Whether you’re a first time home buyer needing your first mortgage or if you’re an experienced home buyer ready for your next home, knowing how the mortgage process works and how to qualify for a new mortgage is an important first step in the process of buying a home.
You’re obviously not expected to know the various acronyms and details involved in how to qualify for a mortgage, but having some general understanding of the process and expectations will put you in the best financial position for buying a new home. It’ll also simplify the process for you.
Credit scores required for a mortgage
Your credit score is really the starting point that most mortgage lenders look at in determining your mortgage qualification. While credit scores are certainly not an indicator of wealth, they do provide a baseline for lenders to determine your creditworthiness. It’s also the tool that determines all of the other ratios we’ll look at below and the interest rates which you will qualify under.
The higher your credit score, the lower the costs of getting a mortgage and the lower the interest rates will be. For the most part a minimum credit score of 640 is needed, however there are several programs available for home borrowers with credit scores as low as 580.
Income requirements for a mortgage
Your income shows the ability to repay the mortgage. Income combined with credit score make up a large portion of what a mortgage lender look at when qualifying you for a mortgage. Mortgage lenders are looking at your Gross Monthly Income. They prove this income through your W-2’s from your employer, your paycheck stubs from your employer, and your 1040 tax return from the IRS. They’ll also consider other regular income that isn’t salary based like dividends from stocks or company ownership, child support, or other income that is consistent.
Your income is the starting point in mortgage calculations for how much mortgage you can qualify for.
Qualifying limits for a mortgage
Obviously credit scores and income are important pieces in qualifying for a new mortgage. But they are only the starting pieces of the puzzle mortgage lenders look at when issuing a mortgage.
One of the most important pieces is actually your Debt-to-Income ratio (DTI).
This ratio is calculated by adding up all of your current debts like car payments, student loan payments, minimum monthly credit car payments, and other debt payment plus adding in the future estimated mortgage payment. Then you divide that monthly amount by your provable gross monthly income. This will give you a percentage of debt-to-income.
Depending on your credit score, there are different limits for this DTI ratio. The higher your credit score, then the higher your DTI ratio can be and still qualify for a mortgage. But it is fairly typical for the limit to be around 42% maximum as a good rule of thumb. There are circumstances and loan programs that will allow for this ratio to be as high as 50%.
This is process is how mortgage lenders determine how much house you qualify to purchase as a maximum. They start with your provable income, verify the maximum DTI you are allowed to have based on your credit score, and calculate the maximum amount of monthly payments you can have. Then they subtract out your existing debts, which leave them with the maximum monthly mortgage payment.
House Qualifying Limits
Loan-to-Value (LTV) is another important piece of the puzzle that determines several aspects of your qualifying limits. The LTV is the percentage of mortgage you’re borrowing against the value of the property. Your downpayment helps to determine the Loan-to-value.
An FHA mortgage will allow you to have a minimum down payment of 3.5% of the purchase price. While there are conventional programs that have various down payment options starting as low as 0%, the most common minimum down payment percentage allowed on a conventional loan is 5% down.
The LTV is a risk measure for the mortgage lender. The smaller the down payment you have, then the higher the LTV ratio is which means the higher the risk the mortgage lender is taking by issuing you a mortgage. Therefore they price their loan accordingly to the risk they’re taking.
A 20% down loan will have fewer closing costs, lower interest rates, and no Private Mortgage Insurance, whereas a 3.5% down payment will have higher overall costs associated with the mortgage.
These mortgage costs all factor into the estimated monthly mortgage payment, which ultimately carry into your DTI ratio for qualifying. Remember, your DTI ratio has to be under the maximum allowed limit as determined by your credit score and loan program.
How to Estimate a Mortgage Payment
There are 4 pieces to a monthly mortgage payment: Principal, Interest, Taxes, and Insurance. There’s a 5th piece called Private Mortgage Insurance (PMI) if your LTV is higher than 80%.
You can calculate the Principal & Interest (P&I) portion of your payment using any payment calculator. A 30 year loan (360 months) or 15 year loan (180 months) with the total amount of money you plan on borrowing for the mortgage with an average market mortgage rate. This will give you your fixed monthly payment.
Taxes are fairly simple to calculate, although they can be different for each house on the market. The easiest way is to look up the local tax rates and multiply that percentage by the sales price. Divide by 12 and that’ll give you your monthly tax bill. The more specific way is to go to your county website and find the actual tax bill for each property you want to buy and divide the amount by 12.
