Purchasing a Home

Purchasing a home is probably this largest purchase anyone will make in their lifetime. It is a major decision and should not be taken lightly by the buyers. Buying a home requires a lifetime of financially responsibility, a buyer needs to truely understand how much they can afford before purchasing a home. A general rule of thumb is your morgage should not exceed 25% of your income. But, you also need to consider the cost of owning your home, which includes utility bills, insurance, etc, these payments should also not exceed 25% of you income, but a good rule is your combined morgage and housing expenses should not exceed more than 36% of your income. Almost everyone who purchases a home will have to finance through a lending company. Because I work at a bank I see people nearly everyday come in with morgage loan applications. Right now rates are very low, and incentives for first time buyers are great, so there are a lot of incentives for someone to purchase a home in they are financially and personally ready to. Most people will choose to finance their home with a fixed rate morgage, which would be the same interest rate for the life of the loan. Others choose adjustable rates morgages which may have lower interest rates in the beginnings, but these rates normally rise as time goes on. You also need to be aware of financing fees before you begin to purchase a home. Finally, when purchasing a home you need to be aware of all the other debt you have, such as car loans, students loans or credit card debt. If you have to much debt before purchasing a home its probably a good idea to pay most of that debt off before you purchase a home which usually requires 30 years of payments!

Online Purchasing

Online purchasing is a major business in our society today. I personally love online shopping, I am too busy to go shoppping so online shopping is quick and convinient, and I have been fortunate to have never had any security problems when online shopping. Online shopping can be dangerous though, as a bank employee I have seen the terrible effects when someone gets their idenity stolen and it effects their bank accounts. There are steps you can take to protect yourself when online shopping. First, only shop at established merchants, you can check businesses reputation and the Better Business Bureau website. You can also check to see if a page is secure by seeing a padlock on the site, this lets you know the site is secured. Make sure the site has contact information to contact the seller, and you may want to contact the seller before making your purchase. Use a third party paying system, such as PayPal, which only makes you put your credit card number in once, rather than everytime you buy something online. Also at my bank, we tell customers not to use their debit card when shopping online, because if fraud does occur it can mess up your entire checking account, if you used a credit card you could dispute the charge and not have to pay it, rather than waiting for the bank to refund your money. The final step is to slow down and read everthing twice. This is important because you first have to protect yourself and make responsible decisions when online shopping. If the purchase feels fishy it probably is make you're following all the online safe shopping steps before your make your purchase!

University Personal Finance Course

Universities should definately require every college student to take a personal finance class during college, no matter what there major is. Whether it be related to their career or not, everyone is going to be able to manage their finances not only in the future but now as college students. Most students accumulate thousands of dollars in students loans while in college. They need to understand how they are going to pay off these loans when the graduate a lot with all the other expenses they may accumulate such as buying a home or a new car. Being financially responsible is what of the most important things anyone can learn, college student or not. I think it is the universities responsibility to teach students to be financially responsible adults. Schools should also encourage students to start being financially responsible right now, so it will not only be just another class for students but a total lifestyle change. If high schools understand the importance of personal finance classes, the universities need to start requiring it too!

Cash Management

Chapter 5 discusses cash management and the liquidity of your assets. It is a general rule of thumb to have 3-6 months income worth of liquid assets in your emergency reserves. These reserves would only be used in case of an emergency such as a illness, job loss, or any serious event that would strain the family financially. If someone did not have these liquid assets set aside, when an emergency happened they would not be able to handle it. They may have to sell their car or home to be able to cover the cost of the emergency. Obviously in time like these, it would be extremely stressful being financially prepared would help a family be less stressed. If someone is ill the last thing the need to worry about is money, someone who is less stressed has a better chance of recovering from a serious illness. Having an emergency fund is extremely important, must families think something serious will not happen to them, but it could and we all need to be prepared.

Tax Law Changes with Regard to Educational Incentivies

After reading the information on the IRS website, I felt slightly more informed but was also slightly confused. There are so many different credits and deductions and rules and regulations it can be difficult to sort through it all and find out what I would and would not qualify for. I've been very blessed almost my entire undergraduate education has been paid for through grants. So, these changes do not effect my decision to continuing my undergraduate education. However, as I prepare to enter gradute school next semester, and my grant funding will end, these new educational incentives are encouraging. Graduate school is more expensive than undergraduate school in the first place, so knowing at the end of the year I may be eligible for education tax credits, gives me reassurance about my decision to attend grad school. Overall, I think the education incentives are a great idea, and it is nice to see that new regulations are coming out to help and encourage students to further their education.

The Importance of Bugdeting

Making a budget is by far one of the best things anyone can do to be financially responsible. A budget can help in so many aspects of financial planning, such as, goal setting, understanding consumption costs, estimating monthly income, cutting expenses, or planning for a big expense or family change. I think no matter how much money someone makes a budget is necessary for anyone. Budgeting can help on a day to day basis and also help plan for to buy a house or retire. Someone who is havine difficult managing their finances may find budgeting helpful by letting them see places they need to cut expenses, such as the cost of eating out every night. Instead they could cook at home to save money and reach their goal of financial independence.

I came to his conclusion because my parents have also taught me budget my money whether I had $1 or $1000, they have always tried to teach me the importance of money and how to respect money. Also after reading chapter 3 I found a lot of great reasons to budget as I mentioned above. Budgeting can really help someone save money. If anyone is serious about a financial goal they have, budgeting is a must!

Lottery

If I had just won the lottery it would hard to stand up, let alone make a million dollar decision. But, I have always said if I ever won the lottery I would take the large sum, rather than the smaller payments over time. Yes, it would be nice to receive $100,000 every year for 15 years, and it may be easier to budget and maintain a normal life, but I feel like I could gain more interest if I took the million dollars. If I invested a large portion of the million dollars, with compounding interest over 15 years I would have more money than if I just invested some of the $100,000 each year. I could also diversify my million dollars in the beginning that way if something crashed I would have another account to back it up. For me this would be the best decision, but it is important to consider your personal financial history and family needs before making an financial decision, especially one as big as winning the lottery.

The Important of Financial Management- Kelly Kesinger

Being able to manage your finances is extremely important to be succesful in life. As an employee at a bank, I see daily how stressful it can be on families when they do not manage their funds properly. When finances are managed properly it can help in several different aspects of someone's life. First, they will be able to plan better for their future, which will help them accomplish their goals. From early adulthood to retirement financial management is important. It can help with debt, investment, insurance, retirement, and estate planning. Secondly, if money is managed properly their will be less stress in the home, therefore a person overall happiness will increase. Finally, someone who is financially responsible can teach their children or close family or friends by example, therefore helping more people be financially responsible too! Anyone can benefit from responsible financial planning. As I said it can help anyone at any age, the more financially responsible someone is with their money the easier it will be able to plan major life events, such as graduating from college, having a child, or retirement. Also, someone who is financially responsible will have more liberties to have luxuries, such as vacations or their favorite gadget. Being less stressed at money will allow someone to much happier with their lives!