On August 29th, 2019, major iBuyer Opendoor launched a mortgage lending division known as “Opendoor Home Loans” to create a one-stop shop for home buyers and sellers.
As a result, those interested in purchasing a property from Opendoor can take advantage of their financing department, similar to how home builders partner with mortgage lenders to facilitate loan closings.
You can even sell an existing property to Opendoor and finance a new one, all with one company if you feel so inclined.
Let’s learn more about this new mortgage lender, which operates out of Plano, Texas.
Opendoor Home Loans Wants to Cut Closing Times in Half
Aim to close home purchase loans in 3 weeks
Offer $100 per day toward closing costs if loan closing is delayed
Can generate a pre-qual letter in minutes via phone or computer
Limited-time $1,000 closing cost credit also available to customers
Noting that financing is often “one of the most complicated and intimidating parts of a home purchase,” they claim they can cut the typical 45-day timeline in half.
So instead of closing in a month and a half, they aim to close your home loan in as little as about three weeks.
They’re backing up that promise by offering $100 per day for every day beyond the scheduled closing date that the loan closing is delayed.
To get started, they ask that you get pre-qualified, which can be accomplished over the phone or online in just minutes.
You’ll receive a pre-qualification letter as well, which can be used to show home sellers that you’re a serious buyer.
Once you find your dream home and your loan is submitted, you’ll receive one-on-one support along with regular updates from your dedicated Mortgage Consultant.
If you happen to be using Opendoor’s trade-in program, where you sell them your old home and buy a new home from them directly, you can schedule the closings to take place on the same day.
At the moment, the company is offering a limited-time $1,000 credit toward closing costs, which is automatically applied to your closing statement.
Speaking of closing costs, they say they don’t charge an application fee, and that you’ll only be on the hook for third-party fees, such as home appraisal and title/escrow fees.
What Types of Loans Does Opendoor Home Loans Offer
Currently offer conventional mortgages (Fannie Mae and Freddie Mac) and FHA/VA loans
Can obtain a fixed-rate mortgage or an ARM with varying loan terms
Offer both home purchase loans and mortgage refinances
A minimum 620-FICO score is required for loan approval
The company began by only offering conventional mortgages, those backed by the likes of Fannie Mae and Freddie Mac, but has since expanded into FHA and VA loans.
They do not offer USDA loans, though that may change in the future as they expand.
In terms of specific loan programs, fixed-rate mortgages are available in 30-, 25-, 15-, or 10-year terms.
You can also get an adjustable-rate mortgage with an initial fixed-rate period of five, seven, or 10 years.
Regarding their mortgage rates, they simply refer to them as “competitive,” so be sure to shop around to see what other lenders are offering for similar loan scenarios.
The lowest down payment available for Fannie- and Freddie-backed loans is 3%, so even those with little set aside in assets have the ability to qualify for a mortgage.
Like Fannie/Freddie, Opendoor Home Loans requires a minimum 620-credit score to get approved for a mortgage.
Once the loan is closed, it will be sold off and serviced by a different loan servicing company, which is common practice in the mortgage lending industry.
Where Opendoor Home Loans Operates
Only licensed to lend in eight states at the moment
Additional states are planned for the near future
Can finance any home purchase, not just Opendoor-owned properties
Company will likely serve mostly Opendoor home buyers to facilitate loan closings
Currently, the company only offers financing to home buyers in the states of Arizona, Colorado, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Texas.
They plan to expand to more states in the near future if all goes well.
You can finance any home purchase in these states, even if it’s not an Opendoor-owned home.
You’ll just want to ensure it actually makes sense to do so versus using one of the many other lenders out there.
All in all, Opendoor Home Loans joins a very crowed space in the mortgage ecosystem, but it makes sense to have their own financing department to facilitate their iBuying activity.
Ultimately, it gives them more control of the process to ensure there aren’t any roadblocks put up by third parties, similar to why Zillow Home Loans exists.
Whether they become a major mortgage lender in the future remains to be seen, but my guess is they will mostly serve Opendoor customers.
In November 2021, Opendoor acquired RedDoor, a so-called digital-first mortgage brokerage that delivers 60-second verified pre-approvals.
The move should allow the company to compete with the likes of Rocket Mortgage and other tech-heavy lenders, while also bolstering their iBuying business.
Update: In early November 2022, Opendoor Home Loans was shuttered. The company also laid off 550 workers, or 18% of Opendoor staff.
In January 2023, Opendoor announced that Lower was its exclusive mortgage provider.
My husband and I are in the process of building a home on 4.5 acres in the Texas hill country. At the moment, we’re still in the planning phase — not quite ready for blueprints.
Last month, our architect asked us to start thinking about the make and model of the kitchen appliances we want for our home. Visions of sleek, Thermador cooktops and double ovens danced in my head. Even when I saw the hefty price tag, I thought maybe we could find other ways to cut back so that we could afford the dream oven. After all, we’re both avid cooks. To us, eating well is one of the best ways to enjoy life. There’s no doubt we’d use it, so the purchase makes sense. Right?
Reality Check From a Minimalist
Then I happened upon an article by Mark Bittman, who writes The Minimalist column in The New York Times. In “So Your Kitchen is Tiny. So What?” he describes how he makes do with 42 square feet of kitchen space, precious little counter space, and a stove that sometimes doubles as storage for pots and pans. It is in this space that he develops most of the recipes for his cookbooks.
But when he posted a photo of his kitchen on his blog, readers were shocked. Bittman writes:
[Chefs and food writers] know that when it comes to kitchens, size and equipment don’t count nearly as much as devotion, passion, common sense and, of course, experience.
To pretend otherwise — to spend tens of thousands of dollars or more on a kitchen before learning how to cook, as is sadly common — is to fall into the same kind of silly consumerism that leads people to believe that an expensive gym membership will get them into shape or the right bed will improve their sex life. As runners run and writers write, cooks cook, under pretty much any circumstance.
With my feet firmly back on the ground, the fancy cooktop and double oven were erased from our kitchen plans. We don’t need top-of-the-line appliances to do what we love. Sure, I’ll have to cope with the quirky nuances of our oven, which loves to cook my cupcakes unevenly just to spite me, but I’ve learned its ways and I work around it. We know where the hot spots are on the stovetop, and we’ve learned how to position the racks just so for even browning. Surely if we’ve managed with a slightly cantankerous oven for this long, we’d be just fine with a new, moderately-priced range.
We do love to cook — and we like to think we’re pretty good at it — but we don’t need a 36″ Thermador to let the world know that, hey, in case you weren’t aware, we’re serious about food. That wasn’t my conscious thought as I was drooling over appliances at Lowe’s, but Bittman’s article made me question my motives (and probably saved me a couple thousand dollars). Anything that could be cooked on a fancier stove can be cooked on a standard one.
Curbing Wants, Focusing on Needs
Because we’re building a house, it dawned on me that this is just the beginning of a long list of decisions we’ll have to make — each one with a price tag. Our goal is to keep expenses down as much as possible so that we don’t feel owned by our mortgage payment. We want to pay off the house early. We want to travel. We want the flexibility that a lower house payment affords us. My fear is that we’ll be faced with so many decisions that we might lose sight of our goals.
To help us stay on track, I started thinking about questions to ask ourselves as we’re faced with more and more building decisions. I organized the set of questions into a flowchart, which we’ll use as a tool to help ignore emotions and evaluate need.
My “Should I Buy It?” Flowchart
Let’s look at how this would work using my cooktop example:
First, we’d ask ourselves whether we can afford it. Technically, yes, we could.
