Tagged: downsizing

5 Ways to Not Get Divorced During the Homebuying Process

image of a couple fighting on a bench

Even the most level-headed couples can go a little crazy when hunting for a home. If not careful, stress levels can suddenly shoot through the roof.

This shouldn’t come as a surprise. Most homebuying decisions swirl around major life changes: marriage, a new baby, job relocation, retirement, and downsizing. Those are tectonic shifts in one’s life, and adding a hefty down payment and a 30-year mortgage to the mix doesn't ease the burden.

Tensions don’t end there. A home isn’t just an investment; it’s a place you’re tethered to for years. You’re literally shaping your future by the neighborhood you choose.

In such an emotional situation, people easily become overwhelmed. In fact, a U.K. report found that 70 percent of respondents thought buying a home was a critically stressful time in their lives. Only one other life event was ranked worse: getting a divorce.

Yet it’s not practical to live in the same place forever. In other words, it’s up to every couple to rethink the way they handle the house-seeking experience, starting with preparing themselves for the reality of the situation.

Decisions, Decisions, and More Decisions!

Any homebuying newbie can relate to how complicated the process can be. When two people are involved, however, the strain amplifies. Luckily, knowing a few upfront expectations and being prepared to make tough decisions can ease the pressure.

First, understand the substantial financial burden. You must openly talk about your expenditure expectations with your partner. Partners can have significantly different ideas of what they are willing to spend to have a comfortable, safe home.

You must also accept that both of your priorities won’t necessarily align. For example, you drive east for work, and your spouse drives west. Whose work is more important if you can’t find a house centralized between the offices? In addition, what if the new home allows your partner to be 10 minutes from relatives, while you have a two-hour trek to visit yours? Until these considerations are aired out, a couple will be far from acing the homebuying process.

5 Ways to Keep Your Marriage Intact During Homebuying

Overall, communication is essential. In fact, with a few steps, you can turn looking for the perfect house into a way to strengthen — not wreck — your relationship:

1. Stick to a budget

Ironically, people often discuss stretching their budgets before they’ve even set them. Take a pragmatic approach, and know your budget first. A fast way to figure out your top monthly payment is by multiplying your combined monthly income by 0.25. For example, if you two make $10,000 a month, your mortgage payment with taxes and insurance shouldn’t be more than $2,500.

At that point, you can work backward. Use a mortgage calculator, like the one provided by Zillow, to figure out that a $2,500 monthly payment equates to a $500,000 house. Don’t even consider asking your mom to co-sign a loan to get more money. Instead, acknowledge the fact that you two can only afford what you can. Accepting this will help you both make decisions logically.

2. Start with the “good,” and work up to “best”

You know you can afford a $500,000 house, but don't initially schedule showings in that price range. The first three homes should be listed at about 20 percent below your budget. As you walk through the homes, notice what you like and what you don’t. For your next house, go up to the $450,000 level. Jot down what you love and hate. Finally, step into a $500,000 home. Is it tremendously better than the $450,000 one? Are its advantages worth an additional $50,000?

By starting at “good” options and moving toward “best” choices, you gain control over the process, and both partners have a chance to air out their objections. But be warned: If you flip the order and start with a $500,000 listing, anything less would seem subpar.

3. Quantify what’s important

Try to quantify preferences to put a more rational tenor on the process. An example is weighing the objective value of school districts and home prices. Typically, a home in a stellar school district will cost up to 25 percent more than comparable homes. Thus, for your money, you would have to get a smaller home to live in a preferred community.

Talk about this not as a way to “steal” opportunity from your kids but as a way to look at the pros and cons of each decision. For example, if you have 15 percent less of a house, your kids could attend a better school. This is a more rational approach than blaming your partner for not caring about your children's education. Quantifying priorities allows both of you to look at the big picture.

4. Speak magic words

Couples involved in buying homes often forget to incorporate productive, positive phrases into their conversations. Even if it doesn’t come naturally, emphasize how grateful you are for your partner throughout the process. Talk about how you appreciate that he or she has helped make it possible to look at better homes. Or admit that you’re blown away by the flexibility you’re seeing in your partner’s willingness to incur a longer commute to work.

While it isn’t an easy feat to be affirmative, you'll end up with better long-term results. You’re starting a new chapter together, after all. Don't you want your partner to know you are here for him or her in this journey? All it takes is a sprinkling of gratitude.

5. Invest in a little reflection

Whether or not you’re religious or spiritual, make time for reflection before signing on the dotted line. This will ground you and your partner and create a sense of much-needed calm. Ask yourself: “Is this really the direction for us? Is this where we’re supposed to be?”

In addition, vow not to bicker about dollar amounts after making your choice. Rather, use your home as a launching pad for the next page of your relationship.

