Category: MONEY MANAGEMENT

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MONEY MANAGEMENT

Land, Lumber & Labor: How the One-Time Close Construction Loan Does It All

Depending on market conditions, you may have trouble finding a home that checks all of your boxes. Sometimes there aren’t enough homes available in your area, sometimes there’s nothing in your budget, and sometimes you just may not like what’s out there. 

If that’s the case, or if your needs have shifted throughout various life stages, you may want to consider new home construction. Not just any new construction, though—custom construction, or the opportunity to build your dream home from the ground up. 

A one-time close construction loan, which allows you to pay for a plot of land, all the lumber, and the labor with one convenient mortgage, may be able to help. 

Breaking down the benefits

There are three main reasons to consider a one-time close construction loan when building a custom home: Cost, credit, and closing. 

Cost

Depending on what type of one-time close construction loan you go with, your down payment probably won’t be what you think it’ll be. Sure, there’s the common notion that you should put down 20% (which we’ve dispelled before), but VA buyers could obtain financing with nothing down and FHA buyers could build a custom home with as little as 3.5% down. 

Beyond that, a one-time close construction loan allows buyers to roll the cost of land, building materials, and labor into one loan—saving you from having to pay two mortgages: one for the land and another for the home itself.  Even better? You’ll make interest-only payments during construction, saving money upfront. 

With a one-time close construction loan, you’ll make interest-only payments during construction, saving money upfront.

Credit

Because you won’t have to take out two separate loans to fund the purchase of land and labor, there’s no need to worry about re-qualifying. So, instead of taking two hits to your credit report—potentially and unnecessarily dragging down your score—you only have to submit one application and go through one underwriting process.

Closing

Since a one-time close loan pays for the land and the construction, you only have to work through one closing. That closing occurs before construction even begins, and because a one-time close loan comes with a fixed rate, you never have to worry about market changes forcing your rate to rise. 

It’s all part of the process

Building a custom home isn’t as simple as buying a bunch of wood and throwing some shingles on a frame. Because a one-time close construction loan is still a mortgage, it comes with its own set of procedures and requirements. Here’s what you can look forward to:

  • Contractor Validation We’ll review your builder’s qualifications, including their own credit reports, building history, and project references.
  • Project Approval If your construction details meet loan standards, we’ll make sure the budget fits the project and approve a start date.
  • Underwriting After submitting your application, our underwriter will review the information like they would any mortgage.
  • Closing Once approved, we’ll schedule a closing date to sign final documents and pay whatever closing costs are left to pay.
  • Funding Throughout construction, your builder can request to draw funds from your loan to pay for materials, labor, and other costs.
  • Completion This one’s easy! Once construction is over, it’s time to grab some friends and pack those moving boxes.
  • Conversion Once everything’s done and dusted, we’ll convert your one-time close construction loan into a permanent mortgage.

Any downfalls?

One-time close construction loans are pretty straightforward, and they come with a long list of benefits (including the fact that they can be used for primary, secondary, and investment properties). That said, there are some considerations to think about before opening an application. 

First, due to the COVID-19 pandemic, lead times on construction materials, as well as their costs, are both heightened in the current market. So, keep in mind: These factors could impact your total loan amount. 

Second, a one-time close loan tends to come with a higher interest rate. If rates are already higher due to market conditions, you may want to run your budget with your rate quote to make sure everything is affordable.

What’s it cost?

Some sources report that building a house can cost anywhere from $500 to $1,000 per square foot, depending on location. According to American Home Shield, the average house size in the U.S. is 2,500 square feet, meaning a custom build may run anywhere from $1.25 to $2.5 million. 

If that number shocked you, don’t worry too much. Other sources pin the average cost of a custom, similarly sized home at about $500,000. 

So when you’re building a house, your location, equipment, and finishes can and will push your costs up or down. The safe bet is to leave some cushion in your budget, just in case. Even safer? Get pre-approved for construction loan financing with a lender you trust. That way, you know exactly what you’re getting into with your one-time close construction loan.

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MONEY MANAGEMENT

5 Ways to Make Homeownership Affordable for You

Find out just how affordable homeownership can be with these five tips.

Tis the season of savings—or so they say. While it’s true that some of the best retail deals of the year are happening right now, some would argue that this is the season of spending. As such, you might be inclined to believe that buying a house is completely out of the question at this time of year, but think again! Homeownership is possible and can be affordable for people of all kinds of financial backgrounds. Take a look at these five tips for making a home purchase affordable and see if your dream of homeownership is possible this holiday season.

