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Good morning Dinks.  Nick and I have been in our new apartment for almost a month and although we still have some furniture to buy and some boxes to unpack we are slowly but surely getting settled into our new space.

I have advocated many times here on Dinks Finance that I am not a fan of debt because I will be forever scared by my past money troubles.  Now at 34 years old I’m in $5000 of debt again but surprisingly I’m not freaking out.  I did have a pain in my gut just before I signed for the financing but now I’m totally OK with it.  Why? Because this time it’s different.

This time I have a plan

We decided to finance our new furniture with two different companies and pay for our other apartment must haves with the savings we’ve been accumulating since May.  I’m not freaking out about my debt this time because there is a definitive start and stop date.

This debt is not going to be an ongoing thing.  I set up payments on both furniture accounts to have the debt completely paid off by April 30, 2015.  It could have been a lot faster but we have Nick’s birthday and Christmas during that time so we will need some extra cash to celebrate.  I didn’t want to spend all my income paying off debt then using credit to live until my next paycheck – that’s a mistake you only make once.

The debt is for a good reason

Our old apartment was less than shall we say perfect.  We moved there in 2008 after the market crash and we didn’t buy any new furniture at the time due to our limited budget.  So this time when we moved we wanted to do it right with a bigger apartment in a better location and with all new furniture.

With our recent move our lifestyle got a whole lot better.  Our living space more than doubled; we knew we would have to buy new furniture as well as functional items for our new apartment such as lamps and desks etc.  We also have new appliances in our new apartment so we had to buy supplies for the washer and dryer as well as the dishwasher.  It doesn’t make sense to use the good stuff when you share laundry with 21 other floors of tenants, but now that we have our own laundry in our new apartment we can splurge a bit for laundry supplies.

This time I have something to show for my debt

This time our debt is actually for something – new furniture.  This time I have something to show for my debt – a gorgeous new apartment.  My biggest debt mistake in the past was living off credit to finance my lifestyle.  It was continuous spending on clothes and vacations as well as at restaurants and concerts.  If I wanted something I would whip out my credit card and pay for it.  Not this time.  This time I have fixed financing through a store, no credit cards and no revolving credit – unless I want to buy something else at that same store.  This time my debt is controlled and that’s why I feel good about it.

Photo from Flickr

 

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Good morning Dinks.  As you know buying a car was my biggest financial mistake and although some days I do really miss the convenience of hopping in my ride I will probably never buy a car again.   Actually that’s not necessarily true I will never buy a new car again unless I really need it.  As my current living situation is Nick and I don’t need a car.  However if some day we buy a house and move to the suburbs we may need a car.  I’m not saying never, I’m just saying not now.  But what can we do if we need a car and don’t want the monthly payments?  Rent a car temporarily.  So that’s exactly what we did.

Buying a car is expensive

With our move on October 1st Nick and I needed a car to run errands and set up our new apartment.  It was convenient having the car to help buy things for our new apartment.  However having a car for the last two weeks also brought back all the things I hated about owning a car over.

Saturday night as we were driving home from our last day of shopping (after seeing the new Dracula movie) Nick said something to me that made me realize we made the right decision when we sold the car.   He said that owning a car comes with so much more expenses than just the car payment.  When you have a car you can drive to big box stores such as Wal-Mart, Target and Home Depot – I went to Home Depot for the first time in my life last weekend and all I can say is WOW.

When you have to carry your groceries and shopping bags you can only spend as much as you can carry.   However when you have a ton of space to load bags into the back of your SUV you can end up spending hundreds of dollars in just one shopping trip.

Buying a car is convenient

I’m not going to lie, there are days that I do miss having a car.  However the majority of the time I’m just glad to be saving the monthly payment.  That Honda Civic was the first thing I ever truly bought and selling it was a personal defeat, but at the end of the day I just couldn’t justify the monthly expense.

If you are thinking of buying a car – don’t do it.  If you’re thinking about selling your car – do it.  You’ll miss it at the beginning but you’ll get along just fine without it.  You’ll walk more which is good for your health and you’ll spend less which is good for your wallet.

4 reasons I won’t buy another car:

The expensive payments.  Oh I don’t miss the payments.  I think we can all agree that $800 a month could be better spent.

Looking for parking.  There is nothing more that I hate than driving around in circles looking for parking.  It’s a waste of time, gas and it runs my patience very thin.

It’s killing the environment.  Gas consumption and car exhaust pollution are extremely bad for the environment.  I for one can live with walking.

The gas game.  I hated paying for gas and watching the prices drop the next day.  Is there really a right time to gas up?

 

Photo from Flickr

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Reverse mortgages aren’t exactly new, but they’re sometimes marketed as though they’re the greatest thing since sliced bread. At the same time, critics of reverse mortgages deride them as being questionable financial products that prey on the ignorance of senior citizens. The truth is that these financial products have the potential to help millions of people – you included. But, you can also get into financial hot water if you’re not careful, so here’s how to assess the many offerings out there to find the best reverse mortgage package for you.

