You don’t have to be a U.S. citizen to buy a home in the U.S. You don’t even have to be a U.S. resident. Anybody who wants to can purchase property here.
Between April 2021 and March 2022, the value of residential property in the United States that was sold to foreign buyers totaled $59 billion, according to the National Association of Realtors (NAR)’s International Transactions in U.S. Residential Real Estate report. The vast majority of non-resident buyers are from Canada and Mexico, followed by China. They’re largely purchasing detached single-family homes in Florida and California.
While almost half (44 percent) of foreign buyers rely entirely on cash to make these purchases, it’s also possible for non-residents to obtain a mortgage in the United States to help finance the new homes. It’s not all smooth sailing, though. Non-citizen homebuyers will have to deal with slightly more complicated mortgage application requirements establishing their financial qualifications. They will also have more complex tax laws to comply with as homeowners.
What type of property can a non-resident buy?
Any non-U.S. citizen, including permanent residents, temporary residents, non-residents, refugees, asylum seekers and those who are recipients of Deferred Action for Childhood Arrivals (DACA) relief, can buy property in this country. There are no legal restrictions prohibiting the purchase of real estate by individuals who fall into any of these categories.
“Purchasing a residential property in the U.S. is open to any individual regardless of their citizenship,” says Jen Horner, a Realtor with RE/MAX Masters in Salt Lake City, Utah.
There are also no limits surrounding the type of property that can be purchased. A non-U.S. citizen can buy a single-family home, condo, townhouse, duplex or apartment building — or even land with no structure on it at all.
“There are no restrictions in the United States on purchasing a property as a foreign national. This applies to resident foreign nationals who might want to buy property for primary residence based on where they currently live in the United States, or non-resident foreign investors looking to buy property for other reasons — such as investment use or a vacation home,” says Chase Michels, of the Michels Group at Compass in Hinsdale, Illinois.
According to the NAR, between the spring of 2021 and the spring of 2022, 74 percent of foreign buyers purchased a detached single-family home or townhome. In addition, 44 percent of foreign buyers purchased a property for use as a vacation home, rental or both.
What documents does a non-resident need to buy a home?
While they can buy freely, non-U.S.-citizen buyers are typically required to provide additional documentation to complete a home purchase in the United States, compared with U.S. citizens.
The exact requirements vary however, depending on whether the home is being purchased with cash or a mortgage, and based on the specific resident status of the buyer. Some of the basic requirements for non-U.S. citizen buyers, says Michels, often include:
A foreign passport, U.S. visa or driver’s license
Social Security number or Individual Taxpayer Identification Number (ITIN)
Financial statements from applicant’s foreign bank, if applicable
Evidence of financial assets/income (bank statements, etc.)
Tax returns (preferably U.S., if applicable)
“Cash purchases will require proof of identity and reporting the purchase to the federal government,” says Horner. “If a mortgage lender will be used, they have the ability to request as much documentation as they feel necessary to advance [the] mortgage application.”
Which begs the question: Are non-U.S. citizens able to obtain mortgages to finance home purchases in the United States? The short answer is yes. But it’s complicated.
How can a non-resident finance a home?
In general, mortgage lenders prefer to work with applicants currently living in the United States, and who are classified as permanent or non-permanent residents. (Individuals who have a green card and a Social Security number are permanent residents, while those who have a Social Security number, but no green card, are non-permanent residents.) Their rationale is simple: Applicants residing in this country are viewed as less of a risk, particularly in cases of default on the loan.
Their residency status impacts the specific type of mortgage that can be used. There are two main categories of lending for non-citizen purchases, says Michael Cantwell, loan officer for Guild Mortgage. “One major classification is that of a foreign national and the other would be those individuals currently living in the United States who have not received U.S. citizenship yet,” says Cantwell.
Applicants who fall into either of these categories can usually qualify for a conventional mortgage backed by Fannie Mae and Freddie Mac, as well as Federal Housing Administration (FHA) government-backed loans. However, non-permanent residents will need to be using the home as a primary residence in order to obtain mortgage approval.
“Many banks and mortgage companies offer conventional and FHA home loans to non-U.S. citizens provided they can verify their residency status, work history, and financial track record,” says Michels.
And for non-residents? Applicants living abroad can buy properties in this country using what’s known as a foreign national loan or foreign national mortgage loan, says Cantwell. These loans are typically offered by U.S.-based banks and lenders and are designed for borrowers living outside the country who are seeking to either purchase or refinance. Foreign national mortgages are not backed by Fannie Mae or Freddie Mac.
Additional rules and restrictions for non-residents
Tax rules also apply to properties owned by non-U.S. citizens. For instance, if a non-U.S. citizen rents out the property purchased to generate income, then that income must be reported and taxes must be paid both in the United States and in the property owner’s home country, says Bruce Ailion, a real estate attorney and Realtor with Re/Max Town & Country in Atlanta. In addition, non-U.S. citizens are liable for paying local property taxes.
And when selling a property in the United States as a non-U.S. citizen, capital gains tax will typically apply as well.
“When selling a property in the U.S. there are special withholding provisions that must be complied with,” says Ailion. “A tax advisor with specific knowledge in international tax should be consulted.”
On the plus side, all Fair Housing Act, Title VII, and other anti-discrimination protections apply to real estate transactions involving non-U.S. citizens. These laws are in force no matter who the buyer is, says Michels.
Final word on non-resident home purchases
It is entirely possible to purchase a home as a non-U.S. citizen — whether you’re a foreign national or a permanent or a temporary resident. There are no limitations on the type of property that can be purchased or how the property is used. Furthermore, U.S. laws that protect the rights of all homebuyers cover non-U.S. citizens and non-residents as well.
What’s really more significant, in terms of complications, is not a person’s citizenship, but their place of residency. If you don’t live in the U.S., buying a home does get more difficult — especially if financing is going to be needed for the purchase.
Non-residents must be prepared to deal with additional complexities, including more extensive documentation requirements establishing their identity, income and assets. They are limited to certain types of loans or mortgages, ones not backed by the primary mortgage market-makers. But the path to U.S. homeownership is certainly not blocked — it just may have a few speed bumps on it.
A college job can be a chore. Or it can be the doorway to future success. The choice is yours.
I asked Michael Hampton, director of career development for Western Oregon University, for advice on how college students should approach work. What should they look for in a job? What should they try to get out of it? Are college jobs really that important? We drafted the following seven tips, which we believe can help you to get the most out of your college work experience.
Connect Jobs With the Future Try to connect your jobs — even part-time jobs — with something you enjoy doing. Ideally each job would relate to something you think you might want to do later in life. (This isn’t always possible — it’s an ideal.) This can help you determine if the job is actually a good fit. Test-drive jobs like you would test-drive cars. Students often think they want the prestige and feel of the glamorous BMW/Lexus job, but after a while they realize they’re better suited for a Honda/Nissan job. The opposite happens, too.
(Michael has a personal example. He once sought and obtained a glamorous BMW/Lexus job working for Nike. Though he liked the job, he came to realize that his personality was better suited for a Honda/Nissan job — advising college students.)
Do Your Best Whichever job you choose, do your best. Don’t treat it like a chore. If you approach your work with a good attitude, a willingness to learn, and a spirit of excellence, you will set yourself so far apart from your peers that your employers will be forced to take notice.
Learn How to Work Use any job to evaluate the work style of your supervisor and coworkers. Pay attention to what you like and dislike about how people operate at work. Notice who gains the respect of their supervisors, who seems to be in the dog-house, who gets the better work assignments. Emulate the people who are closest to what you consider the ideal work style. Learn from other’s mistakes and successes and adapt accordingly.
Don’t Spread Yourself Too Thin Remember that you’re in school to learn. It’s nice to have money for beer and pizza, but it is study that will repay you in the long-run. When possible, favor fewer jobs to more jobs. There was once a time I was doing all of the following:
Working in the school’s A/V department from 8-9 three mornings a week. [3 hours/week]
Answering phones in summer events from 4-5 every weekday afternoon. [5 hours/week]
Working at a local coffee and dessert place from 7-11 three nights a week. [12 hours/week]
Waiting tables at a restaurant from 6 a.m. to 2 p.m. on Saturdays and from 8 a.m. to 2 p.m. on Sundays. [14 hours/week]
Serving as a resident assistant for a floor of 54 freshman men.
I enjoyed each of these jobs, and am glad to have had the experiences, but I was spread so thin that I could not excel at anything. And my studies suffered. It would have been better to find one job that could give me the hours and money I needed, and to have devoted myself to it exclusively.
Learn How to Network While you’re working, you’re also networking — with employers, with coworkers, and with customers. It may sound crazy, but the connections you make on a college job can be parlayed into something greater, if you’re ready to do so.
I once worked at a coffee and dessert place that was owned by a man from one of Oregon’s wealthiest and most influential families. He was heir to a department-store fortune. He was chief of staff to a United States Senator. He spent most of his time on the East Coast, hobnobbing with the political elite. I spoke with this man at least once a week, sometimes more. But I was a cypher to him — just a cog in the machine. If I had taken the time and the effort to excel at his store, to become more than just a nameless employee, I could have formed a useful connection.
The summer after I graduated, I worked as an A/V aide on campus. One day, I was drafted to give a tour to an incoming freshman and his family. I was sincerely passionate about the school, and made a good impression. As the father was leaving, he gave me a business card. “You should call me,” he said. “I think I have a job for you.” I never did call him, and it’s probably one of the dumbest things I’ve ever (not) done. (Because this led directly to the worst job I ever had.)
Networking is often just being open to the chance encounters that come your way.
Foster “Planned Happenstance” Michael speaks with students all the time about “planned happenstance” (outlined in the book: Luck Is No Accident by Krumboltz & Levin). The basic principle is that “you should be aware of your surroundings, take a risk, even with rejection as a possible outcome, and be adaptable and open-minded. Unplanned events — chance occurrences — more often determine life and career choices.” No one can control or foresee what happens on a day-to-day basis. Those people who accept and embrace this concept, and who realize these “accidents” are opportunities, experience positive changes. A person lives the planned happenstance life when they prepare for the unexpected, and make the most out of those experiences.
Learn From Others One of the best ways to market yourself in any job is to ask questions. Learn from the wisdom of others. Most people love to talk about themselves and what they do. Tap into that. Ask questions, even if you know some of the answers already (even if you have more knowledge about that particular subject). Leave your ego at the door. It is amazing how much respect you can gain by working hard and asking questions. You should never need to sell yourself through overeager speech and rhetoric. (Don’t be a brown-noser.) Let your actions and questions speak for you.
A college job is not just about earning money for pizza and beer; you can earn money doing almost anything. You’re at the ground floor of life. What you do now establishes the foundation for everything to come. Make smart choices. Work hard. Be open to chance.
Engel & Völkers announced today the opening of its newest real estate shop in Pagosa Springs, CO. The Source for Pagosa Real Estate will now do business as Engel & Völkers Pagosa Springs under the continued leadership of original founders and luxury specialists Mike and Lauri Heraty, both highly experienced and top-ranked real estate professionals who have served Pagosa Springs for more than two decades. Conveniently located in a historic shop located on Main Street, Engel & Völkers Pagosa Springs serves homebuyers and sellers in Pagosa Springs, Bayfield, and Durango.
“The western Rocky Mountains have been a strong foundation for our growth in North America,” said Anthony Hitt, president, and CEO, of Engel & Völkers Americas. “Engel & Völkers Pagosa Springs is our 12th shop to open in Colorado, and our continued expansion in the region speaks to its increasing popularity among home seekers, both foreign and domestic. Amidst this growth, it is critical to partner with real estate professionals like Mike and Lauri, who not only bring a deep understanding of the local market but also share our approach to real estate, that is, delivering a concierge-style experience and understanding luxury as something that is distinct and personal to each client.”
Located in the San Juan Mountains, Pagosa Springs is a community offering residents luxury mountain ranches on sprawling acreage, luxury residences, condos for weekend getaways, townhomes, and a variety of development sites. It is home to North America’s largest natural hot springs, as well as Wolf Creek Ski Area, known for getting the most snow in Colorado with an average of 341 inches per year. It is the only small mountain town in the state surrounded by 2,000,000 acres of the San Juan National Forest. This abundance of natural amenities affords residents countless opportunities to enjoy the mountain lifestyle by hiking, rafting, kayaking, biking, skiing, snowshoeing, golfing, fishing, and soaking in the hot springs, as well as playing tennis, pickleball, and more. With warm winters and fabulous summers, the area is easily accessible through the Durango-La Plata Airport and private jet service at Stevens Field.
