Inspection vs. Appraisal for Home Buyers

In this article:

  • What is the difference between an appraisal and an inspection?
  • What happens during an appraisal?
  • What if the appraisal comes in low?
  • What to expect from a home inspection
  • How are home inspections and appraisals similar?

Inspections and appraisals are both important parts of the home buying process, and buyers should do both to protect their financial interest in a home – and give themselves peace of mind that they’re making a smart purchase. Inspections and appraisals serve different functions, but both give you the insights you need to avoid large financial missteps.

What is the difference between an appraisal and an inspection?

The main difference between an appraisal and an inspection is that an appraisal deals with the value of a home, while an inspection deals with the condition of the home.

Appraisal: An appraisal is a walk-through and a general assessment of a home, analyzed with the help of nearby comparable sales. The goal of an appraisal is to determine the fair market value of a property. It is conducted by a licensed professional appraiser. While an appraiser will visit a home in person, the majority of the work will be done in their office, as they compare the home’s features, location, and finishes with other comparable recent sales in the area. An appraisal usually costs around $400, depending on where you live and the size of your home.

Inspection: An inspection is a deeper dive into the condition of the specific home. A licensed home inspector will spend multiple hours doing a comprehensive review of the home’s condition, both visually and by testing functionality of major systems. After completing the inspection, they will provide recommendations to the buyer on items in the home that should be repaired or replaced before closing. A home inspection costs between $250 and $700, depending on where you live and the size of your home.

Do lenders require appraisals?

Yes, most lenders do require appraisals in order to approve financing. Lenders want to protect their investment by ensuring they’re not financing a loan for more than the property is worth.

Do lenders require home inspections?

Lenders providing conventional financing do not usually require home inspections, but they are still strongly recommended. FHA or VA loans usually do require inspections.

Do I need an appraisal and inspection when buying a home with cash?

Cash buyers often opt to do an appraisal and inspection, even though they’re not required. Some cash buyers, particularly home investors, may waive the inspection or appraisal if the home is being sold “as is” or if they are competing with other offers and want to close quickly.

Regardless of how you’re paying, an appraisal can give peace of mind that you’re not overpaying for a property, and an inspection can uncover potentially costly issues and necessary repairs.

What happens during an appraisal?

During an appraisal, a licensed appraiser evaluates the home you want to buy in person and gives you an estimate on how much it’s worth. Typically, the appraiser is chosen by the lender but paid for by the buyer as part of the closing costs.

Appraisals cost around $400, but can cost a bit more or a bit less depending on your home size and location. The appointment usually takes about an hour, and then the appraiser will complete the report back at their office.

1. Assessment of property

The appraiser will walk through the home, taking note of its condition, finishes and location – consider it somewhat like a light inspection.

2. Review of comparable sales

The appraiser will use the findings of their walk-through to identify similar homes that have sold recently in the neighborhood. This will help them decide upon a fair market value.

3. Final report

The appraiser will deliver a physical report on the fair market value of the home, including photos and descriptions of comparable sales. In most cases it’s just the lender and the buyer who will receive copies of the report. The seller may request a copy of the appraisal report, but in most cases you are not required to share it.

Ideally, the appraisal will come back higher than the agreed-upon sales price. That indicates that you’re paying less than the fair market value and your lender will approve the loan.

What if the appraisal comes in low?

Appraisals that come in below the agreed-upon sale price are commonly referred to as low appraisals. When an appraisal comes in low it can jeopardize your ability to acquire the loan you were pre-approved to get, causing a headache for buyers.

Low appraisals can happen for a couple reasons:

  • Bidding wars with multiple buyers drive the price up beyond market value.
  • There’s a lack of relevant comparables to use as a basis for the home value.
  • You’re buying in a high season (like late spring) and the only available comparables are from other points in the year.
  • The appraiser is inexperienced.

Buyers who are using financing have a few options to work around a low appraisal:

  1. Contest the appraisal: You can contact your lender and point out any glaring issues or errors in the appraisal report, then request a new appraisal.
  2. Pay the difference: To make up the difference between the amount your lender is willing to finance and the offer price, you can pay cash or ask the lender if you can restructure your financing.
  3. Ask the seller for a price reduction: If the appraisal was accurate and the home is indeed worth less than what you’re offering, you may not want to overpay. To avoid having to back out completely, consider asking the seller for a price reduction, using the appraisal report as proof the home is overpriced.

