ARE YOU 20-SOMETHING AND STILL LIVING WITH MOM AND DAD?

#millennials #StillLivingAtHome #adults
OK, you’re 20-something, with no job, perhaps a college degree.
Let’s presume you don’t want to be living at home, but you don’t believe you can afford not to.
If you PREFER to live with your parents, that may be a discussion for another time.
Peter Dunn, an author, speaker, radio host and personal finance expert, tells young people to “knock it off,” as the headline reads, and stop laying their financial problems on their parents. He discussed this in a March 29, 2016, column in USA Today.
Dunn says that every late-night pizza, every beer and every other good-time splurge in college contributed to the young person’s financial dilemma.
“Your parents (speaking directly to the young folks) want to cut you off, but are afraid to,” Dunn writes. “It’s not good enough to stop asking for money. You must tell them you don’t need their money anymore.”
Admittedly, the problem is not as simple as it appears. Kids go to college expecting to come out with some kind of job. But, as the last few years have taught us, not only is that not guaranteed, it’s becoming more unlikely in certain fields.
On top of not having a job, the kids may have mountains of college debt lurking in their lives.
Certainly, if you are in college now, you need to be aware that you might not have a job when you get out. The earlier you plan for it, by, say, watching your spending while in school or getting work experience in some area that might employ you when you get out, the better off you will be.
It’s great to love your parents. It’s great for your parents to love you. The greatest love you can show your parents, perhaps, is not to burden their lives. They are trying to save for retirement. Every dollar they give you is one they cannot put to that cause.
As a young person, you can lament that your parents probably had it better than you as far as the job market goes. Or, you can buck up and find ways to support yourself in the current climate.
Believe it or not, there are many ways out there to do that that don’t necessarily involve manual labor. For one of the best, visit www.bign.com/pbilodeau. You may have to look outside your comfort zone for a solution, but the possibilities are out there.
Let’s look at this from a social perspective. Do you really want to bring a date back to your place with your mom and dad there? Do you really want to confine your personal space to one room? Do you really just want to hang out at home the rest of your life?
A life is certainly worth working for, even if that work may not be exactly what you want to do. You can also find a solution (job) that is temporary, while you think about how you are going to use all those skills and all that knowledge you paid so dearly for. Chances are, you WILL find a use for it, but it may or may not make you a living.
“I’ve come to the conclusion that asking 18-year-olds to commit to tens of thousands of dollars of debt, without a job, income or assets, is among the stupidest things modern society does,” Dunn writes.
We hear that you can only get a good job with a good education. But some of those “good” jobs don’t pay much. If you are going to commit to a college education, have a plan. Know what you are going to do with it as you proceed. Also, beforehand, do the math. Decide whether the education is worth the debt. There’ no shame in deciding that college is NOT for you, or just not worth the financial sacrifice.
Whatever you do, give mom and dad a break. Come home to visit, even frequently. But make your home somewhere out of theirs.
Peter

HOW MUCH HOUSE SHOULD YOU BUY?