“We’ve long been known throughout the region for our quality of service,” said Lauri Heraty. “Beyond real estate, we’ve arranged everything for our clients—from architects and top-tier contractors to private chefs, ski instructors, and fly fishing guides—which has set us apart in the market. As our business has evolved and we increasingly work with clients from across the U.S., Europe, and Mexico, we recognized the competitive advantages of partnering with Engel & Völkers, which has the connections, tools, and technology to deliver best-in-class service.”
“In order to grow while continuing to deliver the highest level of service to clients buying or selling today or three years from now, we needed to align with the best in the industry for unparalleled service, global reach, real estate technologies, and brand marketing. That’s exactly what Engel & Völkers offers,” added Mike Heraty. “In partnering with Engel & Völkers, we’re able to synergize years of local experience and market insights with a customer service offering that will exceed anything available in the region.”
For more information, visit pagosasprings.evrealestate.com.
About Engel & Völkers
Engel & Völkers is a global luxury real estate brand. Founded in Hamburg, Germany, in 1977, Engel & Völkers draws on its rich European history to deliver a fresh approach to luxury real estate in the Americas with a focus on creating a personalized client experience at every stage of the home buying or selling process for today’s savvy homeowner. Engel & Völkers currently operates approximately 275 shop locations with over 6,300 real estate advisors in the Americas, contributing to the brand’s global network of over 16,500 real estate professionals in more than 31 countries, offering both private and institutional clients a professionally tailored range of luxury services, including real estate and yachting. Committed to exceptional service, Engel & Völkers supports its advisors with an array of premium quality business services; marketing programs, and platforms; as well as access to its global network of real estate professionals, property listings, and market data. Each brokerage is independently owned and operated. For more information, visit www.evrealestate.com.
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The new home sales report has been the same story for almost 18 months, with home sales stabilizing from a low level.
From Census: New home sales: Sales of new single‐family houses in April 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 4.1 percent (±11.8 percent)* above the revised March rate of 656,000 and is 11.8 percent (±15.1 percent)* above the April 2022 estimate of 611,000.
Last year, while the Census Bureau was reporting the new home sales numbers and the builders were having high cancellation rates, the monthly sales report didn’t account for the cancellations of contracts. This can make the monthly reports higher than normal, so taking that into consideration, the new home sales numbers were really low last year.
Last year, sale levels were meager and once mortgage rates fell and the builders were buying down rates to get more homes sold, the data stabilized and moved higher slowly. To give you an idea of the percentage of homes where the builders were giving a buy-down, the chief economist of the National Association of Home Builders, Robert Dietz, tweeted out this data line on Tuesday: “21 pct of builders used mortgage rate buy downs in April. It was 33 pct last Fall. More likely big builders.”
Looking at new home sales with an historical context, you can see that we weren’t working from a high bar last year on sales. So, the bar was very low to just have demand stabilize as rates fell, much like the existing home sales market. We also have a lot more workers now than what we did back in 1996 — the level where new home sales were trending last year.
Just like with the existing home sales market, all that is happening is that home sales stabilized from a low level.
This is different from the 2007 housing market when the builders’ sales were still collapsing and monthly supply spiked with rising cancellation rates. The opposite is happening now; cancellation rates have been falling from a high level and 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 4.4-6.4 months, this is just an OK market for builders. They will build as long as new home sales are growing.
When supply is 6.5 months and above, the builders will pull back on construction.
From Census: For Sale Inventory and Months’ Supply:The seasonally adjusted estimate of new houses for sale at the end of April was 433,000. This represents a supply of 7.6 months at the current sales rate.
When we talk about the monthly supply data, we need to break it into subcategories because the 7.6 months has confused many people.
The Inventory for homes completed is at 70,000 = 1.23 months of supply.
The Inventory for homes under construction is 263,000 = 4.6 months.
The Inventory for homes that haven’t started yet is at 100,000 = 1.8 months
As you can see, we don’t have a lot of new homes ready to go — we have an abnormally high number of new homes still in construction and the builders don’t just ramp up production until they know they can sell those homes for a profit. I am skeptical of any big pick-up in housing permits until we exceed 6.5 months of supply and new home sales rise.
So, if you’re confused about housing still being in a recession while were supposed to have been in a bubble crash last year — only to see the builders doing OK with the data above, I don’t blame you. Traditionally, with a housing bubble crash, you don’t have new home sales stabilizing, cancellation rates falling, monthly supply falling and rising builders’ confidence. These economic data lines don’t happen when we are in a housing bubble crash year.
The real story is that active listings are still very low historically, the builders had and still have a significant backlog of homes to finish and get sold, and they’re working through that backlog. They can do this by cutting prices and buying down rates, as I believe they are efficient sellers.
Now that mortgage rates have hit 7%, the question is whether the builders can continue to keep this slow uptrend in sales going. The housing market has not responded well with 7% plus mortgage rates and this is now the third time this has happened since the big run-up in mortgage rates in 2022.
I am not a money genius. I’ve touched many proverbial “hot stoves,” and the Best Interest is part of my scar tissue. Today, let’s dive into seven of my money mistakes and the lessons I’ve learned from them.
Not an Arrested Development fan? Huge mistake.
Money Mistake #1: Not “Renting My Fun”
I once heard radio host Colin Cowherd say, “Buy ‘normal life,’ but rent your fun.”
It makes sense to buy healthy groceries. It makes sense to buy comfortable shoes. It makes sense to buy a reliable car. You need those things every day of your life.
Life is a constant.
But fun might be seasonal or weekend-only. Does it make sense to buy a snowmobile that you’ll only use eight weekends a year? Maybe. It might fall high on your bimodal passion graph.
Does it make sense to buy a boat? I have coworkers who sail every weekend during the summer. They plan sailing vacations on Lake Ontario. They love sailing. A full purchase makes sense for them.
But for the rest of us, renting a boat or snowmobile makes better financial sense. It’s too easy to overspend on a shiny object you’ll underuse
I’ve discovered a second category of “fun objects”: those that are fun only due to confounding factors.
Is a hot tub fun? Or is a hot tub fun when you’re hot tubbing with other people? That’s the lesson I learned…and the money mistake I made because of it. It’s a story I’ve written about before here on the Best Interest.
I bought a hot tub. It’s great, especially on cold winter nights. But my rationale for buying the hot tub was, “Hot tubs are great!”
We checked the record, and that rationale was determined to be false.
Hot tubs aren’t great. Hanging out with other people in a hot tub is great. Oops.
I could scratch my hot tub itch with a few trips per year. The rest of the time, I should just try to hang out with my friends more often. Thankfully, I didn’t use credit to buy the hot tub. I didn’t borrow money for it.
But it was an impulsive purchase. It didn’t mesh with my financial goals. The hot tub is nice, but buying my fun (rather than renting it) was a money mistake.
Money Mistake #2: Decrease Spending vs. Increase Income?
In this world of credit card debt and budgets and dwindling emergency funds, it makes sense to spend less. That’s the easiest way to save money. We can enact it today. Just spend less!
But is it the most consequential improvement? I say no.
Over the long term, you’ll be much better off making efforts to increase your income. Why? Let’s do some quick math.
Sadie makes $50,000 per year. Of that, she saves $10K. The other $40K goes towards bills—that’s $3300 per month.
Real life Sadie. She’s not a human.
If Sadie needed $500 extra this month, she could cut her $3300 monthly budget down to $2800. Scrimp and save.
If Sadie needed an extra $1000 this month, she might be able to cut that $2800 monthly budget down to $2300. Do you see where this is headed?
At some point, Sadie can’t cut any more fat from her budget. She’s limited by her survival needs. Frugality and cost-cutting have lower limits. They are bounded.
But increasing your income, technically speaking, is unbounded. The upper limit does not exist.
In reality, we’re not all going to be billionaires. We will eventually hit an income ceiling.
But Sadie can make a plan to increase her salary. She can look for promotions within her company. She might be able to switch jobs and leverage a raise that way. Making more money is possible for many people in many professions.
For my first few years of personal finance stove-touching, I focused on reducing expenses. And it worked! But I eventually hit a lower limit.
Then I looked for ways to increase my income. The results were fast and fantastic. I found a new job, negotiated my salary higher than offered, and secured the easiest 30% raise of my life.
Cutting spending is fine. Start there, it’s ok. But it’s a money mistake to neglect ways to increase your income.
Money Mistake #3: Listening to Mr. Market
I read a lot of information about personal finance and investing. I’ve done so for years. And there has always been someone calling for a crash, a burst bubble, or a bear market.
See—here’s an example from 2015. Meanwhile, how has the stock market actually performed since 2015?
Up 100% since September 2015…did someone say “impending crash?”
We’re risk-averse, over-developed monkeys. Fear is normal. But we should try to delineate between irrational reactions to fear and rational reactions to facts.
Ben Graham’s famous Mr. Market parable personifies this irrational fear. If you’re not familiar with Mr. Market, follow that link and read up.
When I was new to investing, I listened to Mr. Market. And that was a money mistake! I let my investing choices be controlled by irrational fears.
As a result, I didn’t max out my investing accounts (which I’ve changed now). I estimate that I under-invested by about $20,000 in 2014 and 2015. It’s an opportunity that I’ll never get back.
Fast forward to today, that $20,000 mistake is worth about $40,000. Keep going to 2040, and that mistake is likely to surpass $100,000 in value.
There’s no use crying over spilled milk. It doesn’t keep me up at night. I’ve learned my lesson, and I won’t make that mistake again. And I hope you learn from my money mistake too.
P.S.—if you’re worried about an impending market crash, I 100% empathize. I get it. I recommend you read this and let me know if that helps.
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Money Mistake #4: Caring About the Joneses
We’ve all heard it before. “Keeping up with the Joneses.” Buying nice things simply because your peers—the Joneses—have those nice things.
But as I pointed out on the Rochester Business Connections podcast:
“The Joneses might be broke.”
-Jesse
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It’s easy to forget that fact. The Joneses might be stretching—and stressing—their budget to a near-breaking point. Are you sure you want to keep up with that?
I worked at a software company after university. They hired tons of 22-year olds like me. And I immediately noticed that many of my peers had nice stuff.
They drove $50,000 cars. They wined-and-dined most nights. They planned cross-country trips on a whim—what’s a round-trip flight, $1000? Chump change.
I know that pang of envy. I wanted those things too! How were my peers—ostensibly on a similar salary as me—living these lavish lives? There are two obvious answers:
They had different budgets and different priorities.
They had alternate sources of income.
#1 makes will always be true. Everywhere you look in life, people will spend differently than you. My coworkers made conscious choices to spend on nice items. I put my money to different uses. That’s neither good nor bad. It’s just different. Each person spends differently.
And #2 is something I have zero control over. Some people are born on third base. Others are born in the ditch. It’s not fair. It’s just luck. I enjoy writing about the role of luck in society.
(But I certainly shouldn’t feel bad that some people are luckier than me. I’m very lucky in my own life.)
Once I’d convinced myself of these truths, my money mistake became obvious. Let the Joneses do their own thing. They’re on their own path. I have my path.
Money Mistake #5: Hunting Mice, Not Gazelles
Why don’t lions hunt mice? What chance does Mickey have against the lion king? Lions could hunt mice in spades!
But the energy gained from that small mouse isn’t worth the lion’s effort. The lion is better off hunting gazelles.
We can—and should—apply a similar thought process in our lives. It applies to time management. It makes sense at work. And yes, it makes sense in personal finance.
Don’t hunt the field mice in your money life. It’s a common money mistake. My favorite example is this classic:
“I’ll drive across town to fill up my gas tank…gas is 20 cents cheaper at that gas station!”
This is quintessential mouse-hunting. Driving 5 miles (which has a cost) over 10 minutes (what’s your time worth?) in order to save, let’s say, 20 cents/gallon * 15 gallons = three dollars!
You are spending—both in time and money—more than you’re saving.
I’m not saying, “Don’t go after free money.” I would certainly pick up three dollars if it was lying on the sidewalk. That’s because sidewalk money costs me two seconds of time and one solid bend of my back.
But this gas savings had a real cost. That cost completely negates the benefit. The $3 gas savings is not free! To ignore that fact is a money mistake.
It’s the same reason lions don’t hunt mice. Some “easy prey” simply aren’t worth the effort.