Is it something we need? Yes, our house will need a cooktop of some sort.
Is there a less expensive option? Yes, a standard range is much less expensive.
Is the alternative durable? Yes, there are durable ranges. (We researched Consumer Reports articles on ranges for their top picks.)
Our result? The flowchart suggests we should purchase the less expensive option.
This chart could be used for small, personal purchases, as well. For example, I’ve been coveting a blue YogiToes towel for my yoga practice. Can I afford it? Yes. Is it something I need or lack? No. I have one in red. Flowchart says don’t buy it.
I know we’ll want a few nicer features in our home, but it’s important that our spending decisions are made consciously. Little upgrades here and there could easily add up to a sizable mortgage in the end. If there’s one thing I’ve learned from being in credit card debt, it’s that the seemingly small things accumulate quickly. The only way to combat this is to be conscious of what we buy — and why we are buying it by constantly keeping a check on our credit report.
There are lots of different ways to get a mortgage these days – you can walk into a physical bank branch, call a mortgage broker, or even start a loan application on your smartphone.
While the mortgage broker model isn’t new by any means, a company called “Credible” is shaking things up on that front, promising real-time mortgage rates from multiple mortgage lenders without the “annoying calls or emails.”
They also let you compare rates and close your loan all in one place. Let’s learn why this company is different and if they make sense for your mortgage needs.
Credible Launched Back in 2012
Company founded by former investment banker in 2012
Initially focused on student loan refinancing
Has since delved into personal loans, credit cards, and mortgages
Lets you compare personalized loan offers from multiple lender partners anonymously
Acquired by Fox Corp. in late 2019
The company is relatively new, having been founded less than a decade ago in San Francisco.
But that didn’t stop it from being acquired by none other than Fox Corp., better known for TV shows like The Simpsons rather than finances.
Originally a student loan marketplace, the company has since expanded to personal loans, mortgages, and credit cards.
Our focus will be the mortgage piece of the pie, this being a mortgage blog and all.
In late 2018, Credible announced a “first-of-its-kind mortgage marketplace” that offers actual rates to consumers in just two or three minutes, all without affecting the applicant’s credit score.
But that’s not all – you also get a streamlined origination platform that allows you to complete much of the loan process without leaving Credible’s website, similar to Rocket Mortgage.
Their digital process utilizes “smart logic” to cut down on the number of questions asked to borrowers, as well as documentation requests, by making sure they are pertinent to your unique situation.
Additionally, the Credible platform automates the collection of things like pay stubs, bank statements, and tax documents, making the application process both faster and easier to complete.
Many of these items can be gathered electronically by simply granting access to your financial institution, without having to exit the Credible website.
However, they also have licensed loan officers available to those who would like additional support along the way. And they don’t work on commission, so they should have your best interests in mind.
How Credible Works to Get a Mortgage
First, you tell them a little about yourself and your property, just like most other mortgage companies.
This includes your property address, whether it’s a primary, second, or investment home, property type, estimated value, and mortgage balance.
Next, they ask if you have a second mortgage or if you’re looking to take cash out in addition to refinancing your existing loan balance.
One neat feature is they provide estimates of your property taxes and homeowners insurance for you, but you can adjust those numbers if needed.
They then ask for a source of income and average annual income, along with how much you have in assets.
If it’s a home purchase loan, they’ll ask you how far along you are in the process (just looking or found a home, etc.), and what your down payment will be.
You can generate a pre-approval letter instantly and see how much you can afford based on your inputs.
Lastly, you enter your name, date of birth, and phone number, agree to their terms and conditions, and get your loan options.
They note that they take privacy seriously, and that they’ll NEVER sell your information to external companies, nor will you receive phone calls from lenders.
A Soft Credit Check Provides Accurate Rates
Once you click “See My Rates,” a soft credit check (doesn’t affect your credit score) is conducted to look up your credit history and credit scores to ensure your pre-qualified rates are accurate.
If any of their partner lenders have home loan options that fit your profile, you’ll see a notification on your Credible Dashboard within minutes.
Credible will also reach out via email, phone, or text, but only once they have received responses from all potential lenders.
Note that these are just pre-qualified rates, and you’ll still need to qualify, like you would any other mortgage.
Once you select a loan option, you will be asked to provide additional information, and a hard credit pull will take place (these do affect your credit).
If your credit and application pass muster, the mortgage lender partner will provide you with an offer that you can review.
Then you’ll begin the loan process by signing disclosures, providing financial and personal documentation, and so on.
What Types of Home Loans Does Credible Mortgage Offer?
They offer home purchase and refinance loans
Including conventional conforming and jumbo loan amounts
FHA, VA, and USDA loans don’t seem to be available at the moment
Credible has two main mortgage options available – Home Loans, which is designated for purchase transactions, and Mortgage Refinancing, which as the name implies is for refinancing an existing home loan.
This means both prospective home buyers and current homeowners can take out a mortgage using Credible.
In terms of loan types available, I’ve been told that they only offer conventional loans, aka non-government. That means no FHA, VA, or USDA. It’s unclear if that will change soon, but I assume it will.
They also offer jumbo loans, those that exceed the conforming loan limit.
So if your loan scenario fits those criteria, there’s a good chance their lender partners will provide you with pre-qualified rates.
Which Mortgage Lenders Does Credible Work With? And How Do They Get Paid?
The first two lenders to join Credible were Quicken Loans and UWM
There are now several others including loanDepot and Stearns
Credible acts as a mortgage broker and only gets paid if the loan funds
They receive a percentage of the loan amount from the lender who closes your loan
While they don’t list all the mortgage lenders they work with, they do displays the logos of Caliber Home Loans, JMAC Lending, loanDepot, Quicken Loans, Stearns Lending, and UWM.
Originally, they started with just Quicken Loans and UWM, so it’s possible there are even more lender partners today.
As noted, you don’t need to work with those companies directly, or talk to anyone at those companies.
Instead, you can continue to complete your loan application on the Credible website, or ask for assistance from a Credible loan officer.
This is similar to how a mortgage broker works – they handle everything and you never actually deal with the wholesale lender providing the financing.
In terms of how Credible gets paid, it’s also like how a mortgage broker gets paid. If and only if the loan funds, they receive compensation from the corresponding lender.
That means they don’t charge you any fees directly, but rather take a cut, which is a flat percentage of your loan amount, such as say 1% or 2%.
For example, on a $500,000 loan they might make $5,000 to $10,000, depending on the terms they have with their lender partner.
Should I Use Credible to Find a Mortgage?
If you like the idea of a mortgage broker in terms of shopping around
But don’t actually want to deal with a human being
Credible could be a good option for your home loan needs
Just note that they may not offer all loan types at this time
However they do come highly rated by both Trustpilot and the BBB
If you live in one of the states where Credible offers mortgages, you might be wondering if they’re a good choice.
They refer to themselves as “Your trusted online mortgage broker,” which highlights the fact that they aren’t a direct-to-consumer lender. Nor are they a mortgage lender at all.
Rather, they connect you to trusted lender partners and earn a commission if your home loan funds.
As noted, they don’t charge any fees directly, nor do they hit your credit report with a hard inquiry. Despite this, you get to compare real, pre-qualified rates from a variety of lenders in minutes.
So if you aren’t the type to shop around, but still want the benefit of shopping around, you could give them a whirl.
And you can take advantage of their digital platform, which should make the loan process easier, smoother, and quicker.