Consider a different neighborhood

So you’ve got your dream neighborhood picked out and you can’t stop thinking about it. You can’t imagine living anywhere else. You’re convinced that it’s perfect in every way—except for the price tag. When you’re that invested in a particular neighborhood, it’s tempting to enter a bidding war where you either agree to pay a price that’s way over your budget or have to walk away empty-handed. If this sounds like you, you may want to consider searching for a home in a less expensive neighborhood.

This is where making homeownership affordable requires give and take. Those neighborhoods a little farther from downtown? Don’t write them off completely. You just might have to consider houses in other neighborhoods where location isn’t in such high demand. Although farther from your target location, these areas may just offer more land and a bigger house at a better value.

Save up for amenities

Amenities make for a great place to start when you’re making homeownership affordable for you. If considering a different neighborhood isn’t an option, it might be time to dial it back on your must-haves list. Expand your opinion on what’s acceptable. You may need to refocus your search for “the perfect home” to a search for a great home that has just what you need.

A great home doesn’t have to come with all the latest and greatest features. You may have to be willing to save up and make gradual improvements after you purchase the home. Some characteristics of residential properties that may increase the value of the home include brand new appliances, a finished basement, renovated kitchen and bathroom, new floors (carpet or hardwood), a big yard, and finished landscaping. Look for houses that don’t have these features and you’ll usually find that they’re more affordable.

Lower your utility bills

Let’s face it: Owning a home is expensive. Typical costs include your monthly mortgage payment, a down payment, mortgage insurance, property taxes, and utility bills that are usually higher than those for renters. This list doesn’t even cover all of the costs that some homeowners pay. And don’t forget that, once you buy a house, you give up the convenience of free maintenance that you had as a renter. All repair bills are now in the hands of your financial responsibility.

Nevertheless, there are plenty of options available that help you cut down the costs. Many states and utility companies have programs that help low-income residents pay for utility services. These programs include anything from energy and utility assistance to housing initiatives and more. One example of this is AT&T’s Access program, which provides home internet service to low-income households—some packages are as low as $5 a month! Get this: Some states even provide cell phones for low-income residents. It just goes to show that it’s possible to make homeownership affordable and income-qualified assistance programs for utility bills can help.

Check out FHA loans

Backed by the Federal Housing Administration (FHA), these loans are perfect for borrowers who are trying to make homeownership affordable. Only 3.5% of the total price of the home is needed for a down payment and borrowers can have a credit score as low as 580 to qualify. FHA loans are more flexible in credit, income, and down payment requirements, making them a secure choice for borrowers who might not qualify for conventional loans.

But, with FHA loans, you have to take the sweet with the sour. These loans require you to pay for two types of mortgage insurance—one is an upfront premium that’s rolled into the mortgage payment and the other is an annual premium that’s broken down into monthly installments. In addition, your desired home must meet minimum property standards and pass an inspection made by an FHA-approved appraiser.

Research other government assistance programs

Aside from FHA loans, if you’re on the hunt for affordability, there are many other assistance programs available that are specially made to help low-income residents reach their homeownership dreams. The U.S. Department of Housing and Urban Development (HUD), for example, offers many of these types of government-funded housing programs. Don’t let financial struggles keep you from living in a home that’s suitable for you and your family’s needs.

Don’t believe that homeownership is out of the question this holiday season. If you’re dreaming of owning your own place now or in the near future, take these tips to heart, learn about your options, and find what works best for you.

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MONEY MANAGEMENT

21 Ways to Save for a Down Payment

First-time buyers: We’re here to help you save money!

When you’re preparing for one of the biggest purchases of your life, it’s important to figure out where that money is going to come from. There are so many ways to save for a down payment, and we’ve got a few here that can help you get started right now. Ready to start that dream home fund? Read on.

Money matters
1. Document all of your expenses

Documenting your expenses can be tedious but this is one of the best places to start when you’re looking for ways to save for a down payment. Next to budgeting and assessing your finances, take note of every transaction for a clear picture of your spending habits. It’s easy to buy something small and say to yourself, “Oh, it’s only a few bucks…” but make ten of those little transactions and it adds up! Plus, there are plenty of fintech apps out there (like Mint, and EveryDollar) to help you easily budget and track expenses.

2. Try a cash-only “diet”

It’s a tough discipline, but for some people, a cash-only “diet” works! If you’re one of the many people today who don’t carry cash, using only your debit card is just as effective. Ditch your credit cards for a certain amount of time (try one to three months) and notice how quickly you feel the impact of each time you spend. This practice should teach you to be more disciplined with your spending and help you gain better control over your finances.

