The global economic crisis has dug deep into the aspirations of Generation Y. Unlike other generations, Generation Y is facing dire consequences of the recession for the first time. Youngsters between the age group of 22- 28 years are known to own the latest in technology and the desire to try almost everything available in the market - from an expensive car to a luxurious flat, even at the expense of paying high interest rates.
Having learned from the challenges of their elders, one finds this trendy generation taking up part-time jobs for financial independence even during their school years. In spite of their earnings at an early age, Generation Y'ers typically do not indulge in savings or budgeting.
Saving a fortune for your retirement days is not a difficult task if you start working on it in your early twenties. Here are three basic tips that can help Generation Y take maximum advantage of available opportunities, such as compounding interest, and simultaneously gear up for the future:
1. Self determination to SAVE is the first financial tip for the trendy generation. This will help you to curb your desire to spend lavishly or rather indulge yourself in frugal spending. Dwindling your earnings on petty luxuries can be put on hold for the time-being and instead can be redirected towards investing and securing your future. The market and return from mutual funds is uncertain, but it is advised that Generation Y must take the challenge and go for it now. Focus on growing your net worth from your income.
2. Make the best of all opportunities given to you. Invest in your company’s 401(K) rather than depositing all your excess money in a savings account. You can also think about an Independent Retirement Account, or IRA.
3. Another important factor that the members of the trendy generation must remember is to clear all debts as soon as possible. The more debts you have, the greater the burden. This aspect is equally important in investing as it will help you to improve your credit score.
Perhaps all the discussed suggestions are heard by the Generation Y group...but the question is this: How many will follow them religiously to maintain the trendiest lifestyle post retirement? By staying out of the market and not taking advantage of all the compounding interest and opportunities during their working years, Generation Y will remain unprepared for their retirement.
Now...let's hear from the audience! What does everyone think? What could you be doing now that you aren't? Why not?
I'd love to hear your thoughts!
Tuesday, May 5, 2009
Thursday, December 18, 2008
A Systematic Approach to Eliminating Your Debt
A lot of us may be dealing with minor or major debt. It seems like we can't get ahead no matter how hard we try. If this sounds like you, then listen up: for a small investment of $299.99, I can totally eliminate your debt for you! Okay, I'm totally kidding...but didn't that sound like one of those infomercials you've seen on tv or heard on the radio?
Really, though. I have some debt I need to pay off and, up until this point, I've been paying on it randomly. I'd save some money, pay off most of any particular debt, and then have to save all over again to pay for the rest. I felt like it was taking forever and it didn't feel organized - that's because it wasn't. It was a completely random approach to paying off my debt and I'm glad I found a better way.
What I thought of probably isn't a new concept. I'm sure it's been done by thousands of people but it has proven to be really helpful for me. The goal is to pay off your debt, right? Okay, agreeing with that is step one. Step two is trying to figure out how to do that when you have recurring monthly expenses like rent, food, gas, utilities, etc. If you save a few extra dollars in a given month and you use them to pay down your debt without a system in place, you're always going to feel overwhelmed. The goal is to develop a consistent monthly system to eliminate debt in a specific timeframe without falling behind on your current month's expenses.
Let's look at an example. Chris and Nancy have the following in debt:
1. Electric bills: $300
2. Water bills: $200
3. Personal loans from family and friends: $3300
4. Cell phone bills: $250
5. Dance lesson fees: $100
Total: $4,150
Their combined net (after taxes) monthly income is $4,000. Their total expenses per month are $3700. That leaves $300 each month to use towards whatever they want.
Chris and Nancy currently use that $300 to pay down debt as the person/company requests it. For example if one of their friends asks for a payment because she hasn't received one in a few months, Chris and Nancy will pay something to that friend. The remaining money will go towards other similar situations. Chris and Nancy aren't setting aside any money for savings, either.
Here's what they should do:
1. Examine, re-examine, and re-re-examine their montly budget and cut out all unnecessary expenditures. They can save a lot of money by decreasing their cell phone plans, switching from premium cable to basic cable, buying more groceries instead of eating out, etc.
2. Contact each person or company they owe and ask them to accept a repayment plan. Most, if not all, will graciously accept because they'd rather have consistent payments than random ones.
