Rent, Buy, or Stay Home?
Accommodation is usually the top expense in most people’s budgets. Therefore, decisions regarding where you live will have a significant impact on the rest of your finances. If you’re a grad settling into a new job, you’re probably looking into or have recently signed that first apartment lease. Given this is very different to living in college dorms, you need to be aware of potential pitfalls – for example, broker fees, pet policies, whether or not you can sublet and the rules around hanging your favorite photos on the walls.
In the event you are still living at home, it’s not a given that you’ll be living rent-free. With 36% of young adults between 18 and 31 living at home, the question of whether or not to charge rent is being dealt with by many parents. If you live at home, what arrangement do you have with your parents? Or, are you a parent who has recently tackled this very debate?
If you’re at the point where you are thinking of buying your first home, there’s a whole host of different factors to take into account – some of which may not even pertain to your life right now. For example, it’s a good idea to consider the quality of your new town’s school district and not just because you may want a family down the line. If you recently bought a home, is there anything you now wish you’d considered during your search?
If you are just starting to think about house hunting, this series does a great job breaking down the home-buying process and offering up resources to help you determine affordability, mortgage types among other things. And since it’s based on the author’s real-life experience you get a real feel for the decision-making journey from the house hunt all the way through to a quick mortgage paydown. And, speaking of paying off a mortgage, if it’s something that piques your interest, here is a another great story of how someone did just that. Very inspiring!
The end of the year is quickly approaching so it’s not a bad idea to start thinking about your taxes, especially if you have side income or work multiple jobs where organizing your paperwork and figuring out your tax situation is more complicated. Even though the tax season will be slightly delayed because of the government shutdown, make sure you’re doing everything necessary before year-end in order to make filing go smoothly and to minimize your tax liability as best you can.
Earning extra income is a great way to get your finances in order – every extra dollar can be applied to debt repayment, building an emergency fund or saving for a down payment. But don’t forget about the consequences at tax time. Having your records in order regarding income and tax-deductible expenses is really important, especially if you end up receiving tax forms from employers that don’t match up with your records. It will help you avoid amending a return with errors, saving you both time and money.
This year’s tax season will also bring a lot of changes for same-sex couples as a result of the August DOMA ruling. If you are part of a same-sex couple, you are now eligible to take advantage of a spousal-IRA retirement contribution and other IRA benefits. Overall, these changes are great news because they allow for more flexibility with contributions, inheritances and rollovers of retirement accounts, while maintaining tax-advantaged status.
And, on a different note, this was an interesting read on people who are considering moving because of high tax rates in their state. Cost of living can play a huge part in your financial well-being and, as you get older, your ability to leave your estate intact to your heirs. If you have parents or grandparents with considerable assets who are approaching retirement age, this is a great way to understand options they may be mulling over such as annual gifts and estate tax exclusions.
I thought this was a great, relevant piece on what to do if your net worth is negative. With student loans, credit cards, mortgage debt and a sluggish economy, many young people are unfortunately in this position. But don’t be disheartened – this article has lots of helpful tips that will help you improve your situation and build measurable, forward momentum.
While it’s definitely not wise to use the excuse, “Spend now, save later,” for every last thing that you want in your 20s or 30s, there is also something to be said for using the free time you have when you are young to enjoy some things in life since free time may not be as ample later. So, the comments in this post about time versus money really hit home. What are your thoughts on saving vs. spending, now vs. later?
Finally, check out this great list of 40 money things everyone should know by 40. Whether you’re starting early at 20 or a little bit behind the curve at 45, this is an awesome place to start a financial checkup.