Money_DollarsThe hustle and bustle of the holiday season has ended and the start of a new year is a wonderful time to set the foundation for a new budget! According to a National Retail Federation study in 2015, people spent an average of $805 dollars on holiday celebration, with more than $594 of that going to gifts. Holiday giving is a wonderful and fulfilling experience, though for many these expenses are financed on credit cards and can easily bring debt into the New Year and beyond.

If you are trying to purchase a new home in Florida, protecting yourself from debt is especially important. Here are some very easy ways to make sure you keep your New Year’s budget resolution going strong throughout the year!

Tip 1: Track Your Expenses

Creating a budget does not mean that you have to be cheap or forego fun. Start by tracking what you currently spend – you may be surprised by how much of your money goes towards things like coffee or grabbing lunch.

There are various applications you can use to set budget plans and track spending; a personal favorite, Mint by Intuit, connects to your accounts and sends you weekly updates on your spending habits, sets personalized budgets for food, shopping, bills and will also give you customized spending tips. As soon as your pending payments go through, you’ll get both and email and notification letting you know if you’re close to breaking your budget and how much more you have left to spend. If you’re not of the tech-savvy nature, try keeping a written log for the month as to where every penny is spent.

Tip 2: Plan How You Should  Be Spending

Start with the basics:

  • How much you bring home on a monthly, after tax basis
  • Subtract your essentials like gas, groceries and bills
  • Decide how much you would like to put into savings each month and include that in your budget
  • List out your “want” spending categories like fitness, eating out, etc. and set spending goals for each category
  • Track your spending under your new budget
  • Automate as much as possible to set yourself up for success. Having an “accountability partner”, such as a friend or family member to help keep you in line can help for some.
  • Revisit your budget and tweak as necessary

Tip 3: Manage Credit Card Balances

Money_GrowSetting a budget certainly does not mean using your card instead of cash to compensate. Utilizing under 30% of your available credit balance is one of the best way to keep your credit score high and help your chances of mortgage loan approval. For example if your credit card has a $1,000 credit limit, don’t max this out! It is best for your credit score to keep the balance under $300.

Instead of using your credit card for purchases, simply use cash! Taking money out of your bank account and putting it in your hands allows you to have better control over what you are spending because it’s much easier to see money leaving your hands than swipe a piece of plastic.

If your balances are over 30% of your credit limit you should, if possible, include a line item in your budget to pay them down by paying more than the minimum payment. When paying only the minimum, you will rack up interest and just extend your monthly expenses.

As an additional note, do not close accounts with balances just to stop yourself from using them. This makes it look as though you have a high debt to available credit ratio which will also lower your credit score.

Tip 4: Say No to Store Credit Cards and Deferred Payments

Money_CreditStore credit and financed purchases may seem like a good idea at the time – it’s tough to say no when the salesperson waves extra special savings at you – but they will only save you money for a moment and can easily lead you into more debt in the long run. Store cards tend to have high interest rates which pile on debt at a much faster pace and make them harder to pay off. Plus, they usually have very low credit limits; meaning high credit utilization and a lower credit score for you.

If you are looking to save money at your favorite store, there are a variety of ways to save. You can sign up for the store’s newsletter, clip coupons, or use apps like Ibotta and Checkout 51 which give money back on purchases and email newsletters that notify you of sales and discounts as well as coupons that can help you save money at checkout.

You should also avoid getting into any deferred payment contracts when going through the mortgage process on your new home. Even if they don’t bill you right away, deferred payments will still count on your debt to income ratio now and can cause a negative impact on your ability to qualify for a mortgage. And, this will just put a debt burden on you in the future. If you can’t afford to pay for something now, you are best to put off the purchase until you can.

Tip 5: Triple Check Your Bank Accounts

Not only should you make sure your account has enough money to cover the check you are writing or a scheduled payment coming out, you should also check to make sure not to be the next victim of identity theft. Keep an eye on your accounts for any charges you haven’t made and report fraudulent charges as soon as you see them.

Florida New Homes to Fit Your Budget

Interested in finding out if a new home for the New Year will fit your budget? Pre-qualify today with a Highland Homes preferred lender to determine your home purchasing power, get a personalized analysis of your credit and finances and start down the path towards home ownership!

For more information about our preferred lenders, new homes in Florida and additional home buying tips and information, visit the Highland Homes website or call our New Home Specialists today at 863-797-4999.

Please note, the information contained in this blog is provided as a courtesy and should not be solely relied upon for home buying advice or information. The information provided in this blog was accurate at the time of publication but has not been verified since. Please consult with your financial, tax, legal and/or real estate professional for more details.