Chris and Nancy follow the steps above and shave $400 off their monthly expenses. Now they have $700 left over each month. That's a lot of money!
Now, they must determine the percentage each debt is of the total debt. This is determined by dividing the individual debt by the total debt. For example, the unpaid electric bill is (300/4150) x 100, or 7.23% of the $4,150 total. We'll just say this is 7.2%. They'll perform this calculation for all of their debt.
After this is completed, Chris and Nancy should determine how much of the $700 they will save and how much they will use to pay down their debt. Suppose they decide to save $300 and use the remaining $400 to reduce their debt each month. They would take each percentage found earlier and multiply it by $400. The number that results is the monthly payment Chris and Nancy would make to each person or company.
Chris and Nancy would eliminate their total debt of $4,150 in a little more than 10 months:
Monthly Allocation is: $400.00
Personal loans: $3,300.00
Percent of Total: 79.5%
Payment from Allocation: $318.00
Months to Pay Off: 10.4
Electric bills: $300.00
Percent of Total: 7.2%
Payment from Allocation: $28.80
Months to Pay Off: 10.4
Cell phone bills: $250.00
Percent of Total: 6%
Payment from Allocation: $24.00
Months to Pay Off: 10.4
Water bills: $200.00
Percent of Total: 4.8%
Payment from Allocation: $19.20
Months to Pay Off: 10.4
Dance lesson fees: $100.00
Percent of Total: 2.4%
Payment from Allocation: $9.60
Months to Pay Off: 10.4
Total Debt: $4,150.00
Total Percentage: 100%
Total Monthly Payments: $400.00
Total Pay-Off Time: 10.4 months
Notes: Rounding was used in all calculations. Total pay-off time of 10.4 months assumes the debt reduction process is started in the same month for all debt without skipping any future payments.
This may seem like a long time but it is a systematic approach with a definite ending date. Who knows how long it would've taken without this approach. Any extra money earned in a given month by Chris and Nancy can be added to the monthly allocation, thereby reducing the number of months needed to eliminate their debt.
Do you see why this method makes a lot more sense than just randomly throwing money at debt without a clear sense of direction?
You might be thinking, "Manoj, I have credit card debt that require certain minimum monthly payments. I can't use the method above."
That's okay - I have a method for that one, too. Stay tuned...
Really, though. I have some debt I need to pay off and, up until this point, I've been paying on it randomly. I'd save some money, pay off most of any particular debt, and then have to save all over again to pay for the rest. I felt like it was taking forever and it didn't feel organized - that's because it wasn't. It was a completely random approach to paying off my debt and I'm glad I found a better way.
What I thought of probably isn't a new concept. I'm sure it's been done by thousands of people but it has proven to be really helpful for me. The goal is to pay off your debt, right? Okay, agreeing with that is step one. Step two is trying to figure out how to do that when you have recurring monthly expenses like rent, food, gas, utilities, etc. If you save a few extra dollars in a given month and you use them to pay down your debt without a system in place, you're always going to feel overwhelmed. The goal is to develop a consistent monthly system to eliminate debt in a specific timeframe without falling behind on your current month's expenses.
Let's look at an example. Chris and Nancy have the following in debt:
1. Electric bills: $300
2. Water bills: $200
3. Personal loans from family and friends: $3300
4. Cell phone bills: $250
5. Dance lesson fees: $100
Total: $4,150
Their combined net (after taxes) monthly income is $4,000. Their total expenses per month are $3700. That leaves $300 each month to use towards whatever they want.
Chris and Nancy currently use that $300 to pay down debt as the person/company requests it. For example if one of their friends asks for a payment because she hasn't received one in a few months, Chris and Nancy will pay something to that friend. The remaining money will go towards other similar situations. Chris and Nancy aren't setting aside any money for savings, either.
Here's what they should do:
1. Examine, re-examine, and re-re-examine their montly budget and cut out all unnecessary expenditures. They can save a lot of money by decreasing their cell phone plans, switching from premium cable to basic cable, buying more groceries instead of eating out, etc.
2. Contact each person or company they owe and ask them to accept a repayment plan. Most, if not all, will graciously accept because they'd rather have consistent payments than random ones.