Money Mistake #6: Servant or Master?
Various philosophers are attributed with saying:
Money is a great servant but a bad master.
This is certainly a lesson I’ve learned the hard way, and continue to learn—both through normal life and through my blog & podcast projects.
Money is nothing but a tool. Nothing more, nothing less. Tools help us build. But you probably know some people who classify as ‘tools’—and you don’t want them to be your master!
Jokes aside, there’s a slippery slope towards letting money control you. I’m pretty transparent here on the Best Interest. I’m in a healthy money situation and have been for a few years. But I still stress periodically. Without fail, that stress is due to my letting money become more master than a tool.
Perhaps my favorite articles to write are the ones that involve the psychology of money. Stuff like the fulfillment curve and the aforementioned “bimodal spending.”
There’s a pattern in my articles. That same pattern is borne out when other financial writers discuss the psychology of money. Namely, we all ask: how do we optimize money as a tool and minimize its role as a master.
Money Mistake #7: No Budget, No Clue
For many years, I operated without a budget. It’s true.
Yes, now I’m a budgeting fiend. But there was a time when I had zero clue where my money was going. And that, no surprise, was a massive money mistake.
I’d check my bank accounts occasionally. I knew—roughly—what I spent on groceries and gasoline. But I couldn’t tell you for sure. And I certainly couldn’t have found any good ways to improve my finances.
It’s funny. Because of my lack of knowledge, I can’t even tell you the opportunities that I missed! That’s scary in-and-of-itself. As I wrote in the “Budget Basics” article, all of the experts I spoke with budgeted. They all monitor their spending in some way.
Readers, you don’t have to be a zealot like me. As I outlined in my 2019 review and 2020 review, I budget like a maniac.
But you can’t just “do nothing” when it comes to budgeting.
No More Money Mistakes?
No, no. I’m sure I’ve made tons of other money mistakes. But we’ll stick with those seven today. Quick recap, they were:
Not “Renting My Fun”
Decrease Spending vs. Increase Income
Listening to Mr. Market
Caring About the Joneses
Hunting Mice Instead of Gazelles
Letting Money Be My Master (Instead of Servant)
No Budget = No Clue
Feel free to chime in with some of your money mistakes below. It’s ok. We’ve all messed up before 🙂
Thank you for reading! If you enjoyed this article, join 6000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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We’re living longer than ever before, and doing so in better health. So what can you do when you retire and want to keep your mind sharp or need to gain additional skills to stay competitive at work?
For many, the answer is to go back to school. But tuition can be prohibitively expensive.
At the same time, schools want their classrooms to be full of engaged students, regardless of age. In the interest of continuing education, many colleges and universities offer reduced or free college for seniors (typically, adults 60 and up, although the rules vary).
In fact, we found at least one option in every state.
Free (or Cheap) College for Seniors in Every State
While some institutions only allow senior students to audit classes, many offer the chance to earn credits toward a degree at a reduced — or completely waived — tuition rate.
Does your state have a senior citizen education program you can use? Find out below!
1. Alabama
The Alabama Commission on Higher Education states that Alabama seniors can attend any two-year institution within the state tuition-free.
Adults 60 and older should contact the financial aid office at any community college for admission and eligibility details.
Some Alabama schools, like Coastal Alabama Community College, offer online courses if you want to avoid in-person classes.
2. Alaska
The University of Alaska waives tuition for senior-citizen residents who receive full Social Security benefits. Seniors must wait until the first day of classes to enroll to ensure that there’s space remaining; they must also complete a tuition-waiver form.
Additional costs such as student activity, health center and lab fees are not covered; the student must pay them directly.
Online courses may be included if offered; check with the admissions office for confirmation.
3. Arizona
All 10 campuses of Maricopa Community College allow senior citizens to take classes for credit at 50% of the full tuition cost.
Students 65 and older must register between the first and second class sessions of the semester to ensure space is available. You can register for in-person, online or hybrid classes.
4. Arkansas
Arkansas waives tuition for anyone 60 and over who wants to work toward an undergraduate or graduate degree at state institutions.
Student fees may apply, and senior citizens may register only for classes with space available. If you need online courses, check with your chosen college to see what options you have.
5. California
California State University waives all tuition for state-supported classes and dramatically reduces campus fees for residents age 60 or older.
Different Cal State locations may offer online courses or in-person classes. Students who attend in-person classes must provide proof of COVID-19 vaccination.
6. Colorado
Students age 55 and older may attend class on a space-available basis at Colorado State University. There is no tuition fee, but visitors don’t get credit for attending class. It is up to the instructor how participation and grading of assignments and tests are handled. CSU currently offers face to face, hybrid and online classes.
At the University of Colorado Denver, people 60 and older may enroll on a no-credit basis to attend up to two classes per semester as auditors when space is available. (Courses with a lab component are excluded, as are computer courses and online courses.)
7. Connecticut
Residents 62 and up may attend state colleges, including community colleges, for free on a space-available basis.
At Central Connecticut State University, for example, tuition is waived for any resident over the age of 62 who applies for full- or part-time admission for a degree-granting program. Online courses are included.
Senior students may also take noncredit courses on a space-available basis and have tuition waived. All students must still pay all other fees.
8. Delaware
The University of Delaware, Delaware State University, and Delaware Technical and Community College allow all permanent state residents age 60 or older to audit or take classes for credit for free.
At the University of Delaware, students wishing to use the program must apply for admission on a space-available basis. Some graduate degrees may be eligible, as well. Residents can register for online or in-person courses.
Participants must pay all related student fees and buy their own textbooks.
9. District of Columbia
Senior citizens 65 and up may audit undergraduate courses from Georgetown University’s School of Continuing Studies. These students pay a fee of $32 per credit, which means a three-credit course will cost $96.
To audit a course, there must be available space and the instructor of record must approve the enrollment.
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10. Florida
The Florida college system waives application, tuition and student fees for those age 60 and above, but colleges will award no credit and will grant admission on a space-available basis. Check to see whether your chosen college covers online courses as well as in-person ones.
Fun fact: Florida Atlantic University’s Lifelong Learning Society has the largest adult continuing education program in the U.S. It even has its own auditorium on campus to help serve FAU’s 30,000 new registrants each year.
11. Georgia
Georgia residents age 62 and above may take classes on a space-available basis for “little or no cost” at the state’s public colleges.
Seniors may choose to take classes for credit or continuing education, but they must apply through the regular admissions process at their school of choice. Many general education courses are offered online.
12. Hawaii
The Senior Citizen Visitor Program at the University of Hawaii and state community colleges allows senior residents age 60 and up to attend up to two courses per semester free of charge. Seniors who have been residents of Hawaii for at least one year may enroll in in-person, hybrid or online courses for no cost. It’s recommended but not required for students to be vaccinated against COVID-19. Students must demonstrate tuberculosis (TB) clearance by providing test results or a TB risk assessment form signed by a licensed U.S. health care provider.
Schools will not award credit nor will they keep permanent records of students’ class history.
13. Idaho
Programs in Idaho vary based on institution, but some schools offer good deals. The College of Southern Idaho offers free tuition for lower division courses for students aged 60 and older, in addition to other benefits. The college has online and in-person courses.
At Boise State University, Idaho residents who are at least 65 years old can audit classes on a space-available basis for free except for applicable special course fees. BSU offers online courses as well as in-person ones.
14. Illinois
Upon admission, senior citizens age 65 and up who meet income requirements can attend regular credit courses at Illinois public institutions for free. Lab, student and other fees still apply. Each institution will have guidance on registering for online or in-person classes.
15. Indiana
Indiana University offers programs that allow retired residents age 60 and older to take up to nine credit hours per semester and pay just 50% of in-state tuition fees. Courses are in person.
16. Iowa
Private institution Simpson College in Indianola allows people 65 and older to take one noncredit class for free per semester. Courses are open on a space-available basis and do not include lab courses. Online courses may be available.
17. Kansas
Tuition and fees are waived for students age 65 and older taking classes on a space-available basis. Residents must be admitted to a state-supported school to take advantage of this discount. Each school can also provide info on in-person versus online courses.
The registration process varies: The University of Kansas and Wichita State University, for example, require senior auditors to apply for admission. Online or in-person courses may be offered.
18. Kentucky
Tuition and fees are waived for students age 65 and older taking classes on a space-available basis. Residents must be admitted to a state-supported school to take advantage of this discount. Each school can also provide info on in-person versus online courses.
19. Louisiana
Students age 65 and up attending Louisiana state schools receive free tuition and 50% off books and materials at the campus student bookstore. Check with each school to see if online courses are included.
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20. Maine
Senior citizens 65 and up may attend undergraduate classes as degree-seeking or audit students in the University of Maine System for free, subject to space availability.
Each college within the system can provide info on the types of courses covered (i.e., online, in-person, hybrid).
21. Maryland
Any student in the University of Maryland System who is retired and over the age of 60 may have tuition waived for up to three courses per semester, even for degree-granting programs. Online courses are available as well as face-to-face offerings.
Online courses are available as well as face-to-face offerings.
22. Massachusetts
Residents age 60 or older can take at least three credits per semester at any state-supported school in Massachusetts and receive free tuition.
Each location has information on what online courses are offered.
23. Michigan
Opportunities for seniors in Michigan vary by institution.
At Michigan Tech, for example, students 60 and older can have tuition waived for up to two courses per semester. Seniors must apply through the admissions office.
Western Michigan University invites seniors 62 and older to register for one class per semester tuition-free, which may include online classes.
At Wayne State University in Detroit, seniors 60 and up receive a 75% discount on tuition but must pay registration and related fees. Wayne State offers some online courses.
24. Minnesota
Minnesota waives tuition for senior citizens 62 and older, but fees and online options may vary by school. At the University of Minnesota, seniors pay a $10 fee per credit, but they can audit for free.
25. Mississippi
There’s no statewide benefit in Mississippi, but some schools have programs for seniors.
Mississippi State University provides a waiver to residents age 60 or older for classes offered on the Starkville or Meridian campuses or by the Center for Distance Education. Seniors are limited to six semester hours per semester and a maximum of 18 credit hours per calendar year, where space is available. MSU offers online courses as well as traditional in-person ones.
The University of Mississippi’s Office of Professional Development and Lifelong Learning allows seniors 65 and older to take one class for free per semester (up to four hours) at any UM campus.
26. Missouri
Missouri residents age 65 and older are exempt from paying tuition at state-supported institutions for classes attended on a noncredit basis. Schools may limit the number of students who receive the tuition benefit based on space availability. Online classes are offered in addition to in-person ones.
27. Montana
The Montana University System offers a tuition waiver for in-state residents 65 or older. Campus and registration fees are not waived. Choose from online or in-person classes.
28. Nebraska
Chadron State College allows adults 65 and up to audit one course per semester for free. The college offers classes online and on campus.
29. Nevada
The University of Nevada, Las Vegas allows seniors 62 and up to take autumn and spring courses free of charge. They pay 50% tuition for summer classes. Lab and other course fees are not covered. Online courses may be offered.
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30. New Hampshire
The University of New Hampshire offers residents 65 and older free tuition for two credit-bearing classes per academic year on a space-available basis, so long as they’re not enrolled in a degree program. Courses are offered online or in person.
31. New Jersey
Rutgers University allows retired New Jersey residents 62 and older to audit courses for free in the spring and fall semesters at its Camden, New Brunswick and Newark campuses, space permitting. Current guidelines allow senior citizens to audit in-person or online classes if they have been fully vaccinated against COVID-19.
32. New Mexico
New Mexico offers reduced tuition of just $5 per credit hour to state residents 65 and older. Online courses are available.
For-credit classes are eligible as well as auditing; senior citizens can take no more than 10 credit hours per semester. The program is offered on a space-available basis, and students are responsible for paying any additional course fees.
33. New York
Many schools offer free or reduced tuition for senior citizens. Queens College allows residents 60 and up to audit any course on a space-available basis after completing a Senior Citizen Auditor Application and paying $80 per semester. Up-to-date COVID-19 vaccinations are required to enroll.
At SUNY Purchase, New York state residents 60 and older can enroll tuition-free in a maximum of two credit-bearing, on-campus courses in which space is available. They pay a $50 audit fee, $20 ID processing fee and any course fees. In-person, online and hybrid courses are available, and COVID-19 vaccinations are required for anyone coming on campus.
34. North Carolina
Tuition and registration fees are waived for residents 65 or older attending North Carolina community colleges. Senior citizens can take up to six credit hours per semester for free. Audit options may be available at other schools.
