Category: Personal Finances

8 Surprising Costs of Buying a Home You Need to Budget For

Buying your first home is so exciting. It can also be a little nerve wracking the first time around if you don’t have any guidance. Here’s what you should know about the home buying process before, so you aren’t shocked by the expenses that come along.

The Appraisal

An appraisal is when you have a home expert come and determine the value of a home. They have no stake in the outcome of their conclusion, so you can expect an honest answer. You will want to be sure to have an appraisal completed to ensure that you are not paying more for the home than what it is worth. This can cost upwards of $600 and should be factored into your budget.

Home Inspections

Some get appraisals and home inspections confused. They are both important, but the home inspections are more tailored to your needs and may help to answer some of your questions about the conditions of the home. By getting an inspection, you are able to have a better understanding of the home’s condition. This can cost an average of $300.

Closing Costs

Sometimes, you may be able to convince the seller to pay the closing costs. Yet this isn’t something that should be relied on. Closing costs cost an average of 2-5% of the value of the home’s purchase price. It includes costs such as loan fees, taxes and title searches.

Homeowner’s Insurance

If you’ve rented prior to this, you may be new to fire insurance or more commonly known as homeowner’s insurance. It differs from rental insurance, as that covers your liability and personal items, while homeowner’s insurance also covers the physical structure of a home. The average cost for this is $1,500 a year.

Home Maintenance

The nice part of renting is that you aren’t responsible for home maintenance. Surprisingly, many are unprepared for the maintenance that comes with home ownership and how this can create additional expenses. You are going to need to buy basic items like a lawnmower, snow blower and a leaf blower.

Cleaning

If the prior owners hadn’t cleaned, you may have an additional expense of getting the carpets cleaned before you move in. Carpets should be professionally cleaned once a year, so if they haven’t been cleaned immediately prior to your move in, you may want to schedule a cleaning. This can cost $300 for a 1,500 square foot space.

Homeowners Association Fees

A homeowner’s association is a part of an organization that enforces rules and regulations for your property. They charge a fee for the upkeep of the property in addition to shared services among the community. These are typically due at closing, but you should be aware that the average HOA fees increase by 5% each year.

The Big Move

Often forgotten or not factored, is the move itself. Moving is an expensive business, especially if it’s across state lines. You will need to figure in the costs of movers, moving materials and transportation. These usually cost an average of $3,000.

Budgeting for these costs will allow you to have a correct price in mind when house hunting. Our team offers great insight into our mortgage products. Discover more today!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

Savings Hacks for College Students

While college remains one of the best ways you can invest in yourself and your future, it doesn’t change the fact that the costs of attending college only continues to grow. Focusing on your education should be your top priority while you’re in school. However, developing strong saving habits can not only cut costs while you’re attending college, but those habits can also help you be more responsible with your money once you’ve graduated.

Set a Budget

While this may seem simple and obvious, creating a budget is the first step in any successful savings strategy. Outline what your monthly expenses are, including things like going out with friends on weekends, and figure out how much money you have. If you’re working while in school, your goal should be to have your income be more than your expenses. If you’re living off money you made during the summer, figure out how much you can afford to spend so that it lasts you throughout the entire year.

Saving on Supplies

While your school’s bookstore may have the latest and greatest when it comes to logoed swag, shopping there won’t help you when it comes to saving money for your school supplies. When it comes to notebooks, pens, pencils and backpacks, you’re much better off going to a local big box store.

Additionally, buying new course textbooks from the campus is usually more expensive than exploring other options. Whether it’s purchasing a used copy of the book, using an older version of the text book or exploring book rental programs online, finding alternative textbook solutions can save you hundreds.

Getting a Part-Time Job

Even if you’re considered a full-time student, you probably have some free time outside of attending classes, doing your homework and studying for exams. If you find yourself with extra time, getting a part-time job is a great way to earn extra money and start saving. If you can find a job on campus, you can save money and find a job that will work with your class schedule. But, don’t be afraid to look for a job off-campus. Just be clear with any potential bosses about what your class schedule is and set realistic time expectations for yourself.