However, you’re still at the mercy of one of the lenders they match you up with, so customer experiences will certainly vary based on your unique loan scenario and the lender you’re paired with.
Another potential negative is they don’t seem to offer all types of mortgages – those looking for an FHA, VA, or USDA loan may want to search elsewhere until they add those loans to their stable of offerings.
In terms of customer satisfaction, they have an excellent rating on Trustpilot and an A+ rating with the Better Business Bureau.
They could be a good alternative to LendingTree, which provides a similar shopping experience without the ability to complete the loan process on their own website.
Credible vs. LendingTree
Credible
LendingTree
Type of business
Online mortgage broker
Mortgage lead provider
Compare mortgage rates from multiple lenders
Yes
Yes, but after providing contact info
Get pre-approved
Yes
No
Credit check
Soft pull
Soft pull
Do they sell your information?
Keep your data private
Share with lenders you are matched with
How they get paid
When your loan funds
After you fill out lead form
How to apply for a mortgage
Digital process via their own website
Depends on lender you match with
If you’ve checked out Credible, you might be wondering how it compares to LendingTree.
While the pair sound similar, they’re actually pretty different. Credible is an online mortgage broker that matches you up with wholesale mortgage lenders.
And LendingTree is merely a lead generation service that matches you with retail mortgage lenders.
The key difference is that Credible will be your loan guide throughout, and only gets paid once your loan funds.
LendingTree will simply share your information with multiple lenders, at which point you’ll need to pick one to work with. After that, LT is out of the picture.
Credible’s pitch is that you can shop anonymously, whereas LendingTree will provide your contact to multiple lenders upfront.
Additionally, Credible allows you to complete the entire loan process online with the latest digital tools, and even generate pre-approval letters instantly.
However, both services may match you with the same lender. For example, if you use either you could wind up getting your home loan from Rocket Mortgage.
The chart below shows the number of active listings since 1982:
The people who told you demographics in the U.S. are awful and that we resemble Japan were drinking some powerful saki. For years, people said slowing U.S. population growth means we will become Japan, but I’ve been focused on demographics and how that will affect housing from 2020-2024. Concerning the housing economics demand curve, it’s always about the net people living and working.
In reality, housing economic modeling takes a lot of work, and some people instead choose marketing gimmicks to make a name for themselves. It’s very sexy to talk gloom and doom about the housing market, but sometimes that doesn’t end well. I have been highly skeptical of stock traders when they talk about housing economics.
And here is a case in point: New home sales came in Tuesday at a big beat of estimates, but the real story is one about supply and demand.
New home sales
From Census: New Home Sales Sales of new single‐family houses in March 2023 were at a seasonally adjusted annual rate of 683,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.6 percent (±15.2 percent)* above the revised February rate of 623,000, but is 3.4 percent (±12.7 percent)* below the March 2022 estimate of 707,000.
As we can see in the chart below, it’s not like the new home sales market is booming at all; we aren’t anywhere near the top of sales in 2005 or in 2020. However, what has happened is that the housing data has stabilized.
When did this all happen? The forward-looking housing data started to improve from Nov. 9, 2022, with purchase application data, and almost everyone ignored it. The thing is, builders have time to work off their backlog of homes because they’re efficient sellers — they can cut prices, lower mortgage rates and do what they need to do to sell their product, which is a commodity to them. They don’t have the same issues as an existing homeowner because they’re not living in the home they’re selling.
New Home Monthly Supply
For Sale Inventory and Months’ Supply, The seasonally‐adjusted estimate of new houses for sale at the end of March was 432,000. This represents a supply of 7.6 months at the current sales rate.
The builders are progressing here; their confidence improves as the monthly supply falls. Context is always crucial with all housing data, and we had a waterfall dive in many housing data lines and bounced from that deep dive.
However, the housing market is still not good enough to start issuing new housing permits. That’s when you will know housing is out of the recession, and when the builders can start building again. It’s that simple.
The data below is a significant improvement for builders, as housing completions are still rising while their monthly supply is falling.
I have a straightforward model for when the homebuilders will start issuing new permits with some kick and duration. My rule of thumb for anticipating builder behavior is based on the three-month supply average. This has nothing to do with the existing home sales market — this monthly supply data only applies to the new home sales market, and the current 7.6 months are too high for the builders to issue new permits with any natural steam.
When supply is 4.3 months and below, this is an excellent market for builders.
When supply is 4.4 to 6.4 months, this is an OK builder market. They will build as long as new home sales are growing.
When the supply is 6.5 months and above, the builders will pull back on construction.
So, as we can see below, the homebuilders are no longer dealing with spiking supply data but a slow-moving downtrend that still needs much work. However, there is a lot more to this the active listing story than meets the eye.
The 7.6 months of supply is broken down this way.
267,000 homes are under construction, still. 4.7 months of supply
94,000 homes still need to start construction. 1.7 months of supply
71,000 homes are completed for sale. 1.2 months of supply
No, I am not kidding you; the mass supply increase some people have been talking about is only 71,000. We are far from the peak of supply during the housing bubble crash nears, which was closer to 200,000.
All in all, Tuesday’s new home sales report is consistent with what we have seen in the new home sales data for many months now. The builders are simply taking advantage of the low total housing inventory by doing whatever it takes to move their product, and that is being helped by paying down the mortgage rate for their buyers. Imagine what the total housing market would look like if mortgage rates were at 5% today.
As part of the Housing Market Tracker, we look at seasonal inventory weekly, and hopefully, the seasonal inventory bottom has already happened, as I talk about here.
Regarding Wall Street’s take on the surprise in the new home sales sector, was it really a surprise? Someone had to be buying the builder stocks, right? The reality is that home sales crashed last year and that didn’t create the inventory that some housing experts were looking for last year and this year. This is where understanding how credit channels impact housing inventory would have helped.
Hopefully, my work during my time as a housing analyst for HousingWire has brought some light into this discussion, and this will be more in focus when the next recession hits. However, until then, the Housing Market Tracker data got ahead of this stabilization in new home sales data, and that shouldn’t have surprised Wall Street.
Christine just sent me a National Public Radio story about the frugal artists of New York City. Columbia University recently released a study of 213 visual artists over the age of 61. Their average income? $30,000 a year. According to the NPR story:
Most of them said they were satisfied with their lives. However, many reported that they also have had to make daily economic compromises. They don’t eat out, buy clothes at flea markets and rarely travel.
Many of these artists manage to make it in New York through frugal living. All they seem to need is some food, a roof overhead and the time and opportunity to practice their art.
This is a nice story, with some lovely bits in the interviews with individual artists. More than that, it was just the shot in the arm I needed.
Kris and I enjoy our lives. We have a lot, and we’re grateful. But our focus in the past year has been on frugality, on refining the art of buying only that which we will use or bring us pleasure.
Sometimes, though, I lose my focus. It’s been a struggle for me lately to remember that frugality is a good thing, that thrift is a responsible choice. I haven’t turned into a spendthrift or anything — I’ve just been paying too much attention to those who ask, “What is the point of amassing a fortune while living below your means? Why make sacrifices now for an uncertain future?”
When I hear stories like the one about the frugal artists in New York City, I’m reminded that frugality is a virtue, that it can allow people to pursue their dreams. I’ve always wanted to be a writer. Now I am. I never thought I’d be writing about personal finance (I thought I’d write science fiction novels), but to be honest: writing is writing. I love what I do. And one of the reasons I’m able to do it is because I’ve learned to live below my means.