#housing #RealEstate #OverHoused
Buying a house is never easy, unless you are, say, an investor paying cash.
Most homebuyers need a mortgage, and getting qualified for one is a process.
Peter Dunn, a financial planner, says many people are “over-housed.” It’s a concept of paying too much money for housing, in relation to one’s income. In some areas, housing prices are over the top, and one cannot help paying too much for a house.
But some over-housing is self-inflicted, Dunn says. He wrote about over-housing in a column in the Jan. 18, 2016, edition of USA Today.
He cites the example of Mark and Jennifer, a Midwestern couple in their mid-40s, who decided 11 years ago to build their “family home.”
Mark and Jennifer knew they were pushing the limit of what they could afford, but the bank approved them for a loan. That gave them reassurance, Dunn writes.
“Things spiraled out of control from there,” Dunn quotes Jennifer.
When housing bubbles burst, it’s the over-housed folks who get slammed first. Are you over-housed? Here are Dunn’s pitfalls: if you’ve dumped everything into a house, and have no emergency fund, you could be in trouble. There are also the realities of increased utility costs, home maintenance, homeowners insurance, property taxes etc. If you didn’t budget for those increases, you could be in trouble.
Mark and Jennifer’s home was 2,000 square feet bigger than their previous home. Their utility costs were much higher and, after two homeowners insurance claims, their premiums went through the roof, Dunn writes. Their tax assessment was based on the value of the land alone. When the structure was added, their tax bill tripled, Dunn writes.
Worse yet, the couple hasn’t saved a dime for the future, Dunn writes. If you’ve given up vacations, new clothes and dining out to live in your new home, you are probably OK, Dunn writes. If you’ve given up your current and future stability, you’re in trouble, he says.
Dunn’s rule of thumb: don’t let the bank tell you how much house you can afford. Being house-rich and cash-poor is not a good situation, especially if housing values plummet, as they did in 2008. Your house is a significant investment, but don’t rely on the equity in it to secure your future. You need to be saving and investing regularly.
The folks who have a comfortable retirement are those who lived BELOW their means, and socked money away. If you buy or build a house, make sure your mortgage payment and other expenses leave a portion of your paycheck left over to save and invest.
Taking vacations and dining out occasionally are nice, too, but saving and investing for retirement are a priority.
Of course, there are ways to earn extra money so you can live in that dream house. For one of the best, visit www.bign.com/pbilodeau. You’ll see stories of people who bought their dream home, but not until they had the money – often the cash – to do it.
Remember, too, that homeownership is not for everyone. Though the American Dream may dictate that one owns his own home, give some thought to the life you want to lead before deciding to buy or build. That house could own you, in more ways than one.
In short, do the math before buying or building a home. Make sure the house doesn’t eat too much of your net worth. If you tap out your emergency fund for that down payment, it could come back to bite you.
Just because you think you CAN swing it, doesn’t mean that you SHOULD.
Peter

WILL A FINANCIAL EMERGENCY KILL YOU?

#FinancialEmergency #savings #spending
Fewer than 38 percent of Americans have at least $1,000 in savings.
Say what?
Peter Dunn quotes that statistic in a column he wrote for USA Today, published Jan. 26, 2016.
A car repair, a refrigerator breakdown etc., can drain that $1,000 just like that. When you need a car to get to work, or a refrigerator to keep your food from spoiling, one, more or less, has to find the money to take care of these.
Dunn suggests making a plan. First, determine whether immediate spending changes or income changes will take care of your financial emergency. Second, grab the money from savings, if available. Third, borrow the money for the emergency, while concurrently creating a plan t pay off the debt in a specific period. Fourth, pay off the debt in that time.
“If you don’t leverage your emergency to create stability, you’re going to find yourself in deeper and deeper trouble,” Dunn writes.
Let’s get to basics. If you really only have $1,000 in savings, there are much bigger issues here, especially if you are older than, say, 18. You have to start planning not just for emergencies, but for your retirement years.
You don’t make that much money, you say? Well, then, start with looking at what you are spending, and whether your spending is necessary. Buying a cup of coffee on your way to work? Buying lunch at work? It might be better to make your own coffee and buy an insulated container to take it to work. It might be better to make your lunch at home and bring it to work.
You don’t have the extra time in your day to do that, you say? Then, look at how you spend your time. Perhaps getting up 15 minutes earlier in the morning to make your coffee, or making your lunch the night before as you sit in front of the TV may leverage your time better.
Look at other spending habits. For example, how much do you spend on “entertainment?” That can include dining out, movies, even digital services. As a start, look at your cell phone, television and Internet packages. Are there ways to trim back those costs in a way you can live with? Maybe get rid of your premium TV package.
Want a pet? Remember, pets are expensive. They need food, perhaps medicine, as well as your time and attention. Time is money. Are you prepared for that?
You should be able to save a portion of every paycheck, no matter how small. Regular savings, multiplied by time, augmented by wise investment, equals financial security in your later years. If you start saving $5 every week at age 20, and never touch that money, it will amaze you how much you would have at age 40. Then, at 40, check out the amount you’ve saved and continue not to touch it until, say, age 60, all the while continuing to put a regular amount from every paycheck into that fund.
Of course, getting back to Dunn’s point, you also need money for financial emergencies. Remember, if you are young, that you can’t lean on your parents or other family members forever.
Perhaps you might look at ways to earn extra income in a way that doesn’t interfere with what you are doing now. There are many such vehicles out there. For one of the best, visit www.bign.com/pbilodeau. You may get a two-fer: a lesson on saving money and a way to earn more money.
Most of all, you need to make saving an absolute priority. What you sacrifice today will pay off tomorrow. One never knows what tomorrow brings. One never knows when you might be forced to retire, or forced to look elsewhere for a job. What you save today may save your life later.
Peter