Develop a Strategy that Works for You

There are countless ways to responsibly save while you’re in college. All you need to do is develop a strategy that works for you, and stick to it. We hope these tips will give you a good starting point that can help you develop strong savings habits that will serve you well throughout your life. Place your new savings into an account with us – we’d be happy to help your money grow!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

Best Retirement Strategies for Your 20s

If you’re in your twenties and thinking about retirement, you are light-years away from your peers who wait until it’s too late. You’ll be so glad you started to take serious steps towards your golden years with these straightforward strategies.

1. Negotiate More

Your first job isn’t typically known to be a real money maker. You’ve been told to “pay your dues” and take the work for little pay. However, it is especially important for college graduates to negotiate for a higher salary. Whatever number you are thinking, add $5,000 to that salary. This is important because whatever salary you start with will follow you and be the basis for much of your career. You will of course get raises, but often, each new position you take is related to the salary you had prior. Start off high so you can begin investing greater now.

2. Automate Savings

It’s never easy to save and can be incredibly challenging if it’s saving for something that’s thirty years away. One way to take the struggle out of this is to have your savings automated. You can set a specific percentage to come directly out of each paycheck and into your savings account. It’s a painless way to force yourself to make wise decisions with your money.

3. Establish an Emergency Fund

While you’re saving for the golden years ahead, your plans can be easily derailed with a major financial emergency like a flooded basement or an unexpected medical procedure. Having an emergency fund in place will help to provide some cushion so you aren’t going into debt to cover these losses.

4. Start a Retirement Fund

Having a straightforward savings account for retirement is not the best way to make the most out of your money. You are going to want to invest in a retirement fund that’s built for growing your wealth over time. Most employers offer a matching 401(k) compensation plan as a part of the benefits. However, if yours does not, you can and should invest in your own Roth IRA.

5. Pay Off Debt

Debt of all kinds is crippling to millions of Americans at all ages. Those in their twenties average $20,000-$35,000 in debt. Debt should be paid off as soon as possible so you can begin investing in the things that matter most to you. You shouldn’t have to be constantly playing catch up, but instead, planting financial seeds for your future.

Continue to build your retirement funds with a CD or IRA from Peoples Bank & Trust!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

How to Buy a Car – and Actually Save Money

Is your current car on the fritz or have you been eyeing that shiny new Jeep you see parked at a dealership on your way to work every morning? If you’ve been hesitant to buy a new vehicle because you’re worried about it costing too much, here are some ways that you can get the car you’ve had your eye on while still saving money.

Get Pre-Approved

Before starting your search, you should get pre-approved for a loan. It’s important to know what limit you can qualify for and match that up with your monthly budget. It has been estimated that your total auto expenses should not exceed more than 10 percent of your yearly income. This includes the loan, insurance, maintenance and interest. When you know your limit, you can stop yourself from gazing at cars out of your price range that you may have otherwise talked yourself into buying.

Sell Your Current Car

Many times the dealerships will ask for you to trade in your vehicle in order to get a “better” deal on the new car. However, you can typically get more for the auto if you sell it privately. This may cost you some additional time to fix anything major with the car, as well as listing it in the local classifieds. The dealership will turn around and sell the car for a profit anyways – shouldn’t that extra money be yours to put towards your new wheels?

Shop Around

You are your best advocate when it comes to finding and buying your new car. Don’t make any decisions right away. A smart way to start looking is searching at the average value of the car you are wanting. Look at reputable sellers online to see what the cars are typically going for, so you don’t find yourself getting swindled by a dealership transaction.

New to You Is Often More Valuable

The minute a car is driven off of the lot, it loses a significant amount of value. Often, the newer cars aren’t necessarily any different than ones a from few years prior in terms of features. Consider buying Certified Pre-Owned vehicles to save yourself hundreds or thousands of dollars.

Be Wary of Extended Warranties

Many dealerships will push heavily for you to have an extended warranty because this is how they make a large portion of their money. It is of course your choice on whether or not it is worth the risk of not accepting the warranty. However, many times these extended warranties are mute in comparison with the manufacturer warranty. They are usually very expensive and do not make it worth your dollar in the long run.

Allow us to help you with a big purchase like this – we’d be happy to speak with you about our options.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407727

How to Set and Reach Your Financial Goals

A dream is just a dream until a plan is created and executed. It can be a challenge to know where to start, as some days the expenses seem to come in faster than you can keep up. It’s time to take a step back, think about what you want for your life and begin building that future today.