There’s real value in boosting your income — I don’t deny that. But frugality is an important part of personal finance, too. And for each of us it’s different. I might be able to cut back on clothing and transportation, but I’ll probably always spend a lot on food. On the other hand, food may be a perfect place for you to cut costs, but maybe you’re not willing to compromise on your wardrobe.
Frugality and thrift allow us to emphasize those things that are most important in our lives. When we restrict our spending on the unimportant, we’re able to indulge ourselves on the things that matter most.
And what about sacrificing now when the future is so uncertain? I think this is a fallacy on a couple of levels. First of all, spending is not happiness. If it is, there’s something wrong. Second, most of us are likely to live a long time. Which would you rather do?
Prepare for a long life by saving and investing, but then die tomorrow.
Spend money you don’t have now, and then be unable to afford what you need when you’re older.
I’d prefer the former. Kris and I make sacrifices, but we’re not miserable. In fact, frugal folks are some of the happiest people I know. They spend money on the things that are important, and they save for the future.
Insolvency is a state of financial distress where a person or business cannot pay bills or debts.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Insolvency, or being unable to pay one’s bills, typically arises when a person or business is experiencing economic hardship or borrowing excessively. When experiencing insolvency, businesses or individuals can potentially avoid bankruptcy by increasing income, working with a financial advisor and settling debts.
When asking, “What is insolvency?” the distinction between individuals and businesses is an important one. This will help you decide what options are available and what is the right fit for your specific situation.
Here, you’ll learn about the different types of insolvency as well as how and why it happens. We’ll also cover the difference between insolvency and bankruptcy, so you’re aware of different routes you can take to repair your finances.
How insolvency works
Insolvency isn’t a process, but instead, it is a state in which a person or entity is unable to pay what they owe to creditors.
The IRS defines insolvency as when a person or business’s liabilities have become greater than its assets. The IRS uses this situation to decide if canceled debts should or should not be included in a person’s income taxes.
To better understand insolvency, let’s look at some examples. If a restaurant owner owes $200,000 to their various vendors, but the restaurant is only worth $150,000, the business is insolvent. Or, if an individual owes $30,000 in credit card debt, but their net worth is only $25,000, they would also be insolvent.
What causes insolvency?
Insolvency can happen due to poor financial management as well as factors out of a person’s control like unexpected bills. There are various ways that financial insolvency can happen.
Some of the most common causes of insolvency for businesses include:
Budget mismanagement
Rising costs to vendors
Losing a lawsuit
Not keeping up with competitors
Excessive borrowing
For individuals, common causes include:
Job loss
Reduced salary or working hours
Divorce
Medical debt
Excessive use of credit cards
Signs of insolvency
Knowing the signs of insolvency can help you avoid this situation. This will give you more time to get your finances in order and prevent the negative consequences that come from being insolvent.
The following are signs that you or your business may be nearing insolvency:
You are regularly late making payments
You are late paying employees
You are taking on more debt to pay off other debts
You have lost vendors due to late or missed payments
You need to sell assets or property to pay debts
You are unable to collect debts that are owed to you
You regularly receive calls or notices from your creditors
The two types of insolvency
To further understand insolvency, it’s helpful to unpack the two types: cash flow and balance sheet insolvency. Cash flow insolvency is more common for both individuals and businesses and can happen at any time. Balance sheet insolvency is primarily a concern for businesses.
Cash flow insolvency
Cash flow insolvency happens when you don’t have the money to pay off your debts. This is more common because it can happen whenever you have an unexpected financial situation. For example, people often become cash flow insolvent when they’re laid off and no longer have a reliable source of income. Ongoing financial mismanagement can also lead to long-term insolvency.
Some individuals or businesses find that they’re insolvent after they exhaust other options like selling personal assets. This can also happen if you were borrowing money to pay off debts and no longer have access to new loans.
Balance sheet insolvency
In short, balance sheet insolvency is when a business is spending more than it is bringing in. For example, if you’re spending $30,000 a month to keep the business running, and it’s only bringing in $10,000 per month, this is balance sheet insolvency. When the business isn’t bringing in enough money and the value of the business’s assets is less than what’s owed to creditors, the business has negative net assets.
If an owner believes that their business is insolvent, there are a few common routes they can take to avoid bankruptcy:
The business may hire a financial advisor or accountant to see if the business can cut spending or budget in other ways
A business consultant may be hired to see if business operations can be improved
Insolvency vs. bankruptcy
Insolvency is a financial situation, while bankruptcy is a legal proceeding. You can go through insolvency without having to file for bankruptcy. The bankruptcy process allows you to find a resolution with creditors through the legal system. With insolvency, there’s a low possibility that you’ll need to deal with the courts at all.
There are downsides to filing for bankruptcy, so individuals or businesses may benefit from finding a solution to insolvency before turning to bankruptcy as an option.
If you do decide to file for bankruptcy, it is important to know that there are different forms of bankruptcy. Deciding on which form of bankruptcy to file depends on the individual or business. If your bankruptcy filing is approved, it can help to either eliminate debts or provide you with a manageable payment plan. Although it can provide some relief, a bankruptcy may be difficult to remove from your credit report.
Five actions to take when you’re insolvent
The following steps may help you prevent bankruptcy if you are insolvent.
Step 1: Contact a debt counselor or debt management company
A debt counselor or debt management company may be able to help you find options for dealing with your insolvency. You may even be able to find nonprofit help in your area. They can assist you with a plan of action to pay or settle your debts.
Step 2: Try to negotiate a settlement for your debts
Negotiating your debts can be done with or without outside help. You can contact your creditors to see if they’re willing to settle the debts you owe for a lower price. If you are dealing with collection agencies, it can be helpful to know debt collection laws. In some cases, you can have your debt lowered by upwards of 50 percent of what you owe.
Step 3: Find out if you owe taxes
If you’re able to settle your debts, you may be liable for taxes. This situation can happen if the creditor writes off your debt in a settlement. To find out if taxes are owed, it’s helpful to contact a tax professional or credit counseling agency.
Step 4: Check if you are eligible for an insolvency order
An insolvency order happens through the courts and provides you with protection from filing for bankruptcy. If approved, the insolvency order may also prevent debt collection efforts temporarily.
Step 5: Seek legal counsel
Finally, it may be beneficial to contact legal counsel. You may be dealing with illegal debt collection practices that you’re unaware of. By working with a lawyer, you’ll receive professional advice to ensure you handle your insolvency properly.
Can insolvent businesses or individuals recover?
Whether you’re a business owner or an individual, you can recover from insolvency. As you’ve learned, insolvency can be due to a temporary setback or mismanaged finances. In both cases, you can bounce back by taking the right steps.
For a business, this may mean better business management or accounting. If you have a business that’s spending far more money than it’s bringing in, it may be time to develop a new plan. This may involve cutting spending or finding ways to bring in new customers.
Individuals who become insolvent may need debt relief, which gives you the opportunity to adjust your payments. You may also find that seeking out additional sources of income or cutting down on expenses allows you to recover and pay off your debts.
Does insolvency affect your credit?
If you’re dealing with insolvency, it may be affecting your credit. Things like missing payments, making late payments and using a large percentage of your available credit can hurt your credit. It’s also possible that you might have errors on your credit reports that are negatively affecting your credit. Fortunately, help is available.
Here at Lexington Law Firm, we can help you understand your credit and work to address any errors on your credit reports. The consequences of your insolvency may not be as bad as you think, and that is where we come in. To learn how we can help you, contact us today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Anna Grozdanov
Associate Attorney
Anna Grozdanov was born in Sofia, Bulgaria, but moved to Arizona with her family.