Homeowners insurance varies by geographic location, company, type of house, age of roof, square footage of house, and price point. It’s difficult to estimate this annual premium without knowing a specific house and receiving a quote. However mortgage lenders in your market can make an educated guess based on their knowledge of recent loans and housing types in the area. You can always ask your mortgage lender or a Realtor in your area how much you should estimate for homeowners insurance. A good rule of thumb is $200/month, knowing that it could be more or less depending on the house and time.
You take these 4 elements, P&I, taxes, and insurance and add them together for your estimated mortgage payment. If you have less than 20% down payment, then you’ll need to also add in an estimated PMI payment (Private Mortgage Insurance). There are calculators online for this and the actual amount will vary depending on LTV, credit score, and overall amount financed. A general guideline would be $130/month knowing that it could be more or less.
How to qualify for a mortgage
These are all of the primary elements that go into mortgage qualifications. A mortgage lender takes your credit score and provable income to start the process and figure out what loan program may work best for you.
They look at your down payment percentage on a specific house to determine the LTV. Based on your credit score and loan-to-value ratio they then are able to calculate mortgage pricing for origination and interest rate costs as well as PMI.
They use all of that information to determine the estimated monthly mortgage payment including taxes, insurance, and PMI.
They then add that new estimated monthly mortgage payment to your existing debts. If the total of those debts divided by your gross monthly income is under the DTI ratio requirement, then you likely qualify for the mortgage.
What options are available if you don’t qualify for the mortgage?
After all of those elements are reviewed, if you come back not qualifying then the mortgage lender reviews each of those individual elements to see where adjustments could be made.
Maybe, your credit score is 714 which gives you a 45% DTI maximum but at a 720 credit score your qualifying DTI maximum would increase to 48% under some circumstances. If you have revolving debt like credit cards that have a high utilization rate, then paying down those credit cards would increase your credit score enough to get into the better pricing bracket.
Maybe you have enough cash available for down payment to get to 20% down instead, which eliminates PMI from your calculations and would get you under the maximum DTI limits.
Maybe there’s other income you forgot to include in your application that would increase your Gross Monthly Income enough to get under the maximum DTI limits.
Maybe you have a retirement account or savings reserves that give you 6+months of reserves the lender can use to increase your qualifying ratios.
There are dozens of different things mortgage lenders can do to adjust and help you in mortgage qualifying.
Should you get a new mortgage?
Just because you may technically qualify for a mortgage doesn’t mean you should rush out to buy a home. There are guidelines out there that would allow you to buy a house where the monthly mortgage payment is 50% of your gross monthly income. There’s not a financial advisor in the world that would say that is a wise decision, even though you could technically qualify for that loan.
Your first step is to make sure your financial house is in order, that you have your consumer debts eliminated or super limited, and that you have enough cash in the bank for a down payment. Then determine how much you personally feel comfortable budgeting each month for your housing costs (20%-33% is a realistic and understandable amount for most families in the US.)
From there, you should meet with a professional Realtor to help you start narrowing in on all of the details in purchasing a home and helping you navigate the process. Your professional agent will have several mortgage lenders that will help you qualify for a mortgage and get the process started. If you’re in the DFW area, our team would love to help you get qualified for a mortgage and buy your new home. Learn more about our team and how we help home buyers here!
We made a catastrophic mistake in the name of “protecting property values.” We did it too well! Over the last 50+ years or so we’ve slowly and unintentionally made it illegal to live somewhere other than in large single family homes or in luxury apartments.
During that time period we have created entire zoning ordinances that require minimum square footage homes on minimum sized lots with minimum setbacks from neighbors and streets. We’ve prohibited generational living such as building a mother-in-law suite and guest homes are prohibited from having someone occupy them full time. We’ve let HOA’s and municipalities put ordinances in place that restrict our ability to let our aging parents live in a small apartment in our backyard. How crazy!!?!?!
We did all of this just so we could “protect our investment” into our single family neighborhoods by keeping out any other development (and people) that doesn’t look exactly like our own. God forbid someone might allow a newlywed couple to live in an over the garage carriage house while they save for a down payment! The world may literally end if our single family home sits adjacent to a really beautiful duplex where a family owns one unit and rents out the other unit to help offset the cost of their mortgage! I think the sky may actually fall if a quadplex even shares the same air as a Country Club neighborhood.
