Anybody that has tried to change their satellite or cable service knows how much of a pain in the butt it can be.
You’ll spend at minimum an hour on the phone and most likely by the end of it you’ll be so disgusted that even a hot shower won’t make you feel any better.
One of the biggest fears that investors have when starting with a new brokerage firm is what happens if you want to quit or break up with your financial advisor.
Are you going to be stuck in the same situation as trying to transfer your satellite service and are you going to be hit with massive amount of surrender fees?
Is this something that you worry about?
Let’s take a look how it works if you want to transfer your brokerage account.
If you’re in the process of hiring a new financial advisor or opening an online brokerage account, the first thing you want to do is ask,
“What happens if I ever want to leave? What type of cost or transfer out charges would I incur?”
If it’s really a concern of yours, I wouldn’t accept the explanation verbally. Get it in writing. Make sure you can see exactly how much you would pay if you had to pay anything at all.
Many people don’t realize how easy it is to actually transfer your brokerage account elsewhere. It’s easier than switching banks. It’s easier than dropping your cable. It’s easier than changing your cell phone provider. Yes, that easy!
The beautiful thing about transferring is that you actually don’t even have to talk to the institution that you’re currently with. Say,”What?” Yes, that’s right. You can actually transfer out without ever having to notify them that you’re leaving. How beautiful is that?
Brokerage Account Transfer Example
Let’s say for an example that you have a brokerage account with Edward Jones and you’ve been with them for four years. You’ve now decided that you want to work with XYZ Financial. Instead of contacting Edward Jones and telling them why you’re leaving, you would actually go to XYZ Financial, open the same type of brokerage account that you have opened at Edward Jones and then sign XYZ Financial’s transfer paperwork.
XYZ Financial’s back office should then contact Edward Jones’ back office and the transfer is all done for you. The reason that this is so simple is that most brokerage firms use an account transfer process called the automated customer account transfer service or ACAT.
The rules that govern the ACAT system require firms to complete various pages in the transfer process and in a very specific period of time window. If the transfer is made using the ACAT system, then the transfer should take no more than six business days.
Here’s brief description of the ACAT process directly from the SEC website:
Most account transfers between brokerage firms are made using the Automated Customer Account Transfer Service (or “ACATS”) system. The National Securities Clearing Corporation operates ACATS, and both the New York Stock Exchange and the National Association of Securities Dealers, Inc. require their member firms to use ACATS.
These rules require firms to complete various stages of the transfer process within a limited period of time. If the transfer is made through ACATS, and there are no problems, the transfer should take no more than six business days to complete from the time your new firm enters your form into ACATS.
There are situations where the accounts may not be able to utilize the ACAT system. In those cases, you can expect upward to two weeks for the transfer to take place. In the last couple years, I’ve only encountered a few situations where an account could not be transferred utilizing ACAT. Most likely, you won’t run into this situation.
Brokerage Transfer Out Fees
What about cost?
All brokerage firms are going to charge some type of transfer out fee.
That fee can range anywhere from $55 on up to $95, at least what I’ve seen.
It may also be more for an IRA. Another potential cost that you may incur is an IRA custodial fee.
I know some firms will charge you both for the transfer out fee and a prorated cost of the IRA custodial fee. I know in one case a client had to pay $115 to transfer out his IRA. Ouch!
The only other issues that may come up is depending what type of investments you hold. I’ve seen some mutual funds that aren’t able to be transferred “in-kind” so they have to be sold at the brokerage firm that you’re currently with before the account can transfer. In that case you would have to contact them to give them instructions to sell what can’t be transferred. If you want to avoid the phone, you can always draft a letter with your instructions to liquidate the investments and then transfer the account upon settlement of those funds.
Please also note that insurance or annuities are a whole other animal when it comes to transferring. It’s pretty simple to change the broker record on annuity accounts, but there also may be surrender charges on the actually policy itself. Be sure to verify with the insurance company before liquidating any annuity contracts.
Save more, spend smarter, and make your money go further
Budgeting for life insurance might not be as exciting as budgeting for a new car or a fun trip, but it is much easier. Many people think about life insurance, but then decide to put it on the back burner because they think it’s expensive. Well guess what? Life insurance is actually very affordable.
Life insurance is really about protecting your loved ones from financial disaster if you should pass away. Think of it as income replacement.
Plan for what you need
Most people overestimate the cost of life insurance by 3-4 times. Life insurance is less expensive than you think. On average, you can get a $500,000 policy for $50 per month! We recommend getting coverage that is at least 5-10 times your income, but most importantly you should buy what you can comfortably afford. Having $100,000 in coverage is a million times better than having nothing at all.
Here’s what you need to cover:
Personal debt (car, student loans, credit cards)
Mortgage
Funeral expenses
Monthly income your family will need (future college tuition for children, groceries, monthly bills)
How to save money on life insurance
There is no such thing as a coupon for discounts on life insurance, but there are other ways you can save money.
Buy term. Term life insurance is the most affordable coverage you can own. Permanent insurance can cost 10 times more than term life insurance.
Pay annually. Insurance companies add fees for the extra administrative work needed to provide you that convenience of paying monthly or quarterly. Paying annually typically saves you around 5%.
Compare quotes. Life insurance pricing isn’t the same across the board with insurance companies. Different carriers evaluate your application on their specific guidelines, so you may save money by choosing a company that is more lenient toward your health situation. When you compare quotes using a tool like Quotacy, you are provided with competitive prices from all the top life insurance carriers.
Take another look. You may be overpaying especially if you purchased life insurance directly through an agent that only represents one insurance company. Chances are you may be able to get a lower rate just by comparison shopping different companies.
Unbundle your coverage. Bundling your life insurance with home and auto insurance is typically more expensive.
Put the cost of life insurance into perspective
We insure our health, cars, home, valuables, and even our phones, but most of us don’t realize that life insurance is cheaper to insure than most of these. In life we face financial challenges. We budget for daycare, student loans, phone bills, car payments and much more. Life insurance may not feel like a necessity when we are on a tight budget, but when you realize that you can get your family covered for pennies on the dollar, it’s easy to make that decision. If you feel the financial struggle now, what happens to your family if you die? Make sure your family is protected.