Ms. Grozdanov grew up in Arizona and went on to graduate Magna Cum Laude from the University of Arizona with a B.A. in both Philosophy and Psychology. Ms. Grozdanov finished her first year of law school at Pepperdine University School of Law in California, but returned to Arizona where she graduated from the Sandra Day O’Connor College of Law. Since graduating from law school, Ms. Grozdanov has worked in Estate Planning, Estate Administration, Probate, and Personal Injury. She has extensive experience advising and working closely with clients and applies these skills at Lexington by helping clients achieve their credit repair goals. Ms. Grozdanov is licensed to practice law in Arizona. She is located in the Phoenix office.
Senators Tina Smith (D-Minn.) and Mike Rounds (R-S.D.) introduced this week new legislation that aims to address a shortage of affordable housing in rural communities. The lawmakers say the bill would represent “the most significant Rural Housing Service reforms [in] years.”
If passed, the bill, known as Rural Housing Service Reform Act of 2023, would “improve federal rural housing programs, cut red tape, and strengthen the supply of affordable housing” and would “improve and build upon a number of U.S. Department of Agriculture (USDA) rural housing programs,” according to a press release from Sen. Smith’s office about the bill.
“This legislation makes important improvements and updates to the Rural Housing Service that will create and preserve affordable housing opportunities in South Dakota,” said Sen. Rounds. “As we face an affordable housing crisis across the nation, I look forward to working with my colleagues to get these important, bipartisan updates signed into law.”
In particular, the bill aims to fix what the senators describe as a “longstanding problem for [515] properties that were financed by the USDA decades ago and now have maturing mortgages, by making it easier for non-profits to acquire those properties and by decoupling rental assistance so that assistance doesn’t disappear when those mortgages mature.”
Otherwise known as “rural renting housing loans,” USDA Section 515 loans are “direct, competitive mortgage loans made to provide affordable multifamily rental housing for very low-, low-, and moderate-income families, elderly persons, and persons with disabilities.”
The bill would make it easier for non-profits to acquire properties with Section 515 loans. It would also decouple the related rental assistance so that the assistance doesn’t disappear when the mortgages mature.
In addition, the bill would make permanent a USDA pilot program that provides mortgages to Native American communities through partnerships with community development financial institutions (CDFIs).
Technology is also a focus of the bill. In addition to the other priorities, the bill would allow the USDA to make better investments in its information technology infrastructure. The senators contend that this would allow the USDA to “process loans more quickly and with less staff time wasted on paperwork or manual data entry.”
Another area of focus are the USDA’s methods of measuring incomes, which are “outdated,” according to language in the bill. If passed, the bill bring those methods in line with the way incomes are measured by HUD.
The bill would also “modernize” the USDA’s foreclosure practices to better ensure affordability, the senators said.
Smith and Rounds have been heavily focused on affordable rural housing issues recently, with both senators spearheading hearings on the topic in order to develop a plan.
“Without a safe, affordable place to live, nothing else in your life works. Not your job, not your education, not your health,” Sen. Smith said in a statement. “We know that the housing crisis is hurting communities across the country, and the problem is particularly acute in rural places. This legislation is the direct result of bipartisan hearings and conversations with stakeholders who helped identify ways we can make federal rural housing programs work better for people struggling to find a safe, affordable place to live.”
Natalie Maxwell, managing attorney for the National Housing Law Project, recently told The Hill that approximately 560,000 renters who live in apartments financed by Section 515 are under threat due to the mortgages maturing or due to a loss of eligibility related to other reasons.
“In rural communities, the Section 515 program has been a critical source of affordable housing especially for low-income seniors and people with disabilities,” Maxwell told The Hill. “Congress can and must do more to preserve these properties for families living in poverty.”
The U.S. Department of Housing and Urban Development has also turned its attention toward the needs of rural areas recently, including through proposals that seek to expand broadband internet access to a greater number of rural communities.
The U.S. Department of Housing and Urban Development (HUD) on Thursday announced that it will be investing more than $837 million in funds from the 2022 Inflation Reduction Act and its own commitment authority to address energy costs and housing quality in underserved communities.
The funding will be distributed through HUD’s Green and Resilient Retrofit Program (GRRP), which is designed to reduce greenhouse gas emissions, address climate resilience, as well as energy and water efficiency of HUD-assisted multifamily properties located in low-income communities.
HUD Secretary Marcia Fudge will announce the funding initiative during an appearance in Center Line, Michigan.
“Under the leadership of President Biden, HUD is committed to building a more equitable and sustainable housing system and making necessary investments to reduce the impacts of climate change and improve the lives of people across America,” Secretary Fudge said in a statement. “The launch of the Green and Resilient Retrofit Program today will ensure low-income individuals and families have better access to healthy, energy efficient, and resilient homes.”
Last year’s Inflation Reduction Act allocated $837.5 million in grant and loan subsidy funding and $4 billion in loan commitment authority specifically for this program.
An additional $42.5 million will also be going toward a new HUD initiative coming in the summer, which will “collect and assess energy and water usage data from HUD-assisted multifamily housing properties to better target opportunities to save energy and water, cut costs, and reduce emissions,” according to HUD.
“Lower-income communities are often the last to obtain access to state-of-the-art efficiency, resilience, and clean energy technologies,” said Assistant Secretary for Housing and Federal Housing Administration (FHA) Commissioner Julia Gordon. “The Green and Resilient Retrofit Program will change this by providing communities with an opportunity to lead the multifamily sector in retrofitting homes to make them safer and more sustainable for the future.”
HUD noted that building owners will be able to more easily invest in new technologies designed to increase climate resilience and pay more attention to their carbon footprints. These technologies include solar panels for electricity, heat pumps for interior climate control, roofing that is more resistant to heavy winds and others.
“The program’s implementing notice and Notices of Funding Opportunity (NOFOs) released today detail a range of grant and loan funding options for multifamily housing owners with varying levels of expertise with green retrofits,” HUD said.
The agency noted that the GRRP is the first HUD program to offer simultaneous investments in energy and water efficiency, the reduction of greenhouse gas emissions, clean-energy generation and climate resilience strategies in multifamily housing.
Have you ever been excited about a film enough to go to the theater, and spend a fortune on concessions, only to be disappointed beyond belief in the movie? After polling the internet, here are twenty-five films people admitted were the worst they have ever seen in theaters.
1. Holmes and Watson (2018)
“Holmes and Watson. My friend turned a good Christmas into an unforgettable Christmas. But in a bad way. This movie was the end of those styles of comedies,” shared one.
A second admitted, “I was looking for this one. My ex and I saw it on Christmas, we wanted to walk out, but we had to see the garbage the whole way through. Just God awful. I would not recommend it to anyone!”
“My wife and I debated which movie to go see. Being a big Will Ferrell fan and loving John C. Reiley, combined with the amazing world of Sherlock Holmes, I was confident my movie pick was the right one. She conceded, and we went to it. Terrible. Horrible. We haven’t been to the movie theatre since,” a third user confessed.
2. Alvin and the Chipmunks: Chipwrecked (2011)
“Alvin and the Chipmunks: Chipwrecked. I hated this movie so much. It sucked so bad that I wanted to cry. So I took my daughter and her friend to see this. I still wanna cry,” one mom replied.
“I, too, took my daughter. It was her first movie, and she got to pick. I was hoping for Muppets, and I’ll never forgive Jason Lee. And David Cross! I love him. But I have not watched anything he’s been in since that movie. I read that he hated it too, and I’m mad that I can’t even enjoy him anymore,” a second added.