At the University of North Carolina Wilmington, for example, senior citizens may audit classes for free after getting the instructor’s permission and submitting an application. Lab, studio, performance, distance education, independent study, internship and special topic courses are excluded. Online courses are available for those who prefer them.
35. North Dakota
Programs vary by institution in North Dakota. At Bismarck State, for example, senior citizens 65 and older can audit one course tuition-free per semester on a space-available basis. They’re still responsible for other course fees. Some online courses are available.
36. Ohio
Ohio residents at least 60 years old may attend class at any state college for free. Senior-citizen students do not receive credit and can register only on a space-available basis. They are still responsible for special assessments, such as lab fees, that may apply.
Many Ohio state colleges offer online courses, as well as in-person and hybrid.
37. Oklahoma
Oklahoma state colleges and universities waive tuition and fees for senior citizens 65 and older who wish to audit classes on a space-available basis.
38. Oregon
Oregon State University allows senior citizens at least 65 years old to audit classes for free at a maximum of eight credit hours per semester.
The University of Oregon also waives fees for seniors 65 and older auditing classes on a space-available basis.
Online course options may be offered depending on availability.
39. Pennsylvania
Clarion University offers a tuition waiver for residents 62 and up to audit classes. At Bloomsburg University, you need to be only 60 to take tuition-free classes on a space-available basis.
There can be additional benefits at the community college level: Bucks County Community College, for example, waives for-credit course tuition for seniors 65 and up so long as they register after students who are paying full tuition. Many courses are offered online, though some in-person and hybrid options are available.
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40. Rhode Island
Tuition waivers can be requested from citizens over 60 at the Community College of Rhode Island. Seats are granted when there is space available.
All degree-seeking senior students must fill out a FAFSA. They also have to submit a Senior Citizens Means Test to verify they have limited income.
Proof of COVID-19 vaccination is required to attend in-person classes. There are also online classes.
41. South Carolina
Residents 60 and above can attend classes at state schools on a credit or noncredit basis, pending space available, for free. The school must grant admission via its normal procedures.
Technology, lab and other fees are the responsibility of the student. Many South Carolina community colleges offer online courses for those interested.
42. South Dakota
Residents 65 and older can attend public universities in South Dakota at 55% of the normal cost of tuition for undergraduate or graduate in-person courses on a main university campus.
Interested adults should apply through the regular admissions system, and the school will automatically grant the discount upon admission. Student fees are not waived.
Contact your chosen university to see whether online courses are offered.
43. Tennessee
The University of Tennessee allows senior citizens to enroll in undergraduate or graduate courses for $7 per credit hour with a maximum fee of $70.
Students will still pay application and course fees. Senior citizens can choose between online courses and in-person ones.
44. Texas
A senior citizen age 65 or older can take up to six tuition-free credit hours at the University of Texas at Austin.
At the University of Texas at Dallas and Lone Star College, undergrad students 65 and older must maintain a 2.0 cumulative GPA to receive a tuition waiver for up to six credit hours per semester.
Check with each individual university to see which online and in-person classes are available for enrollment.
45. Utah
Utah residents age 62 and up may enroll tuition-free at a state institution, space permitting; a quarterly registration fee is required.
At the University of Utah, for example, seniors can audit most classes on a space-available basis and only have to pay a fee of $25 per semester, plus any special fees required. Call to see whether online classes are included.
46. Vermont
Vermonters over the age of 65 can audit one class per semester tuition-free on a space-available basis in the Vermont State College System. Students can take additional classes at a 50% discount of the tuition rate, either in person or online.
They’ll still have to pay administration and course fees for all classes.
47. Virginia
Under the amended terms of the Senior Citizens Higher Education Act of 1974, Virginia residents over 60 years old who earn a taxable income of less than $23,850 annually can audit up to three courses per term for free on a space-available basis at any public institution, either in person or online.
48. Washington
Institutions in Washington are required to partially or fully waive tuition fees for residents age 60 or older who are enrolled for credit on a space-available basis. Nominal fees may apply to students auditing courses.
Some schools limit senior citizens to a certain number of classes or credits; for example, Washington State University caps the waiver at six credits for the fall and spring semesters. Online programs are available.
49. West Virginia
Senior citizens 65 and older at West Virginia University seeking college credit must use the regular admissions form. Those wishing to be non-degree students pay just $5 to apply. WVU offers classes online or in person.
50. Wisconsin
Adults 60 and up may audit classes at the University of Wisconsin-Madison campus or at UW-Madison Online for free, where space is available.
51. Wyoming
At Laramie County Community College, senior citizens 60 and older pay only 20% of the resident tuition rate per credit hour, though they still need to pay any other course or online fees.
Northwest College offers adults 60 and older free tuition up to six credit hours per semester for on-site and online courses, as well as free entry to most college social, cultural and athletic events.
Another Continuing Education Option
More than 100 colleges and universities around the country offer another continuing education program for senior citizens: enrichment courses through the Osher Lifelong Learning Institutes (OLLI).
Prices vary depending upon the institution. Duke University, for example, has a $50 annual membership fee and then charges $50 to $175 per class. Senior citizens can choose to take classes online or in person.
OLLI classes don’t count toward a degree, but if you’re looking for personal development opportunities among older adults, these courses can provide opportunities that mix in the campus experience, too.
Contributor Catherine Hiles updated this post for 2023.
Every once in a while I get a question from a reader about how to get rid of a timeshare. Sometimes the person is asking for themselves, but other times, they are trying to help a friend or family member.
The problem is that timeshares aren’t as amazing as the salesperson claims they are. They are expensive, you probably won’t use them as much as you think, timeshare resale values are incredibly low making them hard to sell, and more.
So, if you have been thinking about purchasing a timeshare or if you are wondering how to get rid of a timeshare, today’s article is for you.
Many adults have attended a timeshare presentation, and even more have been asked to attend one. You are usually offered something if you stay the whole time, such as a free vacation, an iPad, a cruise, or something else that is quite enticing. And, that’s how they get you interested.
All you have to do is listen to the presentation and get your free gift. Sounds simple enough, right?
But, after sitting through the timeshare presentation and listening to the salesperson talk about all the “benefits” of owning a timeshare, you may be intrigued.
Even though you told yourself that you weren’t going to purchase anything, the salesperson is well-trained and you can’t resist something that seems like such a good deal.
Many people cannot say no in these situations, and that is why around 10,000,000 households in the United States own a timeshare.
I had no idea that the timeshare business was this large. Maybe I’m missing something, but the negatives that I’m going to explain in this article seem to significantly outweigh the positives. I’m honestly shocked that there are that many timeshare owners out there, and many sadly end up regretting their purchase.
One of the issues with timeshares is that there are different types, some of which you pay for but never actually own. Those are called non-deeded timeshares, and they fall into two categories:
Right-to-use systems- You sign a lease from anywhere from 20 to 99 years and pay for the right to use the timeshare. It would be very difficult to sell something you never own.
Points-based system- You purchase points each year to trade for reservations at different properties owned by a timeshare company. Some companies let you “bank” points that can be rolled over to another year.
There are also timeshares called deeded timeshares. With these ones you share ownership of the timeshare with other people. These usually fall into two categories:
Fixed-week system- You get to use the timeshare for the same specific week each year. That means you will have to be available that same week every year.
Floating-week system– Same as above, but the difference is that you get to pick the week you use your timeshare. You may compete with other people for busy weeks or seasons.
Lately, I’ve been hearing about more and more people buying timeshares. It’s been brought up by my readers, in my Facebook group, and by my friends. But, at the same time, I have seen more and more people asking how to get rid of a timeshare.
Someone I know spent $15,000 on a timeshare. I know of another person who has bought multiple timeshares with their student loans.
I also once read a post on Facebook that said, “Please, help me sell my timeshare!” This person was trying to sell their timeshare for $1 and there weren’t any offers yet. They were looking to Facebook as a last resort and wanted friends to share their post.
Sure, I have an open mind and perhaps sometimes timeshares are an okay idea, so I won’t completely discredit them. However, I’ve never met someone who bought a timeshare and was happy with their purchase years down the line.
I’ve only heard horror stories about timeshares.
Due to this, I’ve never really understood the appeal of timeshares.
And I’m not sure I ever will.
I’m not writing this post to offend anyone. Like I said, I’m sure there are cases that exist where someone has found a great deal on a timeshare and they know they’re going to actually use it. I won’t ignore the possibility of that. However, I know that each and every year many people buy timeshares thinking they are a great deal when in reality most of the time they are not.
If you are interested in learning even more about how to get rid of a timeshare, please read the free guide The Consumer’s Guide To Timeshare Exit.
Related content:
In today’s post, I’m going to talk about why you should skip the timeshare, as well as what to do if you already own one and are looking for a timeshare exit.
Below are 5 reasons not to buy a timeshare.
1. Timeshares are expensive from Day 1.
Timeshares are expensive.
Even the people who’ve bought them told me that their number one hesitation was price, and it goes beyond the upfront cost.
Actually, many people end up taking loans out for their timeshares. This means that your timeshare might end up costing two or even three times the cost over the duration of the loan due to interest.
If you are buying a timeshare, then the cost of owning one is the main upfront costs being the lump sum price you pay to “buy” it. Then, there are also the interest fees if you are using a loan to buy your timeshare and also closing costs.
According to the American Resort Development Association, the average price for a one week timeshare is approximately $21,455, with an average annual maintenance fee of around $1,000 on top of that.
That is a lot of money. No wonder so many people want to learn how to get rid of a timeshare.
2. Timeshares have expensive annual maintenance fees.
Maintenance fees are something that you’ll have to pay if you own a timeshare, and you’ll pay them every year for as long as you own the timeshare. This annual fee is to pay for the cost of operating the resort. This covers the general upkeep up the timeshare property, landscaping, utilities, staffing, plus more for future upgrades and repairs.
As I said earlier, the average annual maintenance fee on a timeshare is around $1,000, and in many cases it can be over $1,000 a year depending on your timeshare agreement. I did some research and found some timeshares that had annual maintenance fees of over $2,000 a year.
Maintenance fees need to be paid year after year, regardless if you use the property or not. If you stop paying them, the resort your timeshare is at can begin the collections process. This can cause long-term negative effects to your credit score and finances.
Also, the annual maintenance fee can increase over time as well, in many cases, at a rate that is higher than inflation. It can more than double in just a few years, and there is no cap on how high a resort or timeshare company can raise your rates.
This is the number one reason that so many people want to learn how to get rid of a timeshare.
3. Timeshares are near impossible to sell.
If you want to learn how to get rid of your timeshare because of the high annual cost, you are tired of paying monthly payments on your loan, or if you simply just aren’t using the timeshare, you will have a hard time selling it.
Timeshares do not appreciate like normal property does. This is another reason I do not think they are suitable for the average household.
You know that person that I said was on Facebook trying to sell their timeshare for $1? That is not uncommon at all.
If you do a quick search online, you will find hundreds of timeshares going for just $1.
If they are such a great deal, why are people trying so hard to get rid of them?
Like I said, the number one reason that people want to sell their timeshares is because of rising maintenance fees. You hear one price when you are sold your timeshare, but the costs keep increasing making it harder and harder to budget for.
This is why people want to sell their timeshares for so cheap – anything to get out of the constant and increasing costs.
Because there are so many people trying to sell timeshares without any luck, there are companies popping up all over the internet claiming to help people get out of timeshares. However, many of these companies are scammers. This presents another danger to consumers who have purchased a timeshare.
4. You may not use the timeshare as much as you think.
When you purchase a timeshare you probably think that you’re going to use it every single year. You might even laugh at someone who says you’ll eventually want to learn how to get out of a timeshare.
You tell them and yourself it will be an easy way to go on an inexpensive vacation and that you’ll actually save money. However, there are many reasons why you might not use your timeshare every year, which then becomes a waste of your money.
Maybe you have a bad income year and can’t afford to travel to your timeshare, an emergency comes up, you want to take a vacation somewhere else, etc.
And, whether you use your timeshare or not, maintenance fees need to be paid year after year.
For every year that you don’t use your timeshare, that’s more money you’ve invested in it with no return, not even a fun vacation. Really, there are much better ways you could have invested your money.
5. You have plenty of other options for your vacation.
Timeshare salespeople try to find buyers by claiming that timeshares are a great way to save money on a vacation. They tell you that every year you’re going to be able to visit this beautiful place and that it will actually save you money.