Fitting life insurance into a budget
Let’s look at three easy changes that you can make to fit life insurance into your budget. I’ve even made them myself!
1: Practice BYO (Bring Your Own)
Do you go through the Starbucks drive-thru or out to lunch on a daily basis? What about those happy hours and brunching on the weekend? I get it. It may take baby steps to start making your own coffee, packing your own lunch, and cutting back on eating out in general. But you’ll be surprised at how quickly the savings adds up.
My girlfriends and I alternate between throwing our own happy hours or brunches on the weekends. There’s no pressure to get all dolled up, and we make it easy by having everyone pitch in and bring their favorite drink or dish. Sure, I still go out and have fun, I just do it a little less often.
2: Conduct a subscription audit
These days with all the apps we have our fingertips and that fine line between need and want, it’s easy to let the number of subscriptions we have get out of hand. So many of these subscriptions are auto withdrawn, so when you look at your bank account it’s hard to decipher what you are even paying for anymore. Chances are you don’t need to pay for Hulu, cable, and Netflix, or Pandora, Spotify, and iTunes Radio. Give up a few and your bank account will thank you.
I’m the queen of subscriptions. But after my budget boyfriend became my budget husband, I was encouraged to give up a few subscriptions in order to save for our future. I thought $10 per month was no big deal, but when I added everything up, it became a real chunk of change. I encourage you to go through your subscriptions and decide what you really need.
3: Get creative with date nights
Going out for a date night gets expensive. Even if you just go out for dinner and a movie, that night adds up quickly. A dinner for two can quickly reach $50 or more, especially when you add in drinks. Have you been to a movie lately? Evening tickets are averaging $12-$14 each! And of course you want that delicious, buttery popcorn to go along with that show. It’s easy to spend $100 for a simple night out.
I’m a lover of date nights, but when my husband and I made it a weekly thing, it became a large monthly expense. While we enjoy a dinner and a movie, sometimes we make it a daytime activity. A lunch and a matinee can cost almost half the price of an evening out. Or, we choose a movie on Netflix and make a dinner at home.
We also decided to spice things up by finding activities we both enjoy and took up tennis lessons. Now we love taking our dates to the tennis court and loser has to make dinner at home. Fortunately my game is better than his, so I rarely have to cook. Not only do we save money by not going out, we also get a good sweat session in.
How to shop around for life insurance coverage
Admittedly, you’ll be shopping for the lowest price. Make sure the prices you see are from well-known brands with high financial strength ratings (A rated or better). These companies have been around a century or more and will be here for a long time to come.
Let’s say you’re looking for a $500,000, 20 year term policy. To stay competitive, insurance companies all have around the same price for the same policy, maybe just within a few cents of each other, so at first look they all appear to be about the same. Starting prices are based on your gender, your age, what state you live in, and whether or not you smoke cigarettes.
From there, pricing starts to change based on specific niches that insurance carriers have created for certain medical conditions and lifestyle habits. For instance, if you enjoy an occasional cigar during your monthly golf game, many carriers will consider you to be a smoker at a higher price, while a few companies see that as less of a big deal and will classify you a non-smoker at lower prices.
Here’s another example. Even if you are the epitome of health, but one of your parents wasn’t, prices can be higher because of the genetic risk they passed onto you. Let’s say your father died of cancer before we was 50. Your low rate won’t be affected with one or two carriers, but with all the rest your price will be higher.
A good place to start your shopping is at Quotacy. When you use Quotacy’s life insurance quoting tool you’ll see how easy it is to find and compare prices between the top carriers. You’ll be able to find the right price for you.
Jeanna Simonson is a writer and the Ambassador of Buzz at Quotacy. She has been researching and writing educational articles on the importance of life insurance since 2015. When not writing for Quotacy, you can find her scoping out the newest fitness and beauty trends for her own personal blog, traveling and spending time with her husband and fur babies. Connect with her on LinkedIn.
Save more, spend smarter, and make your money go further
Has your credit suffered a hit or two? Before you start thinking rentals, read this.
What mortgage lenders are looking for
You know all about credit scores and that, across the three big credit reporting agencies, scores can really fluctuate. Mortgage brokers and lenders will look at your credit score, toss out the lowest and the highest and typically make decisions based on the score that’s smack in the middle.
But credit scores aren’t the only thing a mortgage lender considers. Other factors affecting loan qualification include:
Your income
Debt-to-income ratio
How long it’s been since you missed a payment
How long you’ve been in your job
Ratio of income and projected home payment
In other words, it’s a numbers game that goes way beyond your credit score.
And, if you’re buying with a partner, consider whether or not it’s best to have them on the loan.
If your co-buyer’s credit is crappy and yours is good, you may want to consider removing the co-buyer from the transaction. Realize, however, that the co-buyer’s salary won’t be factored in as income this way. Of course, the co-buyer is still welcome to live in the house with you.
Cleaning up your credit ASAP
Truthfully, there’s no way to change your credit score overnight. Cleaning up your credit, if it’s not too terrible, can take a few weeks at minimum. If it’s dreadful, expect to spend a few months (even up to a year) playing everything straight in order to get that number to inch a little higher. Fortunately, to purchase a home, you may not need to do either.
If your score is above 680, odds are good you’ll have no problem. If you’re looking at an FHA loan, 580 should do it (tip: you may get approved with a lower credit score for an FHA loan if you can put more than 3.5% down on your home). For comparison, the lowest possible credit score hovers around 300. FYI, if your score is in the 300s or 400s, you have work to do. Now is not the time to buy a home.
A lender will likely ask you to explain away all the dings on your credit report–for example, why you were late on a payment to your cable TV company (“I took the check to the post office but forgot to drop it in the mail and found it two months later, after disputing the past-due balance. It was paid in full on January 31.”), or why you failed to make a full payment to your car payment a few years back (“I had a large medical bill that I had to pay so I worked with my car loan company to move my February payment to the end of my loan instead.”) As long as you have a legitimate reason that shows why you paid late and that you didn’t walk away from the debt, this may be sufficient to clear up problems in order to obtain the mortgage. These don’t, however, change your credit score.
