Municipal infrastructure & equipment upkeep is expensive. City/Town councils or commissions have to make hard decisions every day on how to finance capital projects – the big question is to borrow money or save over time and pay with cash. Sounds much like a personal budget dilemma – and in fact, it is.
More than any generation before them, millennials have grown up in a world built on credit and borrowing. For many of them, debt has become a way of life. And for many, especially those who financed an education with credit, they may already find themselves carrying a significant amount of long-term debt and are having difficulty dealing with it. Understanding how to handle this debt will be an important, if not essential, part of how they fare in the coming years. So here are some general rules to follow for millennials hoping to better manage their debt.
If you are considering buying a house, especially if it is your first time, you will want to follow these basic guidelines to save yourself headaches, confusion, and perhaps a good deal of money:
- Know Your Credit Rating
How much money you can borrow and how much it will cost you will depend heavenly on your credit score. Contact one of the three major credit agencies, Experian, TransUnion or Equifax to get a complete credit report. A print out of this, especially if it is good, will be a useful document to have. If there are mistakes in your credit record each of these agencies have ways for you to dispute or amend that info. You may also use one of the many online services that provide your credit info to you, but often this is a simple score without much detail.
Of the many ways there are to tap into the equity that your home has acquired with time and appreciation, one of the most flexible is to set up a Home Equity Line of Credit, or HELOC, as it is commonly known. Unlike a standard home equity loan that is paid to you in a lump sum and paid back in a fixed amount of time, usually at a fixed interest rate, a HELOC establishes a certain level of credit, secured by a lien on your home, against which you may draw as you need it. It can provide you with a comfortable cushion for unexpected expenses like small renovations, extra college bills or medical expenses.
You’ve found the perfect house. You’ve figured out exactly what you want to do with the kitchen, where the kids’ rooms are going to be and the placement of the living room furniture. But have you spent any time determining the best way to finance your new dream home? If you haven’t, you should. No, it’s not nearly as fun as mentally redecorating, but it is far more important and will have a lasting effect on how much money you have to spend on any future renovation.
Science has taught us that children are like sponges – they soak up the most information when they are young. Linguistic experts always note that children who grew up hearing phonemes of other languages have an easier time learning the language when they are older. The same is true when it comes to learning about finances. The bottom line is: children pick up habits when they are young and it shapes who they are as adults.
Now, I am not advocating for you to sit your three-year old down to help you balance your checkbook – although, I would be impressed if they could do it! However, there are other ways to teach your children valuable lessons on saving, such as:
You are registered for the Litchfield Hills Road Race. You’ve trained for the 7 + mile race, ready to conquer the infamous Gallows Lane, a steep quarter-mile long hill at the 6-mile mark that threatens to sap your strength.
You go to pick up your number and your free T-shirt. The crowds are beginning to gather on the green – the tailgaters are staking out their territory and you see it…the big bin of sneakers, most of which have seen a mile or two.
You’re ready to realize your dream of homeownership. You spotted the perfect neighborhood, the one with the tree-lined streets, tidy houses, and well-manicured lawns. The next step is to get a mortgage. It can become overwhelming very quickly! Take a deep breath and relax – although there is a fair amount to do – we can get you through the process fairly pain free!
Here are 5 tips to help you secure your first mortgage and make the process easier.
Your home is probably your biggest asset. Have you ever thought of using the equity in your home to finance other “stuff”?
A home equity line of credit, or HELOC as we call it in the banking world, allows you to borrow money against the value of your home. It works like a credit card, you withdraw money as you need it> The difference between plastic and a HELOC is a home equity line of credit carries a low interest rate and is tax deductible. Win-Win!
5 Situations where a Home Equity Line of Credit makes sense:
Sales are great. Customers keep coming back. Your cash flow is positive.
Congratulations! It sounds like your small business has successfully capitalized on a great idea. It might be time to expand.
At Litchfield Bancorp we know that small businesses are the workhorses that drive the U.S. economy. We love seeing them grow and prosper.