What to expect from a home inspection

Scheduling a home inspection is one of the first tasks you’ll want to do after the contract is signed between you and the seller. Although, in some low-inventory markets, buyers sometimes hire an inspector prior to making an offer. It’s up to you to pick a home inspector you trust, and most people ask their agent for a recommendation, get a referral from friends or family members or search online reviews.

Since the goal of a home inspection is to get a comprehensive report of the condition of the home you’re buying, a home inspection takes between three and four hours, sometimes more. Unlike an appraiser who does a visual check of the home, your inspector will both examine and test functionality of your home’s key systems, including:

  • Plumbing
  • Roof condition
  • HVAC
  • Foundation
  • Appliances
  • Drainage
  • Water damage and mold

However, a home inspection may not find every potential issue in the home, especially if they are hidden or seasonal, so buyers should discuss any exclusions with the licensed home inspector both before and after the inspection itself.

Who attends the inspection: Usually, the buyer and their agent will both attend the inspection. This allows you to have the inspector walk you through any red flags in real time, while also giving you the chance to familiarize yourself with how the home’s systems work ahead of moving.

What happens after the inspection: After completing the on-site inspection, your inspector will provide a written report that highlights their findings, including photos.

Specialized inspections for buyers to consider

While inspecting the home’s major systems and features is standard practice, your inspector may recommend a second, more specialized inspection if they notice issues including:

  • Radon
  • Pests
  • Septic
  • Lead paint

Why home inspections are important

The few hundred dollars you’ll spend for a home inspection is a small price to pay for the opportunity to confirm that the home you’re about to buy is free of major – and costly – issues. It’s no wonder 83% of buyers reported having an inspection done, according to the Zillow Group Consumer Housing Trends Report 2019.

Risk of not having an inspection: While some buyers opt to waive their inspection contingency to make their offer appear stronger, this means they’re essentially buying the home “as-is,” and any issues discovered after closing will fall 100% to the buyer to repair, even if they were present before closing.

Why disclosures aren’t enough: In most states, sellers are required to disclose underlying issues in the home that they know exist (specific disclosure requirements vary by state). While disclosures are an important protection, they only cover un-repaired issues that the seller knows about – there’s no guarantee that the home is free of other underlying issues or that the repairs were made correctly. A home inspection is simply the best way to find out about any potential problems in the home.

If you buy a Zillow-owned home, you’ll have the peace of mind that comes with knowing the home went through a pre-listing home evaluation process and was renovated by local professionals to make it move-in ready. Of course, you’re always welcome to do your own inspection, too.

How are home inspections and appraisals similar?

Despite having two different processes and requiring the services of two different professionals, appraisals and inspections do share some similarities:

1. Appraisers and inspectors are licensed

Both roles require licenses and extensive training. Both appraisers and inspectors act as impartial third parties, paid to provide their professional opinion.

2. Buyers pay for both inspections and appraisals

Usually, the buyer selects the home inspector they want to work with and the lender selects the appraiser. The buyer pays for both the inspector and the appraiser, unless otherwise negotiated.

3. Appraisal and inspection both occur during escrow

The home inspection usually happens within the first week after your offer is accepted – the sooner the better, so there’s time to fix any issues flagged in the inspection report or renegotiate with the seller. The appraisal also happens during the escrow period, usually a week or two before closing.

4. Appraisal and inspection results allow for negotiations

Assuming you’ve structured your offer to include contingencies for both the appraisal and inspection, you’ll be allowed to renegotiate your offer based on the findings. If the appraisal comes back low, you’re allowed to renegotiate with the seller to figure out how to cover the difference between the appraised price and the offer price. Similarly, if the inspection report uncovers significant repairs, you’ll have a period of time where you can request repairs or credits, or back out of the deal without losing your earnest money.

The post Inspection vs. Appraisal for Home Buyers appeared first on Home Buyers Guide.

Source: zillow.com

Most popular homes and their neighborhoods of July 2019

Summer is underway, and home buyers are dreaming big. Our most-viewed properties in July include several stunning homes that are asking eight or nine figures. But even the most palatial estate needs a top-quality neighborhood to seal the deal. So we took a look at July’s most popular homes to get the rundown on the neighborhood with an assist from What Locals Say, our guide to residents’ insights on their own communities.

Enjoy browsing these big summer dreams—and the very reasonable buys mixed in here, too.