3. Catwoman (2004)
“I wanna go back in time to be in the editing room when they cut the basketball scene together. The number of cuts and the decision to have Halle Berry grinding on the guy in front of a bunch of kids is bizarre,” shared one.
“Wow… I, uh, man, I watched that. I know I watched that. And yet, somehow, as if some defense mechanism, my brain must have deleted that scene, and most of the film, from my memory,” another confessed.
“I can’t believe that actual professional filmmakers decided that any part of this movie was worth making. The whole thing is just such a pile of trash. I saw it for free — I worked for a part of the company that released the movie — and I STILL wanted my money back,” a third admitted.
4. Transformers: Age of Extinction (2014)
“My parents dropped me off to see this movie when I was a kid, and I was the only person in the theater. I like the first one, but after that, I’m done,” one stated.
“Don’t get me started on Transformers with Marky Mark. I was nauseous, to begin with, in the theater when I watched it—nausea combined with awful storytelling. I fell asleep at like three different times,” a second expressed.
“Totally. You’ll have to take a lot of Dramamine to choke down Transformers: Age of Extinction. There were many moving parts, like the fast, third-person following the action of the bots running through the city while transforming multiple times. Then there was the banal cast I wish would get squished in one of the bots while they rode in them,” a third shared.
5. The Amazing Spider-Man 2 (2014)
“I worked at a movie theater as a first job, and the owner got this movie for a week because he thought I would like it (nothing else going on at the time). I couldn’t apologize to him enough. It was awful. I remember the attendance was 25 tickets sold for the entire week,” someone volunteered.
“Came here to say this. I took my 8-year-old brother to see it for his birthday. The only thing I can remember was that I wanted to get up and walk out less than halfway through,” another confessed.
“It’s always painful to take someone to a movie as a special treat like a birthday or Christmas, and the experience sucks. For example, I took my son to see The Amazing Spider-Man 2 for his first theater experience, and I can barely hold back my disdain for it,” a third user expressed.
6. Mortal Kombat Annihilation (1997)
“I’m seriously dating myself here, but Mortal Kombat Annihilation. Five minutes in, Johnny Cage was like 80% of what made the first movie decent – dies; I felt the film was in trouble.”
“Then a recast Raiden walks in, and I knew it was all over,” said one. Another added, “I was a teenager when the first one came out… it was awesome! Finally, after years of playing the game in arcades, I loved it. So I went to the second without hesitation, leaving highly upset and bummed out. What a pile of trash it was!”
7. The Dark Tower (2017)
“The Dark Tower adaptation of the Stephen King book series was a trainwreck. I’m the most disappointed I’ve ever been with a film adaptation—Scratch that. I was more than disappointed. I was disgusted,” admitted one.
“My dad (70) wanted to see it. He has never read any of the books. I don’t think he’s ever read a single book. I cautioned him that it was NOT a western, which is what he likes, but I didn’t expect it to be such hot garbage. He was utterly confused, and I could tell he wanted to leave.”
8. Space Chimps (2008)
“Space Chimps. The things you will do for a loved one. I was a teen and took my kid sister to see this; so many bad monkey puns. This movie came out the same day as The Dark Knight, and I saw Space Chimps,” one digressed.
“My kid sisters were addicted to it when we didn’t have cable for a while. It was so bad, and I saw it originally in the theaters a few years earlier. I hated it the FIRST time I saw it,” another added.
9. After Earth (2013)
“That movie with Will Smith and his son. They were space travelers looking for something on Earth. I would look up the title, but I’ve already spent enough time on it typing this out. Time wasted,” one shared.
“I believe it’s After Earth! That is hilariously bad and another M. Night Shyamalan special. Based on this thread, I have learned that M Night Shyamalan deserves a Bad Movie Lifetime Achievement Award,” suggested another.
10. Howard the Duck (1986)
“I saw Howard the Duck at the theater the year after I saw Back to the Future. I remember thinking I wish this were as good as Back to the Future. It wasn’t. Howard the Duck is as memorable as Mannequin 2. I can’t believe I saw that turd in the theater,” confessed one.
“Prime Lea Thompson is the only reason anyone could have positive memories of the movie so bad that it led to firesales resulting in Pixar, the Marvel Cinematic Universe, and Disney buying all that plus Lucas and Fox,” a second noted.
11. Battlefield Earth (2000)
“Battlefield Earth was awful, and this is my answer. It is the ONLY answer. So I walked out,” shared one. Another confessed, “The first movie I ever walked out of was Battlefield Earth, it was awful, and it was the catalyst of why I hate everything Sci-Fi.”
12. The Adventures of Pluto Nash (2002)
“Watching The Adventures of Pluto Nash in a dingy hotel room at 3:00 am was perhaps the most hollow experience of my life. Of all the questionable things I have in my lifetime, this is by far at the top of the list of things I wish I could undo,” one shared.
13. Godzilla (1998)
“Then there are universally panned movies that I enjoyed. Godzilla comes to mind, which everyone hates, but I, who had never seen a Godzilla film in my life up to that point as a 14-year-old, thought it was pretty bizarre,” one stated.
“I finished the Godzilla movie, walked out, and snuck into Deep Impact. It was just starting, and I needed a way to make my money spend well. It’s not the worst film I’ve ever seen, but it is the worst I’ve seen in theaters,” a second answered.
14. Fant4stic 4 (2015)
“I remember sitting through a long dialogue/monologue scene with Miles Teller talking at length between Reed and Sue that went on long enough for me to turn to my friend and say, ‘this conversation has no point and could have been cut from the movie entirely,” one replied.
“And it turns out I was right. It didn’t set up a payoff later, didn’t develop the characters at all; it just added runtime to an already bloated movie.”
15. Drag Me to Hell (2009)
“I would say my worst movie experience was Drag Me To Hell because I’m already not a horror fan, and that movie has a jumpscare every four minutes, which meant I was looking at the film from the corner of my eyes most of the time,” shared one.
16. Ghost Dad (1990)
“I saw it in the theater. I was in a phase back then where I loved movies so much that I loved every movie I saw. But, Ghost Dad taught me that sitting through a movie could be awful,” admitted one.
17. Leonard Part 6 (1987)
“There are some excellent movies people list in this thread, which I find hard to agree with,” one said. Meanwhile, I saw Leonard Part 6 in the theater.”
Another shared, “I remember that there was a machine that was going to let the bad lady take over the world, which the good guy sabotaged by replacing the fluid inside with dish soap….only to find out the original fluid was dish soap anyways. Terrible, just terrible.”
18. The Village (2004)
“I was not too fond of it when I was younger when it first came out, but I thought I was going to see a monster movie because that’s what all the advertising at the time was making it seem to be,” someone admitted.
“The Village by M. Night Shyamalan is the same story as Running Out Of Time. Some random teen book that came out in the 90s. I had read it, and within the year The Village came out, it made the twist very predictable. So I didn’t like the film,” another expressed.
19. Old (2021)
“That was the stupidest movie I’ve ever seen in my life. My roommate wanted to watch it, and after the film, we were all sitting in stunned silence until I blurted out that it was the stupidest movie I’d ever seen in my life, and that’s the only thing I’d been able to say about it since,” answered one.
“I just watched Old not long ago, and that was quickly one of the worst movies I’ve seen in years. It was so bad. But, truthfully, Old and Glass are both pretty awful films,” a second added.
20. The Happening (2008)
“One person noted, “He has several movies on this list. The Happening is my vote. What a disappointing film included in such a disappointing character arc that M. Night Shyamalan had.”