I do not understand that.
Spending $20,000 or more on a timeshare where you only get around one week annually seems very expensive. In some cases you may struggle to get the week of your choice. And, don’t forget the maintenance costs!
There are PLENTY of ways to go on a more affordable vacation. You could shop around for the best prices on hotels and flights, use credit card rewards, visit during the off season, bundle your trip, and more. I’m sure you could spend less on an annual vacation than what it would cost to own a timeshare.
Plus, if you are still wanting the “timeshare feel,” you can rent timeshares from other owners for a FRACTION of what they have paid. You can usually find them for a couple hundred dollars per week, whereas the owner is still paying the maintenance fees each year that are most likely twice or three times as much.
Related articles:
How to get rid of a timeshare.
Is it hard to get out of a timeshare?
If you currently own a timeshare, you may be wondering how to get rid of a timeshare. If so, then I can help with that today.
I recommend the company Newton Group Transfers to help you learn how to get rid of a timeshare. Newton Group Transfers helps timeshare owners get rid of the timeshare they no longer want by ending your timeshare agreement so that you can stop paying high maintenance fees.
For over 15 years, they have helped thousands of people exit their timeshares, and they have an A+ rating with the Better Business Bureau. Remember, there are lots of scammers out there, so research any company you are thinking about using to make sure it is highly rated and legit.
You can contact Newton Group Transfers in the link above or call them at 888-713-0403.
If you are interested in learning more about this subject, please read their free guide The Consumer’s Guide To Timeshare Exit.
Have you ever been to a timeshare presentation? What do you think of timeshares?
Everybody likes to talk about how much they’re contributing to their 401(k) plans, or about how much they should be contributing to their 401(k) plans.
That’s important, no doubt.
But the bigger question should be the end game. That’s how much you should have in your 401(k).
That’s the real measure of success or failure of any retirement plan which involves the 401(k) as the main piece.
It’s a tough proposition. Everybody’s in a different situation, as far as age, income, immediate financial condition, and risk tolerance.
There’s no scientific way to determine how much you should have in your 401(k), but we’re going to take a stab at it, by approaching it from several different angles.
We’ll break it down this way…
Table of Contents – What We’ll Cover in this Post:
The State of American Retirement – It Needs Improvement!
Contributing Just Enough to Max-Out the Employer Match Will Fail
You Need to Contribute at Least 20% of Your Income for Retirement
Don’t Randomly Pick Investments for Your 401(k)
And Don’t Let Your Co-workers Tell You What Investments to Pick Either!
While You’re At It – Stay Away From Target Date Funds
If You Have a Roth 401(k) Take Advantage of It
Don’t Forget About the Roth IRA, Too
How Much Should YOU Have in Your 401(k)?
Let’s start with the bad news first…
The State of American Retirement – It Needs Improvement!
According to an article released by CNBC, which looked at data from Northwestern Mutual and Gallup’s 2018 surveys, 21% of Americans have no retirement savings, and the average amount that Americans have saved is $84,821.
A wide majority of those surveyed, 78%, expressed concern that they will not have a substantial amount of retirement money to live on, meaning they will continue to work past retirement age.
Many people do not realize what an advantageous opportunity a 401(k) plan offers. It is the most generous of all retirement plans, one that could alleviate much of the concern Americans are expressing over their financial future.
Contributing Just Enough to Max-out the Employer Match will Fail
I often recommend contributing at least enough to a 401(k) plan to get the maximum employer match.
If an employer matches 50% up to 3%, then you contribute 6%. That will give you a combined contribution of 9% per year.
But there’s a problem with this recommendation.
It’s not that it’s bad advice – it certainly makes sense for someone who is struggling with financial limits, and needs a minimum contribution level.
The problem is when the minimum contribution becomes the maximum contribution. There’s no question, 9% is way better than nothing. But if you intend to retire, it won’t get the job done!
The other problem is that the employer match typically comes with a vesting period. That could be up to five years.
If you stay on the job substantially less, you’ll lose some or all of the match. That will drop you down to only your 6% contribution.
An example of contributing just enough to max out the employer match
Let’s assume you’re 35 years old, and earn $50,000 per year.
You contribute 6% of your salary to your 401(k) plan, and your employer matches that at 50%, or 3%.
Over the next 30 years, you earn an average annual rate of return on your investments of 7%.
By the time you’re 65 years old, you’ll have $441,032.
That may seem like a lot of money from where you’re at right now. But when retirement rolls around, it will probably be inadequate.
Here’s why: it’s called the safe withdrawal rate.
It holds that if you limit your withdrawals from your retirement plan to about 4% per year, you will never outlive your money. You can see the wisdom of that, can’t you?
But a retirement portfolio of $441,032 with withdrawals at 4%, is just $17,641 per year, and that’s just $1,470 per month.
Since most employers no longer provide traditionally defined benefit pension plans, you’ll have to live on that, plus your Social Security benefit.
Let’s say that your Social Security benefit is $1,500 per month.
What kind of retirement will you have with an income of $2,970 per month?
You won’t do much better than just getting by on that kind of retirement income. My guess is that you won’t even be retired at all.
You Need to Contribute at Least 20% of Your Income for Retirement
Most people expect that retirement will be more than just getting by.
Retirement isn’t just a number – it’s the sum total of what you will take out of a lifetime of hard work. It should provide you with an income that will give you more than just basic survival.
For that reason, you need to contribute at least 20% of your income to your retirement plan. The only way for most people to do that is through a 401(k) plan at work.
Let’s look at another example. Let’s the same financial profile from the last example, but instead of making a 6% contribution, you instead contribute 20% of your salary. The employer match will remain a 3%, giving you a combined annual contribution of 23% of your income.
What will your retirement look like by age 65?
How about $1,127,066???
4% of $1,127,066 will be $45,083, or $3,756 per month. Adding in $1,500 for Social Security, and you’re up to $5,256, which is more than you earn on your job!
Are you getting excited? You should be.
Don’t Randomly Pick Investments for Your 401(k)
Next to low contribution rates, the biggest problem with most 401(k) plans is poor investment selection.
Sometimes that’s inevitable, because some 401(k) plans just have very limited investment selection. But in other cases, the owner of the plan just makes bad choices.
What makes investment choices bad?
Investing too conservatively, by favoring fixed-income investments for safety
Holding too much company stock, which is a classic case of “putting too many eggs in one basket”
Not having adequate diversification
Adding random investments to your plan, like “hot tip” stocks
Trading too frequently, which causes high transaction fees, and usually doesn’t work anyway
Designing your portfolio in a way that’s inconsistent with your long-term goals
Let’s face it, most people are not investment professionals. That means you can’t rely on your own resources in creating and managing what will eventually become your largest incoming-producing asset.
And that means you need to get help.
One source is Personal Capital. That’s an investment service that doesn’t manage your 401(k) plan directly, but it does provide guidance on how to invest the plan.
They do that through their Retirement Planner and 401(k) Fund Allocation tools.
Another service that’s growing rapidly is Blooom. It’s an investment service that will provide you with investment management for your 401(k) plan.
The service cost just $10 per month, which is a small price to pay to get professional investment advice for your largest asset.
And Don’t let Your Co-workers Tell You What Investments to Pick Either!
One of the complications with 401(k) plan management is the herd mentality.
It happens in most companies and departments. Someone says go to the right, and everyone turns to the right without giving it much thought. We’re virtually programmed to operate that way in an organizational environment.
But it’s financial suicide when it comes to investing for retirement.
We should never presume that a coworker, or even a boss, has some sort of superior knowledge when it comes to investments. That person might be bragging about what he is investing in, maybe to get moral support for his decision.
You, and you alone, will one day need to live on your retirement portfolio. You shouldn’t trust that outcome to what amounts to water cooler gossip.
While You’re at it – Stay Away from Target Date Funds
There’s one type of investment that’s gaining in popularity, and I don’t think it’s a healthy development.
It’s target date funds.
I don’t have a good feeling about them, and that’s why I don’t recommend them.
In fact, I hate target date funds. Does that sound too strong?
Target date funds are one of those innovations that work better in theory than they do in reality.
They start with your retirement date, which is why they’re called “target date funds”. If you plan to retire at age 65, they’ll have tiered plans (which are actually mutual funds).
They have one when you’re 40 years from retirement, another when you’re 30 years out, then 20 years, and 10 years. That may not be exactly how they all work, but that’s the basic idea.
The target dates mostly adjust your portfolio allocation. That is, the closer that you are to retirement, the higher the bond allocation is, and the less that’s invested in stocks.
The concept is to reduce portfolio risk as you move closer to retirement.
That all sounds reasonable on paper.
But it has two problems.
One is target date funds have unusually high fees. That reduces the return on your investment.
The other is they arbitrarily reduce growth in your portfolio as you move closer to retirement.
That generally makes sense, but not for people who either have a higher risk tolerance, or those who need healthier returns as they move closer to retirement.
Avoid these funds, no matter how hard the pitch is for them.
If You Have a Roth 401(k) Take Advantage of it
A growing twist on the basic 401(k) plan is the Roth 401(k).
It works just like a Roth IRA. Your contributions to the plan are not tax-deductible, but your withdrawals can be taken tax-free.
That’s as long as you are at least 59 ½, and have been in the plan for at least five years.
The Roth 401(k) has two major differences from a Roth IRA.
The first is that the Roth 401(k) is subject to required minimum distributions (RMDs) beginning at age 70 1/2. A Roth IRA is not. (You can get around this problem by rolling your Roth 401(k) plan into a Roth IRA.)
The second is the amount of your contribution.
While a Roth IRA is limited to $5,500 per year (or $6,500 if you are 50 or older), contributions to a Roth 401(k) are the same as they are for a traditional 401(k). That’s $18,000 per year, or $24,000 if you are 50 or older.
This doesn’t mean that you can put $18,000 in a traditional 401(k), and another $18,000 into a Roth 401(k). You must allocate between the two.
It makes a lot of sense to do this. You will lose tax deductibility on the amount of your contribution that goes to the Roth 401(k).
But by making the allocation, you ensure that at least some of your retirement income will be free from income tax.
If your 401(k) plan offers the Roth option, you should absolutely take advantage of it. It’s a form of income tax diversification for your retirement.
Don’t Forget About the Roth IRA, Too
If your employer doesn’t offer a Roth 401(k), then you should contribute at least some of your retirement money to a Roth IRA.
There are income limits beyond which you cannot contribute to a Roth IRA (those limits don’t apply to Roth 401(k) contributions).
For 2019, your income cannot exceed $122,000 per year if you are single, or $193,000 if you’re married filing jointly. Both of those amounts have increased since last year, meaning those whose earnings were on the fringe of the income limit can now contribute to this rewarding retirement account.
Having a Roth IRA, in addition to your 401(k), has several advantages:
It increases your total retirement contributions. If you are contributing $18,000 to your 401(k), plus $5,500 to a Roth IRA, that raises your annual contribution to $23,500.
Roth IRAs are self-directed accounts. That means that you can hold the account with a large investment brokerage firm that offers virtually unlimited investment options.
You will have complete control over how the plan is managed. The account could even invest the account with a robo advisor, which will provide you with low-cost professional investment management. (Two popular choices are Betterment and Wealthsimple.)
You’ll have an account ready and waiting, in case you want to do a Roth IRA conversion. It’s a popular way to convert taxable retirement income into tax-free retirement income.
Set up and contribute to a self-directed Roth IRA account, if you qualify. It’s become a retirement must-have.
How Much Should You Have in Your 401(k)?
With all the above information in mind, how much should you have in your 401(k)?
The answer is: as much as you think you’ll need to retire.
Does that sound too vague?
Let’s start with this…make sure that you have more in your 401(k) than the average person does. Based on the information presented in the chart at the beginning of this article, the average person won’t be able to retire.
You don’t want to be average. You want to be above average. And you need to be.
And don’t be one of those people who pokes along throughout their career, making the minimum 401(k) contribution to get the maximum employer match.
As I showed earlier, that won’t get you there either.
Let’s go through some steps that can help you determine how much money you’ll need when you retire:
Determine how much annual income you’ll need when you retire. The rule of thumb is that you use 80% of your pre-retirement income. That’s a good start, but you should make adjustments for variations. This can include higher healthcare and travel expenses, but lower housing and debt payments.
Subtract pension and Social Security income. You can get a pension estimate from your employee benefits department. For Social Security, you can use the Retirement Estimator tool that will give you an approximate benefit.