We have protected property values so well that we now have increasingly expensive single family neighborhoods all over the country. We’ve refused to build anything near those single family homes that doesn’t meet some subjective standard of quality that changes over time. And they’re now getting to the point where homes are flat out of reach for a new generation of homebuyers.
If real estate is one of the best ways to build generational wealth, to break generational poverty, and provide financial stability for families… which I believe it does… then EVERYONE DESERVES THAT OPPORTUNITY!
Accessory Dwelling Units help to solve this home affordability crisis by providing new options for renters and property owners.
An ADU is simply a secondary dwelling unit that is built on a single family lot and occupied/rented by someone else. They’re sometimes called carriage homes, garage apartments, granny flats, mother in law suites, backyard cottages. Sometimes they’re attached to the single family house or even a finished out basement. Other times they’re a detached structure on the side or in the backyard. 150 years ago it was uncommon that anyone but the extremely wealthy could afford a single family home without putting the land to use. It was a sign of extreme wealth to have a front lawn that’s only purpose was to grow grass that had to be mowed every week. The average family had to utilize as much of their land as they could to help financially pay for their home.
ADU’s help average property owners build wealth, but they also provide an affordable home option for a variety of people that live in a community. Maybe your aging parents need a little assistance from time to time and want to maintain their independence without owning their own single family home. Perhaps your college graduate just moved back home while they’re starting out in their first career and can’t quite afford the rent at one of the luxury apartments in town, but wants to be out living on their own. The recent high school graduate that’s working full time in the restaurant around the corner while they figure out what’s next in life likely can’t afford the rent at an apartment complex with tons of amenities, but they also need to be out living on their own instead of with family for whatever reason.
Building Accessory Dwelling Units on your single family property creates unique housing options within your community to address home affordability options while also creating wealth building opportunities for you. It’s literally a win-win scenario.
Yet for the vast majority of single family property owners that live in the United States, they are illegal to build. The zoning in your community most likely doesn’t allow for them. And if the zoning does allow for them and you live in an HOA, then your HOA likely prohibits them.
We could almost overnight change this home affordability conversation. We could create opportunities for you and your neighbors to build a she-shed in the backyard and rent it out for a few hundred dollars each month to someone needing a different housing option. It’d generate income for you as well as help you grow your equity in your property. It’d give someone else in a different life stage than you a housing option other than splitting luxury apartment rent with 3 other people. It’d let new homeowners find ways to generate extra income to help offset the rising mortgage costs.
We can solve this problem. It just takes your local governing body to quit making it illegal for you to build a small apartment for your kids grandmother to live in your backyard.
The Tarrant Appraisal District mailed out property value notices for 2022 this weekend.
You may have heard the real estate market is on fire so the value you see on your TAD Blue Form may not be a surprise to you. But if we’ve learned anything the past several years it’s that higher property values also likely mean higher property taxes.
There are a few things in place this year (HB3 & SB2) that the Texas State Legislature has done to minimize the impact of rising property values on our property tax bills. But you should still understand the process involved and do what you can to lower your annual property tax bill.
The Process of Calculating Your Tax Bill
Your property tax bill is actually a two part calculation that happens each year. Part 1 is happening right now from April-May and is where the Chief Appraiser for the Tarrant Appraisal District assesses the property value of each piece of property in the County. By State Law the Chief Appraiser is required to determine the taxable value of your property as of January 1 of the tax year and notify you by a certain date.
The Chief Appraiser will then deliver each taxing entity like the city, school district, and county a preliminary tax value number. That occurs on April 30th of the year.
We are then in what is commonly known as the “Protest Period.” This is where property owners have the right to protest the value of their property assessed by the Chief Appraisers office. The deadline to apply for your protest is typically around May 15, or 30 days after you receive your valuation notice. Property owners work with the Tarrant Appraisal District during this time period to come to an agreement of the fair market value of their property, based on January 1 of the taxing year.
During that time period the individual taxing entities begin preparing their budgets for the upcoming fiscal year. At the end of the Protest Period, the Chief Appraisers Office delivers a Certified Tax Roll to each taxing entity. This moves us into Part 2 of how your tax bill is calculated. The certified tax roll is then what each taxing entity uses to determine what tax rate they need to charge in order to fulfill the budget they have built for the upcoming fiscal year. Public hearings on the budget and tax rate must be held prior to the adoption of the tax rates. These meetings typically occur each year in September as the fiscal year begins on October 1.