To really attack your credit score and give it a lift, start by getting a free credit report (yes, these are totally free and should not cost you anything–do NOT pay). You will not receive your credit score in these reports but you will see detailed information about what’s on your credit report. If you spot errors, work with the credit reporting agency directly to clear these up. This usually entails offering proof of some sort that you did pay the bill or that the debt is not yours. Once your dispute or proof is submitted, it usually takes 1-3 months for the score to be affected.
So what home buying options do you have when your credit is in the toilet?
Talk to Homie Loans about your situation and whether any of these options can help get you into a home loan and building equity.
Take on a co-signer/co-buyer: A parent may be willing to share the risk associated with your loan. The co-signer’s credit score will boost the likelihood you’ll obtain the loan, but if you default, the loan is on both of your shoulders.
Put more money into your down payment:When reviewing mortgage-worthiness, your lender will look at how much the home will cost relative to your income and other factors. If you put more money down on the home, your mortgage payment will be lower and can help offset a lower credit score. The same thing holds true for a lower-priced home.
Work with a mortgage broker, not directly with a lender: Whether your credit score is amazing, iffy or somewhere in between, working with a mortgage broker gives you access to more competitive options than mortgage lenders can provide. Mortgage brokers shop around to get the best overall costs/fees/interest scenario or their client’s budget. They’re not linked to a single financial institution, which can only offer that lender’s loan programs. Mortgage brokers frequently have access to wholesale mortgage rates and add their own “commissions” by inching up the interest rates slightly. Homies can tap into low costs and lower-rate loans through Homie Loans, which also accesses wholesale mortgage rates without the higher costs. To your wallet, the difference between Homie Loans and other brokers is frequently the lowest possible interest rate. As a bonus, Homie Loans also currently pays the price of the appraisal for all homes purchased through Homie.com. All in all, you may see both a a short-term reward and a long-term benefit amounting to considerable cash over the life of your loan with Homie Loans.
Extend your mortgage term: Aim for 30 years, the typical length of a first-time mortgage in the U.S., instead of a 15- or 20-year loan. Your payments will be lower, which can help you qualify for a loan more easily. Talk to your mortgage broker for more details.
Consider unique loan programs: Few of the truly odd or unique loans exist today (some of these probably helped usher in the mortgage crises), but checking with a mortgage broker before you start looking at homes can help you determine if you’re eligible for other programs like a VA loan that doesn’t factor in credit scores, a USDA/rural loan that requires no money down, or another unique home loan program.
Rent-to-own and owner financing: While you’ll still need to qualify, rent-to-own and owner-financing agreements can be great options for wanna-be homebuyers who can’t obtain a loan. Unfortunately they’re very hard to come by and you won’t be able to go through a mortgage broker or lender for either one. Your best bet is to luck into one of these, usually because you’re buying from family a close friend.
Should you sign a lease or buy a home if your credit is bad? It’s true that poor credit can affect where you live, regardless of whether you’re renting a home or buying one. Before you decide to rent again, check with a Homie Loans mortgage broker to see if you qualify for a home loan. If the answer is “yes” (and stats say it’s likely–a 2015 report indicated the average credit score in Utah was 677; nationwide, Millennials had a score of 625; older generations had higher scores), go month-to-month on your lease. Then start the process by getting pre-approved for a loan and start shopping for the home you really want to live in. Get pre-qualified.
Homie Loans is a Equal Housing Lender, NMLS# 1016597
I was stunned but not surprised when Don wouldn’t meet my eyes that morning. I had grown suspicious when he started passing me over earlier that week while handing out new projects. I was responsible for 40% of the workload in a three man group — why else would he do that?
The company I worked for had been in a downward spiral for quite some time. Every month another group was laid off. Initially they started with the new people and the slackers. These were easy because they contributed little to the bottom line. After round three, the cuts started to hurt. We started to lose project engineers. Ten electricians were quietly told their services were no longer needed. What started as 150 employees would now be 78. Unfortunately for me, I was employee number 79.
A strange twist to the story Actually, I was relieved. This may sound crazy, but getting laid off was the best thing for my family. The past year had been painful as I watched friend after friend escorted to the door. The hours got longer. The sense of despair was almost palpable.
I knew that a layoff was imminent. I was actively searching for another job, but I had several challenges. First, the economy was still a mess. Second, I had to be extremely discrete. If the company caught wind of my efforts I would feel the ax that much sooner.
But the main reason I felt relieved was that I had a secret weapon: my network.
From the day I started at the company, I aggressively built my network. This was in part because I was an application engineer and worked closely with our customers. In many cases I was far closer to them than our salespeople. I also worked hard to build good relationships with my suppliers. I often knew them better than our purchasing group.
My network gave me strength in the face of unemployment.
Seven keys to a strong network A strong network doesn’t just happen. It takes time, effort, and patience. Here are seven tips for creating and maintaining a group of contacts:
Key #1: Build it before you need it Building a network is a lifelong process, and relationships take time to develop. If you wait until you need help, it may be too late. The odds are you already have a network, but have not developed it to its full potential. Start with your family and friends. Move on to business contacts, members of your church, club members, etc.
This is your base network. If you have weaknesses, get to work. Call up the old friend from college. Email a buddy from your old job. Add business contacts to your Christmas card list. Attend industry events and talk to as many people as you can.
Key #2: You must make a deposit before you have the right to withdraw Just because you have a name and number doesn’t mean a person is part of your network. You must first help them before you can ask a favor. View it like a bank account. Can you take out money if you never make deposits? I’ve known people who try to do this. After about two requests they are no longer welcome. Pretty soon they are on their own and have a reputation for being self serving.
Something as simple as saying thank you can be a major deposit in your network bank account. If someone gives you a hand, make sure they get credit. See an article in the paper they would like? Cut it out and send it to them, or put them in touch with a resource that can help them with a problem.
Key #3: Give more than you receive This goes hand-in-hand hand with number two. Strive to maintain a positive (and growing) balance. Compare this with personal finance. You must always make more than you spend.