“Seeing that movie made me feel legitimately shaken. I wasted a lot of time in my life, but only after sitting through that in a theater did I have these dark thoughts about how I would never get back that precious time that I could have been doing anything else. It made me confront mortality. I had an awful day that day,” a second shared.
21. Epic Movie (2006)
“Epic Movie. With my grandparents. It is partially my fault, nonetheless. Epic Movie was my first experience with a dumb parody/satire film,” someone confirmed.
“I’ve walked out of two movies in my life. Epic Movie is one of them. I was with five friends, including one who drove me there. I wished I could have walked out sooner. But, instead, we all learned our lesson from this movie,” a second replied. “After I sat through Epic Movie, I promised myself that I would walk out if I ever saw a film that bad again,” a third user commented.
22. Norm of the North (2016)
“I took my kids to see Norm of the North. Instead, I’d have watched Paint Dry, and my kids would have. But, unfortunately, I lost it with the addition of purple drank in a styrofoam cup added to the arctic snacks ideas,” one stated.
“I still point out how horrible it was, and my wife’s response is, it’s a kid’s movie. As if it being a kid’s movie excuses it from being a steaming pile of garbage. As if we use a different scale for kid’s movies despite agreeing that some of the best movies ever made are kid’s movies. I hate that movie so much,” a second user confessed.
23. The Last Airbender (2010)
One person shared, “I was 12-13 when this movie came out, and I LOVED the show. So my siblings and I all watched the show, and my parents agreed I could go with them to my first midnight showing since I loved the show so much.”
“So I shaved my head, painted blue arrows on my head, arms, and neck/upper back, wore a robe, and carried a staff.” “The movie freaking sucked. A movie ruined my first midnight showing, so terrible many deny its existence. I’m still angry at M. Night Shyamalan to this day.”
24. Eragon (2006)
“As a kid seeing their first movie with their same-age friends. Eragon. That move was such a massive waste of money. My buddies and I constantly read the books and saved pocket money for weeks to watch them. I’ve walked out of movies since, but the Supreme disappointment that movie had as a kid me cannot be beaten,” someone explained.
“I watched that terrible film on a DVD from Redbox years later once I had finally read the books. But, man, that was a major heartbreaking book-to-film adaptation, even then. I wished we hadn’t rented it at all,” a second agreed.
25. Lady in the Water (2006)
“It was the last nail in the coffin for me in terms of my hope that M. Night Shyamalan could have a rebound after his fall from grace. But, unfortunately, the plot (I’m being liberal with the word plot) was garbage. The idea and the execution were also trash,” said one.
“M. Night Shyamalan casts himself as a prophet in it. Aside from a few moments of unintentional comedy, it had no redeeming qualities. I got my money back for it despite having sat through all of it. The guy at the counter didn’t even ask follow-up questions; he was used to doing it for that movie,” a final user commented.
Source: Reddit.
Who is one actress you can never stand watching, no matter their role? After polling the internet, these were the top-voted actresses that people couldn’t stand watching.
10 Actresses People Despise Watching Regardless of Their Role
These 7 Celebrities are Genuinely Good People
We’ve all heard the famous adage that “no publicity is bad publicity,” and while it tends to be accurate, there are certainly exceptions. But what about those few stars who stay out of the limelight and get along without a hint of trouble?
These 7 Celebrities are Genuinely Good People
Have you ever known someone and thought you liked them—until you learned about their hobbies? Then you get to know them and then you’re like, “Wow, red flag.” Well, you’re not alone.
These 10 Activities Are an Immediate Red Flag
Some celebrities definitely seem to enjoy the limelight and keep working to stay in the public eye. While others quickly move out of the spotlight. Many of these actors and actresses stepped out of the spotlight to live a more private life without constant media pressures.
10 Celebrities That Made the Big Times Then Disappeared Off The Face of the Earth
We’ve all been there – sitting through a movie that we can’t help but cringe at, but somehow it still manages to hold a special place in our hearts.
These 10 Terrible Movies Are Still People’s Favorites
New Year’s resolutions don’t have to be reserved for diets and exercise. Sometimes the area of your life that really needs attention is your finances. As 2022 ends and 2023 begins, this is your opportunity to reset and reevaluate.
The new year is the perfect time to give your finances a boost. Here are my top 15 financial New Year’s resolutions that can help improve your financial health.
I’m jumping in with the big ones first…
What’s Ahead:
1. Start investing
While it may not be the easiest resolution on this list, investing is one of the best ways to build your wealth. If you don’t think that you have time to start investing, I get it. Investing can take time to understand. We’ve done our best to lay out the different investing methods in our article: How To Invest: Essential Advice To Help You Start Investing.
While it’s totally possible to invest without the help of an advisor, many of us are choosing the advisor route because, let’s be honest, it’s just so much easier. Remember that advisors also includerobo-advisors, which can help you decide what to invest in including when to buy and sell.
Read more: The Best Robo-Advisors
2. Build your emergency fund
When emergencies happen, you don’t want to be stuck without anemergency fund. Emergency funds can be lifesavers when unexpected challenges make their way into your life, like losing your job or getting into an accident, or a global pandemic.
So, if your emergency fund is non-existent at the start of the new year, it is time to change that!
To start, decide how much money you need in your emergency fund by calculating your monthly expenses. This should include not only your rent or mortgage but also your utilities and your basic expenses. Many financial experts agree that this should be at least three to six months’ worth of expenses, but it can’t hurt to overestimate how much money you would need in times of emergency.
If you need help calculating how much money you should save in your emergency fund, check out MU30’s handyemergency fund calculator to help you find your perfect number.
My husband and I like to keep our emergency fund in ahigh-yield savings account. These accounts allow us to access our savings quickly. Even better, high-yield savings accounts accrue interest at a higher rate than a traditional savings account, letting our money grow while it lies in wait.
Read more: Best High Yield Savings Accounts Compared
3. Pay off your credit card debt
If credit card debt is bogging down your financial success, why not make it a goal to tackle it in the new year?
Paying off your credit card debt is an important step in becoming financially healthy. If you don’t pay it off, you are doing a serious disservice to your credit score.
When searching for ways to pay off your debt, I recommend opening abalance transfer credit card. While it may sound counterproductive on one hand, these cards can help you consolidate your debt and even stop it from collecting interest for some time. That’s a big incentive right there!
Read more: How To Pay Off Credit Card Debt Fast – The Smart Way
4. Start a budget and track your expenses
If you don’t already have one, you need a budget. Creating and sticking to one could be the single best thing that you do for your finances in the new year. Budgets force you to take a hard look at the money that you bring in, the money that you shell out, and the money that you may owe.
If you have never followed a budget before, the thought of starting one can be daunting. The truth is, budgets can be incredibly freeing. Once you get used to following your budget, you can begin finding ways to free up cash to put towards your future.
Read more: How To Make A Budget: Our Step-By-Step Guide To Managing Your Money
5. Pay off your student loans
Student loan debt is one of the nation’s largest consumer debts and if you have it, you know just how painful it can be. Wouldn’t it be nice if you could get rid of your student loan debt altogether? Well, depending on how much you have, 2023 could be the year that you make it possible!
Making a plan to pay off your student loans is all aboutgetting organized. Knowing who you owe, how much you owe, and how you will afford to pay off your loans should be your first priority.
If you are having trouble trying to fit your student loan payment into your budget, it’s worth it to give your lender a call. Often, you can work outincome-driven repayment plans or deferments that can lessen the financial blow of your current loan payments.
Read more: Income-Based Repayment: Should You Do It?
6. Open a retirement account or fine-tune your existing one
When you are young,saving for your retirement probably sounds like the least exciting thing that you can do with your money. The truth is, the sooner that you start, the more secure you will be when your retirement comes. Investing in your retirement means that you are investing in your future.
If you’re employed, a quick conversation with your boss or human resources department can help you find out if your employer offers retirement accounts like 401(k)s or 403(b)s. Often, employers who have them will match a percentage of your annual contributions. This match is like an extra bonus from your employer that you don’t collect until retirement.
If your employer does not offer retirement accounts or you’re self-employed, you still have options for saving for your retirement.IRAs, or Individual Retirement Accounts can be opened by anyone.
Read more: The Beginner’s Guide To Saving For Retirement
7. Build your credit
If you are going into 2023 without any credit, it’s time to start building some. The credit system was put in place as a way to give future lenders and creditors information about potential borrowers. This allows them to make an informed decision and weigh the risks of loaning money to you.
If you haven’t built your credit, you could find yourself regretting it when you want to finance a car or even buy a house. Most lenders will not give out loans to people with poor credit and if you’re lucky enough to find one that does, your interest rates are often through the roof!
Taking out a loan with acosigner or becoming anauthorized user on your parent’s credit card can help you get started. Personally, I began building my credit with asecured credit card. When you get a secured credit card, you’ll need to put down a deposit, which then becomes your line of credit.
The OpenSky® Secured Visa® Credit Card is unique among secured cards in that they won’t run your credit when you apply, giving even those with no credit the ability to qualify.
Read more: Best Secured Credit Cards
8. Create a will
Don’t be fooled into thinking that having a will is just for old people. If you don’t have a will already, making it one of your New Year’s resolutions could benefit you and your family. Without one, in the event of your death, yourstate’s laws will determine who takes ownership of your assets and property.
If you’re wondering if you really need a will, the answer is probably a resounding yes. Most importantly,wills are strongly recommended for those who have children, have a spouse, or have a positive net worth. Having a will protects your family and your assets, something that all of us can agree is important.
If you don’t have a will, don’t put it off!
Read more: Do I Need A Will? Who Needs A Will (And When)
9. Spend less money
Everyone wants to save money, right? One of the best ways to do that is toconsciously spend less of it. While it is easier said than done, spending less money in 2023 is doable with a few tweaks to your spending habits.
To begin spending less money, I recommend this: take a hard look at your budget and try to find spending categories that you can cut back on. Lessening, or even getting rid of, spending categories allocated towards things like coffee runs and eating out could save you a significant amount of money each month.
Here are a couple more of my favorite ways to save:
Find a better deal on cell phone service. Cell phone services can be expensive. If you haven’t shopped around lately, give it a try. Many cell phone service companies will work hard to beat their competitors and will often beat your current rate!
Learn how to clip coupons. Clipping coupons is an easy way to save money at the grocery store and beyond. Often found in local circulars and newspapers, using coupons can add up to some significant savings.
Make a grocery list. Grocery lists can keep you on track financially in the midst of temptation, saving you from overspending on snacks and unneeded ingredients.
Make coffee at home. Coffee runs add up quickly, but it would be hard to get through the workweek without it. Instead of running to the coffee shop, try making coffee at home and bringing it to work in an insulated thermos.
Bring lunch to work. If you areeating out for lunch every day, your finances are more than likely feeling the pressure. Why not try giving them a break and pack last night’s leftovers instead?
Have date nights at home. Date nights can be an important part of staying connected with your partner and you shouldn’t have to sacrifice them. Finding alternative date night ideas, like cooking dinner together at home, can help you rack in the savings.
Try a meal delivery service.Meal delivery services will deliver pre-portioned ingredients and easy-to-follow recipes straight to your door. Home Chef is just one option, offering meals that take as little as five minutes to prepare. Plus, whether you’re looking to cut back on meat, carbs, calories, or more, Home Chef has options for you.
Cut back on subscriptions – We live in a world overrun by subscription services. It can be easy to sign up for a bunch and then never use half of them.
10. Save money on insurance
Protecting the ones you love is always a priority. In 2023, why not make it a goal to do so, while also keeping more of your hard-earned money in your bank account? I’ve found that one of the best ways to do this is by saving money on insurance.
11. Define your long-term financial goals
Sometimes you get so caught up in your present financial situation that you forget to plan for the future. Setting long-termfinancial goals is an exciting way to keep yourself on track and to ensure that your money is working for you.
Long-term financial goals vary depending on the person and the state of their finances. These goals could include saving for retirement, a downpayment on your future home, or even saving for that trip that you have always wanted to take. After you have defined your financial goals, it is time to start planning for how and when you will reach them.
I like to organize my long-term financial goals into my monthly and yearly household budget. This allows me and my husband to aggressively work towards our goals.
12. Track your expenses
Implementing this habit in my household was easy. My husband and I decided to ask for receipts with every purchase, ensuring that we don’t miss any expenses. After making a purchase and returning home, we began recording the totals on our receipts into monthly spending categories. These include areas of spending like groceries, entertainment, and gas.
Knowing how much we spend each month allows us to not only make a more accurate budget but also plan for the future. Keeping track of your expenses gives you a reference to look back at when creating a budget, including utility bills that may change due to the seasons.
If you have a mortgage, chances are that you would like to get rid of it. Well,making extra principal mortgage payments in 2023 could help you be free from it faster!
Those who can afford to put extra money towards their mortgage, but don’t, are missing out on some major savings. If you pay your mortgage for the life of your original loan, you could end up paying nearly as much in interest as you do for your home itself.
For example:
A $150,000, 30-year mortgage with an interest rate of 4.5% will cost a total of $273,610 by the end of thirty years. This means that $123,610 of your payments have been made towards interest.
If you take the same mortgage, but pay an extra $100 monthly, you would save $29,723.18 and shorten your loan by six years and four months.
If you want to make paying down your mortgage a priority in 2023, simpleloan pay-off calculators can help you figure out how much extra money you would like to put towards your mortgage.
You could also consider refinancing your mortgage, which can provide you with a much better interest rate, which, in turn, can lower the total cost of your loan.
14. Save money with money-making and reward apps
What if I told you that you are throwing money out the window every time that you shop online? If you are shopping without a cash back app, this is most definitely true for you! And since most of us have resolved to online shopping, this extra money could be adding up quickly!
To remedy this, I like to use a cash back app. Not only do cash back apps help you save money, but they can help you make money, too!
If you are looking to save, or make, money, Swagbucks may be a great choice for you. In fact, it is the internet’s leading rewards site! For users who are hoping to save money, I recommend installing Swagbucks browser extension, the “SwagButton.”
15. Get your taxes done early
Tax season is coming and there is no need to stress about it. Getting yourtaxes done early in 2023 can help put your mind at ease and save you from taking an extra trip out of the house. You may even find yourself with your return in hand faster than if you wait until closer to the deadline!
Filing taxes can be complicated. Luckily, there are great tax preparation companies that can help make filing a breeze and answer many of your tax questions – you can find a list of our favorites here.
Summary
The end of 2021 is fast approaching and it’s time to start thinking about the resolutions that you’ll make for 2023. While many of us – myself included – typically resolve to follow a healthier lifestyle, we sometimes forget to think about our financial health.
As 2021 comes to a close, start thinking about what you can do to make your finances stronger, because we never know when a financially challenging year will hit again.