Flatiron District, New York

$98,000,000

Flatiron District penthouse for sale in New York City on Trulia
How many fireplaces can fit in one home? This place tests the limits. See more photos here.

Named for one of New York City‘s early skyscrapers, the Flatiron District in Manhattan is home to lots of publishers and ad agencies and is also part of the city’s “Silicon Alley” tech business district. Major attractions range from the popular Italian food hall Eataly to Teddy Roosevelt’s birthplace. But despite the bustle, the Flatiron District is also an in-demand residential area, as notable residents like Chelsea Clinton can testify. What Locals Say users describe the neighborhood is just an all-around nice place. “There are parks and schools in the immediate area as well as plenty of fun stores and galleries and movie theaters,” one resident says.1

Available now in the Flatiron District, this extravagant penthouse suite is 19,000 square feet. With 11 bedrooms, 14 bathrooms, and truly grand views of the city from its 4,500 square feet of terrace, NYC living doesn’t get much more luxurious than this.


Hearthstone, Yonkers

$399,000

Wood beams on the ceiling are always a plus. See more photos here.

One resident of Yonkers’ Hearthstone neighborhood describes the place as “centrally located to all”—including Yonkers itself and the Big Apple, just 45 minutes away by train.2 Neighborhood restaurants are wildly diverse, featuring Filipino, Korean, Mexican, and Italian cuisines. Residents also enjoy a variety of local groceries, including the fish market and restaurant at Highridge Fishery Seafood, described by one Yelp reviewer as “Yonkers’ best-kept secret.” If you’re seeking entertainment, the Alamo Drafthouse is an upscale movie theater, and for the outdoorsy, nearby Sprain Ridge Park has 278 acres of natural beauty to explore.

Available now in Hearthstone, this charming Cape Cod is the epitome of cozy living. It packs a lot into its small footprint, including three bedrooms, a bathroom, plenty of storage space, and a finished basement. We also love the little deck for summertime relaxation.


Bel Air, Los Angeles

$195,000,000

The hedge maze will make you feel like you’re in a Jane Austen novel. See more photos here.

Bel Air is the stuff of pop-culture legend, thanks to the TV shows set or shot there and the stars, from Jennifer Aniston to Alfred Hitchcock, who’ve called it home. But if you look beyond the big names, big houses, and big reputation, you’ll find neighbors who enjoy a quiet area with abundant natural beauty. “We are surrounded by nature: trees, flowers, birds, butterflies,” says one resident on What Locals Say.3 Right in the neighborhood, Getty View Park is an ideal place to enjoy some of that beauty (and take in a great view of L.A.). And, as you would expect, there’s chic dining and shopping in the area if you don’t feel like venturing out into the rest of L.A.

Available now in Bel Air is the 10-acre Chartwell estate. All told, the property has 11 bedrooms and 18 bathrooms, as well as a 40-vehicle car gallery and a 12,000-bottle wine cellar. And the gardens and L.A. views are downright magical.


Beverly Glen, Los Angeles

$150,000,000

A barber chair comes in the bathroom, but it’s BYO barber. See more photos here.

One resident of L.A.‘s Beverly Glen neighborhood describes it as, “Beautiful, quiet and unique. Feels far away from the city but is close to everything.”4 The small community is tucked between two of the area’s most prestigious neighborhoods, Beverly Hills and Hollywood Hills, and also has easy access to Westwood and Hollywood. Despite its exclusive address, Beverly Glen has a very close-knit community feel. There’s little retail in the area, but Glen Market is a beloved local grocery. And neighbors look forward to annual community events like the Garden Walk and Glen Fair, with music, dancing, food, and kids’ activities.

Available now in Beverly Glen, this luxury home is ideal for anyone who loves soaking up the sun and 270-degree views of L.A. And its 38,000-square-foot interior is worth a peek too, with gorgeously designed spaces including—get this—a candy room, a movie theater, and three gourmet kitchens.


Soundview, The Bronx

$649,999

Peek inside to see the reading nook under a window. See more photos here.

Just north of the confluence of the Bronx and East rivers, Soundview is a working-class community with culture to spare. According to AM New York, “Bronx residents frequent Soundview for two things: Food and music.” It’s easy to see why. The local dining scene has Mexican, Caribbean, and Spanish restaurants—although a single cuisine isn’t enough for local institution Joe’s Place, which proudly “offers three distinct dining atmospheres” under the same roof. Joe’s is also a neighborhood music venue, as is Soundview Park, which hosts summer concerts on the waterfront. “Just nice and calm. No drama,” says one local. “I love living in this area.”5

Available now in Soundview, this two-family home has been well maintained and beautifully renovated. The hardwood floors and stone shower walls lend a contemporary elegance, and the small back deck is a great place to relax outdoors even in the heart of the city.