Divide the remaining amount by .04. That’s the 4% safe withdrawal rate. It will tell you how large of a retirement portfolio you’ll need to produce the necessary income.
Determine how much you will need to reach that portfolio size. Project how much you will need to contribute to your 401(k) plan and other retirement plans in order to reach the needed portfolio size. Just make sure that your return on investment calculations are reasonable.
Working a Retirement Plan Example
You can get as complicated as you want with this exercise, but let’s keep it simple.
Let’s assume that you earn $100,000 per year. You estimate needed retirement income at 80% of that number, or $80,000 per year.
You expect to receive $30,000 in Social Security income, but are not eligible for a pension. That means that your retirement portfolio will need to provide the remaining $50,000 in income.
Dividing $50,000 by .04 (4%), shows that you will need a retirement portfolio of $1.25 million.
In order to reach $1.25 million by age 65 (you’re currently 40), will require that you contribute 20% of your annual income, or $20,000 per year to your 401(k) plan. This assumes a 3% employer match, and a 7% annual rate of return on your investment.
You can also take the easy route by using an online retirement calculator, like the Bankrate Retirement Calculator.
In order to make his retirement goal, the 40-year-old in our example would need to hit (roughly) the following 401(k) balances at various ages in order to reach $1.25 million by age 65:
At age 45, $110,000
Age 50, $260,000
Age 55, $490,000
By age 60, $800,000
However you calculate how much you should have in your 401(k), what I want you to take away from this article is that the amount that you actually need is way above what you probably have.
At least that’s the case if you’re the average person.
That’s why I recommend that you decide that you’re not going to be average when it comes to your 401(k) plan. If you want a better-than-average retirement, you’ll need to have a better than average plan.
Inside: This guide will teach you about the different factors you need to consider when purchasing a home with a 70k salary.
There are a lot of factors to consider when you’re trying to figure out how much house you can afford. Your income, your debts, your down payment, and the interest rate on your mortgage all play a role in determining how much house you can afford.
Your situation will be different than the person next-door or your co-coworker.
Making 70000 a year is a great salary. You are making the median salary in the United States.
It’s enough to comfortably afford most homes and gives you plenty of room to save money each month.
But how much house can you actually afford?
It depends on several factors, including your down payment, interest rate, income, and credit score.
In this ultimate guide, we’ll walk you through everything you need to know about how much house you can afford making 70000 a year.
how much house can i afford on 70k
In general, you can expect to spend 28-36% of your income on housing.
Generally speaking, if you make $70,000 a year, you can afford a house between $226,000 and $380,000.
How much mortgage on 70k salary?
In general, you should expect to spend no more than 28% of your monthly income on a mortgage payment.
Thus, you can spend approximately$1633-2100 a month on a mortgage.
Just remember this is relative to the interest rate, term length of the loan, down payment, and other factors.
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28/36 Rule
But there’s one factor that trumps all the others: The 28/36 rule.
Also known as the debt-to-income (DTI) ratio.
The 28/36 rule is a guideline that says that your housing costs (mortgage payments, property taxes, homeowners insurance, and HOA fees) should not exceed 28% of your gross monthly income.
And your total debt (housing costs plus any other debts you have, like car payments or credit card bills) should not exceed 36% of your gross monthly income.
You must follow the 28/36 rule.
How to calculate how much mortgage you can afford?
If you’re like most people, you probably don’t know how to calculate how much mortgage you can afford.
This is actually a really important question that you need to ask yourself before beginning the home-buying process.
The answer will help determine the price range of homes you should be looking at. Plus know how much money you’ll need to save for a down payment.
Step #1: Check Interest Rates
Research current mortgage rates to get an accurate estimate. You can also check your credit score and search for average mortgage rates based on your credit score.
Right now, with sky-high inflation, you are unable to afford a bigger house when interest rates are hovering around 6% compared to ultra-low interest rates of 2.5%.
With a 70k salary, this can be the difference between $50-100k on the total mortgage amount you can afford.
Step #2: Use a Mortgage Calculator
Use a mortgage calculator to get an estimate of the home price you can afford based on your income, debt profile, and down payment.
Generally, lenders cap the maximum amount of monthly gross income you can use toward the loan’s principal and interest payment to not more than 28% of your gross monthly income (called the “Front-End” or “Housing Expense” ratio). Then, limit your total allowable debt-to-income ratio (called the “Back-End” ratio) to not more than 36%.
You can use a mortgage calculator to a ballpark range of what house you can afford.
Step #3: Taxes, Insurance, and PMI
When planning for a home purchase, it’s important to factor in all of your monthly expenses, including taxes, insurance, and PMI.
This will ensure that you get an accurate estimate of your home-buying budget based on your household annual income.
Don’t forget to include these payments to get a realistic understanding of your monthly budget.
Step #4: Remember your Living Expenses
When considering how much house you can afford based on your $70,000 salary, you must consider your lifestyle and current expenses.
It is important to factor in other monthly expenses such as cell phone and internet bills, utilities, insurance costs, and other bills.
More than likely, you will be approved for a higher mortgage amount than you would feel comfortable with. This is 100% what lenders will do.
They want to provide you with the most you can afford – not what you should afford.
Step #5: Get prequalified
Prequalifying for a mortgage is an important first step to take when estimating how much house you can afford.
It gives you a more precise figure to work with and helps you make a more informed decision based on your personal situation.
Remember that your final amount will vary depending on a number of factors, especially your interest rate, which will be based on your credit score.
Taking the time to research current mortgage rates helps you secure a better mortgage rate, giving you more buying power.
Home Buying by Down Payment
How much house can you afford?
It’s a common question among home buyers — especially first-time home buyers. Use this table to figure out how much house you can reasonably afford given your salary and other monthly obligations.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 4% interest rate.
Annual Income
Downpayment
Monthly Payment
How Much House Can I Afford?
$70,000
$9,552 (3%)
$1,750
$318,412
$70,000
$16,215 (5%)
$1,750
$324,316
$70,000
$34,058 (10%)
$1,750
$340,581
$70,000
$53,573 (15%)
$1,750
$357,152
$70,000
$75,094 (20%)
$1,750
$375,468
$70,000
$98,933 (25%)
$1,750
$395,731
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Mortgage on 70k Salary Based on Monthly Payment and Interest Rate
How much house can you afford on a $70,000 salary?
This largely depends on the current interest rate of the mortgage loan you’re considering. When interest rates are high, people aren’t actively buying as when interest rates are low.
By understanding these factors, you can better gauge how much house you can afford on a $70,000 salary.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 20% downpayment.
Annual Income
Monthly Payment
Interest Rate
How Much House Can I Afford?
$70,000
$1,750
3.25%
$406,796
$70,000
$1,750
3.5%
$396,231
$70,000
$1,750
3.75%
$386,101
$70,000
$1,750
4%
$375,994
$70,000
$1,750
4.5%
$357,554
$70,000
$1,750
5%
$339,954
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Home Affordability Calculator by Debt-to-Income Ratio
Around here at Money Bliss, we always stress that debt will hold you back.
In the case of buying a house, debt increases your DTI ratio.
Here is a glimpse at what monthly debt can cause your debt-to-income (DTI) ratio to increase. Thus, making the house you want to buy to be more difficult.
Annual Income
Monthly Payment
Monthly Debt
How Much House Can I Afford?
$70,000
$2,100
$0
$440,085
$70,000
$1,900
$200
$404,584
$70,000
$1,800
$300
$382,334
$70,000
$1,600
$500
$337,883
$70,000
$1,350
$750
$282,208
$70,000
$1,100
$1000
$226,582
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Increase your Home Buying Budget
Here are a few ways you can increase your home buying budget when buying a house on a $70k annual income.
By following these steps, you can increase your home buying budget and find a more suitable house for your income.
1. Pick a Cheaper Home
Home prices vary significantly in different parts of the country.
Moving out of a major metropolitan area with notoriously high housing costs can help you find more affordable homes.
There are plenty of ways to find a home that is cheaper than you would normally expect.
Look for homes that are for sale in less desirable neighborhoods.
Find homes that are for sale by owner or have not been listed yet.
Check for homes that are for sale outside of your usual price range and haven’t sold as they may drop their price.
Move to a lower cost of living area.
2. Increase Your Down Payment Savings
A larger down payment can reduce the amount you have to finance, which lowers your monthly payment.
Plus help you get a lower interest rate and avoid paying PMI.
Putting down at least 10-20 percent of the home sale price can help boost your home buying power. You can also take advantage of down payment assistance programs in your area.
3. Pay Down Your Existing Debt
Paying down your debts such as credit card debts or auto loans can help raise your maximum home loan.
Paying down your debts can help you qualify for a higher loan amount.
This is because when you have lower amounts of debt, your credit score is higher and your debt-to-income ratio is less. This means you are less likely to be rejected for a home loan.
4. Improve Your Credit Score
A higher credit score can lead to lower rates and more affordable payments.
You can improve your credit score by:
Paying your bills on time
Paying down your credit card balances
Avoiding opening new credit before applying for a mortgage
Disputing any errors on your credit report
This is very true! We had an unfortunate debt that wasn’t ours added to our credit report right before closing. While the debt was an error, it still cost us a higher interest rate and forced us to refinance once the credit report was fixed.
5. Increase Your Income
Asking for a raise, seeking a higher-paid position, or starting a side gig can help you increase the amount of home you can afford.
While you need two years of income from a side gig or your own online business to count as income, the extra cash earned helps you to increase the size of your downpayment. Plus it lowers your debt-to-income ratio with the savings you are setting aside.
What factors should you consider when deciding how much you can afford for a mortgage?
How much house can you afford on your current salary and with your current monthly debts?
This is a question that we are often asked, and it’s one that we love to answer.
We’ll walk you through all the different factors that go into this decision so that you can make an informed choice.
1. Loan amount
The loan amount is a key factor that affects the total cost of a mortgage.
If you have no outstanding debt, a 20% down payment, a high credit score, and a 3.5% interest rate from an FHA loan, you could be able to afford up to $508,000.
However, if you have debt, a smaller down payment, or a lower credit score, the loan amount you can qualify for will be lower.
Similarly, if you choose a 15-year fixed-rate loan, your monthly payments will be higher, but you will end up paying less in interest over the life of the loan than with a 30-year fixed-rate loan.
Ultimately, your loan amount will affect the total cost of your mortgage, so it’s important to consider all the factors when making your decision.
2. Mortgage Interest rate
Mortgage interest rates can have a significant impact on the cost of a mortgage. The higher the interest rate, the more expensive the loan will be.
For example, a difference between a 3% and 4% interest rate on a $300,000 mortgage is more than $150 on the monthly payment.
Remember, in the first few years of a mortgage, the majority of the payment goes toward interest rather than trying to reduce the principal amount.
3. Type of Mortgage
The primary difference between a fixed and variable mortgage is the interest rate and the amount of your payment
Fixed-rate mortgages offer the stability of having the same interest rate for the life of the loan.
Adjustable-rate mortgages (ARMs) come with lower interest rates to start, but those rates can change over the life of the loan. ARMs are often a riskier choice, as if the economy falters, the interest rate can go up.
Fixed-rate loans are typically the most popular choice, as the monthly payment amount is more predictable and easier to budget for. The terms of a fixed-rate loan can range from 10 to 30 years, depending on the lender.
Adjustable-rate mortgages (ARMs) have interest rates that can increase or decrease annually based on an index plus a margin. ARMs are typically more attractive to borrowers who plan on staying in the home for a shorter period of time, as the lower initial interest rate can make the payments more manageable.
The Money Bliss recommendation is to choose a 15-year fixed-rate mortgage.
4. Property value
Property value can have a direct effect on how much you can afford for a mortgage.
As the value of the property increases, so does the amount of money you will need to borrow to purchase it. This, in turn, affects the monthly payments and the amount of interest you will pay over the life of the loan.
This is especially important as many people have been priced out of the market with the rising home prices.
Additionally, higher property values can mean higher taxes, which will add to the amount you need to budget for your mortgage payments.
5. Homeowner insurance
Homeowner’s insurance is a requirement when securing a loan and it can vary depending on the value and location of the home.
Additionally, certain areas that are prone to natural disasters or are located in densely populated areas may have higher premiums than other locations and may require additional insurance like flood insurance.
As a result, lenders typically require that you purchase homeowners insurance in order to secure a loan, and may have specific requirements for the type or amount of coverage that you need to purchase.