Chris and Nancy follow the steps above and shave $400 off their monthly expenses. Now they have $700 left over each month. That's a lot of money!
Now, they must determine the percentage each debt is of the total debt. This is determined by dividing the individual debt by the total debt. For example, the unpaid electric bill is (300/4150) x 100, or 7.23% of the $4,150 total. We'll just say this is 7.2%. They'll perform this calculation for all of their debt.
After this is completed, Chris and Nancy should determine how much of the $700 they will save and how much they will use to pay down their debt. Suppose they decide to save $300 and use the remaining $400 to reduce their debt each month. They would take each percentage found earlier and multiply it by $400. The number that results is the monthly payment Chris and Nancy would make to each person or company.
Chris and Nancy would eliminate their total debt of $4,150 in a little more than 10 months:
Monthly Allocation is: $400.00
Personal loans: $3,300.00
Percent of Total: 79.5%
Payment from Allocation: $318.00
Months to Pay Off: 10.4
Electric bills: $300.00
Percent of Total: 7.2%
Payment from Allocation: $28.80
Months to Pay Off: 10.4
Cell phone bills: $250.00
Percent of Total: 6%
Payment from Allocation: $24.00
Months to Pay Off: 10.4
Water bills: $200.00
Percent of Total: 4.8%
Payment from Allocation: $19.20
Months to Pay Off: 10.4
Dance lesson fees: $100.00
Percent of Total: 2.4%
Payment from Allocation: $9.60
Months to Pay Off: 10.4
Total Debt: $4,150.00
Total Percentage: 100%
Total Monthly Payments: $400.00
Total Pay-Off Time: 10.4 months
Notes: Rounding was used in all calculations. Total pay-off time of 10.4 months assumes the debt reduction process is started in the same month for all debt without skipping any future payments.
This may seem like a long time but it is a systematic approach with a definite ending date. Who knows how long it would've taken without this approach. Any extra money earned in a given month by Chris and Nancy can be added to the monthly allocation, thereby reducing the number of months needed to eliminate their debt.
Do you see why this method makes a lot more sense than just randomly throwing money at debt without a clear sense of direction?
You might be thinking, "Manoj, I have credit card debt that require certain minimum monthly payments. I can't use the method above."
That's okay - I have a method for that one, too. Stay tuned...
Wednesday, December 10, 2008
Innovative Ways to Make Extra Money
Many of us are trying to find additional, legal ways of making money aside from our main sources of income. In this type of economy, it is especially important to have multiple streams of income. Even if your additional stream is only $100 per month, that is still money that can be put toward something of importance.
Here are some ways to get more money that won't cost you much, if anything, to get started:
1. Tutor: Regardless of the economy, school is in session and there are students who are falling behind! Remember sitting in your high school calculus class thinking, "When am I ever going to use this stuff?" Well, you may not have used it in your profession but you can sure use it to make some extra money! Break out the old books, polish your skills, and make yourself available as a tutor. Put ads on bulletin boards at the grocery store or on free sites like Craig's List - hey, why not tape a flyer to your rear windshield? Determine a fair price and a place to meet and you're all set! By the way, I tutor on the side and I make pretty good pocket money each week!
2. Administrative/Personal Assistant: Ask around and find people you know who are in need of an assistant. Maybe you know a former college professor who would like help making photocopies a few hours a week. Or maybe you know a busy single mom who would absolutely adore you if you took her two boys to and from soccer practice one night a week. In both of these examples, you can charge by the hour and dictate your own schedule. You can advertise as described above.
3. Tech Support: Are you a computer whiz? I won't mention names but certain company tech support teams charge obscene amounts just for a diagnosis of a computer problem. If you want them to actually fix the problem, then you better be prepared to shell out half of last week's paycheck. If you know you can do the same thing these companies are doing (or if you can do it better), why not contract yourself out as a freelance technical support professional? Even if you work only 10 hours a week and charge $20 per hour, that's an additional $200 a week in your pocket!
4. Handyman (or Handywoman): A lot of people can't do routine maintenance themselves, so you can fill in the gap. If you're good with home repairs, cars, bicycles, landscaping - basically anything - then you can make some pretty nice cash per hour if you contract yourself out as a handyperson.
