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Small Changes Make For Big Rewards

Small Changes Lead To Big Rewards: How To Save More Money Today!

 cute funny happy baby in a colorful shirt making his first steps on a green lawn in a sunny summer garden, mother holding his hands supporting by learning to walk

Baby Steps

It is easy to become frustrated when trying to save money. However, it is important to remember that even making small strides toward your goal can really help you. Putting aside your spare change each day, for example, can add up before you know it. One mistake that I made was thinking that I had to have ten or twenty dollars to save and ignoring anything that wasn’t a substantial amount. I wish I could go back in time and change my original outlook.

If you keep a strict budget, you may not have room to save a big chunk of change all at once. You probably do not allow yourself many luxuries, which is why it can be harder to put aside money. You have to think about little things you can do that will add up over time.

The information included here will help you put aside money easily and efficiently. You may not be able to use all the tips, but some should certainly apply to your situation.

Even just reading through the article will be of benefit to you, because it will help you think more about how you can save going forward. You may be able to come up with your own tips, that are personalized for your life!

1. Know What You Make And What You Spend

Do you know exactly how much you make each month? Do you keep track of your expenditures? You’d be surprised at how many people answer “no” to one or both of these questions.

When you write out the amount that you make and the amount that you spend, you are better able to evaluate how you can save going forward. You can see where you might be spending too much and think about how to cut back.

However, you have to be precise here. Look at several months of bank statements to ensure accuracy. You may have expenses that pop up every few months, rather than every month, for example.

Once you have your numbers in order, you simply subtract what you spend each month from what you make each month. If you have some money left over, that is wonderful! If you break even, that is okay, too. However, if you are in the negative, you need to reevaluate what is happening.

 energy efficiency chart and neat calculator

2. Take A Close Look At Your Bills

Once you have an accurate picture of your personal finances, you can figure out what you need to do going forward. Start with the bills.

Is there something that you can eliminate? If so, you’ve got a great start to your savings. If you aren’t sure, systematically look at each one of your bills. Think about them carefully. Can you do without the service? Can you cut back on the service so that you save more money?

For example, how much do you spend on cable every month? You may be surprised. My bill skyrocketed over the course of just a couple of years, and many of the channels I simply didn’t watch. After contacting my cable company, I was able to reduce my package and save quite a bit of money each month.

My car insurance was high as well. I adjusted my deductible (making sure it was an amount I was comfortable paying in the event of an accident) and saved money that way.

There are so many ways to make a difference. For example, try writing out your grocery list before you head to the store to shop. You may find that you spend less when you stick to a plan. I know that if I head to the store without writing out what I need, or the ingredients that are necessary for the week’s meals, I end up overspending by quite a bit.

You can save money if you really set your mind to it. Challenge yourself to see how much you can put away this month!

All About Loans And What You Were Afraid To Ask

loan type word cloudFrom auto loans to personal loans and student loans to mortgages, there are plenty of options from which you can choose, and they all fit into different buckets.

If you find yourself in need of funds but aren’t sure how to pick from the many types of loans out there, here are a few ways to tell them apart.

Open-ended vs. closed-ended loans
Open-ended loans, such as credit cards, offer revolving credit, meaning debt can be added to the loan as needed. By comparison, loans for a predetermined amount, such as auto loans, are considered closed-ended.

Open-ended loans
Examples: personal lines of credit and credit cards

Open-ended loans offer you the chance to borrow as much or as little money as you want, up to a certain amount, and then pay back some or all of the funds monthly. There’s no end date for this type of loan; it’ll always be open for you.

The upside to an open-ended loan is that you’ll be able to use exactly as much money as you need when you need it up to the pre approved limit. This can come in handy if, say, you’re temporarily short on funds. The downside is that if you only make the minimum payments, the interest can add up.

Watch out for open-ended loans with a variable interest rate, which fluctuates depending on the market. This can add a sizable chunk of money to your payments if interest rates rise over the life of the loan. You can find more information on variable rates below.

Closed-ended loans
Examples: auto loans, student loans, and mortgages

Closed-ended loans are probably what you think of when you imagine a traditional loan. You borrow money for a specific purpose, such as paying for a car or house, and then you make monthly payments until it’s paid off.

Closed-ended loans are installment loans. When you borrow money, you make payments in installments until the loan is paid in full. You might have a five-year car loan or a 30-year mortgage — both have endings.

Closed-ended loans are clear-cut since you know exactly how much you’ll borrow and when you’ll have it paid off. Once the loan is paid off, you’ve held up your end of the bargain. And if you need to borrow money, you’ll have to get another loan, which can be costly with establishment fees added in.