Who has time to heap additional stress into their lives? Avoid the price of a divorce lawyer, and focus on the exciting possibilities ahead that come with buying a new home. The homebuying process might not be a cake walk, but your marriage doesn't have to pay for it.

An entrepreneur at heart, CEO Mike Kalis leads the team at MarketplaceHomes.com, a Detroit-based brokerage that specializes in new construction sales and property management. If you purchase a new home through Marketplacehomes.com, we'll agree to buy yours. Marketplace Homes has sold more than $3 billion in new construction homes through its unique home trade-in system and manages more than 3,500 single-family properties for investors who have 1 to 10 properties. It also offers new-construction homebuyers a guaranteed lease on their previous properties for up to six years.

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5 Signs You Should Sell Everything and Move

Have you ever felt like the universe is telling you you need a fresh start? Many of us get the urge to scrap everything and start over from time to time, but it can be challenging to know if this is just a fleeting feeling or if it’s meant to be. With that said, there […]

The post 5 Signs You Should Sell Everything and Move appeared first on Apartment Life.

How to Pay Off Credit Card Debt Faster

I've received several questions from Money Girl podcast listeners about paying off credit card debt. It's a fundamental goal because carrying card balances come with high interest, a waste of your financial resources. Instead of paying money to card companies, it's time to use it to build wealth for yourself.

7 Strategies to Pay Off Credit Card Debt Faster

1. Stop making new card charges

If you're carrying card balances from month-to-month, it's essential to understand what it costs you. As interest accrues, it can double or triple the original cost of a charged item, depending on how long it takes you to pay off.

The first step to improving any area of your life is to acknowledge your mistakes, and financing a lifestyle you can't afford using a credit card is a biggie. So, stop making new charges until you take control of your cards and can pay them off in full each month.

As interest accrues, it can double or triple the original cost of a charged item, depending on how long it takes you to pay off.

Yes, reining in your card spending will probably require sacrifices. Consider ways to earn extra income, such as starting a side gig, finding a better-paying job, or selling your unused stuff. Also, look for ways to cut costs by downsizing your home, vehicle, memberships, or unnecessary expenses.

2. Consider your big financial picture

Before you decide to pay off credit card debt aggressively, look at the "big picture" of your financial life. Consider any other debts or obligations you should prioritize, such as a tax delinquency, legal judgment, or unpaid child support. The next debts to pay off are those already in default or turned over to a collection agency.

In many cases, not having a cash reserve is why people get into credit card debt in the first place.

Assuming you don't have any debts in default, focus your attention on your emergency fund … or lack of one! I recommend maintaining a minimum of six months' worth of your living expenses on hand. In many cases, not having a cash reserve is why people get into credit card debt in the first place.

3. Make more than the minimum payment

Many people who can pay more than their monthly minimum card payment don't do it. The problem is that minimums go mostly toward interest and don't reduce your balance significantly.

For example, let's assume your card charges 15% APR, you have a $5,000 balance, and you never make another purchase on the card. If your minimum payment is 4% of your card balance, it will take you 10½ years to pay off. And here's the worst part—you'd have paid almost $2,400 in interest!

4. Target debts with the highest interest rates first

Make a list of all your debts, including credit cards, lines of credit, and loans. Include your balances owed and interest rates charged. Then rank your liabilities in order of highest to lowest interest rate.

Getting rid of the highest interest debts first saves you the most.

Remember that the higher a debt's interest rate, the more it costs you in interest per dollar of debt. So, getting rid of the highest interest debts first saves you the most. Then you can use the savings to pay more on your next highest interest debt and so on.

If you have several credit cards, evaluate them the same way—tackle them in order of highest to lowest interest rate to get the most bang for your buck. And if a credit card isn't the most expensive debt you have, make it a lower priority.

In general, debts that come with a tax deduction such as mortgages, home equity lines of credit, and student loans, should be paid off last. Not only do those types of debt have relatively low interest rates, but when some or all of the interest is tax-deductible, they cost you even less on an after-tax basis.

5. Use your assets to pay off cards

If you have assets such as savings and non-retirement investments that you could use to pay down high-interest credit cards, it may make sense. Just remember that you still need a healthy cash reserve, such as six months' worth of living expenses.

If you don't have any or enough emergency money saved, don't dip into your savings to pay off credit card debt. Also, consider what you could sell—such as unused sporting goods, jewelry, or a vehicle—to raise cash and increase your financial cushion.

6. Consider using a balance transfer card

If you can’t pay off credit card debt using existing assets, consider optimizing it by moving it from higher- to lower-interest options. That won’t make your debt disappear, but it will reduce the amount of interest you pay.

Balance transfers won’t make your debt disappear, but they will reduce the amount of interest you pay.

Using a balance transfer credit card is a common way to optimize debt temporarily. You receive a promotional offer during a set period if you move debt to the account. By transferring higher-interest debt to a lower- or zero-interest card, you save money and use it to pay down the balance faster.