Attention Readers! Tell us your ideas!
Here are some ways to get more money that won't cost you much, if anything, to get started:
1. Tutor: Regardless of the economy, school is in session and there are students who are falling behind! Remember sitting in your high school calculus class thinking, "When am I ever going to use this stuff?" Well, you may not have used it in your profession but you can sure use it to make some extra money! Break out the old books, polish your skills, and make yourself available as a tutor. Put ads on bulletin boards at the grocery store or on free sites like Craig's List - hey, why not tape a flyer to your rear windshield? Determine a fair price and a place to meet and you're all set! By the way, I tutor on the side and I make pretty good pocket money each week!
2. Administrative/Personal Assistant: Ask around and find people you know who are in need of an assistant. Maybe you know a former college professor who would like help making photocopies a few hours a week. Or maybe you know a busy single mom who would absolutely adore you if you took her two boys to and from soccer practice one night a week. In both of these examples, you can charge by the hour and dictate your own schedule. You can advertise as described above.
3. Tech Support: Are you a computer whiz? I won't mention names but certain company tech support teams charge obscene amounts just for a diagnosis of a computer problem. If you want them to actually fix the problem, then you better be prepared to shell out half of last week's paycheck. If you know you can do the same thing these companies are doing (or if you can do it better), why not contract yourself out as a freelance technical support professional? Even if you work only 10 hours a week and charge $20 per hour, that's an additional $200 a week in your pocket!
4. Handyman (or Handywoman): A lot of people can't do routine maintenance themselves, so you can fill in the gap. If you're good with home repairs, cars, bicycles, landscaping - basically anything - then you can make some pretty nice cash per hour if you contract yourself out as a handyperson.
Attention Readers! Tell us your ideas!
Saturday, December 6, 2008
I'm Tired of Renting!
There are many of us who rent apartments or homes but we'd rather be paying a mortgage because it means we are building equity on an investment. But with all the mortgage and credit issues in our nation's economy, how do we know we're making the right decisions? With so much job insecurity, how do we know we can afford a mortgage? Can we afford the added expenses of home ownership like real estate taxes, water bills (if you're not paying for water now), and home improvements? There are so many legitimate questions that people have regarding home ownership today.
The first step in determining if you're ready to purchase a home is to meet with a mortgage lender. She or he will review your credit score, income statements, bank statements, and tax returns and determine a pre-approval amount. This is the maximum amount the lender is comfortable in giving you based on your financial credibility. The lender feels confident that you can repay this amount. Unfortunately, you can't get a real perspective on how much you can afford without supplying all of this information to the lender. Don't worry - they honor your privacy and they won't ask you for anything that's not going to help them help you in the best way possible.
One of the measurements your lender will assess is your debt-to-income ratio. This is the ratio of your debt compared to how much money you bring in. The lender will determine if the debt you have eats up your income or if you have relatively low debt compared to how much income you make. Generally, if you are paying more than 40-50% of your income towards debt payments each month, you are not in the best position to purchase a home. Depending on the lender, he or she may feel that the mortgage is at risk of not being paid because there are many other debts to pay each month. Don't worry! The lenders will develop a financial game plan with you. This game plan will help you to reduce your debt and prepare you to purchase a home.
Let's talk about me for a minute: I'm currently renting an apartment.
*Cars come screeching to a halt*
"What??? But Manoj, you're a Realtor!!! You shouldn't be renting!"
Well, trust me...I would love to stop renting but I know I can't get the home I really want until I build up more savings. I don't think you need to own a home to help people buy one - just like you don't need to own a Honda in order to sell one. You just need to be educated on the product/service in question and how to service a client in need of that product/service from start to finish.
Remember, I'm a young professional like many of you and I have to build up to the point where I can actually purchase a home. Plus, real estate agents make their living off of people who make decisions to buy or sell homes. If they don't make those decisions, we don't get paid. Although we are in the business of homes, we may not be able to afford them because we don't get paid a salary or hourly wage like most of you - we are paid strictly on commission. No decisions = no income. See what I mean?
