Do you ever wonder how your monthly mortgage payment is calculated?
…I am buying a house and received a huge package of disclosures from my lender. There’s an amortization schedule table in there with a ton of numbers. My lender said it’s just standard procedure to send them and for me not to worry. Do I need to care about this? And why is less of my money going towards principal at the beginning? Is it their tactic to make more money?
– Writes Kathy
Participants of an amortizing loan (aka a fixed rate mortgage) should get to know the amortization schedule, a table that details each periodic payment and how much of it gets applied to the principal and interest. In order to illustrate what this schedule tells us, let’s start off with an example. A $100,000, 30-year fixed loan at 5% interest will have the schedule as follows:
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You know that if you want to make it through retirement, you need to plan now. And that planning should involve an investment plan. Your goals and individual needs will be a big part of the kind of investment portfolio you have to get you through your retirement years. Here are some steps to take in order to create your retirement investment plan:
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Everyone seems to have a gym membership these days. Whether you stick with the same place year after year or hop around, a gym membership can be expensive, especially if you opt for a full service institution.
When you are single, you might be able to justify spending $50 or even $100 per month on your membership, but once those kids start coming along, you find yourself rethinking that sum of money. There are many ways you can cut back and still find a good gym for your workouts, and here are a few suggestions.
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I was wondering if you can offer me any information about investing in stocks and real estate. I am tired of doing this shift-job. My hours are 7-3, and getting a salary with one minute you have it and the next minute its all gone. Please help.
– Writes Beckie
First of all, good job with wanting to do better. The drive to have financial stability is an important (and seldom talked about) first step in financial independence. But here’s the reality. What you need to figure out first is not how to invest, but to learn how to live below your means and save. Investing requires capital, and that comes from money you have. It could come from savings, or from a side hustle. Either way, money doesn’t grow on trees.
And don’t listen to everyone who tells you that you can make money in investments out of nothing either. While there are examples of people who seem to be stock picking geniuses, the odds of someone having those abilities seem to rival winning the lottery. The majority who become wealthy with investing do so from income generated through managing other people’s assets. Getting rich solely with the stock market, or other investments, is largely a fantasy. It’s possible, but chances are slim that you could do it. Investing will help your money grow, but if you need it to explode to the upside to replace your job, I hate to say this, but don’t bet on it happening. Again, save, save, save, and put it in online savings accounts first.
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Nurturing, even when you wouldn’t have it any other way, can be tiring.
Sara is over two weeks old already, and I can’t believe how tired I am. I knew beforehand that there will be sleepless nights, but nothing prepares you like real world conditions. I actually just woke up, but I thought I had more energy when I went to bed. Everyone tells me that it gets better after 3 months, and hearing that makes me feel better. So today, let me repay the favor and tell you this:
Frugal living can be tiring sometimes, but it gets better and easier with time. At first, you need a conscious effort to save. Eventually though, decisions seem to become second nature and pretty soon, you will be scratching your head and wondering why other people need to spend the way they do. Emma and I always ask ourselves whether we are being a little too frugal (no doubt everyone’s comments about our lifestyle contribute to this), but our discussion always ends with “but we are happy being the way we are”. And… isn’t that the end goal? To be happy?
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On the surface, it seems like owning a business only makes your personal finances more complicated. You have to deal with more paperwork when tax season rolls around and you have to keep books for your business. But while the financial paperwork does increase, having a business of your own can make a big difference in your personal finances in a positive way.
Tax Breaks
As a business owner, there are often opportunities to reduce your tax burden. Business expenses are tax deductible and, if your business is based on something you’d be doing anyway, you may even be able to deduct purchases you’d make whether or not you run a business. You do want to be sure that such an expense is actually necessary to the success of your business, so you can show proof when the IRS audits you.
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