How to Set

You are probably familiar with the concept of goal setting in your everyday life. Often, they take on the form of dreams, like someday having a vacation home in Hawaii or being able to complete a half a marathon. It’s fantastic that you have these dreams and dare to imagine bold things for your life.

However, financial goals should be approached differently. This is why it is difficult for many people to ever achieve their goals, because they don’t know how to set them. A great place to start is taking the time to really think about what is most important to you. Where do you see yourself in five years based on the current financial decisions you are making? Are you happy with this? If not, why? What needs to change? You may want to sit with your partner as you both talk about your goals. You may be surprised at what they have to say and how it may spark ideas of your own! Some examples of other’s financial goals are: paying off credit card debt, starting an emergency fund or saving for a down payment on a vacation home.

How to Attain

If you haven’t heard of the acronym SMART, it’s time to apply it to your financial strategy.

S – Specific

Your financial goals need to be specific. What is it exactly you want? Instead of saying, “I want to be a better saver,” change it to, “I will be a better saver in the entertainment part of my budget. I will do this by…”

M – Measurable

Because we are dealing with numbers to begin with, your financial goal should be something that can be measured. This is so that you can tell how far or close you are to the mark. “I will increase our emergency savings by 10 percent.”

A – Achievable

Are your goals out of this world? That may be good for daydreams, but if you are wanting an action plan, it should be attainable. For example, saying that you hope to win the lottery by buying tickets isn’t exactly achievable. Have a goal that is within reach and motivating.

R – Relevant

Is the goal relevant to your life? Does it make sense? If your goal is to buy a luxury vehicle, but you still have many other debts, it may not be a good goal. If it isn’t relevant to your life at this time, it can be put on the back burner. It’s all about the climb.

T – Time Bound

Every goal needs a time stamp. If there isn’t, the goal will just be floating in your mind. This can make it less motivating to accomplish, ensuring that it will never get done. Have an end date in mind. Once this date comes, evaluate where you are and what you did well. Take the time to recognize what you can work on for the next goal. Keep building off of this until you get to where you want to be financially!

Once you start setting some financial goals, open an account with us to help you continue that success!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

7 House Buying Tips to Save Money

It’s finally house hunting season and you could not be more excited to get the ball rolling on your big purchase! Before you hit the road or the search bar, take these 7 tips into consideration.

1. Know Your Limits

Before signing the papers or falling in love with the first home you see be realistic about what is in your budget. We recommend spending no more than 25 percent of your monthly income on the mortgage. When you know what this number is, be sure to stick with homes in that price range. Don’t even go into homes that are going to be proportionately out of that limit, or you may kick yourself later as you feel straddled with a home you can’t afford.

2. Be Realistic About Fixer Uppers

While they are fun to watch on TV, if you don’t have the skillset to actually fix homes, a house that needs a lot of TLC is likely not for you. Many see a low price on a home and jump on it, thinking the work needed will be minimal and easy. When it comes to home improvement, no fix is simple and this is even more true if you are a newbie to the renovation game. Often people do not realize the time commitment and additional cost that come with dramatic improvements.

3. Provide a Strong Down Payment

The more you are able to give for a down payment, the greater equity you will already have in the home in addition to a lower monthly payment. This will save you money on interest in the long run.

4. De-clutter the Current Space

It’s time to spring clean your “extras.” We all have things sitting around our home that go untouched and unneeded. Start selling these items at a local thrift store or posting them for sale online. This will help to make your move easier and be a helpful way to start saving for the down payment!

5. Take Your Time When Shopping

Don’t let the desire to get out of your current living space cloud the judgement of the purchase. Take your time studying each home and realize that this is one of the most important big purchases you will make in your lifetime. It needs to be a thoughtful, decisive purchase.

6. Eliminate Other Debts

Get a great deal on the mortgage by making sure your credit score is in tip-top shape. A large purchase with a loan or credit card right before you buy a home will certainly have an impact on your mortgage rate. Boost your credit score by paying down the debt you have and stay away from any other purchases until after the home is in your possession.

7. Conduct a Personal Roof to Basement Inspection

Know the property backwards and forwards before signing the dotted line. This means hiring a trusted inspector and having a contractor come to confirm the findings. After this, there is still a final step. You need to conduct a thorough inspection to ensure that you know exactly what you are in for. This is a great checks and balances system to confirm that you are getting a fair deal that won’t end up costing you thousands in repairs later.

Be smart with your finances and don’t spend all your money on a “dream home.” We’re here to help you know how much house you can afford, while offering mortgage solutions to fit your needs.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

3 Questions to Ask Before Using Your Emergency Fund

Emergency Fund

If you’re new to budgeting, we recommend having a $1,000 cushion to help offset the cost of an emergency expense without it derailing the rest of your budget. If you aren’t able to put the $1,000 aside now, start small and work your way up to a number that is comfortable for you.

When is a financial emergency, truly an emergency? Establishing an emergency fund is an incredibly important part of your budget, but knowing when to use it is just as important. Ask yourself these three questions before dipping into the pot:

Is it unexpected?

Unfortunately, life can hit us with some difficult challenges that result in significant financial hardship. These are the situations in which use of the emergency fund is acceptable. This could be an unforeseen medical expense, like a child’s broken arm. Or, maybe you lost your job and will need some help getting the bills paid until you find new employment. These type of events are unexpected and difficult to plan for, as you hope you will never have to face them. What would not be “allowable” is using the EF (Emergency Fund) to pay for expenses that you know are coming each month, such as a cable or utility bill.

Is it urgent?

The word emergency typically implies immediate. For example, if you have a sick loved one who needs you across the country, it won’t do them any good for you to wait until you have saved up enough money to visit. They need you now and it is reasonable to use the EF to get there.

Will it fulfill a need?

For many, it can be tempting to spend the large amount of money accumulating in your emergency fund. But this is where you need to truly consider needs vs. wants. For example, let’s say your dishwasher broke. Of course, this is not ideal and can make your life more difficult, especially if you have many people in your household. However, it wouldn’t be categorized as a need. You can wash dishes by hand and start saving for a new one. But, if your dishwasher broke causing water damage to the cabinetry, this would qualify as an unexpected and urgent need to take care of as soon as possible.

If you’re looking for a safe place to keep your emergency fund, allow us to help it grow a little by placing it in a savings account with us!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

4 Steps to Buying a Home That Won’t Bust Your Budget

It’s that time of year when you’re likely to see ‘for sale’ signs on every block. Maybe you already have your eye on one and go out of your way to drive past it on your way home from work. Before you leap into purchasing a home, be sure to take these four steps before signing the bottom line.

1. Understand Your Monthly Expenses

Alarmingly, many Americans don’t have a true understanding about what money they have coming out each month. This can be a dangerous territory to get into, as it’s likely that there are a significant portion of the expenses that may be unnecessary. Take the time to have an understanding of what each of your monthly expenses are and if any can be cut or lessened. Maybe there’s a subscription you’ve forgotten about or haven’t realized how much money you are putting towards name-brand groceries each month.

2. Know What You Can Afford

Once you have your expenses broken down, you will have more of an idea of what you have coming out. Next, you should understand what you have coming in. Account for each person’s income contribution for the home. Subtract your monthly expenses from the after-tax amount and you will have an idea of what you can afford. You may want to consider meeting with a mortgage specialist to have a robust account of what homes could be in your price range.

3. Understand Home Buying Expenses

Being a homeowner comes with many responsibilities that sometimes can’t be accounted for. From broken pipes or a leak to a busted HVAC, the costs can be overwhelming at a moment’s notice. It’s important to understand the expenses that may come out of home ownership. Even if there isn’t something breaking, you have the responsibility of additional upkeep.

4. Set a Goal

Once you have a complete understanding of where you are and where you might be, you can set a goal. If the house you want is out of your price range, make it a goal to be able to afford a home like this. Take a look at what expenses can be cut in addition to how you can make additional income to get you to your goal within a reasonable time frame.

Don’t strap yourself into a payment that won’t fit your lifestyle. Allow us to help you purchase your dream home with a mortgage from Peoples Bank & Trust!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724

Five Secret Ways to Raise Your Credit Score

Raising your credit score can seem like a daunting task, or you may not really care what your score is. However, a credit score affects more than you may realize, which is why we find it important to share our knowledge. Develop consistently strong credit habits with these secret keys of advice from Peoples Bank & Trust.