Anyway, when you keep reading you'll find a list of action items you'll want to accomplish as you're in the process of purchasing a home. These are meant to be a general overview and not a comprehensive list. If you have any questions, just leave a comment and I'll address them for you.
Steps to follow:
- Make sure you are pre-approved for a loan before beginning your search for a new home. This ensures you know the maximum price you can pay. You don’t want to fall in love with a home and then find out you can’t afford it! (I know some great lenders - just ask!)
- Get connected with a REALTOR®. They have access to current, non-public information that will be vital to your home search. Choose a professional who is dedicated to serving your needs before, during, and after the sale. (That's me! Shameless plug, I know...)
- Don’t think there is only one home out there for you! Buying a new home is not a process of selection – it is a process of elimination. New properties are offered in the real estate market continuously so it's important that you're open to all options.
- Have a home inspection! A certified home inspector will identify existing and potential issues with the home you’ve chosen. Investing in a home inspection may save you tons of money in the future.
- Know the total costs involved. Ask your lender for a Good Faith Estimate; this is an estimate of your closing costs. The following fees should be taken into account: title company and attorney fees, Homeowner Association fees, a home protection plan, and insurance. Study your settlement statement with your real estate agent before closing on the home.
- Follow through on due diligence. Make a list of any concerns you have relating to community issues such as crime rates, school districts, pollution, etc. Ask these important questions before you make an offer on a home! Following through on due diligence will give you confidence in your purchase.
If you have questions that you don't want to show on the comments board, feel free to email us at roadmapblog@gmail.com !
Until we meet again...
The first step in determining if you're ready to purchase a home is to meet with a mortgage lender. She or he will review your credit score, income statements, bank statements, and tax returns and determine a pre-approval amount. This is the maximum amount the lender is comfortable in giving you based on your financial credibility. The lender feels confident that you can repay this amount. Unfortunately, you can't get a real perspective on how much you can afford without supplying all of this information to the lender. Don't worry - they honor your privacy and they won't ask you for anything that's not going to help them help you in the best way possible.
One of the measurements your lender will assess is your debt-to-income ratio. This is the ratio of your debt compared to how much money you bring in. The lender will determine if the debt you have eats up your income or if you have relatively low debt compared to how much income you make. Generally, if you are paying more than 40-50% of your income towards debt payments each month, you are not in the best position to purchase a home. Depending on the lender, he or she may feel that the mortgage is at risk of not being paid because there are many other debts to pay each month. Don't worry! The lenders will develop a financial game plan with you. This game plan will help you to reduce your debt and prepare you to purchase a home.
Let's talk about me for a minute: I'm currently renting an apartment.
*Cars come screeching to a halt*
"What??? But Manoj, you're a Realtor!!! You shouldn't be renting!"
Well, trust me...I would love to stop renting but I know I can't get the home I really want until I build up more savings. I don't think you need to own a home to help people buy one - just like you don't need to own a Honda in order to sell one. You just need to be educated on the product/service in question and how to service a client in need of that product/service from start to finish.
Remember, I'm a young professional like many of you and I have to build up to the point where I can actually purchase a home. Plus, real estate agents make their living off of people who make decisions to buy or sell homes. If they don't make those decisions, we don't get paid. Although we are in the business of homes, we may not be able to afford them because we don't get paid a salary or hourly wage like most of you - we are paid strictly on commission. No decisions = no income. See what I mean?
Anyway, when you keep reading you'll find a list of action items you'll want to accomplish as you're in the process of purchasing a home. These are meant to be a general overview and not a comprehensive list. If you have any questions, just leave a comment and I'll address them for you.
Steps to follow:
- Make sure you are pre-approved for a loan before beginning your search for a new home. This ensures you know the maximum price you can pay. You don’t want to fall in love with a home and then find out you can’t afford it! (I know some great lenders - just ask!)
- Get connected with a REALTOR®. They have access to current, non-public information that will be vital to your home search. Choose a professional who is dedicated to serving your needs before, during, and after the sale. (That's me! Shameless plug, I know...)
- Don’t think there is only one home out there for you! Buying a new home is not a process of selection – it is a process of elimination. New properties are offered in the real estate market continuously so it's important that you're open to all options.