How a Reverse Mortgage Works

A reverse mortgage is almost exactly what it sounds like. Instead of paying the bank a monthly payment, the bank pays you. Now, in the fine print, you’ll notice that you’re actually taking out a loan against the home. Technically, you do owe the bank money, because what’s happening is that the bank is paying you money based on the equity, or value of the home.

You get to enjoy the benefit of that equity as long as you live in the home. If you move or die, the loan becomes due. Households with a husband and wife are typically offered a second-to-die provision where the second person who is left in the home must repay the loan.

Reverse mortgages also require that your home be your primary residence, that you own the home outright, or that you have considerable equity in the house.

Why would anyone agree to such an arrangement? Because reverse mortgages give you money every month, almost like an annuity. They can also be structured as a “pool of money” that you can tap into only when you need it. Additionally, some banks offer a lump-sum distribution.

Interest is charged on the loan that gets repaid when the home is sold. Also, normal closing costs and fees are charged at origination.

What to Avoid

While a reverse mortgage isn’t a scam, some third-party mortgage brokers use unethical sales practices. You should inquire through your own mortgage lender and consult with a reverse mortgage expert. For example, some lenders and salespeople use high-pressure sales tactics to try to get you to purchase a reverse mortgage product. Some salespeople may even try to bypass the normal third-party consultation process, even though this is illegal.

Sometimes, a lender or mortgage broker will misrepresent a reverse mortgage in one of several ways, like what will happen when you take out a loan. Some brokers may tell you that it’s fine if you take out a reverse mortgage, and then make another home your principal residence, which is untrue.

Some lenders or brokers will say that you can never lose your home, but this again is untrue. You can lose your home if you lie on your mortgage application, if you move out of the home, or if you sell or transfer the title – even if it’s only to a family member.

Always get a reverse mortgage guide from your lender, or the Consumer Financial Protection Bureau.

Why You Should Get a Reverse Mortgage

There are many times when a reverse mortgage is appropriate. For example, when you have significant equity in your home, and you are short on retirement savings, a reverse mortgage can help make up the shortfall.

Reverse mortgages can also help when you’ve annuitized all of your retirement savings and you don’t have a lump sum for medical bills or other emergencies. Finally, a reverse mortgage can be a great way to create a backup emergency savings to supplement your pension, 401(k), and other personal savings, or if part of your financial plan includes selling your home when you pass away.

You or your family can even use a life insurance policy to repay the loan after you die.

When a Reverse Mortgage is Not Appropriate

Reverse mortgages aren’t for everyone. If you don’t have a lot of equity in the house, or plan to sell soon, it’s not going to be of much benefit to you.

If you want to make sure the home stays in the family, note that reverse mortgages come with liability issues. What happens to the home when you move out or die? You may want to include your spouse or partner as the co-borrower.

If you take out a reverse mortgage and fail to stipulate your partner as the co-borrower, they will have to either repay the loan, or move out when you die. If your partner is listed as the co-borrower, you and your partner will both be able to stay in your house after one of you passes away.

Most reverse mortgage lenders will tell you that the bank loan needs to be repaid. When you die, your heir will need to pay the full amount back in order to stay in the home. If they can’t afford to pay, the bank may repossess the home and sell it at auction. Reverse mortgages can work wonders if you make sure you understand all the requirements before signing the dotted line.

Kam Brar, registered mortgage broker, and owner of Auxillium Mortgages, specializes in reverse mortgage options for Canadian homeowners. Kam has been involved in the mortgage industry as a respected professional for over 18 years.

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Cutting Dental Costs: The Tragic Price of Skimping on Orthodontics

October 21, 2014

Most of us have to exercise varying degrees of fiscal caution and save money where possible, but there are certain items of expenditure where it could definitely be a false economy to try and pay as little as possible. If you need your teeth straightening for example, should you use a dentist or an orthodontist […]

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How much is your living worth?

October 20, 2014

Good morning Dinks.  Let me ask you a question, are you overpaying for your lifestyle?  I don’t mean if you’re living beyond your means or if you are racking up thousands of dollars in debt.  I’m asking if your currently living situation could be done on less. What does someone with money look like? Why […]

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Weekly roundup: Cars, cards and being in the middle

October 17, 2014

Good morning Dinks and Happy Friday.  It’s been 17 days since we moved into our new apartment and although there are still some boxes we need to unpack we are definitely getting settled in.  This weekend we are going to walk around and get to know our new neighborhood.  For the first time in three […]

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Do I look poor?

October 16, 2014

Good morning Dinks.  This past week one of my colleagues offered to buy me coffee during our break.  Normally I enjoy accepting free Starbucks but there was something about the way he offered that really offended me.  I asked him why he always has the need to pay for things when he’s around me, even […]

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The unknown makes me uneasy

October 15, 2014

Good morning Dinks.  As you know in a mere three months my company will be out of business because we were sold to one of our competitors.  The new company promised to keep as many jobs as they can and their plan is to keep them in our city.  However at the same time they […]

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Increase Your Chances Of Having Your PPI Claim Approved

October 15, 2014

If you have ever opened a credit card or purchased something on credit, chances are you were sold payment protection insurance. This insurance was advertised as a way for customers to avoid becoming delinquent on their accounts in the event that something adverse happened, such as an extended illness or the loss of a job. […]

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