Fixed-rate vs. variable-rate loans
A variable rate is an interest that fluctuates over the life of a loan based on market conditions. A fixed rate means your interest rate never changes for the agreed fixed term, regardless of how thefixed_vs_variable loan set of scales market plays out.

You usually have the opportunity to choose a fixed or variable rate, depending on the lender and the type of loan.

Fixed-rate loans
Examples: student loans, and some personal loans, auto loans, and mortgages

You can also get a fixed-rate mortgage, which means the interest rate won’t change for the duration of your agreed home loan term. This can be valuable when most interest rates are heading higher.

Variable-rate loans
Examples: some private student loans, personal loans, auto loans, and mortgages

If you get a loan with variable interest, it means your payments fluctuate depending on an underlying index rate that tracks the market.

Secured vs. unsecured loans
secured-loan-vs-unsecured-loan padlocksWhen you apply for a secured loan, you offer up something as collateral if you can’t pay off your loan. For an unsecured loan, you don’t have to provide any security for the debt, which means that if you can’t pay it back, it will go into collections and will tank your credit score.

Secured loans
Examples: mortgages and car loans

When you take out a car loan or get a mortgage, you’re receiving a secured loan. It’s easier to get because the collateral you put up secures your loan.

If you fall behind on your payments, your car could get repossessed or your house could be foreclosed on. Secured loans typically have lower interest rates because if you can’t pay back your loan, lenders have a way of recovering at least some of the cost.

Unsecured loans
Example: most personal loans

Personal loans that you use for anything you’d like are usually unsecured loans. These don’t require any collateral and are based on your credit score and income. You can use the loan however you wish, but you might have a harder time getting one if your credit history isn’t great.

Because there isn’t any collateral, unsecured loans tend to have higher APRs and in many insatnces a cap on how much you can borrow.

Types of loans
There are many types of loans that fall into the categories described above. Here are a few common ones that you might use at one time or another.

1. Student loans
These loans are meant for educational expenses, though the borrower can choose how exactly to spend the funds. Government student loans are awarded to you based on your financial need.

If you don’t have enough money to pay for college even after Government student loans, you can take out private student loans, but make sure to compare lenders to see which offers the lowest interest rates and best repayment terms.

2. Auto loans
Whether you’re buying or leasing a car, an auto loan helps you pay for it if you can’t afford a full cash payment. They’re secured loans, which means if you don’t pay back your loan with minimum payments each month, your car could be repossessed.

Your interest rate depends on your credit score. If you don’t have great credit, you might need a cosigner for your auto loan.

3. Mortgages
Unless you can afford the entire cost of a home upfront, you’ll need a mortgage. It’s a type of secured loan that banks offer, usually with a low interest rate. If you can’t afford your mortgage payments and fall behind, you could lose your property.

4. Home equity loans
Home equity is the slice of your home’s value that is your’s outside of what you owe the bank. In other words, it’s the total value minus anything you owe on it to a bank or other creditor. Also known as a line of credit.

You can use a home equity loan for almost anything, but your home is used as security if you can’t pay back your loan. This means it could go into foreclosure if you fall behind on payments.

5. Personal loans
Personal loans can be a good option if you need cash. Whether you’re trying to pay off high-interest credit card debt or stay up to date on bills, you can use personal loans for many things. As with any financial decision, though, you’ll want to shop around and consider your decision carefully.

Unsecured personal loans are harder to get because they require a great credit score. Payday loans are considered personal loans, but they should be avoided since they are short-term, high-interest loans. If you can’t pay it back by your next payday, don’t get a payday loan.

6. Refinance and consolidation loans
If you have a lot of different student loans, you might look into refinancing or consolidating them. This allows you to streamline your debt into one easily managed monthly payment.Debt-Consolidation loan diagram

Consolidation takes all your applicable debt and makes it into one loan, generally at a weighted average interest rate. You can consolidate your federal student loans, for example.

Refinancing loans replaces one or more loans with a new one, often with a lower interest rate, a longer repayment term, or both. If you’re struggling to pay high-interest credit card debt or your mortgage, you might consider refinancing those loans.

Find a loan that’s the right fit for you
Now that you’re familiar with the different types of loans, you can go through all your options to find the one that fits your situation best.

From secured or unsecured to variable or fixed, there are plenty of choices. The next step is to compare lenders and other options to get good repayment terms for your budget and low interest rates.

If you need help, seek out an experienced professional mortgage broker who can help you quickly understand the jargon surrounding loans. There services are generally free as the lender pays their commission. Yes, most mortgage brokers these days also can help you with all kinds of loans including car and personal loans.