- Have a home inspection! A certified home inspector will identify existing and potential issues with the home you’ve chosen. Investing in a home inspection may save you tons of money in the future.
- Know the total costs involved. Ask your lender for a Good Faith Estimate; this is an estimate of your closing costs. The following fees should be taken into account: title company and attorney fees, Homeowner Association fees, a home protection plan, and insurance. Study your settlement statement with your real estate agent before closing on the home.
- Follow through on due diligence. Make a list of any concerns you have relating to community issues such as crime rates, school districts, pollution, etc. Ask these important questions before you make an offer on a home! Following through on due diligence will give you confidence in your purchase.
If you have questions that you don't want to show on the comments board, feel free to email us at roadmapblog@gmail.com !
Until we meet again...
Wednesday, December 3, 2008
Tell Us Something We Didn't Know!
Okay...so we are "officially" in a recession - and have been since December 2007. The National Bureau of Economic Research affirmed what most of us already knew in our hearts. Our shrinking 401(k) accounts and empty wallets knew it, too.
If money isn't tight for you right now, then I am so happy for you. You should feel relieved!
For those of us who have had to tighten our belts, or had to sell them for gas money, it looks like we're going to be in this mess for a little longer. Many people that I know - including myself - have had to reduce spending in some areas, eliminate spending in many others, and live a lifestyle much differently than in the past. Money is still tight for me but I credit my survival to the elimination of a lot of expenses. They were hard to cut at first but now I don't even realize they're gone! I am building up my savings slowly yet steadily.
One thing is for sure: desperate times lead to __________ __________ __________. You're probably thinking, "'Desperate Measures' only has two words, Manoj!" right? You're right - it does. But, that's not what I'm talking about. Desperate times lead to increased financial intelligence! When you're stuck between a rock and a hard place, all of those dusty gears in your head that haven't been used in a long time start to turn and bright ideas start to form. At least that's what happened for me. I'm sure it's happened for you, too!
Here's an example: I needed extra pocket money for gas and food expenditures throughout the week. I didn't want to tap into my work earnings so I suddenly had the inspiration to become a math tutor. I've always been good at math and I figured it would be a great way to pick up some extra cash each week. A few internet postings later, I had my first student. Then another. And then another. See what I mean?
Other personal examples include innovative real estate marketing ideas, increased awareness of various financial tools and products, hunting for discounts when going shopping, etc.
What examples can you think of? Please share because I would love to know! I'm sure your peers would, too!
The point is this: don't let this economy get a one-up on you. Don't let this economy win! Stand your ground and fight this recession until it's over!
"But Manoj, you make it sound so easy." It's not easy...trust me. Remember, I'm dealing with the same issues myself but I have made a decision to overcome my financial obstacles and come out on top. You can, too. It's either you make that decision or you allow the economy to ruin you and your dreams.
Please don't let that happen.
If money isn't tight for you right now, then I am so happy for you. You should feel relieved!
For those of us who have had to tighten our belts, or had to sell them for gas money, it looks like we're going to be in this mess for a little longer. Many people that I know - including myself - have had to reduce spending in some areas, eliminate spending in many others, and live a lifestyle much differently than in the past. Money is still tight for me but I credit my survival to the elimination of a lot of expenses. They were hard to cut at first but now I don't even realize they're gone! I am building up my savings slowly yet steadily.
One thing is for sure: desperate times lead to __________ __________ __________. You're probably thinking, "'Desperate Measures' only has two words, Manoj!" right? You're right - it does. But, that's not what I'm talking about. Desperate times lead to increased financial intelligence! When you're stuck between a rock and a hard place, all of those dusty gears in your head that haven't been used in a long time start to turn and bright ideas start to form. At least that's what happened for me. I'm sure it's happened for you, too!
Here's an example: I needed extra pocket money for gas and food expenditures throughout the week. I didn't want to tap into my work earnings so I suddenly had the inspiration to become a math tutor. I've always been good at math and I figured it would be a great way to pick up some extra cash each week. A few internet postings later, I had my first student. Then another. And then another. See what I mean?
Other personal examples include innovative real estate marketing ideas, increased awareness of various financial tools and products, hunting for discounts when going shopping, etc.
