. Other examples include insurance premiums, end-of-year holiday gifts, and vacations.

Here's what to do. Include one-twelfth of the annual cost of each such item on your monthly budget. Then transfer the total of all of these monthly amounts to a savings account dedicated to these expenses. That way, when the bill comes due, there will be money set aside for it. (See also: Pay These 6 Bills First When Money Is Tight)

5. Not budgeting for miscellaneous expenses

Having a zero-based budget is a worthy goal. That means income minus expenses equals zero. However, creating a budget where every dollar of income is allocated to a specific outgo category is far easier than following such a budget. No matter how detailed your plan, there always seem to be some expenses that just don't fit into one of your preplanned categories.

To cope, set a monthly budget for miscellaneous expenses. But not very much — $50 is a good limit. If miscellaneous items start running higher than that, see if some of those expenses are similar enough to warrant their own category.

Especially if you're new to using a budget, there can be a number of frustrations that make it tempting to quit. Avoiding these five common budgeting mistakes will go a long way toward lessening the frustration factor, and that should help you stay with it.

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This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Determine If Your Finances Are Ready for a Big Purchase

Dan Rafter — Wed, 18 Oct 2017 09:00:06 +0000

Maybe you're ready to make an offer on that dream home down the street. Maybe you're eying a new car for that long commute to work. Or, maybe you just want to plunk down a few thousand dollars on a fancy vacation or the latest gadget. How do you know that you're financially ready to make such a large purchase?

Whatever it is that you want to buy won't bring you any joy if you can't actually afford it. Here are some questions you need to ask yourself to make sure you're financially ready to commit to a big purchase.

Do you already pay all your bills on time?

If you're taking out a loan for a large purchase such as a house or car, first look at how you pay the rest of your bills. Do you routinely pay your credit card bill three weeks late? How about your utilities or cellphone bill?

If that's the case, you're not ready for the financial responsibility of another large monthly payment. If you're already struggling to pay your bills on time, adding another even larger bill to your financial responsibilities will only put you at a higher risk of accumulating debt.

You can hurt your credit score doing this, too. If you're late on the monthly payments for a house or car by 30 days or more, your score will tumble — usually by 100 points or more. If you struggle enough to pay those big payments on time, you might even lose the house or car altogether.

Protect yourself financially by holding off on that big purchase until you've already developed the habit of paying all your other monthly bills on time. (See also: 5 Simple Ways to Never Make a Late Credit Card Payment)

How much wiggle room is left in your budget?

Before making any big purchase, it's important to check your household budget. Make sure you have the ability to make the monthly payments comfortably while leaving enough money to cover your other monthly expenses.

And if you don't have a budget, you absolutely need to make one. How else will you know if you can afford your new purchase to begin with? Making a budget isn't as intimidating as it sounds. First, list all your recurring expenses each month. Then estimate how much you spend each month on discretionary and non-fixed expenses such as entertainment, groceries, and eating out. Finally, list your monthly income. The difference is how much you can afford to spend on new purchases and save each month. (See also: Build a Better Budget in 5 Minutes Flat)

How strong is your credit?

Before taking out a loan for a new car, home, or other big purchase, make sure to check your credit. Lenders rely on your credit score to determine if you qualify for loans and, if you do, how high of an interest rate they'll charge. Lenders consider credit scores of 740 or higher to be strong ones. Generally, the lower your credit score, the higher your interest rate on loans. The higher the interest rate, the more paying off that big purchase will cost you over time.

You can check your credit reports — a list of your outstanding loans, how much you owe on credit cards, and whether you have any late payments or other financial blemishes in your past — by visiting AnnualCreditReport.com. At this site, you can order one free copy of each of your three credit reports (from Experian, Equifax, and TransUnion) every year. It's important to make sure that there are no errors on your credit reports and that the bureaus don't have any late payments or other financial black marks listed against you. These reports, though, don't contain your credit score. You can order your score for a small fee from any of the bureaus.

Before making a purchase big enough to warrant a loan, you might want to check your credit score to determine if you'll be saddled with high interest rates. A score under 640 will almost always leave you with a sky-high rate. (See also: 5 Ways to Improve Your Credit Score Fast)

How much credit card debt do you have?

Credit card debt is among the worst kind of debt to have. Interest rates can be as high as 16 percent, 18 percent, or even higher. If you carry a balance on your cards each month, your credit card debt grows quickly.

If you are struggling to pay down your credit cards, resist the temptation to spend big on electronics, furniture, or other items. Instead, devote that money to paying down your debt. And if you can only make that big purchase by putting it on one of your credit cards, don't pull the trigger. You will only dig yourself deeper into a hole. (See also: 5 Ways to Pay Off High Interest Credit Card Debt)

Can you cover the maintenance expenses?