Bensonhurst, Brooklyn

$695,000

A leaded glass door and wrought iron railings? Yes, please. See more photos here.

The Bensonhurst neighborhood is known as the biggest of Brooklyn‘s multiple “Little Italies” but also as one of the borough’s Chinatowns. The area bustles with sushi bars, innumerable local groceries, nightclubs, and cafes. And with plenty of subway stations in the neighborhood, Manhattan is just 45 minutes away. One lifetime Bensonhurst resident says she’s “seen many changes, but it’s still a safe place to live with great neighbors, shopping, and transportation.”6

Available now in Bensonhurst, this three-bedroom home has both new and old touches. The detailed iron banister, stained-glass windows, and flagstone patio all seem to hail from different eras—but they all work in this warm and welcoming space.

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1 Trulia user, Sept. 2018 “There are parks and schools in the immediate area as well as plenty of fun stores and galleries and movie theaters.”

2Mike P., Sept. 2018 “Neighbors are very friendly and area area is central located to all. wonderful neighborhood! Very quite, shopping is a mile away and Scarsdale train station is only about 1 1/2 miles away.”

3Trulia User, 2013 “I love this area ! The people never want to leave. We are surrounded by nature: trees, flowers, birds, butterflies. The public elementary school is one of the top, if not the top, in the city. The neighbors are multi-generational.”

4 Jenny, Feb. 2019 “Beautiful, quiet and unique. Feels far away from the city but is close to everything. Nice parks. Please do t speed on the blvd, its very dangerous “

5 Dameen T., June 2019“Just nice and calm No drama I love living in this area Very clean and always busy always see the same faces “

6 Msgrace46, May, 2018 “I have lived here all my life have seen many changes but it’s still a safe place to live with great neighbors, shopping and transportation “

The post Most popular homes and their neighborhoods of July 2019 appeared first on Trulia's Blog.

Source: trulia.com

Buying a Home? Plan for These Hidden Costs

You’re excited because you just found the perfect home. The neighborhood is great, the house is charming and the price is right.

But the asking price is just the beginning. Be prepared for additional – and often unexpected – home-buying costs that can catch buyers unaware and quickly leave you underwater on your new home.

Expect the unexpected

For almost every person who buys a home, the spending doesn’t stop with the down payment. Homeowners insurance and closing costs, like appraisal and lender fees, are typically easy to plan for because they’re lumped into the home-buying process, but most costs beyond those vary.

The previous owners of your home are the biggest factor affecting your move-in costs. If they take the refrigerator when they move out, you’ll have to buy one to replace it. The same goes for any large appliance.

And while these may seem like a small purchase compared to buying a home, appliances quickly add up – especially if you just spent most of your cash on a down payment.

You’ll also be on the hook for any immediate improvements the home needs, unless you negotiate them as part of your home purchase agreement.

Unfortunately, these costs are the least hidden of those you may encounter.

When purchasing a home, definitely hire a home inspector (this costs money too!) to ensure the home isn’t going to collapse the next time it rains. Inspectors look for bad electrical wiring, weak foundations, wood rot and other hidden problems you may not find on your own.

Worse still, these problems are rarely covered by home insurance. If an inspector discovers a serious problem, you’ll then have to decide if you still want to purchase the home. Either way, you’ll be out the cost of hiring the inspector.

Consider the creature comforts

Another cost is your own comfort. There are a number of smaller considerations you may not think about until after you move in.

Are you used to having cable? If so, is your new home wired for cable? It’s much harder to watch a technician crawling around punching holes in your walls when you own those walls.

And if you’re moving from the world of renting to the world of homeownership, you’ll probably be faced with much higher utility bills. Further, you could find yourself paying for utilities once covered by a landlord, like water and garbage pickup.

Plan ahead

The best way to prepare for the unknown and unexpected is through research and planning. This starts with budgeting before house hunting and throughout your search.

Look at homes in your budget that need improvements, and then research how much those improvements could cost. Nothing is worse than buying a home thinking you can fix the yard for a few hundred dollars and then realizing it will cost thousands.