Key #4: Be open and genuine People will spot it if you are phony. Relax and be yourself. Just make sure you keep away from volatile topics like religion and politics! To make the most of a network, you must sincerely like people and enjoy helping others when you are able. Say “yes” when you can, but also know when you have to say “no”.
Key #5: Follow up and stay in touch Even the best contact will get old and stale. I like to view a relationship as two people tied together by delicate strands. Each time you make contact adds another strand. If you stay with your initial meeting the connection is tenuous. It is only when you have hundreds of these strands woven together that you have an unbreakable cable.
Key #6: The devil is in the details Even the experts have trouble remembering all the details. Write things down. If you get a business card, take notes on the back after you finish your conversation. Use that pad of paper at the meeting. What is their spouse’s name? Do they have kids? What ages and genders? What college did she attend? What is his birthday?
Key #7: Your network doesn’t end with your contact Each of your contacts has their own network. Don’t be afraid to call and ask “do you know someone who can help?” If you are doing the steps above, they will be glad to make the introduction.
Keep these tips in mind and you too can build a strong personal and professional network.
A happy ending I was laid off Thursday morning. By Thursday afternoon, I had logged over 50 phone calls. My message was simple: “What jobs are available at your company? Who do you know who is hiring? Who else should I call?”
Even with the lousy economy, I had three interviews set up by the next day. The next week I had seven interviews. Within a week I had two job offers with a third coming. Within two weeks I had a job with a better company.
The best part? I received a promotion and am now selling against my former employer!
For more on this subject, you may want to read the following:
My wife and I just got back from Turks and Caicos, which is an incredibly beautiful island in the Caribbean. While there, we were tempted to buy a vacation rental. It seems like every time we go on vacation we think about buying a vacation house, but this time we gave it more thought. Turks and Caicos was the favorite place we have ever been too and the prices were relatively affordable.
We thought about buying a vacation house because we loved the island and plan to go back again and again. At first, buying a vacation rental appears to be a wise decision if you visit the same destination enough. The plan would be to buy a house or condo on the beach, stay there a few times a year and rent out the place when we are not staying there. But when you look at the pros and cons of vacation homes from an investing perspective, we were reminded why it is not always a wise financial decision. The expenses are extraordinarily high on vacation rentals and are you really saving money when you stay there on vacation?
Why was Turks and Caicos so amazing?
Before I get started with an analysis of vacation houses, I want to discuss Turk’s and Caicos. TCI, as it is called locally, is a chain of islands in the Caribbean between the Bahamas and the Dominican Republic. We choose to vacation there, because the water looked crystal clear and had that amazing blue-green color my wife and I love. We have been to Mexico, St Martin, Dominican Republic, and taken a cruise to a few more destinations in the Caribbean. We enjoyed those destinations, but we heard TCI was better, had fewer people and was worth the extra money (it is expensive). We were not disappointed in Turks and Caicos as the water was gorgeous, the beaches were soft white sand and there was a reef right outside our resort that we snorkeled at every day. We saw a giant ray, sea turtles, many tropical fish, a large barracuda, corals and much more.
The island is not as busy as many other places we have visited and everyone was very friendly. My wife also has many food allergies including gluten, soy, dairy, eggs, and the grocery stores were extremely well stocked in allergy-friendly and organic food. There are 40 islands in the country, most of them uninhabited with the same perfect water and beaches. The main island, Providenciales was expensive as most are but was well worth it.
What are the pros and cons of vacation homes?
We enjoyed the island so much, that we looked at buying a vacation house or condo there. The prices actually seemed somewhat affordable for oceanfront property compared to other places we have been like Florida. We stayed at the Coral Gardens and although there is a rather ugly half-finished resort next to it, it was a lovely resort.
The resort next door (The Toscana) was supposed to be a high-end Italian style resort that was started in 2008. The island was hit very hard economically in 2008 thanks to two hurricanes and the global economic meltdown. The building of the Toscana stopped dead in 2008 and the site has been an eyesore ever since, although I found it fascinating. It turns out the original company that started construction ran out of money and went under after taking many deposits for the complex from future owners. The bank that took it over tried to auction the property off multiple times without success, but recently the owners of the penthouses got together and have agreed to finish the project themselves.
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Staying on the island is very expensive and our one-bedroom condo goes for $400 to $500 a night. It had direct ocean views, a balcony, two baths, and a full kitchen. You can buy similar condos in the same building we were in for under $400,000. On the surface that looks like a great return on your money. Buy a place for $400,000 and rent it for $12,000 a month. That blows the 2 percent rule out of the water and is a lot higher rent to value ratio than I get on my 13 rental properties. The properties I buy in Colorado rent for $1,200 to $1,500 and I bought them from $80,000 to $135,000.
Can you make money?
One reason I was intrigued by Turks and Caicos real estate is the rent to value ratios. We stayed in Florida on the gulf coast a couple of times in the last few years. On our last trip, we paid $2,400 for a week in a three-bedroom, oceanfront house. That house was recently for sale for 1.6 million dollars and I guessed it was worth $1.5 million. The rent was less on the beach house in Florida, but the value was over three times as much as the Turks and Caicos condo.
The problem with vacation rentals is the cost to manage and maintain them. I pay 8 percent of my rents to have my rental properties managed by a property manager. The cost for a property manager on vacation rentals is 30 to 50 percent of the rents! The management fees on the Coral Gardens units that we looked at were 40 percent.
There will also be many more vacancies on short-term rentals than on long-term rentals. There are also high and low seasons for vacation rentals and you can’t expect to see peak income year-round. The total income for 2014 on one unit in TCI was $72,000 and another $62,000. These units were identical and right next to each other, but these income differences show the volatility with vacation rentals. It also shows that you can’t count on $400 a night every night. Weekly rates will be lower, many nights will be vacant and rates will be much lower in the off-season.
The actual income is not $12,000 a month, but closer to $6,000 a month once you factor in the vacancies and off-season rates. Now we are getting closer to the returns we see on my rental properties in Colorado. However, we have not considered the management fees.