Sometimes buying an expensive item is only the start of how much you'll actually pay for it in the long run. Many big-ticket items come with high yearly maintenance expenses. Consider a house, for example: Sure, you'll spend a lot of money upfront to buy one. But you can also expect to spend 1 percent of your home's purchase price on maintenance each year. (See also: 10 Hidden Housing Costs New Homeowners Don't Expect)

If you can't afford to maintain your big purchase, hold off until you can create more wiggle room in your budget.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

20+ Questions to Ask During an Open House

Annie Mueller — Thu, 20 Jul 2017 08:30:14 +0000

Shopping for real estate can be daunting. It takes time and discernment to know which house is right for you. To avoid wasting time on open house visits, be prepared with these key questions. If you find a house that matches your wish list, chat with the listing agent to find out all the details you don't want to overlook.

Before you start asking questions

First things first: Pick up a copy of the property information. These are often on the kitchen counter or near the entry during open houses. Many people view the house, and then look over the information. But the disclosure statements often reveal things you'll want to see while on site; maybe there was water damage, or the carpets were recently replaced. Spend five minutes reviewing the property information so you can eyeball the improvements or issues as you move from room to room.

Some listing agents will wait near the information sheets, ready to talk to prospective buyers. If you're not ready to chat yet, say so; the agent should accommodate your desire to view the house and review the information before either of you starts asking questions.

General questions

Ask these questions to get an idea of the overall condition of the house and area.

What's the reason for the sale?

This may seem like a personal question, but it's a valid one. If the house is being sold because the owners are unhappy with its condition, need for repairs, the safety of the area, or the feel of the neighborhood, you want to know. Your goal is to understand if the reason for the sale is personal or due to an issue with the house or area.

Don't press for personal information about the owners, of course; the agent should protect their confidentiality while giving you a top-level answer. If the agent is very hesitant, or unable to provide even a generic or partial answer, note that. If you're interested in the house, you can have your own real estate agent follow up with the listing agent.

What are the biggest problems with the house?

If you ask, "Are there any major problems with the house?" then the agent may say, "No, it's in great shape." Phrasing matters. Every house has problems. This is the time to find out what those problems are. The listing agent wants to sell the property, of course, but they want the sale to be a satisfactory one.

In many states a seller's disclosure is required, and should be included with the property information. You can ask for more details on any issues disclosed:

Have there been any more water problems since the sump pump was replaced?
How extensive was the termite damage listed on the disclosure?
Have the owners done any further mold testing?

Asking for more information will help you determine if the issues have been resolved or would require additional repair or maintenance.

What are the average utility costs?

Older houses tend to be less energy efficient, and can come with heftier utility bills than you'd expect. On the other hand, the owners may have a installed top-of-the-line HVAC system, put in double-paned windows, and invested in other energy-saving upgrades. The listing agent will know, or be able to find out, the average monthly cost for utilities. It's a good idea to ask for a typical monthly cost in the winter and in the summer, so you can compare how much the energy use might fluctuate seasonally.

Has the price changed at all?

The listing agent will know the history of the house, if the listing price has dropped or increased, and the reasons for any change in price. A lower listing price can be great news for you, but multiple drops in price should be a red flag. Was the house listed much too high for the area? Or are there major issues that are keeping buyers away?

In your discussion on price, you can ask other questions to get an idea of the urgency of the sellers:

How long has the house been on the market?
Have there been other offers on the house?
Are the sellers eager to negotiate?
Are the sellers in a hurry to sell?

You may not get direct answers to all these questions, but they're still worth asking. If you are genuinely interested in the property, talking with the agent can give you insight on what matters most to the sellers. If they're in a hurry to move, for example, they might accept a lower offer with a rushed closing date.

Is this a good neighborhood for families?

Maybe you don't have a family; this is still a good question to ask, because "family-friendly" is often code for safe, clean, and welcoming. Are there community events nearby? Is there a neighborhood association? Ask the agent about the nearest places for shopping, entertainment, and dining out. If the nearest grocery store is 10 miles away but the nearest bar is just around the corner, it may not be so family-friendly, after all.

A discussion about the neighborhood is a good time to ask about area resources and attractions, as well as cost of living:

Are there any parks or natural attractions nearby?
What do people in this area like to do for fun?
What's the best restaurant nearby?
Do you know what the average income is for this area?
Where is the nearest hospital?

Room by room questions

Some questions are room-specific. Ask the agent to walk through the house with you and discuss as you go.