7. Consolidate your high-rate balances

I received a question from Sarah F., who says, “I love your podcast and turn to it for a lot of my financial questions. I have credit card debt and am wondering if it’s a good idea to get a personal loan to pay it down, or is that a scam?”

And Rachel K. says, "I love listening to your podcasts and am focused on becoming more financially fit this year. I have a couple of credit cards with high interest rates. Would it be wise for me to consolidate them to a lower interest rate? If so, will it hurt my credit?" 

Depending on the terms you’re offered, using a personal loan can be an excellent way to reduce interest and get out of debt faster.

Thanks to Sarah and Rachel for your questions. Consolidating credit card debt using a personal loan is not a scam but a legitimate way to shift debt to a lower interest rate.

Having an additional loan added to your credit history helps you build credit if you make payments on time. It also works in your favor by reducing your credit utilization ratio when you reduce your credit card debt.

If you qualify for a low-rate personal loan, here are some benefits you get from debt consolidation:

  • Cutting your interest expense
  • Getting a fixed rate and term (such as 6% APR for 60 months with monthly payments of $600)
  • Having one monthly debt payment
  • Building credit

A couple of downsides of using a personal loan to consolidate debt include:

  • Being tempted to continue making credit card charges
  • Having potentially higher monthly loan payments (compared to minimum credit card payments)

While it may seem counterintuitive to use new debt to get out of old debt, it all comes down to the interest rate. Depending on the terms you’re offered, using a personal loan can be an excellent way to reduce interest and get out of debt faster.

What should you do after paying off a credit card?

Credit cards come with many benefits, such as purchase protection, convenience, and rewards. Don't forget that they're also powerful tools for building credit when used responsibly. If maintaining good credit is one of your goals, I recommend that you keep a paid-off card open instead of canceling it.

You don't need to carry a balance from month to month or pay interest on a credit card to build excellent credit.

To maintain or improve your credit, you must have credit accounts open in your name, and you must use them regularly. Making small purchases charges from time to time that you pay off in full and on time is enough to add positive data to your credit reports. You don't need to carry a balance from month to month or pay interest on a credit card to build excellent credit.

To learn more about building credit and getting out of debt, check out Laura’s best-selling online classes:

  • Build Better Credit—The Ultimate Credit Score Repair Guide
  • Get Out of Debt Fast—A Proven Plan to Stay Debt-Free Forever

Steps to Building a House

In this article: Check your financing options Locate the right lot Plan and design the home Hire professionals Understand the process of building a house If you can’t find your dream home on the market or if you want to create a home that’s uniquely yours, you might consider building a house. Buyers who decided […]

The post Steps to Building a House appeared first on Home Buyers Guide.

U.S. Housing Market Will Withstand a Wave of Foreclosures When Forbearance Ends

Investors and first-time homebuyers will quickly buy up an impending wave of foreclosures from homeowners saddled with debt during the pandemic  More than 3.3. million of U.S. homeowners will be on the hook for delinquent payments when mortgage forbearance ends. While some of those homeowners who are overleveraged or unaware of their options will contribute …

U.S. Housing Market Will Withstand a Wave of Foreclosures When Forbearance Ends Read More »

The post U.S. Housing Market Will Withstand a Wave of Foreclosures When Forbearance Ends appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

How to Make Tough Decisions as a Couple

Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.

When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.

One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.

There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.

Tom says no.

Tough decisions and zero-sum situations

Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.

For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.

Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.    

For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.

Three ways not to make tough decisions as a couple

 First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:

Mistake #1 – Trying to convince your partner they'll be better off

The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there? 

No one likes to be told they’ll be happier if they just do things your way.

 Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."

Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing

The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.

Mistake #3 – Appealing to your partner's love

The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.

Marnie is no exception.

“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”

 “The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”

I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want. 

A better way to make tough decisions as a couple

The good news is there’s a much better method. There are three steps involved.

Step One:  Let’s make a deal

In business, this would be a no-brainer, right?  You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.  

In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?

Let’s see what happens when Marnie tries this approach.

One night in bed, just before they turn off the lights, Marnie turns over to face Tom.

“Tom, what can I give you to make you agree to move?” she asks.

Tom is silent.

“A promise to never complain ever again about you watching TV?”

Tom smiles. “It’s going to cost a lot more than that,” he says.

Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”

Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.         

“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."  

Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.

Time for Step Two.

Step Two:  The $64,000 Question

The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?”    Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.

To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.

Marnie thinks for a minute.  

“Let’s see what we can find,” she says.

Step Three: The Price is Right

Now comes the fun part.

The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.

Decision making builds strong relationships

 A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.

A good deal will have both of your dreams in it.

One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.

But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.

Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

As Yogi Berra famously said, “When you come to a fork in the road, take it!”

In the long run, how you settle the issue may matter more than which fork you take.