Why are management fees so high on vacation rentals?
I pay 8 percent for someone on my team to manage my rental properties. I used to manage them myself, but once I got to seven rentals I started to run out of time to manage my properties, flip houses, run a real estate team and write this blog! With a property manager, my properties have become almost completely passive, except when I first buy them.
I own single-family rentals that take very little management. The tenants tend to stay for long periods of time, the houses are repaired after I buy them so little maintenance is needed. We occasionally have problems, but for the most part, our tenants pay on time and take good care of the properties. The tenants pay all the utilities and are on long-term leases.
When you manage a vacation rental, it is an entirely different situation. Vacation rentals take much more marketing, much more active management, have more inquiries from renters, need more cleaning and are more like a hotel. Managers need to be able to check people in at all times of the day and night and even be a concierge in some cases. More responsibilities and work means you have to pay much higher fees as sometimes the manager will need to hire from services like Tidy TN due to time restraints of their duties.
Just the property management fees on the Turks and Caicos condos are $20,000 to $30,000 per year! We have not even talked about the other expenses that come with a vacation house.
What expenses will you have?
When you invest in condos you also have to consider HOA or maintenance fees. On beach front condos the HOA fees can be very expensive. There is a pool, maid service, parking lot, towels and properties close to the beach that have extra expenses. The beach has to be maintained and buildings weather faster due to salt and winds. The occasional hurricane can really cause problems. HOA fees on beachfront condos can easily run $1,000 a month or more.
Vacation rentals must be furnished, have plates, silverware, linens, televisions and everything someone would need while staying there. Over time these items would have to be replaced and upgraded to keep the rental unit desirable. If you are charging $400 a night, it better be very nice.
Vacation rental owners will have to pay for all the utilities as well. The electric, gas, cable, water, internet all are added expenses and will most likely cost more in exotic places like the Caribbean islands. Fresh water comes from rain and desalinization, not wells or rivers. Internet, cable, electric all cost more.
If you want an oceanfront property it is almost guaranteed to be in a flood zone. You will have to get flood insurance, which is much more expensive than regular insurance.
Here are the total costs per month of a vacation rental on the beach compared to a regular single-family rental (assuming they rent for the same amount, or you have multiple single-family rentals that rent for the same as one vacation rental):
Vacation House Single-family Rental
Rents received $5,833 $5,833
HOA fees $1,000 0
Management $2,333 $467
Utilities $60 0
Credit card fees $200 0
Travel agent fees $300 0
Maintenance $600 $600
Taxes $0 $416
Insurance $500 $400
Total Costs $4,993 $1,883
These are not all the costs but are meant to show the huge differences between a long-term rental and a short-term vacation rental. I did not include vacancies, because the rents I used for the vacation rental are actual returns. Keep in mind with a single-family rental property you will have much fewer vacancies than a vacation rental. There are also a few more costs I did not discuss yet on the vacation rental.
If you are renting vacation rentals most people will book with a credit card and you have to pay credit card fees to accept credit cards.
Travel agents also get paid a commission if they book a vacation rental for you.
The insurance number could vary greatly. I am assuming 5 single-family rentals were needed to create that income, but its insurance could be higher or lower based on the number of properties. Flood insurance is much higher per property.
Taxes are very skewed in this scenario on the vacation rental. In TCI there are no property taxes, but there is a 15 percent tax on all property purchases. You would have to add $60,000 to the purchase price of $400,000 for taxes when you bought the condo. Over five years that would average out to $1,000 a month.
The utilities on the condos we looked at were not very high, because the HOA took care of the water, electric and cable. The HOA takes care of the exterior maintenance, but not the interior maintenance. You can see that almost all of the income is used up by the expenses on the vacation rental. If you consider the huge initial tax bill all the income is used up on the vacation rental and you don’t have any loan costs!
Do you save money?
The reason most people consider a vacation rental is they think buying a vacation house will save them money. Even though you are actually losing money on this particular vacation condo, maybe it makes sense to buy it if you stay there enough. You will save thousands on every vacation, right? The problem is every time you stay at your vacation rental you are taking it off the rental market. You could be renting the property to someone else and you are losing rental income.
Is it really an advantage to own a vacation house if you are staying there a week or two every year? Will you also feel obligated to go on vacation every year to the same spot? What if you have a wedding, graduation, a family reunion, a funeral or another occasion you have to use your vacation time on? Most people do not use their vacation properties as much as they think. This is one reason timeshares are such a horrible investment, but that deserves another article.
Loans on vacation houses
All of the numbers I have used so far have assumed you are paying cash for a vacation rental and you are still losing money! If you get a loan it will lose even more money and do you want to tie up $400,000 plus in a vacation rental that you use a couple of times a year? That much money would make me over $7,000 a month in rental income because I can use that money with financing and still make money each month. That $7,000 a month would more than pay for a couple of vacations a year in some really nice places! Not to mention it is not easy to get financing in another country or even another state.
When would it make sense to buy a vacation rental?
There are a few instances when it would make sense to buy a vacation rental, but they can still be very risky.
If you wanted to invest strictly for appreciation it might make sense to buy a vacation rental. I never invest for appreciation, because I cannot predict the market. Prices can go down on vacation properties just like other houses.
If you were going to live in a vacation house for months out of the year, it might make sense.
If you were going to manage the property yourself you could make money with vacation rentals. However, you have to spend a lot of time on marketing and management.
Even in these scenarios, there are other risks like beach erosion, natural disasters, political changes in other countries, insurance changes and giant half-finished resorts next to your condo!
Conclusion
On the surface, vacation house may seem like a great investment. They aren’t making any more ocean and there is only so much beachfront property. However, if you have to tie up huge sums of cash to buy the property and you still lose money every month is it worth it? For me, it is not worth the risk, the money it would take and I would lose flexibility with my vacation choices. I love Turks and Caicos, but that does not mean I want to spend every vacation for the rest of my life there.
Shopping can be a fun activity, no doubt. There’s so much to look at, so many items that promise to make life a little better…it can be hard to stay focused on what we need vs. what we want and on what we can afford.
But those impulse buys, even a new conditioner here and a spiffy new phone case there, have a way of adding up. That can leave you wondering why your credit card bill is so high and can derail your bigger-picture financial goals.
It’s OK to give in now and then and splurge on small treats, but it’s also wise to develop better buying habits so you don’t get in the groove of overspending.
Here, you’ll learn just how to do that. Read on for advice on fine-tuning your routine; you’ll see how to make smarter buying choices without feeling deprived.
9 Tips for Building Better Buying Habits
Here are nine tips for building better buying habits that can help those interested in becoming more mindful consumers.
1. Having a Financial Goal in Mind
Motivation is a wonderful tool. To kick off new buying habits people may want to think about what their financial aim is and what they want to save money for in the first place.
This could be as small as wanting to save money for a handbag they really want or to save up to go to a fancy restaurant instead of their usual haunt.
Or, it could be something much larger like saving for a vacation, a wedding, a home, or even for retirement somewhere down the line.
Having a financial goal might make it easier for consumers to prevent an impulse purchase or spend money on something they don’t actually need.
To double-down on this habit try writing down any and all financial goals in a notes app, diary, or even on a piece of paper. Then, stick it in a wallet so it’s with you wherever you go.
2. Giving Every Purchase — Big or Small — a Little Time
Sometimes all it takes to reverse a buying decision is to just sit and think about it for a second. Is this magazine really worth the read, or can the articles be found online? Is this new dress really all that great, and will it be worn more than once?
For larger purchases try to employ the “take a walk” method, which is to literally leave a store, go for a walk, and think about the item a bit more. This way, the initial adrenaline rush and excitement wear off just a bit so a consumer can clearly consider the purchase with fewer emotions attached.
Then, come back, look at the item again. If it still elicits butterflies then it could be worth the purchase. If not, that’s great. Confidently walk away.
If anyone is looking to take this habit to the next level, try employing the 30-day rule. Just as the name implies, those looking to purchase anything nonessential must put the product back on the shelf and step away for a full 30 days.
If at the end of that time he or she still wants the product badly enough they can then return and purchase knowing full well it will bring them a little more joy.
Here’s one more trick to try when using the 30-day rule. Over the 30 days, try saving little by little to purchase the item. At the end of the month, if you decide that product is no longer needed, that cash could be put right into savings.
Recommended: Different Types of Budgeting Methods
3. Coming Up With a Personal Spending Mantra
If taking a walk just isn’t an option, it may be time to come up with a personal spending mantra. Think things like “Keep the memory, get rid of the object,” or Marie Kondo’s, “Does this spark joy?”
Use Kondo’s phrases, or come up with a unique one to use before making any purchase. By repeating the phrase over and over again it will help determine if that object really deserves to take up space in your life and in your monthly budget.
4. Learning to be a Comparative Shopper
There’s so much information just a click away, you never have to settle for the first price tag you see. Finding a better deal could require just a quick online search.
To become a great comparative shopper, you can start small by investigating prices on everyday purchases like groceries. Try looking up a price comparison for milk between high-end grocery stores versus the neighborhood grocer. Then, think about monthly expenses like the internet, cable, telephone bills, and even things like gym memberships or subscriptions.
Can you find a better price for any of these items or negotiate the price down? Go for it and save along the way.
5. Falling in Love With Coupons and Discount Codes Again
Another better buying habit to adopt: Take a minute when shopping to find a few coupons to use in physical stores and discount codes to use online.
There are a number of coupon websites such as RetailMeNot and The Krazy Coupon Lady that can help shoppers hunt down a few discounts when they need them.
There are also services like Honey, which is a plugin you can add to your dashboard that will automatically scour the web for discount codes and plug them right in at checkout.
Long story short, don’t settle for the first price.
Recommended: Ways to Save Money on Clothes
6. Maintaining the Things You Already Have
A hole in a sweater, a scratched coffee table, and a tiny crack in a dish can be enough for some people to run out and purchase an entirely new item to replace the old.
However, rather than tossing something just because it’s a little faded it’s time to learn how to give things a new life. Or, find an expert who can.
For example, rather than buying all new shoes just because the tread is a little worn down, try bringing them to the local cobbler (aka shoe repair). They may be able to replace the thread for a fraction of the price of new shoes. This same idea goes for big-ticket items too.
Consider keeping a maintenance calendar for things like a car’s oil changes, a home’s roof inspections, and more. That way, things will always stay in tip-top shape for longer, and you may, say, save money on your car or home repair costs.
7. Understanding Shopping Triggers
To create better spending habits, it can be worthwhile to take a bit of time to self-reflect and discover why you like to spend money in the first place.
Do you suffer from FOMO (fear of missing out), spending and buying things because friends, family, or a favorite influencer is sporting it on social media?
Do you shop when bored, or are you triggered by something else? It can be important to delve into why you shop so you can avoid triggers that could lead to overspending.
Doing so could also help you reconcile any tendencies to be a compulsive or impulsive shopper.
8. Getting in on the Financial Buddy System
Everything’s better with friends — including creating better spending habits. Just look to working out for inspiration.
According to one landmark study by researchers at the University of Aberdeen, people who work out with a friend are more likely to hit the gym more often than those who choose to work out alone. That lesson can easily be applied to finances too.
Find a trusted friend or family member who can offer real advice when it comes to creating better buying habits.
Make a pact to call one another every time either of you needs a second opinion when it comes to making big purchases, or when you need someone to talk you out of making a silly purchase.
Don’t worry, odds are you’ll return the favor for your financial buddy in no time.
9. Knowing Where Money Is and Where It’s Going
A major part of creating better buying habits is understanding where your money is right now and where it’s going at all times. Don’t shy away from making a personal budget to see how much money is coming in and where it all goes. Budget tracking apps (perhaps provided by your financial institution) can help in this effort too.
Monitoring your checking account will also help you get in touch with your spending habits. Some people find checking in every couple of days a good move.
These moves can reveal patterns that you might be unaware of and also help you see where you might cut back on expenses. That, in turn, can free up some funds so you feel better about splurging when the opportunity arises.