1. Show you can handle all types of debt.
Debt comes in all different forms, from car loans and mortgages to credit card bills. Instead of paying for an item in full, consider putting that purchase on your credit card and paying in increments. When it’s time to get that new car you’ve been eyeing, add those payments to your list of different types of debt. Each time you create a new loan and pay off your purchases, you’ll see a bump in your score. Be wary of getting too big of a loan or making multiple purchases on your card – be realistic on what payments you can make each month to avoid accumulating too much debt.

2. Make payments on time.
If you decide to open a new account to show your good money habits, be sure to create a schedule for yourself. Don’t forget a payment, even if it just happens here and there. Every time you don’t pay on time, you’re instantly hurting your credit score.

3. Utilize your credit cards to the fullest.
Keep in mind that some of your credit is based on how long you’ve had a credit card. If you finally pay off that debt on your oldest card and decide to close it so you don’t spend anymore, this could actually hurt your credit. Once you pay off your debt, keep your card activated – this will allow your credit to continue to grow! We offer credit and debit cards that can help you work on bettering your credit.

4. Pay off the lowest-balance card first.
If you’re dealing with a lot of debt and feel overwhelmed, come up with a system to help lessen the stress. Find out what card you owe the least on and work to pay off that first, while making your minimum payments on all other cards. While snowballing your money and paying off the highest amount of debt first has been recommended, it may be wise to flip that idea around. You’ll need the boost of energy you get from paying the lowest amount of debt off to keep on track. Knocking your debt out this way won’t hurt you, as long as you continue making your minimum payments.

5. Ask for a credit limit increase.
If you regularly make payments on your card by following rule number two, feel free to ask the credit card company for a credit limit increase. By getting an increased limit and not spending more than you usually do on your card each month, this translates into a better credit score.

We hope you put these simple tips to good use. As your credit score continues to climb over time, you’ll be able to apply for larger loans. Working on strengthening your credit score will lead to other good financial habits. If you’re looking for a credit card, search no more – we have what you’re looking for!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

5 Best-Kept Secrets for Buying a Home

Buying a home may be a common practice for the average American, but it is not a simple one. This is especially true if you are new to the game and have yet to learn the ins and outs of the process. No need to worry, we have plenty of experience from our years in the home buying business and are willing to share the best-kept secrets on the market!

1. Start Today

If buying a new home seems far into your future, that means you are in the perfect position to prepare. Often, many have dreams of a new home but don’t start planning practically for how to get there. Maybe you haven’t bought that new home yet because you’re not financially ready for the investment. However, that doesn’t mean you don’t have a way to prepare. With a home purchase, you will have closing costs and a down payment. Start saving for this now! Imagine how much quicker you can get not only to your goal of home ownership, but having the ability to purchase the home you want without the down payment and closing costs being an inhibition. Additionally, the more you’re able to put down up front, the less your monthly payment will be!

2. Don’t Go Big

The saying, “go big or go home,” doesn’t apply to the purchase of your home. The big, shiny house on the block may catch your eye, but may not be the house for you. Often, people see a big home and instinctively want it to be their own. Yet, this may not always be the best choice. Large homes can be difficult to resell, as the market for them is different. Not to mention, you’ll have additional utility and upkeep costs that come with increased square footage. You have a greater chance of profiting off of a smaller home when it comes time to sell than a large one.

3. Go Shopping

For the open houses that you see as you drive around town – go to them! Become familiar with a variety of homes and their details. What are they pricing homes at in the neighborhood? What is the structure like? Ask as many questions as you can, and expose yourself to a home you may have not considered before. You may be surprised by what you like!

4. The Secret Bid

Know your limits and stick to them. There are many that buy more house than they can truly afford. This is why it’s important to not fall in love with the home until everything is signed. Meet with an inspector and make a fair offer, but realize that this is likely not going to be accepted in round one. At the same time, it’s important to not automatically shoot too low, as it may offend the seller which can set a rigid precedent for any future bids. Do your research on the property and the neighborhood before deciding on the first bid.

5. Negotiate, Negotiate, Negotiate

This is where the communication gets tricky and scares the newbies. Haggling might not be a common practice in our culture, but this is the time to be bold. Don’t hesitate on going back and forth on an offer. This is a normal process and it makes you a smart buyer.

When looking to buy a home, Peoples Bank & Trust offers options suitable for your financial needs. Contact us today for more info.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

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