3. The lure of the Miscellaneous category

As you practice new ways to save for a down payment, you’ll probably want to spend a little on yourself. It’s best, at that point, to plan it into your budget and make sure that this mini splurge doesn’t infringe on your down payment goals. Treat yourself after you’ve been disciplined with your savings for a month or two and make sure your miscellaneous expenses are infrequent and reasonable.

4. Keep an adult piggy bank

We’re taking it way back to your childhood. The good old loose change jar might not save you thousands, but it’s a good way to save a little here and there. Anything helps. If you still carry cash and find yourself with annoying loose change in your pockets, don’t just dump it anywhere. Make a habit of dropping loose change into the jar and, slowly but surely, watch it grow into a sizable savings. Once the jar is full, go to your bank and deposit the cash into your down payment savings account.

5. Spring cleaning comes early

Try digging into spring cleaning early—or any time of year for that matter. This means you don’t have to wait for warmer weather after winter. Take inventory of your things and declutter your place right now. You might find some hidden gems that you can live without and sell for quick cash.

Lifestyle adjustments
6. Cut out coffee trips

Not my coffee! I get it, this is a hard one to swallow. But hear me out because I’m about to break it down. One grande skinny vanilla latte at Starbucks currently goes for $4.15. A trip to the drive thru every day for one week costs $29.05. Multiply that by 30 days and you’re spending a whopping $124.50 every month on your daily coffee run alone! Try brewing coffee or tea at home and taking it to go. Or, take the healthier route and opt for water for a while!

7. Cancel a subscription or two

One of the simplest ways to save for a down payment is to take stock of where you’re spending on a consistent monthly basis and decide which bill you could live without. Ask yourself, “Do I really need cable, and Hulu, and Netflix, and (fill in the blank)?” Most likely, the answer is no. We know Spotify Premium equals life—only until you realize you could cancel that subscription for a year and save $119.88! Let’s not forget about the trusty gym membership. Try living without it for a while and go running outside or work out at home.

8. Make new weekend routines

If your Friday night ritual is a night on the town, maybe you should stay in this month. And if you struggled with FOMO, offer to host your friends and have a movie night or a potluck and play games. There are plenty of alternatives to going out and spending money, you may just have to put your heads together and come up with other ideas. Trust me, your future, home-owning self will thank you.

9. Buy the off brand

In the hype of buying fun and organic foods, it might be tough to commit to buying off-brand foods. Even if you only save a few dollars per item, you better believe that adds up over time. Test it out and see how much money you save after a few store-brand-only trips. Then take that to the bank!

10. Meal prep game strong

Of all the ways to save for a down payment, this is one of the easiest. If you’re already making a routine trip to the grocery store, simply buy a bit more and make your own meals at home—just bulk cook, freeze, and thaw when you’re ready to eat. This might require you to move some money around in your budget and spend less on eating out and more on groceries. But since the cost of dining out is usually higher than preparing your own meals due to the tip alone, you’re still saving a considerable amount of cash over time.

Get thrifty with it
11. Take the bike lane

If you’re one of the countless people who made a New Year’s resolution to exercise more, there’s no better time to start your new fitness routine. Especially if you’re struggling to find the spare time in your busy schedule to hit the gym, make it part of your daily commute. Biking or walking to work is an excellent way to jump-start your day with a fitness-first approach. And, as you can imagine, it’s much cheaper than the gas and vehicle maintenance that comes with commuting.

But, if that’s a little too ambitious for you, or work is just too far, try carpooling with coworkers. It might be tough to give up that autonomy, but sharing a ride with someone who’s going to the same destination is not only environmentally conscious, it’s a great way to cut costs. For other transportation alternatives, try UberX Share* or calculate the cost of public transportation in your area. You could be saving a few bucks each ride—and all of that adds to your down payment fund!

*This service may be unavailable in your area due to Covid-19 protocols.

12. Get creative with your wardrobe

Shift your focus to your closet and see if there are any clothes you could stand to sell. Visit consignment stores and resale shops (like Plato’s Closet, for example) and exchange your gently used clothing for cash. You could also join one of the countless resale groups on Facebook and find one in your area. Or gather your friends and host a clothing swap to refresh your wardrobes for free!

There are also cheaper alternatives out there for buying gently used clothing that you might want to consider before you buy brand new. Try thrift shops and other secondhand stores—you might find some really great pieces for super cheap! All of these suggestions work for furniture resale too if you’re looking to sell some of your furniture or if you’ve been wanting to purchase something new for your current home.