The Takeaway
SoFi Checking and Savings, a high interest bank account, can help you manage your cash better.
With our app, you can transfer money to pay bills directly online and track weekly spending right on the integrated dashboard. You can work towards savings goals with Vaults and Roundups. Plus, you’ll pay no account fees and earn a competitive annual percentage yield, which can help grow your money faster.
Want to create better buying habits? SoFi Checking and Savings could be a first step to help you get there.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. SOBK0423063
Having a roommate can be great; you have companionship and someone to split the bills with. But that sharing of expenses can sometimes get challenging and tense even. Roomies can wind up arguing over who is using up all the toilet paper or sending the electricity bill through the roof.
To help keep the peace and control costs, there are smart tactics you can use. Try some or all of these tips to keep your household as fun and argument-free as ever.
One of the easiest ways to ensure everyone feels satisfied with how the household bills are handled is to be direct and upfront with financial expectations. And this means being straightforward about what those expectations are before anyone moves in.
When negotiating moving into a new home, consider asking how bills are handled now and how it will change when you or someone else moves in. Additional questions to wrangle can include:
These can be helpful, because everyone can understand what’s expected. It also sets ground rules moving forward.
Deciding How Everyone Wants to Split Bills
As for the best way to split bills, that may depend on the household situation. For example, if the home has two evenly-sized rooms and a shared bathroom, kitchen, and living area, it may be easiest to simply split the bills down the middle as everyone has an equal space. But, if one room is exponentially larger than the other and has its own en suite bath, the bills could be split proportionally to reflect the extra space for one roommate versus the other.
It is a good idea to tackle the grocery issue head on. For instance, address such questions as:
• Is the house going to split groceries?
• Is everyone going to enjoy one shared meal together at night?
• Are the roommates going to split common goods like cleaner and toilet paper?
• Or is each person going to fend for themselves?
Any way you choose to go about it is fine, as long as it’s all out in the open — before someone accidentally finishes someone else’s ice cream without asking.
Picking Who Is Responsible for Which Bill
Once it’s decided how a bill will be divided, one other idea may be assigning each roommate ownership of bills for things like the electricity, heating, gas, water, trash, cable and internet, and more, depending on the rental agreement. Perhaps you’re able to get a better deal based on a roommate’s existing account with a certain biller. That may be one way to decide and to lower expenses.
Or, another common method is to have the roommates divide up the bills evenly in order to distribute the responsibility. Doing things this way may also ensure everyone pays bills on time. Being late with bills can lead to fellow roommates being surprised with a service being interrupted and their credit being dinged if they are listed on the account that’s unpaid.
You might also look into changing the due date on bills; this can sometimes be accomplished and can ease cash flow.
Creating a Roommate Bills Contract
Once the lease has been negotiated, the bills have all been cleared up, and everyone is in agreement, you may be considering some sort of “roommate contract” spelling out exactly what was decided upon, which everyone reads and signs.
That way, no one can ever claim they were confused about the household budget and how bills are split, when money is owed, and who is responsible for what. It is recommended to share the fully executed contract electronically and then a printed out copy for all to review and retain.
Recommended: How to Rent an Apartment With No Credit
Sharing a Spreadsheet of Expenses
Settling into a new home and arrangement might be a good time to finish up the admin work by creating and sharing a monthly spreadsheet of expenses.
This spreadsheet could be kept in a common gathering area for easy reference and shared online as well. In the spreadsheet, each roommate can keep track of the expenses they are responsible for, as well as who has paid and what is outstanding.
This spreadsheet may also come in handy for adding in shared groceries and necessities like milk, eggs, toilet paper, and paper towels. That way, everyone can keep track of who bought the last batch to avoid an argument later. You’ll also see how much your household is spending on groceries per month and other expenses.
Recommended: Different Types of Budgeting Techniques
Sitting Down Together at the End of Each Month
It is said that one of the quickest ways to ruin a roommate relationship is for one person to get passive-aggressive about the bills. That’s why it’s recommended to avoid leaving little notes around the house about who owes what (or who hasn’t done the dishes in far too long) and instead face those issues head on.
At a good time for everyone, perhaps toward the end of each month, schedule a 10-minute roommate check-in. In this meeting, everyone can share household happenings, announcements, and any updates on household bills.
By sitting down in person, no one can avoid possible uncomfortable questions about money. You all can figure out potential sticky situations together.
As a bonus, roommates can also use this time to go over any other to-dos around the house. You might also discuss ways to economize, such as saving money on water bills.
Keeping Some Personal Purchases Separate
Though some may be tempted to fully invest in a roommate relationship by sharing the financial burden on just about everything, there are some items that are better left in a budget’s personal spending category.
That includes the purchase of any big-ticket items you’d like to take with you if you ever move out. These might include such items as a TV, couch, tables, glasses, or an expensive Crockpot purchased on a whim.
It may also be helpful to distinguish an area in cabinets and the fridge for each individual roommate to place specialty or expensive food items they do not want to share.
If one roommate has a pet they adopted on their own, it is a good idea to keep those bills completely separate.
Recommended: How to Save Money on Pets
Another common recommendation is for everyone to invest in their own renters insurance. This will protect all their items in case of a fire, flood, burglary, or more. This type of insurance could save everyone a lot of money and heartache if disaster strikes.
Using Modern Technology to Split Bills with Roommates
Fortunately, splitting bills with roommates is easier than ever, thanks to the advent of P2P transfers. You might all pay bills via PayPal, Venmo, or Zelle, and then one person transfers the appropriate amount to the payee. Your bank may also have tools you can use to quickly send funds to others.
It can be fast and free to transfer money this way and can make the bill-paying routine quick and simple.
The Takeaway
If you need flexible banking (whether or not you have roommates), consider what SoFi offers. With an online checking and savings account, you can not only access your money at any time from anywhere but also transfer money to pay bills directly online. Plus, you can complete peer-to-peer transfers between SoFi Checking and Savings members and non-members.
More perks: No account fees and a competitive annual percentage yield (APY) to help your money grow faster.
SoFi Checking and Savings: The smart, simple way to manage your money.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website . Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. SOBK0423064
For the longest time I vowed that I would never pay for cable or satellite TV.