Your tax bill is then calculated by the County Tax Assessor Collector by taking your taxable value assessed by the Chief Appraiser, deducting out any eligible exemptions, and then multiplying those values by the tax rates that have been adopted by the elected officials. The tax bills are mailed out in November of each year, with a due date of January 31 of the upcoming year.
If you have an escrow account attached to your mortgage, your mortgage company will pay the tax bill on your behalf, typically in December of each year. If there is a shortage in your escrow account you are notified sometime later in the Spring of the shortage and given the opportunity to bring the account current and your mortgage payment adjusts so there is not a shortage again the next year.
So what should you do about your property value notice?
If the Market Value of your property is higher this year than it was last year, it is likely that your tax bill will also be higher when it is calculated later this year as rates don’t change substantially year to year. Your best chance to help yourself is by protesting your property tax value with the Tarrant Appraisal District.
The reality is, they have not looked personally at your property. They do not know the condition of your property. In many cases they don’t know what you paid for your home. They don’t know if it is updated or out of date. They don’t know if you have brand new windows or if your whole home is falling apart. They don’t know dozens of factors that help determine the actual value of your property. They’ve used computer algorithms and a database to make an educated guess. And their educated guess is often wrong. Their job is to get the appraised value accurate and the Protest Period is their (and your) opportunity to make sure they get it right. By minimizing the increase that the Tarrant Appraisal District adjusts your taxable value, you give yourself the best opportunity to avoid skyrocketing property tax bills.
If you’re a Mansfield ISD area homeowner, we’ve created a FREE tutorial that walks you through the process of protesting your property tax value with the Tarrant Appraisal District. You can sign up for that free tutorial here!
Last week the stock market was thrown right into the main stream discussion in ways it never has before. It has left a lot of people wondering WHAT IS HAPPENING WITH THE STOCK MARKET!?
For starters, you should know that none of what is happening has anything to do with real investing. The stories you heard last week and what will be ongoing discussions for the following few weeks are essentially gambling where several bets went very wrong for some very wealthy people and some smart everyday people wreaked havoc on Wall Street.
To best understand what’s happening there are some terms that you need to know the definition:
Hedge Fund: A hedge fund is a group or partnership of investors that use high risk investing methods to realize higher gains in the stock market. They are typically wealthy investment groups that use borrowed money or often times have institutional investors backing them with funds from 401k’s and Pensions.
Short Selling: If an investor believes a stock is going to go down in price by a certain date, they can make profit off of that loss in value by borrowing a share of that stock from their broker and sell it on the market today. Then in the future when that stock has a lower price, they can buy the stock back at the lower price and return the share of stock to their broker. The investors profit is the difference between what they sold the stock for initially and the lower price they’re able to buy the stock for in the future.
Retail Investors: If you’re independently investing in the stock market without the assistance of a fund manager, stock broker, or financial advisor utilizing online platforms like Robinhood, ETrade, WeBull, or others, then you fall into a category known as retail investors.
How to profit when the stock price goes down.
If you owned a stock today but believed it was going to go down in price over the next 60 days and that the highest price you could sell that stock for is the price it is selling for today, you would sell that stock today.
But what if you don’t actually own the stock today and are confident it’s going to drop in price in the future? This is where Short Selling a stock comes in. You borrow a share of stock from your broker and sell it today. Short sales have an expiration date in which you must return the share of stock back to your broker.
Investors then make money on a Short when the price of the stock does indeed drop. They sell it today at the highest the stock can sell for and buy it in the future at a lower price so they can return the share of the stock back to their broker. The risk of course is that the price doesn’t go lower but instead goes higher. In this case, the investor that borrowed the stock has to pay more money to buy the stock and return it than the amount they made when they sold the borrowed stock.
What happened this week on the stock market?
A group of retail investors who have been reading a Reddit thread online, primarily run by a group called Wall Street Bets, discovered that several stocks had been shorted by some hedge funds. What they discovered is that these stocks had been over-shorted, meaning that more shares of the stock had been sold short than actually existed on the market.
The hedge funds borrowed and sold more shares of stock than they can now buy and return to their brokers. The time for returning the shorted shares is basically now. The only way the hedge fund makes a profit on the deal is if they can buy back the stocks at a lower price than they sold them for.
These retail investors have chosen to go all in on the stocks that the hedge funds shorted. The sudden increase in buying activity on these specific stocks has caused their trading price to be above what the hedge funds sold them for. Now the hedge funds have to scramble to buy back the stocks thus creating more buyer demand and sending the price of those stocks up higher. The longer the retail investors hold on to their shares, the higher the price will go until the hedge funds can return all of their shares of the borrowed stock.
In order to “cover” their short position losses, the hedge funds have had to sell some of their long positions (stocks they like and that are increasing in value). This sudden sell off of high quality stocks caused the prices of those stocks to also go down, and lowered the overall Dow Jones Average.
The Controversy
There has been a tremendous spike in the volume of transactions occurring as a huge number of new retail investors have jumped into the market. When you open a new brokerage account and deposit money into that account, the money doesn’t immediately transfer. It takes a few days to go from your bank account and be received by your brokers account. The brokerage will still typically allow you to make trades during the waiting period, you just can’t cash out until your funds have all cleared. This has caused strain on the infrastructure system for brokers like Robinhood who cater to the retail investor. To put it most simply, these brokerages had to make a choice to either limit their financial exposure or allow all of these trades to go through even if there were issues a few days from now getting the actual cash transfers into the bank. The controversy here is that retail investors clearly wanted to participate in the market and buy into these various securities they were hearing about on the news and social media. These new investors buying into those securities could have and should have allowed the price of those securities to continue to rise. Because of the limits placed on the retail investors which limited the number of shares of a security could be purchased or held, the price of the securities didn’t rise as much as anticipated which scared off many of the retail investors into selling their securities for a loss. This ultimately allowed the hedge funds to buy back those same securities at a lower price than they were going to be buying them for.
On its surface, what it appears is that the brokers facilitated “stealing from the poor to give to the rich,” which is the opposite of Robinhood. These retail investors overpaid for a stock with the almost certain knowledge that it was going to increase anyway. However due to the actions these brokerages took in limiting purchase transactions, they squashed the price trajectory of these securities. These actions helped hedge funds minimize their losses and cost retail investors losses.
What does all of this mean for the average person?
Ultimately, the value of a company and the price of their stock are typically somewhat equal. Occasionally things get out of whack, like they are right now. The underlying assets in the middle of the stock market mess this week are brick and mortar companies that have had their doors closed for the past 6-9 months by the government in the middle of a pandemic and were already being subjected to digital changes in their markets. The reality is, their stock price likely should not be what it is trading for today. It likely won’t be trading at anywhere near this price 6 months from now.
This is not investing. It is gambling. It is trying to find the perfect time to jump off of a rocket ship in order to profit and if you miss the mark, you will lose money. If you want to play in that game, fine. Just be careful to only invest what you can afford to lose. Don’t bet your rent money on this fiasco and don’t change your long term financial strategies on a whim.
Real investing is following a disciplined strategy of making consistent investments over time into a well diversified portfolio. For the average person, payoff your consumer debts and build a small emergency account to free up your monthly cash flow. Then use your income to follow a proven investment plan that will help you build wealth.
There are probably a dozen things you can think of that you’d do with an extra $1,000 right now. Winter is coming. There are decorations and gifts to buy. Maybe you want to pay off some debt or boost your savings account. Maybe you need a quick weekend getaway. There isn’t much you can do to save $1,000 doing just one thing. But several small things that don’t take much time can add up huge for you! Regardless your reason, here are 21 ways you can save $1,000 in 30 days.
Some Easy Ways to Save $1,000 in 30 days.
The fastest and easiest way to save money is to look into the areas where you are already spending money each month.
Shop your auto insurance policy. Call your agent or get quotes from 3 different companies and see if you may be paying too much. You should do this at least once a year to make sure you’re getting the best rates.
Review your cell phone plan. Are you consistently only using 2 GB’s of data each month but paying for unlimited? Do you have “extra’s” to your plan that you don’t use? Call your carrier and ask them for a discount. If another carrier has better rates, tell your carrier about it and see if they’ll match or beat it. If they don’t, switch.
Check your home utility usage. Do you have a toilet that won’t stop running water? Is there a water spigot outside that is dripping? Can you turn your thermostat up 4 degrees in the Summer or down 4 degrees in the Winter? Are you leaving lights on unnecessarily? It may not seem like much, but a few simple changes to your routine at home could result in $20-$40/month in savings.
Shop your home internet. This is a competitive industry and many providers will compete for your business. Shop around and find the best deal, but ask your neighbors for their recommendations first. There’s nothing worse than saving money but then the new provider can’t deliver internet to your house correctly.
Cancel unused services. Netflix is great. Hulu is great. Amazon video is great. Spotify is great. Pandora is great. Magazine subscriptions are great. iCloud is great. Dropbox is great. But do you need all of these services at the same time? If your goal is to save $1,000 in 30 days then cutting out some of these services is a great start.
Cancel cable TV. With YouTube streaming the World Series and Netflix delivering on demand content, there really isn’t much necessity for cable anymore. You can watch most any show you want online for free and with a good antenna you can catch all of the major network TV live still.
Pause recurring monthly billings. Do you have a pantry full of Shakeology? Do you already have plenty of Monat or Mary Kay for the next month? Products that are set up on auto-ship notoriously ship the products more frequently than we can use them. If you buy things like this and are already oversupplied, press pause on your next shipment and throw that money into your savings account.
Bank Fees. Does your bank charge a monthly fee for checking or savings accounts? They shouldn’t. There are tons of free options available for banking, including online accounts. Check out a few and switch if necessary.
ATM Fees. Are you a chronic violator when it comes to ATM fees? You can avoid those fees by going to your own bank and making withdrawals. Or check out some other banks that will reimburse you for your ATM fees.
Change the frequency of your service providers. Do you have your lawn mowed or house cleaned? Instead of having these done weekly, change it to every other week. Or consider cancelling the service for a season while you use that money to boost your savings.
Life Insurance. If you have a Whole Life insurance policy, you’re likely spending too much money. Get a 20 or 30 year level term life insurance policy in place that has a death benefit of 8-10 times your annual income. Then cancel your whole life insurance policy. You’ll save money each month on the premium and as a bonus, if your whole life policy had cash value then you’ll get a check in the mail.
Adjust Your W-4. If you get a tax refund every year and your tax circumstances haven’t significantly changed then you need to adjust your W-4 at work so your company takes less out of your check for federal income taxes. That’s your money. Bring it home sooner into your bank account rather than let the government hang on to it for a year for you. This is super simple to do and can make a huge impact on your budget.
Easy Ways to Cut Food Costs and Save $1,000 in 30 days.
One of the other major areas to help you save $1,000 in 30 days is to adjust your food budget. Here are a few ideas that might help.
Shop your pantry and freezer first. Before you go to the grocery store or out to eat, check out the food you already have in your house. Do you already have spaghetti sauce in the pantry? Can throw together a meal or two with the items in your freezer?
Meal Plan. Coming up with a plan for what you’ll eat and when you’ll eat it is a great way to save money. It forces you to think about the meals for the coming week beforehand and you can buy exactly what you need at the store.
Buy meat when it’s on sale. That seems like a dumb point to put in this article. Of course you should buy things you need if they’re on sale. If you see that chicken breasts are significantly cheaper at the store than they normally are though, go ahead and buy a few extra and put them in the freezer. Later in the month you’ll have meats for you meals that you bought when they were on sale.
Leftovers and Sandwiches. It may seem obvious to some, but when you do cook make enough extra that you can have lunch tomorrow. Sandwiches are also an inexpensive way to feed your family when you’re on-the-go. For a fancier option, heat up your sandwich on a skillet.
Breakfast for Dinner. This is also probably silly. But eggs, bacon, and a can of biscuits cost like $8 and can feed a family of 4 pretty well. You may not want it all the time, but breakfast for dinner is a great cheap option to help save some money.
Chick fil A survey receipts. Okay so this is just a bonus one for me. If you have a Chick fil A with the survey receipt, call that survey number and then go get you a free chicken sandwich.
Income Ideas to Help Save $1,000 in 30 days.
Garage Sale. You have a ton of stuff in your house you aren’t using anymore. This could be old baby clothes or toys or home decor or electronics. If you’re not using it, haven’t used it, or just don’t want it around anymore, then move it out to the garage and get ready for a garage sale.
Facebook buy/sell/trade groups or Craigslist. Selling items online is often faster and will make you more money than selling in a garage sale. If you have time, take some good pictures of the items and start posting them. You’d be amazed at how much money you’ll make getting rid of your old stuff.
Start a side-hustle. Mow lawns. Clean houses. Clean pools. Rake leaves. Drive for Uber. Deliver Pizzas. To save $1,000 in 30 days you only need to generate an extra $250/week. That’s the equivalence of cleaning 2 or 3 homes a week, or mowing 6 or 7 lawns a week. That’s just delivering pizzas for about 12 hours a week. That’s just cleaning 12 homeowners pools each week. There are an infinite number of ways you can start a side-hustle to generate extra cash fast.
This is in no way a comprehensive list of all the ways you could save $1,000 in 30 days. But it’s a start and hopefully it’s got you thinking of more ways you could easily save some money. If you do 1 or 2 of these things you’ll make progress toward your saving goal and if you combine many of these ideas you should have no problem saving $1,000 in 30 days.
I played the trombone in my high school band. Each year was an audition process to make the Region, Area, and ultimately the Texas State concert band or Texas State orchestra. So each year in August I’d get the audition music and begin practicing. By the time auditions came around in November I was as prepared.
I had some natural musical talent that helped me excel and without a significant amount of effort in my Sophomore year I made the Region and Area band. But I did not make the Texas State Band.
My junior year I worked harder, but again did not make it to the state level.
My senior year, I hired a private instructor. And in August we set out a game plan. We mapped out when each practice was going to be held. We mapped out how far on each piece of music I would get to by which dates. We created a roadmap for what those next few months would look like. And in my senior year when it came time for auditions I was 100% ready. I felt confident. My audition was the absolute best it could have been. It was my absolute best effort. That year they took 16 trombone players in the State band or orchestra. I was number 17.
While I didn’t ultimately reach my goal, I was so much closer than I had ever been simply because I had taken a 30,000 foot overview before I even started. I created a roadmap about the things I wanted to execute and that got me incredibly close to my goal.
That’s what the beginning of each month provides for my financial goals now. It’s an opportunity to create a roadmap of what I want the next 30 days of my life to look like. If you want to create something similar, here are 3 tips for an awesome financial month.
3 Tips For An Awesome Financial Month
Review Your Calendar Write out everything that you have committed to attend for the next 30 days. Discuss your schedule with your spouse. Don’t forget about kid events or business trips or date night. Be detailed and look at each of the next 30 days. Create a roadmap with your schedule. Our family uses shared Google Calendars for this because it helps keep us all on the same page.
Plan Your Meals For about the past decade I keep beginning each month with overly optimistic plans about what our grocery budget is going to look like. Then we get about 4 days into the month and that plan gets shot down real fast. The reality is, we’re super busy. At least 4 nights a week we have an activity to attend outside of the house. Taking time at the beginning of the month to compare our calendar with when we’re going to eat helps us come up with a plan that works. Some nights it’s totally reasonable that we grab Chick Fil A separately while one of us runs a kid to baseball and the other one runs the other kid to dance class. Other nights, crockpot meals get to be our best friend. The important part is that you create a plan. You don’t have to know exactly what you’ll feed each person in your family for each meal of the next 30 days. But you should know what nights you’re going to go out to eat, what nights you’re grabbing fast food, what nights you can cook, and what nights you’ll say “every man for himself.”
Create a Simple Monthly Budget Budgeting sometimes gets a bad reputation. It’s sold to us as something that is hard, or worse something that is restricting. The truth is, budgeting is just a roadmap for your money. Without one you don’t really have a plan to follow. With one, you’re much more likely to hit your goals. So make your budget simple. Write down all of your income for the next 30 days. Then write out what you think your expenses will be for the next month. Start with your Groceries, Utilities, Transportation, and Shelter (GUTS). Then write out your health and insurance related expenses like doctor co-pays, gym memberships, and life insurance premiums. Lastly write out everything else you may spend money on like kids school pictures, or new jeans, or daycare, or going out to the movies. If you’re not sure what expenses may come up, create a Miscellaneous category and plan to have those unplanned expenses. Subtract all of those expenses from your income until the resulting number equals $0.
You don’t have to do all of these things to have an awesome financial month. You could luck into success. And doing all of these things certainly doesn’t guarantee success. But I promise if you take about an hour of your life at the beginning of the month to create a roadmap, you’re going to be much closer to your financial goals 30 days from now.