13. Start cutting coupons

You know that grocery store mailer you throw out every week? Next time, read through it and see if you can take advantage of those coupons and deals. And don’t be afraid to ask your cashier at checkout if they have any deals going on or discounts you could use. Things like student discounts or sales campaigns are out there, you may just have to ask. You should also sign up for email notifications with websites like Groupon or Amazon. They’ll send relevant deals right to your inbox.

14. Compare utility prices

Are you sure you’re still getting the best deal? Some utility companies have discounts for switching to their services or seasonal promotions you may qualify for. One of the ways you could save money for a down payment right in your own home is by replacing your light bulbs for energy-saving bulbs. You can find them at any home and hardware store and test them out for a couple of months to see how much money you save on your electric bill.

15. Compare insurance companies

As with your utilities, make sure you’re getting the best deal on insurance. Review the insurance your paying for things like healthcare, dental, auto, renters, and more. Compare what you’re currently paying to what you could be paying if you switch to a different provider. Remember that the cheapest coverage doesn’t always mean the best coverage, so be sure that your priority is always your health and safety first.

16. Services you can do at home

Do you take your clothes to the cleaners? Try buying some supplies like stain remover pens or do some research on home remedies for stains. Do you like to get a fresh shape-up at the barber? Brush the dust off your old clippers and do it yourself for a while. Need a haircut? Ask your friends and family and see if there’s anyone you’d trust to trim it for you. That mani/pedi date you scheduled with your girls? Invite them over and have your own at-home spa day instead. All of these and more can be done yourself at little to no cost to you—and help you save money for a down payment!

17. DIY home cleaning products

If you’re running low on your all-purpose spray, think before you buy a new bottle and make your own instead. Most simple and non-toxic DIY cleaning products have some combination of water, vinegar, baking soda, and lemon—ingredients you probably already own. Turn to the internet (especially Pinterest) for safe cleaning product recipes you can make yourself, like sprays, laundry detergent, and garbage disposal pods.

18. Simplify your beauty routine

It seems like beauty blew up overnight, and everyone wants the latest and greatest products. But before you pay top dollar for the newest anti-wrinkle cream or glow serum, think about how you can repurpose ingredients you already have at home. Try making a coffee scrub or using coconut oil as a moisturizer. Of course, what you do should depend on what’s best for your skin type, but do some research and you might find that perfectly good beauty products exist in your own cupboards!

19. Handmade gifts are better

People say handmade is more heartfelt and we agree! Not only does a handmade gift or card instantly add sentimental value, it’s usually the cheaper route too. You could even make your own gift wrap or gift bag with paint, glitter, or ribbon you have at home. However you choose to make it yourself, you’ll be adding a personal touch and saving some cash for your down payment fund!

Other secrets to saving
20. Tell your world

Invite your friends and family into this venture and you might be surprised how many people are willing to help you or offer support. Telling others also helps you feel like you’re not alone in making lifestyle changes and gives them context when you say no to spending in front of them. You might even find someone who wants to be an accountability partner and go on this journey with you!

21. The Attitude of Gratitude

Saving for a down payment is also an inward process. Judging by this list, there are so many tangible ways to save for a down payment. But while you’re changing your life, you may also need to change your attitude—and that’s priceless. Living a frugal lifestyle, especially when you’re not used to it, can be exhausting and frustrating. 

Don’t expect to accomplish this feat without a steady, ongoing change to your attitude. When you do that, you’ll gave better expectations and you’ll be more likely to experience these changes in a positive way. And always keep in mind your end goal: A home you can call your own!

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MONEY MANAGEMENT

15 Tips for Frugal Living: Kick Spending Habits to the Curb

Embrace frugal living and save money for a down payment with these simple tips.

Are you addicted to the finer things? Love to splurge on little indulgences throughout the week? While these may seem like small, harmless expenses, the truth is, they add up—and they may be preventing you from affording a home. But wait, there’s good news. Better spending habits are possible! And although frugal living is a sacrifice, the reward could be a home you can call your own. We’ve come up with a list of 15 spending habits for you to consider putting an end to in the name of homeownership.

Tips for Frugal Living

1. Daily coffee run

Let’s get right to the point. We love coffee. In fact, Americans consume 400 million cups of coffee per day! The average 16-ounce latte at Starbucks is $3.65, straight up, no additional fees for syrup or special milk. Trust us, we love a good latte too, but that daily coffee run is costing you $25.55 per week, adding up to a hefty $1,328.60 a year! Maybe it’s time you tried brewing at home.

