Eyes On
Home Prices
Home prices are dropping. But with rising interest rates making mortgages more expensive, some experts say it’s still not the best time to buy. In fact, mortgage demand is falling and some sellers are pulling their homes off the market because of a lack of buyers and offers. If you’re thinking about hitting pause on your homebuying plans, here are a few things you can do to get ready in the meantime.
Your move:
Pay down debt. Reducing your debt-to-income ratio can help you qualify for a mortgage. Often with better terms, too.
Save, save, save. Typically, the larger the down payment you can make, the more you’ll save on interest payments later on.
Know your market. It’s all about location, location, location when it comes to real estate prices. Keep an eye on the listings where you want to buy so you can spot a good opportunity when it arises.
Know what you can afford. Set a realistic budget. A bigger home isn’t always better, especially when it comes to your bottom line.
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Money Tip of the Week
Plan your end-of-year giving strategy.
Donating money is a great way to support causes you care about. Plus, it can help you come tax season, too. For the 2022 tax year, charitable donors can deduct up to 60% of their adjusted gross income (aka the income you earn that the gov can tax). So if you’re in a high-income bracket, end-of-year giving could help you reduce your tax bill. Psst…here are some tips for how to vet charities before you give.
Financial Goal Unlocked
The Goal: Save money to go back to school.
A Winning Mindset: Going back to school can help you level up your skill set or launch a new career, but it’s not cheap. According to the Education Data Initiative, the average cost of a master’s degree in the US is $66,340. But with the right savings account and a solid plan, you can pay for school without breaking the bank.
A Winning Strategy…
Set up a 529 plan. Aka a tax-advantaged account that you can use to save money for school expenses like tuition, housing, and books.
Apply for fellowships. They’re like scholarships but for advanced degrees. And they can come with stipends to put toward living expenses.
Go part-time. Going back to school doesn’t have to mean quitting your day job. Work toward an advanced degree part-time to keep that steady paycheck and (bonus) spread out your tuition costs.
Ask your employer for help. Some companies offer tuition assistance as part of their compensation packages. Talk to your HR department to see if they’ll cover part, or all, of your school costs.
theSkimm
Going back to school can help you advance your career, and it doesn’t have to wipe out your savings account in the process. Set up a savings plan ASAP and consider taking classes part-time and applying for fellowships to help bring costs down.
And Also This…
Who's building up their retirement funds…
Younger Latinas, according to reporting by the New York Times. ICYMI, Latina workers are missing out on over $1.2 million dollars in wealth over the course of their careers because of the pay gap. Plus, childcare and other family caregiving constraints often keep them from fully participating in the workforce. Despite these setbacks, some younger Latinas are reportedly making strides with their retirement savings. Many are turning to higher education to increase their earning potential and becoming the first in their families to prioritize investing.
What doesn’t go as far as it used to…
A mil in the bank. Between record-high inflation and a volatile stock market, seven figures might not be enough $$$ to guarantee a secure retirement. At least according to some high-net-worth people. 58% of millionaires polled in a recent survey said they'd have to work longer, and 35% worry they won't be able to retire.
Who wants to help more people ‘money good’…
Cash App. From partnering with Megan Thee Stallionto providing financial services for the unbanked, Cash App wants to position itself as a go-to financial resource for Black America.
Where could you find your next apartment…
A cruise ship. That is, if you want to commit to a 12-year lease.
What can you sometimes find at work if you try…
Asking for a Friend
Q: I have an emergency fund saved up. But what should count as “an emergency?”
Ashley Feinstein Gerstley: When we don't get specific about what counts as an emergency, two things can happen: (1) Mini-crises eat into our emergency funds each month, or even each week. And if/when something major comes up, we don't have the funds we planned for. Or (2) An emergency hits and it's time for our emergency fund to do its job. But we feel too guilty and unsure, we don’t transfer the funds over, and our finances become very stressful. To avoid both of these scenarios, you’ll want to get clear on what counts as an emergency. It's important to note that this is a personal definition, and you can plan the size of your emergency fund accordingly. If you want smaller, unexpected expenses to count as emergencies (think: you get a flat tire, an appliance breaks, your dog gets sick, etc.), you'll want to make room for that. Or if you want to keep emergencies tied to job loss, set aside as many months of expenses as you think you'd need to find a new gig.
Ashley Feinstein Gerstley is a personal finance expert, speaker, and the author of “Financial Adulting” and “The 30-Day Money Cleanse.” She founded The Fiscal Femme, a feminist money platform, that helps people become financially confident, achieve major financial goals, and de-stress their relationships with money.
Her response has been edited for length and clarity.
Skimm’rs
Tell Us How You Really Feel: ‘Tis the season for making resolutions. And we want to know what your money goals are for 2023. Saving up for that dream vacay? Sticking to a budget? Finally setting up that 401(k)? Tell us your money goals (big or small) here.
Last week, we asked you how inflation is impacting your holiday spending, and about 80% of you said it’s affecting your budget. Here’s what some Skimm’rs are cutting back on this holiday season…
"I just bought a house this past summer, and as a first-time homeowner, I was so excited to decorate my own space for Christmas how I wanted. But decorations are extra expensive this year! I’ve had to stick to some very basics like a few stockings for our mantle and a Christmas tree with only lights. Ornaments and a topper will have to wait until next year." — Karen F, Louisville, KY
"Instead of buying everyone gifts, my siblings/their SOs are doing a name-drawing exchange so we only buy for one person and we've capped that at $50 instead of spending that or more on each person." — Allie A, Chicago, IL
"With a baby due around Christmas, we decided not to purchase any gifts for anyone. The gifts we're giving are our presence and our famous biscotti." — Shelby H, Le Mars, IA
Answers have been edited for length and clarity.
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