What examples can you think of? Please share because I would love to know! I'm sure your peers would, too!
The point is this: don't let this economy get a one-up on you. Don't let this economy win! Stand your ground and fight this recession until it's over!
"But Manoj, you make it sound so easy." It's not easy...trust me. Remember, I'm dealing with the same issues myself but I have made a decision to overcome my financial obstacles and come out on top. You can, too. It's either you make that decision or you allow the economy to ruin you and your dreams.
Please don't let that happen.
Monday, November 17, 2008
Your Mom Still Folds Your Underwear???
So you're living with yo' mama, huh? Don't worry, many of your peers are. When I graduated from college, I lived at home with my parents for several months before moving out. I felt like a kid in many ways when living at home but I was able to save a lot of money - and get some good ole home cookin' at the same time!
Many people want to move out but they are unsure of the costs associated with doing so. Let's say you decide to get an apartment. A decent one-bedroom apartment in New Castle County can run anywhere between $600 - $850 a month. Some include heat and hot water as part of the deal, some don't. If they don't, you'll have to budget somewhere between $50-$100 for those utilities each month. Some don't have washers and dryers so you'll have to budget laundry fees, too. Your electric bills will vary by month; those in the summer months can be $100 or more depending on how often you run the A/C. I recommend using fans on the not-so-excruciatingly-hot days. Oh yeah, if you don't have credit history with the electric company you may have to pay close to $200 as a security deposit! Don't worry, you'll get this back in about a year....
Most apartment complexes require a security deposit plus at least one month's rent before you even move in. Sometimes it's the first and last month's rents. You'll also need renter's insurance (mandatory in most cases), which is at least $10 per month depending on the insurance company you use and the type of coverage you choose. All these fees and you haven't even moved in yet!
Let's say you find a one-bedroom apartment with heat and hot water included for $750 per month. Suppose your average electric bill each month is $50. In this example, you must pay a security deposit of $500 and first month's rent before moving in. Renter's insurance will cost $120 a year, too. Let's say you pay this upfront. Before you move in, you must pay $500 + $750 + $120 = $1,370. Your electric bill for the first month would be $200 + $50 = $250. Each subsequent month would yield fees of around $800 (rent + electric).
So, you paid $1,370 to move in, you paid $250 for your electric, and you'll pay $800 each month in the future. Finally, you can relax...gotcha! You now have to budget other expenses such as cable/internet, cell phone, food, gas, car maintenance, entertainment, etc. This also assumes you have all the furniture you need to move in. If you don't, you have to budget some money for furniture. I recommend second-hand furniture. You can find some great pieces at really cheap prices!
Are you nervous? Scared? Don't be! Millions of people have treaded down this path before you. You'll learn a ton from moving out and you'll enjoy so many unique experiences. Now that you know how much moving out may cost, you can examine your finances and determine your next move. Maybe you can find a roommate - it'll be like college all over again! That would certainly help to reduce your living expenses. If you prefer to live solo, perhaps you can trim other expenses to allow for your new living expenses. Purchasing generic products instead of branded goods, buying groceries instead of eating out 6 days a week, and decreasing the minutes on your cell phone plan can all save you loads of money!
I hope this has helped you put things into perspective when making the decision to move out or stay at home.
"But Manoj, I don't want to live in an apartment. I want a house!" Good for you! That's a whole different ballgame. More on that later!
Many people want to move out but they are unsure of the costs associated with doing so. Let's say you decide to get an apartment. A decent one-bedroom apartment in New Castle County can run anywhere between $600 - $850 a month. Some include heat and hot water as part of the deal, some don't. If they don't, you'll have to budget somewhere between $50-$100 for those utilities each month. Some don't have washers and dryers so you'll have to budget laundry fees, too. Your electric bills will vary by month; those in the summer months can be $100 or more depending on how often you run the A/C. I recommend using fans on the not-so-excruciatingly-hot days. Oh yeah, if you don't have credit history with the electric company you may have to pay close to $200 as a security deposit! Don't worry, you'll get this back in about a year....