There’s really no limit to how prepared you can be. Say you find a nice home that’s priced lower than others in the area because of its age. You may save money on the list price, but with an older house, you could be slapped with a much higher home insurance payment, making the house more expensive in the long run.

This is where preparation comes in. Research home insurance and property prices in the areas you’re considering to make more educated decisions before you ever make that first offer.

Clearly define how much you intend to put toward your down payment, and then look at how much cash that leaves for improvements and minor costs, like changing the locks. That way, when you find a house at the high end of your range, you’ll know to walk away if it requires a new washer and dryer or HVAC system upgrade.

Establish a rough estimate for as many costs as you can think of, and be extremely critical of homes at the top of your budget – otherwise, you could easily end up being house-poor.

Know your budget and plan ahead. Buying a home is a lot less scary when you know what you’re getting into.

Top featured photo from Offset.

Related:

Originally published August 2016.

Source: zillow.com

Home Buyer’s Guide: How to Purchase a Property, From Start to Finish [Free Download]

Purchasing a home is both exciting and a major milestone in your life, so you’ll want to be prepared for what to expect to avoid a stressful process. Having an in-depth look at the buyer’s journey can help you make informed and confident decisions.

From finding a real estate agent, negotiating offers to getting your keys on closing day, we’ve outlined all the steps of a home buyer’s journey in our free Buyer’s Guide, which you can download here.

The Buyer’s Guide will cover the buyer’s timeline from meeting an agent to preparing for closing day. We’ve outlined the 8 steps in a home buyer’s journey below.

1. Working With An Agent

Every city is filled with thousands of agents, but not all are equal. We believe it is important to choose an agent that you feel confident with. Before you commit to working with an agent, make sure you have a good understanding of the knowledge and experience they offer. It’s important that you ask your questions before making the decision to work with them.

2. Financing Your Purchase

Before you set a budget and start looking for a home, you’ll have to understand what costs to expect when purchasing a home. Here are some of the major costs involved:

  • Deposits
  • Down payments
  • Mortgage insurance
  • Closing costs

You’ll also want to calculate a rough estimate of the down payment that you will be expected to pay. Depending on the price of your home, your minimum down payment can range from 5% to 20%. If you’re interested in learning more about how to finance your home, you can get our free Financing Your Purchase guide here.

3. Searching For A Home

An important part of searching for a home is understanding how the home will fit with your needs and your lifestyle. You’ll want to consider home ownership as well as different types of properties and features. 

Types of Home Ownership

  • Freehold Ownership
    • You purchase the home and directly own the lot of land it sits on
  • Condominium Ownership
    • For condos, you own specific parts of one building: titled ownership of your unit, along with shared ownership in the condo corporation that owns the common spaces and amenities
  • Co-Op Ownership
    • You own an exact portion of the building as a whole and also have exclusive use of your unit

Types of Properties

  • Detached houses
  • Semi-detached houses
  • Attached houses
  • Condos and apartments
  • Multi-unit

Tip: Depending on your budget and desired location, you may need to be flexible to find a home that meets your needs. By being willing to trade some features for others, you’ll have more options to choose from.

4. Negotiating An Offer

When you are making an offer to purchase a home, the purchase agreement should include the essential components listed below. Your agent can help put together an offer that is compelling, while safeguarding your interests and puts you in a competitive position to secure your new home.

You’ll also have the opportunity to choose the conditions that you’ll want in your offer. Some of these may include a home inspection or a status certificate review.

5. Financial Due Diligence

Whenever you make an offer on a house, you need to provide a deposit to secure the offer. The deposit is in the form of a certified cheque, bank draft, or wire transfer; it’s held in trust by the selling brokerage and is applied towards your down payment if your offer is successful.

There are two types of deposits:

  • Upon acceptance
    • The deposit is provided within 24 hours of the seller choosing your offer
  • Herewith
    • The deposit is provided when the offer is made

6. Property Due Diligence

To firm up a deal or educate yourself more on the state of the property, you’ll likely want to have a home inspection if you’re purchasing a house. If you’re purchasing a condo, then your lawyer will review the building’s status certificate.

Home Inspection

A home inspector will assess elements of the home such as the walls, windows, plumbing, heating and roof to judge the condition of the home. This process is non-invasive and is essential to help provide buyers with a good idea of the home’s current condition and the confidence of putting in an offer. 