Kitchen

Which appliances are included? How old are they?
Have there been any major updates or renovations in the kitchen?
Are there any water issues in the kitchen?
Have there been any major repairs in the kitchen?

Basement

Are there any water issues in the basement?
Is there a sump pump installed?
Have there been any issues with mold?

Living rooms and bedrooms

How old is the carpet?
What's underneath the carpet?
Have the rooms been recently painted?
Are the window treatments included?
Have there been any renovations or updates done lately?

Bathrooms

Are there any water issues in the bathrooms?
How is the water pressure? (Ask if you can check it.)
How recently have the bathroom fixtures been updated?

Yard

Does the landscaping allow water to flow away from the house?
Are there any wet or soggy areas in the yard?
Have the owners done regular pest control?
Are there any issues with the yard or garden?

Open house etiquette

Open houses vary, but there are some common etiquette rules to follow. Don't forget to sign in; leave your name only if you prefer not to include your contact information. Be sure to greet the listing agent. Let the agent know you have questions, but don't keep them from being able to interact with other visitors. Discuss, don't dominate.

Expect to answer a few questions about yourself, such as "How long have you been looking?" A good listing agent will be trying to determine who's a serious buyer and who's there for the free mints.

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This article is from Annie Mueller of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why I Choose to Rent Instead of Buy

Kat Tretina — Mon, 10 Jul 2017 08:00:08 +0000

Conventional wisdom says that buying a home is a smarter financial decision that renting. However, homeownership is a huge decision, and it can be an expensive option. Owning a home is not for everyone, and for some, renting can actually be the more cost-effective choice.

That's certainly the case for me. Despite earning a good income, my husband and I have decided to rent for the foreseeable future. Here's why it makes sense for us.

1. Affordable housing is hard to find

We live in one of the most highly-desired towns in the Central Florida region. A single-family, 1,200 square foot home in our neighborhood starts at $350,000. Even if you do find a home at that price, they often need significant improvements to be livable. Typically, houses in that price range need new roofs or foundation work.

If we put 20 percent down on a home — a whopping $70,000 — our monthly payment for the mortgage, insurance, and taxes would be about $1,600 a month. Besides coming up with a huge down payment, that's a high monthly bill.

While the housing market is extremely competitive in our neighborhood, rentals are much more affordable. We rent a large two-bedroom apartment with granite countertops, stainless steel appliances, hardwood floors, and resort-like amenities for just $1,300. And we didn't have to come up with a large payment to move in.

The lack of affordable housing is a nationwide issue. Particularly in areas like New York City or San Francisco, buying a home can be out of reach for most Americans. In those cases, it can make more sense to rent than buy.

2. Maintenance isn't my problem

If we were to buy that $350,000 home, the down payment and monthly mortgage payment would be only a small portion of our home expenses. We'd have to budget to prepare for other expenses, like emergencies. If the roof needs repairs, or if the appliances break, we'd have to cover the cost of the replacement.

With renting, all I need to do if there's a problem is call my landlord. Within 24 hours, they'll have the problem fixed. Not having to worry about the extra cost is helpful and gives me peace of mind. (See also: What It Really Costs to Own a Home)

3. Homes are not an investment

Houses are often touted as a good investment. However, the recession of 2008 showed how flawed that idea was. There's no guarantee that a home's value will increase over time, and there is a chance it could decrease.

The homes that go for $350,000 in our area sold for $500,000 pre-recession. But in 2008–2010, those same homes plummeted to under $180,000. For homeowners who took the plunge to buy, they lost a lot of money and either saw their bank foreclose on their homes or are still underwater.

To me, homes are a place to live, not an investment. My goal is to have a safe place to live, not to earn money. (See also: Stop Thinking of Your House as an Investment)

4. Flexibility is key

Homeownership scares me because it feels permanent. Of course, you could sell the home if you need to move, but that process can be long and complex. And you can end up losing money on the deal.

Renting gives me more flexibility. If an opportunity pops up on the other side of the country, I just have to pay to break my lease and am free to leave. Having that option is reassuring in a sometimes tough job market.

5. We have other priorities

If homeownership is your goal, you may have to sacrifice other things to make it possible. To save for a down payment, you may have to cancel your retirement contributions, or take money out of your emergency fund.

Contributing the maximum to my 401(k) and building my emergency fund are important to me. Because buying a home would mean postponing those goals, home searching just isn't in the cards.

Buying a home

Whether or not to buy a home is a very personal decision. While many say that homeownership is essential for financial security, it's not the only option available to you. Depending on your circumstances, renting can give you more disposable income each month and more freedom to pursue your other goals.

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This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: