6 Golden Rules of Personal Finance1. EARN MORE THAN YOU SPEND The pillar of personal finance management!
2. SET YOUR FINANCIAL GOALS In order to get a direction and motivation for your frugal lifestyle. set your financial goals’ This will allow you to focus on areas for improvement!
3. CREATE A BUDGET A budget does not limit you but sets you free! You finally are able to understand where your money goes!
4. SET UP AN EMERGENCY FUND An emergency fund is necessary for what it says EMERGENCIES! Also, you can have a better night’s sleep knowing that you are covered.
5. PAY OFF YOUR DEBT Pay off your Flight-interest debt but at the expense of your emergency fund! This will free a part of your income to follow with the next step
6. INVEST! Investing is a very broad topic. Go for 2 things: 1) Invest in yourself and 2) Passive long-term investment that brings in higher yield than you pay for your debt!
Source: Could Be More
Retirement Investment TimelineFINANCIAL FREEDOM IS IN YOUR HANDS TAKE CONTROL & STAY THE COURSE HERE’S ONE WAY TO DO IT!
YEARS 01-05 In the first 5 years focus on Improving myirriLgatt s r e. Once you have an emergency fund it’s time to build your investment portfolio. Figure out your ideal asset allocation utilize tax-sheltered accounts and keep costs low. Choose investments that are well diversified. Consider Total Market & Tar et Retirement Index Mutual Funds.
YEARS 05-15 At this point, it’s easy to get off track. Avoid market noise/trends! Buy and re-balance at regular intervals to dollar cost average. Contribute the maximum allowable to all investment accounts and continue improving your earnings & savings rates. Buy during market slumps and Monitor your emotions closely.
YEARS 15-20 Your nest egg is growing. Reevaluate your asset allocation and adjust your risk accordingly. consider adding additional low-risk investments like bonds. CDs and saving accounts. Review your fees and retirement protections. Consider real estate.
YEARS 20-25 Financial Independence is quickly approaching. Pont let the market dictate when you should retire. Protect yourself by further reducing risk. Consider allocating a portion of your portfolio to dividend funds for supplementary income. Upgrade & maintain your health & life insurance and shield yourself from liabilities.
YEARS 25-30+ Retirement is here. If you invested in low cost. diversified index funds. and contributed diligently each year. you should be very pleased with your portfolio’s growth. Calculate your burn rate and be very cautious of aSamtand money traps. Consider consulting. projects and hobbies to stay share. Travel often, spend time with friends and family. Enjoy life.
PROs vs CONs FHA LoansLow 3.5% Down Payment
Better rates than conventional for low-credit borrowers • 760 FICO conventional = 2.655% APR • 620 FICO conventional = 4.244% APR • Average FHA loan = 3.890%
More Lenient Credit Score Guidelines • conventional hard to obtain below 620 • FHA at 580 FICO with 3.5% down • FHA as low as 500 with 10% down
Lower mortgage insurance rates than conventional • 1.75% upfront MIP • 0.45% to 1.05% annually
Insurance is not cancelable • if c 10% down MIP lasts the life of the loan • many refinance into conventional to drop MIP
Many condos are not approved • FHA insurance concentration limits • owner-occupancy percentage limits • project financial condition limits
Owner-occupied homes only • No vacation homes • No investment properties
Loan limits based on region • lower limit 65% of the conforming loan limit • upper limit 150% of the conforming loan limit
Source: Mortgage Calculator
How to Save Money12 Tips only Smart People Know!
CHECK INFLOW / OUTFLOW What are your Earnings in Hand? INCOME-SAVINGS = EXPENSES Put aside a Fixed amount: Develop a Habit to Save
DECIDE YOUR PRIORITIES Spend on Necessities not luxuries Avoid Impulsive Buying Limit your Credit Card Usage
SET A MONTHLY BUDGET Fix a Monthly Budget for yourself to follow Cut your Mobile, Electricity, Food Bills, etc. Track what you spend: Self Control
SEE YOUR MONEY GROW INVEST Wisely and Let Your Money Work for You Good Returns lead to Increased Savings Review your SAVINGS & INVESTMENTS periodically
Want to Get the Best Finance DealsFollow The Road to Good Credit!
Check Your Credit Report You can obtain your credit report online and you can request a statuary copy for £2 under Protection Act 1998, so you don’t have to pay any costly monthly fees.
Fix any problems Once you have your credit report, check it for problems and inaccuracies. The slightest inaccuracy can harm your score so make sure all information is up to date.
Stay still! Stay at the same address, in the same job, and don’t change your name.
Register on the electoral roll One of the most important things to do.
Never use Pay Day Loans Using this type of high-interest loan does not show lenders you are reliable.
Apply for credit Apply for a credit card, use it and pay it back in full. It’s better to have some credit on your report than none at all, as long as it’s positive.
Never miss a payment Make sure you pay all of your bills on time and NEVER miss a payment. Missed or late payments will stay on your report from 6 to 7 years.
Sever any negative financial ties Other people, bad credit scores can harm yours if you are tied to them.
Get married But only link your finances with theirs if they use credit wisely. If you are connected to their accounts, your credit rating will benefit from their responsible usage.
Get a mortgage A mortgage is one of the most important things you can have on your credit report as it shows lenders that you are a good asset. Having a mortgage is a sign to other lenders that you are an attractive borrower as you present little risk.