Before committing to a mortgage, it is important to consider the cost of homeowner’s insurance and make sure it fits into your budget.
This is something you do not want to skimp on as the cost to replace a home is very expensive.
6. Property taxes
Property taxes are calculated based on the value of a home and the tax rate of the city or county where the property resides.
The higher the property taxes, the more you will have to pay in your monthly mortgage payment.
In states with high property taxes, the property tax bill can be a large sum of the mortgage payment.
It is important to consider these costs when comparing different homes and locations to ensure you can afford the home without stretching your budget too thin.
7. Home repairs and maintenance
It’s important to also consider other factors such as the age of the house, since some properties may require renovation and repairs that can cost more than the house price itself.
Beyond the cost of purchasing a home, homeowners will likely have other expenses related to owning and maintaining the property.
Also, many homeowners prefer to do significant upgrades to the home before moving in, which comes at an additional expense.
These can include ordinary expenses such as painting, taking care of a lawn, fixing appliances, and cleaning living spaces, which can add up.
Additionally, it’s advisable to buy a home that falls in the middle of your price range to ensure you have some extra money for unexpected costs, such as repairs and maintenance.
8. HOA or Homeowners Association Maintenance
This is often an overlooked factor by many new homebuyers, but extremely important as some HOAs add $500-800 per month to the total housing budget.
The purpose of a homeowners association (HOA) is to establish a set of rules and regulations for residents to follow as well as maintain the community or building.
These fees are typically used to pay for maintenance, amenities, landscaping, and concierge services.
HOA fees are used to finance community upkeep, including landscaping and joint space development, and can range from $100 to over $1,000 per month, depending on the amenities in the association.
9. Utility bills
When switching from renting to buying a home, you will have to factor in the costs of your monthly utility bills such as electricity, natural gas, water, garbage and recycling, cable TV, internet, and cell phone when calculating how much mortgage you can afford.
In addition, the larger the home, the higher the costs to heat and cool your new home.
Make sure to ask your realtor for previous utility bills on the property you are interested in.
10. Private Mortgage Insurance
The purpose of private mortgage insurance (PMI) is to protect the lender in the event of foreclosure. It is typically required when a borrower is unable to make a 20% down payment on a home purchase.
PMI allows borrowers to purchase a home with less upfront capital, but also comes with additional monthly costs that are added to the mortgage payment. These fees range from 0.5% to 2.5% of the loan’s value annually and are based on the amount of money put down.
PMI can also be canceled or refinanced once the borrower has achieved 20% equity in the home or when the outstanding loan amount reaches 80% of the home’s purchase price.
11. Moving costs
Moving is expensive, but also a pain to do. So, consider the moving costs associated with relocating from one location to another.
Typically fees for packing, transportation, and possibly storage, and can vary depending on the size of the move and the distance the move needs to cover.
Also, consider if by buying a home, you will stop having moving costs associated with moving from rental to rental.
FAQ
When determining how much house you can afford, it’s important to consider several factors.
These include your income, existing debts, interest rates, credit history, credit score, monthly debt, monthly expenses, utilities, groceries, down payment, loan options (such as FHA or VA loans), and location (which affects the interest rate and property tax). Also, think about the costs of maintaining or renovating a home.
Additionally, you should also evaluate your own budget and assess whether now is the right time to purchase a home. Taking all of these factors into account can help you set the maximum limit on what you can realistically afford.
A mortgage calculator can help you determine your home affordability by providing an estimate of the home price you can afford based on your income, debt profile, and down payment.
It works by inputting your annual income and estimated mortgage rate, which then calculates the maximum amount of money you’re able to spend on a house and the expected monthly payment.
Additionally, different methods are available to factor in your debt-to-income ratio or your proposed housing budget, allowing you to get a more accurate estimate of your home buying budget.
The debt-to-income ratio or DTI is used by lenders to assess a borrower’s ability to make mortgage payments.
This ratio is calculated by taking the total of all of a borrower’s monthly recurring debts (including mortgage payments) and dividing it by the borrower’s monthly pre-tax household income.
A high DTI ratio indicates that the borrower’s debt is high relative to income, and could reduce the amount of loan they are qualified to receive.
Generally, lenders prefer a DTI of 36% or less, which allows borrowers to qualify for better interest rates on their mortgages.
To calculate their DTI, borrowers should include debt such as credit card payments, car loans, student and other loans, along with housing expenses. It is important to note that the DTI does not include other monthly expenses such as groceries, gas, or current rent payments.
Closing costs can have an enormous impact on how much home you’re able to afford.
From application fees and down payments to attorney costs and credit report fees, these costs can add up quickly and affect your overall budget. Unfortunately, most of these closing costs are non-negotiable, but you can ask the seller to pay them.
When buying a house, it is important to research the different mortgage options available to you.
You can typically choose between a conventional loan that is guaranteed by a private lender or banking institution, or a government-backed loan. Depending on your monthly payment and down payment availability, you may be able to select between a 15-year or a 30-year loan.
A conventional loan typically offers better interest rates and payment flexibility.
While a government-backed loan may be more lenient with its credit and down payment requirements.
For veterans or first-time home buyers, there may be special mortgage options available to them.
Ultimately, it is important to talk to a lender to see which loan type is best for your personal circumstances.
When it comes to saving for a down payment, it’s important to understand how much you’ll need and how much it will affect your budget.
Generally, you’ll need 20% of the cost of the home for a conventional mortgage and 25% for an investment property. When you put down more money, it gives you more buying power and may help you negotiate a lower interest rate.
For example, if you’re buying a $300,000 house, you’ll need a down payment of $60,000 for a conventional mortgage. On the other hand, if you put down 10%, you can still afford a $395,557 house. But, you will have to pay for private mortgage insurance.
In addition, there are other ways to help you cover these upfront costs. You can look into down payment assistance programs.
Ultimately, the size of your down payment will depend on your budget and financial goals. You should never deplete your savings account just to make a larger down payment. It’s important to factor in emergency funds and other expenses when deciding on the best option.
Eligibility requirements for loan lenders can vary, but in general, lenders are looking for borrowers with a good credit score, a reliable income, and a history of employment or income stability.
For most loan types, borrowers will need to show a history of two consecutive years of employment in order to qualify. However, lenders may be more flexible if the borrower is just beginning their career or if they are self-employed and do not have W2 forms and official pay stubs.
Income verification also needs to be done “on paper”, meaning that cash tips that do not appear on pay stubs or W2s can not be used as income. The lender will look at the household’s average pre-tax income over a two-year period before determining the amount that can be borrowed.
In order to make sure that the borrower is financially secure, lenders will also pull the borrower’s credit report and base their pre-approval on the credit score and debt-to-income ratio. Employment verification may also be done.
For certain government-backed loan types, such as FHA, VA, and USDA loans, there may be additional or different requirements for eligibility. For instance, for FHA loans, the borrower must intend to use the home as a primary residence and live in it within two months after closing. VA loans are more lenient, and may not require a down payment.
The qualifications for VA loans vary based on the period and amount of time the borrower has served. There are many ways to qualify, whether the borrower is a veteran, active duty service member, reservist, or member of the National Guard. For more information on eligibility requirements for VA loans, borrowers can visit the U.S. Department of Veteran Affairs.
A good credit score will mean you have access to more lending options, better interest rates, and more purchasing power.
On the other hand, a poor credit score could mean you are approved for a loan, but at a higher interest rate and with a smaller house.
This means your budget will be more limited and you may not be able to buy as much home as you had hoped for. Additionally, lenders will also look at other factors, such as your debt-to-income ratio, employment history, and loan term, in order to determine your overall affordability.
What House Can I Afford on 70k a year?
As a borrower, you need to consider the interest rate, down payment, credit score, debt-to-income ratio, employment history, and loan term when determining how much house you can afford.
A higher credit score can often mean a lower interest rate, and a larger down payment can bring down the monthly payments.
All of these factors can have an effect on the amount of money you can borrow and the home you can afford.
Ultimately, understanding the impact of different factors can help borrowers make the best decisions when it comes to getting a mortgage.
Now that you know how much house you can afford, it’s time to start saving for a down payment.
The sooner you start saving, the sooner you’ll be able to move into your dream home. But you may have to wait if you are considering a mansion.
By taking into consideration this guide into account, you can make a more informed decision about the cost of a mortgage for your new home.
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Going on an African safari can be the chance of a lifetime to see some of the world’s most iconic wildlife up close, experience Earth’s extraordinary untouched corners, learn about new cultures and reconnect with nature.
A safari trip can also be the opportunity to make sustainable, responsible choices about how and where you travel, and to maximize the impact your travel spending has on conservation, community and environmental programs in various destinations.
Safaris are about more than luxury tents and thrilling game drives at Wilderness’ Mombo Camp. ERIC ROSEN/THE POINTS GUY
Many travelers decide where to go on safari in Africa based on their schedules and the seasonality in individual regions — both in terms of the weather and the animals they will most likely see. Others focus on sighting specific species, resulting in visits to places like Rwanda or Uganda to trek and see mountain gorillas or trips to destinations like Kenya to observe the endangered pachyderms at a rhino sanctuary.
Sustainability can be another excellent factor in determining where you should go on safari, though. Many of the most reputable safari outfitters and camps put sustainability front and center in their operations, combining environmental practices, conservation commitments and community outreach to create the ultimate holistic travel experience.
Doing a little research on the regions you are considering for a safari and the specific tour operators and lodges in your chosen location can make a huge difference in the effect your tourism dollars have on things like wildlife preservation campaigns, economic development in local villages and minimizing the overall environmental footprint of your individual journey.
Conservation is core to the missions of the best safari companies. ERIC ROSEN/THE POINTS GUY
Unlike some other forms of travel that let you book certain components — flights, hotels, cruises, etc. — a la carte by yourself, many safari companies require you to book the bulk of your trip (if not all of it) through them or a partner agency or operator. Because of this, you can ask these representatives about their sustainability track records and even specific programs while planning your trip. Any reliable operator should have materials on hand to send you to help you make your decision.
Here are some of the factors you can investigate to determine just how sustainable your safari can be, plus some of the safari companies undertaking meaningful measures in this sphere by weaving principles of environmental consciousness, wildlife protection and community development into their core ethos and operations.
Eco-sensitive camps
For North American and European travelers, going on an African safari typically necessitates carbon-intensive long-haul flights and sometimes additional bush flights to reach remote regions. In order to limit the rest of your carbon footprint while on safari, look into the eco-credentials of the camps or outfitters you are considering.
Many safari camps, for instance, now run mostly or even entirely on solar power. At both andBeyond Nxabega and andBeyond Xaranna in Botswana’s Okavango Delta, 80% of the camps’ total electricity consumption is supplied by solar photovoltaic plants and Tesla Powerpack battery energy storage systems.
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The solar array at andBeyond Xaranna in Botswana. ERIC ROSEN/THE POINTS GUY
Nearby, Wilderness’ Chitabe and Mombo camps run on 100% solar (as do 17 of the company’s other camps), and Wilderness has plans to retrofit and invest in further solar power for all new camps and camp refurbishments. Not only is that great for the environment, but it’s also the best means of ensuring an uninterrupted power supply to guests in an area with little other infrastructure.
Cheetah Plains, an exclusive-use safari villa in South Africa’s Sabi Sand Nature Reserve, now uses Toyota Land Cruiser electric safari vehicles with Tesla batteries that are charged via solar power to whisk guests across the reserve’s thousands of acres, creating a zero-emission game drive.
In Tanzania’s Ruaha National Park, Usangu Expedition Camp is steering a different path, developing safari vehicles that run on ethanol, which is derived from molasses produced in the southern part of the country, instead of diesel. The staff even calls the vehicles “Gongos,” a type of traditional Tanzanian gin, since the ethanol looks and smells like the spirit.
Usangu Expedition Camp has created safari vehicles that run on ethanol. USANGU EXPEDITION CAMP
But alternative power and fuel are just the start. For its part, Chitabe recycled the wood from an old set of raised walkways to create a chic bar and lounge area for its current guests. What’s old is new again … and looking better than ever.
Many recently built and forthcoming safari camps are being constructed using both traditional materials and techniques, such as thatching and weaving completed by local artisans, and up-to-the-minute technologies like 3D printing and innovative recycling methods utilizing salvaged materials to limit their physical footprint.