For the first 33 years of my life, I didn’t, and I got along just fine. My wife and I do enjoy movies and TV, but we had found ways to get our favorite shows without paying the high cost for TV service.
This past month my wife and I made a decision to get cable TV. I didn’t really want to get cable, but my wife wanted to because she doesn’t enjoy the process of watching streaming video through our Xbox as much as I do.
She enjoys the ability to just turn on the TV, flip through the channels and just watch something without having to look up a certain show. She also enjoys the social aspect of watching TV by being able to talk with friends about certain shows the day after they air. Me – not so much.
I understand her reasoning for wanting to get service, so I gave in. However, that didn’t mean I wasn’t going to do my best to get a great deal.
Researching The Best Cable And Satellite TV Deals
Once we had decided that we were going to get cable TV, I moved into the next phase – research mode. I started saving all of the cable and satellite TV flyers that we received in the newspaper and in the mail looking for the best possible deal on cable. The deals I found were ok, but nothing to write home about. I kept them all just in case I could hobble together a deal of my own.
Next I tried finding a good deal or promotion on TV service through an online reseller or physical store. A lot of them will have rebate programs available that will give you big incentives if you sign up. One offered me a $100 Amazon gift card if I signed up. The only problem with a lot of these sites or stores is that most of them are selling you cable service at a higher price than you should be paying. For example, for cable tv service with comcast (who we ended up going with), most of the resellers were charging $54.95 for the package we ended up getting for much less. So you may be getting rebates and bonuses, but you’re paying for it through higher monthly subscription prices.
After checking all the reseller sites trying to find a deal I moved on to one of my favorite resources, online deals forums. Through those forums I was able to do a search for all of the latest deals that people had been able to find through Comcast, Dish Network and AT&T TV Now . Many of those deals were much better than anything I had been able to find online or in the newspaper.
After some more research on I found that most people weren’t able to get the great deals on their cable bill just by ordering service through the website, or by phone. The trick was to go on the company’s online chat and to work with the sales agents on there. From what I could gather, the agents when you call are actually Comcast employees, and they toe a hard line on giving discounts or special deals.
The chat agents are outsourced, and are more likely to give you a deal. I found the chat agents much more helpful later on when I was ordering.
Ordering Cable TV Service
After doing our research we finally decided that we’d rather have cable TV service since we didn’t want to have a satellite dish mounted on our garage.
The pricing seemed comparable – as did the channel lineup. So we proceeded to try and find the best deal through the website, over the phone and through the online chat.
Through The Website
Cable TV in our area comes mainly through Comcast, so we set about finding the best possible deal on digital cable through them.
After checking the website for special deals or discounts – the best deal that I could find on service was for 6 months of their digital starter package for $29.99 plus $15 rental every month for the HD DVR cable box. $44.99 a month for the service we wanted. After the first 6 months the pricing would revert back to $54.99 a month plus $15 rental. $69.99 a month after the first 6 months!
No thank you.
Over The Phone
Next I called Comcast’s phone agents to see what type of a deal I could talk them into over the phone. Over the phone they offered me a similar deal to the one I had seen on the website, except they offered to throw in the HD DVR box for 1/2 price. So it would be $36.99 a month for 6 months for everything.
That’s a little better than on the website, but I wasn’t satisfied.
I hung up and called back to get another agent. This agent wouldn’t go any further than the other one, they would give me 1/2 off on HD DVR service, but no free premium channels or further discounts. Even after telling the agents that I knew other people had gotten a better deal, they wouldn’t budge. Time to move on to the chat.
Through The Online Chat
I clicked on the chat icon through Comcast’s support section, and was quickly transferred to the “sales chat”.
I told the agent that I was trying to get a deal that I knew several other people on the forums had gotten. I wanted to get the digital starter package for $29.99 with 1/2 price HD DVR, for 1 year without price increase. I didn’t want to worry about the price going up after only 6 months.
The chat agent quickly agreed to the deal, which made me realize that maybe I could get a little more out of him. I told him I still wasn’t sure I wanted to move ahead with it. He said that if I signed up now, he would also throw in HBO free for 1 year. Normally HBO can cost up to $15/month. With that I agreed to sign up.
So here’s what I got.
1 year Digital Starter Cable TV Package: Normally $54.99/month – we got it for $29.99/month. (we got an extra 6 months of this deal by chatting)
HD DVR cable box: Normally $15/month – we got it for $7.00/month.
Free HBO: Normally $15/month – we got it for free for 1 year. We’ll cancel after that.
Total: Normally our cable package would end up costing $84.99/month. We’re currently paying $36.99/month.
Things To Remember When Signing Up For Cable Or Satellite
When buying cable or satellite tv there are a few things you can do to ensure that you get the best possible deal.
Research the best deals: Save all the flyers and circulars you get, do internet searches for online resellers, and check deals forums to find what kind of deals other people are getting on service. Once you know what deals others are getting, it’ll give you a better idea of what to shoot for.
Figure out what kind of deal you want: After finding out what deals are available, figure out what package you want, what price you’d like to pay, and what (if any) extras you want. Since you’ve already done the research to find out what the best deals are that others are getting, you can now use those as a baseline for your own deal.
Contact the company through phone, website, chat: Contact the cable or satellite TV company through different contact methods. Sometimes you’ll find that one method is more successful than others at getting you discounts, free premium channels and other bonuses. For us the online chat at Comcast had the most friendly agents who were willing to give the best deal. Make sure to get it in writing!
When your promo period ends, re-negotiate your deal!: One of the biggest mistakes that a lot of people make is to not re-negotiate their cable deal with their 6 month or 1 year promo period ends. That means their monthly bill jumps from $30-40 up to $70-100! Don’t make that same mistake. Make sure that you re-negotiate your deal when it comes due, and make sure that you continue paying only as much as you need to. If they don’t give you the same or a better deal, cancel!
Do you have your own suggestions or tips for getting a good deal on cable TV? Do you have ways that you save on your TV bill? Have an experience signing up for service that you’d care to share? Tell us about it in the comments!