Most apartment complexes require a security deposit plus at least one month's rent before you even move in. Sometimes it's the first and last month's rents. You'll also need renter's insurance (mandatory in most cases), which is at least $10 per month depending on the insurance company you use and the type of coverage you choose. All these fees and you haven't even moved in yet!
Let's say you find a one-bedroom apartment with heat and hot water included for $750 per month. Suppose your average electric bill each month is $50. In this example, you must pay a security deposit of $500 and first month's rent before moving in. Renter's insurance will cost $120 a year, too. Let's say you pay this upfront. Before you move in, you must pay $500 + $750 + $120 = $1,370. Your electric bill for the first month would be $200 + $50 = $250. Each subsequent month would yield fees of around $800 (rent + electric).
So, you paid $1,370 to move in, you paid $250 for your electric, and you'll pay $800 each month in the future. Finally, you can relax...gotcha! You now have to budget other expenses such as cable/internet, cell phone, food, gas, car maintenance, entertainment, etc. This also assumes you have all the furniture you need to move in. If you don't, you have to budget some money for furniture. I recommend second-hand furniture. You can find some great pieces at really cheap prices!
Are you nervous? Scared? Don't be! Millions of people have treaded down this path before you. You'll learn a ton from moving out and you'll enjoy so many unique experiences. Now that you know how much moving out may cost, you can examine your finances and determine your next move. Maybe you can find a roommate - it'll be like college all over again! That would certainly help to reduce your living expenses. If you prefer to live solo, perhaps you can trim other expenses to allow for your new living expenses. Purchasing generic products instead of branded goods, buying groceries instead of eating out 6 days a week, and decreasing the minutes on your cell phone plan can all save you loads of money!
I hope this has helped you put things into perspective when making the decision to move out or stay at home.
"But Manoj, I don't want to live in an apartment. I want a house!" Good for you! That's a whole different ballgame. More on that later!
Monday, November 10, 2008
This Life is Tough!
Okay, unless you live in a cave you are obviously hearing about the demise of our economy or feeling the effects of it. I am. I'm hearing about it all the time and I'm definitely feeling it.
So, a bit about my situation: I'm a licensed Realtor and the housing doom & gloom is affecting my business. It's hard to find qualified leads who are ready, willing, and able to buy or sell. Bad Leads = Poor Income and Poor Income = Can't Pay Yo' Bills. Anyone feel me on this one?
So, I picked up a 9-5 to provide steady income. I'm really thankful for it because it reduces a lot of stress but I can't say that it's my passion in life. I guess that's the definition of a job, right?
So, I'm as real as they come. No bluffs here. I'm not like some people who front as though they are doing super well in this faltering economy. I'll be totally honest with you. The purpose of this blog is to encourage each other with inspiring ideas so we can be motivated to achieve our dreams. I'll provide real estate information, financial planning tips, business strategies that work - basically anything that will help you accomplish your goals.
So, if you're struggling in your business - I was/am there. If you're looking for a job - I was there. If you are living on unemployment checks - I was there. If it feels like bills keep coming and money stops flowing - I was there and I'm working hard to prevent it from happening again. I've been there, done that, and I am determined to come out on top. Just like you.
Let this blog be your road map to success!
So, a bit about my situation: I'm a licensed Realtor and the housing doom & gloom is affecting my business. It's hard to find qualified leads who are ready, willing, and able to buy or sell. Bad Leads = Poor Income and Poor Income = Can't Pay Yo' Bills. Anyone feel me on this one?
So, I picked up a 9-5 to provide steady income. I'm really thankful for it because it reduces a lot of stress but I can't say that it's my passion in life. I guess that's the definition of a job, right?
So, I'm as real as they come. No bluffs here. I'm not like some people who front as though they are doing super well in this faltering economy. I'll be totally honest with you. The purpose of this blog is to encourage each other with inspiring ideas so we can be motivated to achieve our dreams. I'll provide real estate information, financial planning tips, business strategies that work - basically anything that will help you accomplish your goals.
So, if you're struggling in your business - I was/am there. If you're looking for a job - I was there. If you are living on unemployment checks - I was there. If it feels like bills keep coming and money stops flowing - I was there and I'm working hard to prevent it from happening again. I've been there, done that, and I am determined to come out on top. Just like you.
Let this blog be your road map to success!
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