The bar area at Wilderness’ Chitabe camp was constructed from reclaimed wood. ERIC ROSEN/THE POINTS GUY
Time + Tide Chinzombo in Zambia’s South Luangwa National Park was designed to be completely dismantled if necessary so as to leave a minimal trace on the landscape, and Wilderness is currently constructing a new tented camp in Botswana’s Mbabe concession called Mokete that can be completely disassembled as if it had never been there.
Simple measures can have a large impact as well. Camps like Wilderness’ DumaTau and sister Little DumaTau in Botswana’s riverine Linyanti region provide guests with Healing Earth’s all-natural, biodegradable bath and body products during their stay to minimize harmful runoff from the camp’s water management system.
Biodegradable Healing Earth products at Mombo Camp. ERIC ROSEN/THE POINTS GUY
For its part, the Elewana Collection of lodges in Kenya and Tanzania launched its “Ban the bottle” initiative in 2018, giving guests reusable water bottles that they can fill up at stations in the camps. The outfitter estimates that doing so in just six of its Kenyan lodges saves around 160,000 plastic bottles from going into landfills each year.
The view from the deck at Elewana Collection’s Sand River Masai Mara camp in Kenya. ELEWANA COLLECTION
Elewana also dropped plastic straws the following year. Even more fun for Elewana guests is the opportunity to toss out seed balls (little nutrient packs that encase seeds of Indigenous plants) during a walk or game drive somewhere along their journey so they’re doing their little part to help revegetate the wild places they are enjoying.
Wildlife conservation
It seems obvious, but without wildlife, there wouldn’t be safari camps. For that reason, many safari companies actively support and participate in wildlife conservation efforts, some of which are specific to individual regions while others are more widespread.
One of the luxurious cabins at andBeyond Tengile River Lodge. ANDBEYOND
Guests at andBeyond’s Tengile River Lodge and Kirkman’s Kamp, which are near each other in South Africa’s Sabi Sand Nature Reserve, can certainly get a thrill sighting the area’s thriving lion and leopard populations on game drives. However, guests may not know that their guides are also logging those sightings and providing the information to Panthera, an organization dedicated to tracking and protecting big cat populations around the world.
A lion surveys his domain near andBeyond Nxabega. ERIC ROSEN/THE POINTS GUY
Various other andBeyond camps, including Phinda Private Game Reserve and Ngala Safari Lodge, help fund rhinoceros anti-poaching units. Guests at Ngala can even observe researchers tagging rhinos’ ears with microchips to help monitor the highly endangered animals. These are individual initiatives, but they are all part of andBeyond’s overarching commitment to conservation and community projects that it supports through its Africa Foundation.
Likewise, Elewana Collection has a charitable arm called The Land & Life Foundation that underwrites various efforts such as the Wildlife Warrior Program, which has clubs in primary schools throughout Kenya and Tanzania. The children who join can take part in activities to learn more about environmental and animal conservation. The club currently counts around 2,200 members and even provides primary and secondary educational scholarships to many of them.
Many safari companies, including andBeyond, Elewana Collection and Singita, support rhino anti-poaching and conservation efforts. ERIC ROSEN/THE POINTS GUY
High-end safari company Singita, which has lodges in South Africa, Zimbabwe, Tanzania and Rwanda, established its Singita Conservation Foundation decades ago with a 100-year plan to protect Africa’s wildlife and wilderness for future generations. These days, it partners with other nonprofit trusts and funds on a plethora of projects, including rhino reintroduction and protection in the Malilangwe Wildlife Reserve in Zimbabwe, land management and anti-poaching efforts in South Africa’s Kruger National Park and combating invasive vegetation as well as helping in the recovery of megafauna like elephants and buffaloes in Tanzania’s Serengeti National Park.
Community improvement projects
Without buy-in from local communities, conservation efforts would go nowhere. Those who live in or near game reserves and national parks need to benefit from the tourism revenue that these natural wonders generate. That’s why many safari companies’ conservation drives include community-based components.
One telltale sign that a safari company is supporting the communities where it operates in a meaningful way is simply through employment. Specifically, whether its camps employ people from the villages or regions that surround them in high proportions. Not only is this a boon for economic stability and growth in places that might otherwise be destitute, but it ensures that tourism dollars stay in the area and benefit the people who live there.
Come for the gorillas, stay for the community projects at Volcanoes Safaris’ Virunga Lodge in Rwanda. BRIAN KELLY/THE POINTS GUY
Many safari companies’ commitments to communities go beyond employment, though. Praveen Moman, who grew up in Uganda before his family had to emigrate to the United Kingdom, founded Volcanoes Safaris in 1997, pioneering the high-end safari experience in both Uganda and Rwanda.
While the Volcanoes Safaris’ lodges have become mainstays for both gorilla and chimpanzee trekking, it is perhaps the company’s nonprofit organization, the Volcanoes Safaris Partnership Trust, that will be its most lasting legacy. The trust supports preservation efforts for the great apes of the region, but it also underwrites innovative, community-based programs that guests are encouraged to explore during their stays at the lodges.
Volcanoes Safaris has donated more than 500 sheep to local families around Virunga Lodge. VOLCANOES SAFARIS
“When I set up Volcanoes Safaris in 1997 in southern Uganda and then in 2000 in neighboring Rwanda, the area was just coming out of the Great Lakes conflict,” Moman told TPG via email. “This experience made me realize how important it was to not only focus on the lodges we were building and the gorilla and chimpanzee experience that we wanted our guests to enjoy, but also that local people need to get tangible economic benefits from conservation and ecotourism for them to support the great apes.”
“Therefore,” he continued, “I felt that it was important that the lodges should be connected to the communities around them. In each lodge, we have set up different community projects.”
At Volcanoes Safaris’ Virunga Lodge in Rwanda, for instance, guests can take a guided afternoon walk through several villages near Lake Bulera to see firsthand the impact of projects such as the “One sheep per family” program, which provides one sheep to each family in three nearby villages (more than 500 so far), thereby supplying them with sources of meat and milk along with natural fertilizer for their sustenance crops.
The lodge has also donated 250-plus water tanks to families in these villages, which help in the catchment of the region’s abundant rainfall and ensure that there is a steady supply of water for drinking and crop irrigation during the dry season.
Volcanoes Safaris has also donated 250-plus water tanks to provide local villages with clean drinking water around Virunga Lodge. VOLCANOES SAFARIS
In Livingstone, Zambia, near Victoria Falls, Tongabezi, which is an elegant lodge along the banks of a tranquil stretch of the Zambezi River, has underwritten the Tongabezi Trust School (also known as Tujatane) since 1996, providing education and meals to children who live within walking distance of the academy. There are currently nearly 300 children between the ages of 3 and 17 enrolled, all of whom can take advantage of the classes and curriculum, as well as the music, sports, arts and computer facilities. What’s more, the school provides funding to send some of the children on to secondary schools and even universities, ensuring a new generation of leaders and professionals with a commitment to the local community.
Children who have benefited from Tongabezi’s support of Tujatane. TONGABEZI TRUST SCHOOL/FACEBOOK
In Botswana, both andBeyond Nxabega and andBeyond Xaranna share several community-based projects, including the drilling of water boreholes for the communities of Gogomaga and Tsutsubega so that their inhabitants have steady sources of usable water; and funding a school in the rural farming village of Sexaxa near Maun (where the area’s main airport is) so children no longer need to walk three hours, some of it through dangerous terrain, to attend the nearest school.
Longer-term development
Ongoing outreach and individual community projects aside, several safari companies have established philanthropic organizations or arms with a broader purview of economic development and social services not just in the areas where they operate, but in entire countries or regions.
Micato Safaris is one of the best-known luxury safari operators, partnering with premier lodges from multiple companies in Africa and Asia to create bespoke itineraries for its guests. However, it also underwrites AmericaShare, which was founded by a Micato Safaris employee named Lorna Macleod more than 35 years ago to support both community development and access to education in Mukuru, one the largest informal settlements in Nairobi, Kenya.
Today, the philanthropy operates the Harambee Community Centre, which has library and computer facilities as well as recreational grounds, in Mukuru itself. Residents can come for a quiet place to study or work, look for employment and take advantage of other services. AmericaShare also supplies fresh, drinkable water in the area via multiple distribution points.
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Students hard at work at AmericaShare’s Harambee Community Centre. ERIC ROSEN/THE POINTS GUY
Guests who go on safari with Micato in Kenya get to visit the community center to learn more about its efforts and meet students who have benefited from AmericaShare’s various educational undertakings during their stay. Those include supplying school uniforms to local children, sponsoring scholarships to primary and secondary schools, and sending some of the most vulnerable children to private boarding schools around Nairobi. In fact, for every safari the company sells, Micato provides the funds to send a child to primary school.
Micato also supports other efforts like Huru International, which supplies sanitary kits and reproductive health education materials to young women (more than 210,000 to date) throughout East Africa who might otherwise have to miss school or work due to the lack of reproductive health services in rural communities. By empowering women to take their health into their own hands, Huru helps them support their families and communities (not to mention cultivating their own careers) in ways that would not otherwise be possible.
Workers make female reproductive health kits at Huru International. ERIC ROSEN/THE POINTS GUY
For its part, one of the most targeted yet impactful ways Wilderness carries out its conservation mission beyond the day-to-day and lodge-specific measures it takes is through its Children in the Wilderness program, which was founded in 2001.
The program aims to cultivate new generations of homegrown conservation leaders in Africa’s rural communities by hosting student clubs at schools with activities that focus on environmental sustainability and wildlife education. Children in the Wilderness even brings kids to one of its camps on a yearly basis (7,800 to date) so they can learn firsthand about the importance of wildlife conservation. The program provides scholarships to high-achieving students, and some even return to become guides with Wilderness.
On a recent trip to Botswana, my guide at Little DumaTau, Segopotso Oja (See for short), was a former participant of Children in the Wilderness. “I was born and raised in a small village called Eretsha, located in the eastern Okavango Panhandle,” Oja told me later by email when I contacted him after my trip to ask more about his experience with Children in the Wilderness.
Wilderness guide Segopotso Oja participated in Children in the Wilderness on his path to becoming a safari guide. WILDERNESS
“Wilderness works closely with the community in this area, and when I was 10 years old, I was given the opportunity to join a Children in the Wilderness Eco-Camp,” Oja continued. “Here I grew to learn about and love the wild, and recognize the importance of protecting our wilderness, and this experience inspired me to pursue a career as a guide.”
Spending time in the bush helps combat some of the negative portrayals of wild animals that village children are typically taught, Oja told me. “Once they explore the wilderness, this opens their minds and changes their way of thinking to realize the value of conservation and that there are other career opportunities available to them in the conservation and hospitality space.”
Talking over the day’s sightings at Wilderness’ Little DumaTau. ERIC ROSEN/THE POINTS GUY
That’s the path that Oja himself took. He has since worked as a guide not only at Little DumaTau, but also two other Wilderness camps, Vumbura Plains and Mombo.
Oja also views his continuing role as an ambassador for Children in the Wilderness as crucial to the work he does and the future of conservation. “It gives me a chance to meet with youngsters when we host them in our camps,” Oja said, “and pass over the love of being a conservationist to the younger generation.”
Minimize your footprint and maximize your impact
Aside from picking a safari company with sustainability efforts you want to support, there are a few things you can do as a traveler to make your safari adventure more sustainable.
Long flights produce a lot of carbon, so you could consider a carbon offsetting scheme to reduce the footprint from your journey to your safari destination.
Don’t overpack since bush flights on small planes mean your luggage will be restricted anyway. What’s more, many safari camps provide free daily laundry, so you don’t have to bring too many outfits along. Plus, by limiting your luggage, you’ll reduce the amount of fuel burned on the planes carrying you to your various camps.
Among those clothes, make sure you bring some made from fabric with sun protection factor. That will reduce the amount of plastic-packaged sunblock you need to bring along. Opt for mineral-based sunscreens (look for those labeled as “reef-safe”) rather than conventional ones since the latter have chemicals that might be harmful to the environment as well as your own body chemistry, according to an increasing body of scientific evidence.
You might also want to leave your usual shampoo and conditioner at home since safari camps tend to provide eco-friendly, biodegradable products that are easier to manage waste-wise in the fragile ecosystems where they operate.
Finally, while safaris tend to be expensive, think about whether you can factor in a charitable donation to your budget. After all, if you’ve done your homework and picked a company with sustainability efforts you support, you might want to do just a little bit more good during your trip by making an unrestricted donation to the measures the group has underway.