Tip: The home inspector will provide a summary of suggested work along with a minimum budget estimate for the repairs needed. 

Status Certificates

If you’re purchasing a condominium, you’ll need to obtain a status certificate from the condo board or management for your lawyer’s review. This document will include valuable information about the condo’s budget, legal issues, reserve fund, maintenance fees and future fees increases – and the lawyer can help identify potential red flags

7. Preparing For Closing

Before the big day, you’ll want to keep a checklist of what to do ahead of time. Some of these include:

  • Review your contract
  • Complete a final walkthrough of the home
  • Purchase home insurance
  • Meet with your lawyer
  • Know how much cash you’ll need
  • Secure cash required for closing

8. Closing Day

Closing Day is when you’ll finally get the keys to your new home! In addition to bringing the cash required for closing, you’ll have to sign a few more documents which will include:

  • Mortgage loan
  • Title transfer
  • Statement of adjustments
  • Tax certificates

For the full details on the home buyer’s journey including examples, advice, pictures and sample calculations, download a copy of our free Buyer’s Guide here.

The post Home Buyer’s Guide: How to Purchase a Property, From Start to Finish [Free Download] appeared first on Zoocasa Blog.

Source: zoocasa.com

Easy Ways to Increase Your Earning Potential Today

Are you sick of feeling as though you always have more bills than income? Every month, you work hard to bring home a decent wage to support your family. Yet, somehow, when you need funds, there never seems to be anything available in your bank account. Sometimes, the problem might be that you’re struggling to manage your budget. Not knowing how to properly look after your money could mean that you spend too much, too fast. In other circumstances, your issue might be that you’re not taking advantage of opportunities to increase your earning potential. If you’re already doing everything you can to reduce excess spending and improve your financial habits, but you’re still facing money worries, then the following earning boosters could be just what you need. Let’s look at some quick and easy ways to turn your life around.

Consider a new job

All jobs have their pros and cons to consider. However, some roles definitely pay more than others. If you feel as though you’ve already gotten everything you can out of your current position, and there’s no room left to grow, a new role might be the best option. If you don’t want to switch away from the current company that you’re with, you could ask about switching to a different department. If there’s nowhere else for you to go in your current business, then it might be a good idea to see what someone can offer you elsewhere. Many people who switch jobs can take advantage of looking to improve earning potential than those that stick with the same role. Remember, if you do decide to switch to somewhere new, take your time to find something that actually appeals to you. Don’t just jump at the first offer you get. Play the field first.

Stick with learning about topics that you’re genuinely interested in. This will give you an opportunity to get a job in a space that you enjoy.

Improve your reputation

Reputation can make a big difference in your earning potential these days. In a world where we’re constantly connected to the internet, your image online might help you to find a new or higher-paying job. For instance, if you’re connected to the right people on LinkedIn, then you might speak to someone who can give a good word for you in a higher-paying department in your company. Start by auditing your existing personal brand online. See what people will find if they look for your name. If you have any unprofessional social accounts that are set to public, make them private immediately. Once you’re ready to begin building a name for yourself, look for opportunities to network and show off your skills. This could mean that you join some professional groups, comment on forums, or even visit local events from time to time.

Once you’re ready to begin building a name for yourself, look for opportunities to network and show off your skills.

Develop your skills

Sometimes, jobs will pay you a higher wage for a reason. A career that requires a specialist skill will often pay more than a basic entry-level job. With that in mind, it might be worth building on the talents that you already have. Think about the kind of things that you enjoy doing. Maybe you could work on something like coding or improving your technical expertise. The best way to boost your chances of getting your new skills recognized is to check out some student loans and head back to school. There are tons of different courses that you can take to add new certifications to your resume. You could also look into building out your knowledge about other topics online, taking free courses in your spare time. Stick with learning about topics that you’re genuinely interested in. This will give you an opportunity to get a job in a space that you enjoy.

Ask for a promotion

When’s the last time you just asked your boss whether they could pay you more? If you know that you’ve been delivering excellent work for a good while now, then it might be a good time to ask for a raise. Most business leaders won’t want to take the risk of losing an employee that’s valuable to the team. Check websites that list job openings and find out if there are any higher-paying companies out there that provide a better wage for the role you do now. This will give you a good starting point when you start asking for a wage. If you’re nervous, remember that hiring new team members comes with its own costs. If you’re a great employee, your boss would prefer to keep you around most of the time—even if that means paying more.

If you want to be able to pay your bills each month without worrying about your bank account, it’s worth keeping your mind open to ideas that could increase earning potential.

Start a side hustle

Finally, if you’ve already gone and built some new skills at school, but you haven’t found the perfect job to use them in yet, why not try creating your own career with a side hustle? This is basically a job that you can do on the side to add more income to your bank. Many people have discovered that they can put a few extra hours into their work online each day and make a hefty amount of additional income. Thanks to the gig economy, it’s easy to find opportunities to make cash with things like graphic design, content writing, website development, and more. Start by making a list of the kind of things you’d be interested in doing. You might even decide to create your own business and sell items online using a dropshipping company. Dropshipping services handle things like manufacturing and shipping products for you, so you just need to build a brand and find customers.

Increase your earning potential

Money might not make you happy, but it’s one of the most important things in many of our lives. If you want to be able to pay your bills each month without worrying about your bank account, it’s worth keeping your mind open to ideas that could increase earning potential. Whether you’re developing new cash opportunities with your current employer or thinking about becoming your own boss with a side hustle, make the conscious effort to invest in yourself this year. The quicker you start working on your new earning opportunities, the more money you’ll make for your future.

Source: quickanddirtytips.com

The Half Payment Budget Method Explained

The post The Half Payment Budget Method Explained appeared first on Penny Pinchin' Mom.

The half payment budget method might be what you need.  If traditional budgets do not work, you really might want to consider this method instead.

 

half payment budget method

 

If you do any research, you will find many ways to budget.  However, many times, the options you find do not work for you.  That is why it is important to find the right budget for your needs.  A new one you may not have tried is the the half-payment budget method.

This system helps many people stop living paycheck to paycheck.  Simply explained, it is where you take your regular, recurring payments and divide them in half.  Each payday, you set aside the necessary money out of each check so that you have the full payment available when it is due.  The half payment is not paid at that time, but rather you hang onto it and pay it on the due date.

If you are just learning about budgeting, you will want to check out our page — How to Budget. There, you will learn everything you want to know about budgets and budgeting.

HOW TO USE THE HALF-PAYMENT BUDGET METHOD

In order to explain this in a simple manner, here is how this system might look for you:

Monthly income: $2,500 (paid $1,250 every other week)

Recurring monthly payments (other than utilities):

Mortgage/Rent: $900
Vehicle Payments: $450
Auto insurance: $100

When you apply the half-payment method, your weekly budget would look something like this:

Paycheck #1 – $1,250

Set aside $450 for rent/mortgage
Set aside $225 for vehicle payments
Set aside $50 for insurance

Leaves $525 out of your paycheck for other expenses

Paycheck #2 – $1,250

Take $450 from previous paycheck and add $450 and pay $900
Take $225 from previous paycheck and add $225 and make full $450 payment
Take $50 from previous paycheck and add $50 to make $100 payment

Leaves $525 out of your paycheck for other expenses from each check

 

Now, let’s compare this to the method that many use – to just pay when the bill is due:

Paycheck #1 – $1,250  

Rent – $900

Leaves $350 for all expenses

Paycheck #2 – $1,250

Vehicle payments – $450
Insurance – $100

Leaves $700 for additional expenses

If you do the math, you will notice that you still have the same to spend over the course of a month, however, you will see a difference in the amount from each paycheck.  You might show that you have more money left after your 2nd paycheck of the month, but will you really save that?  Most people do not. If they have extra month to spend, they just spend it.

 

How to Start

I would not recommend that you jump in and change all of your bills so that they are paid using this method.  That may be too much and you might quit before you even really get started!  Instead, select one bill, such as a car payment, and try using the half payment method for a few months.  Once you see it works, you can transition other bills into this same payment method.

 

Why it Works

So, why would you use the half payment method?  For many it works better because you have around the same income to spend out of every check, rather than cutting your spending in half like you see in the second example.  For many, there is always that paycheck that makes spending tough.  When you have to pay a few larger bills all out of one check, it often leaves little to no money left for other purchases.

By changing to the half method, you are still paying your bills, but you are just earmarking money to pay a bill due later in the month.  You still have the same income.  You still pay your bills on time. However, you have more disposable income every two weeks by doing it in this way.

What is great about this method is that it works no matter how you are paid.  If you are paid monthly or weekly you might try using a quarter payment method every week (breaking out your check to leave spending weekly).

 

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