2. Cigarettes

Generally speaking, if you smoke a pack daily, you’re spending about $6.00 a day. The national average price of a pack of cigarettes is $8.00, and that doesn’t account for the tax that varies by state (New Yorkers pay roughly $10.50 for a pack because of their cigarette tax!). If you smoke a pack a day (and you don’t buy your cigarettes in New York City) this habit’s costing you about $43.12 a week and a whopping $2,242.24 a year! Think about how fast you could afford a down payment on a home if you quit! Talk about motivation.

3. Daily lottery ticket

It’s only a dollar a day, but at the end of the year, you’re out $365 that could’ve easily gone toward a better prize: your own home.

4. Fast food five times a week

Today, a Big Mac meal costs $5.99. If that’s your go-to lunch every day during the work week, it’s costing you $29.95. Do this all year and you’ll rack up a steep fast food bill of $1,557.40! Do you know what this means? If you ended this spending habit and, instead, put that $1,557.40 in savings, in about five and a half years, you’d have enough money for a 5% down payment on a $175,000 home price tag. Yeah, that just happened.

5. Restaurants

Isn’t it nice when someone else cooks for you? We love a good restaurant meal. But if you’re dining for two and factoring in soft drinks, this could cost anywhere from $25 to $35 at a medium-priced restaurant chain. (We’re not even counting dessert or adult beverages.) Don’t forget the tip! If you’re tipping a generous 20%, that $35 meal for two just became a $42 bill. Need we inform you that cooking a similar meal at home will typically cost you less than half the price?

6. Friday and Saturday night at the bar

Let’s say you’re a social butterfly and you like going to the bar on Fridays and Saturdays. We get it. It’s the weekend. You worked hard all week and now you want to go out and unwind with your friends. Well, it’s time to count the cost. Depending on where you go, a mixed drink could cost anywhere from $9 to $15 and a beer might be $5 to $8. Then, you’ll also want to factor in how many libations you enjoy per night. We’ll take the averages and say you buy four drinks each night—that equals about $35 a night, not including tip. A nice 15% tip puts you at $40.25 a night, $80.50 a weekend, and a devastating $4,186 a year! We haven’t even talked about cab rides and late night munchies! How’s that for a sobering reality?

7. Convenience store snacks

Ah, those pesky gas station cravings. Convenient for your stomach, not so convenient for your down payment savings. A bag of chips here, a bottled beverage there. . . Throw in a bag of candy too and you’re spending $5 to $10 every time. Do this three times a week for one year and you just spent anywhere from $780 to $1,560!

8. Thursday night movies

It seems movie ticket prices are only going up these days. If you’re a big fan of the big screen movie experience, you might be surprised to learn it’s costing you big bucks. It’s been reported that the average cost of going to the movies in North America reached $9.37 last year, but for some, we’ve seen movie ticket prices upwards of $15 for one person! Factor in popcorn and a drink and your harmless trip to the movies just cost you $25. And, if this is your Thursday night ritual for one year, you’ll have spent roughly $1,300 by the end of it. (Perhaps, if you saved that for a down payment, you could be watching movies in bed in your very own home.)

9. Bi-weekly mani/pedi

At small nail shops, a simple manicure alone may cost you $10–$15. Throw in a pedicure and your bi-weekly mani-pedi cost might be as much as $40 at a small shop, not including tip. Remember, we’re low-balling it, and even then, this expense could add up to $480 at the end of the year! If you saved that money, you’d be able to put a decent dent in your closing costs on a mortgage.

10. Bottled water

Frugal living starts at home. Buying bottled water at the grocery store may seem convenient (and we know you love the taste better than tap water) but do the math and it could be costing you upwards of $250 a year! Of course, the exact cost will vary based on brand name, quantity, and consumption, but you get the picture. Consider alternatives like installing a filtration system, buying a sink faucet attachment, or getting a water-filtering pitcher. These all might cost more upfront, but long-term, they’re investments that are actually saving you money (money that can go toward a home!).

11. Car washes

The cost to get your car washed twice a month is estimated at $12.68 a month, if washed by hand, and a tunnel or conveyor car wash is averaged at $15 per visit—$30 if you go twice a month. That’s anywhere from $152.16 to $360 a year! Frugal living would not approve.

12. Extra smartphone data

Go over on your data? Avoid buying more. If you truly want to try frugal living and save money to buy a house, step away from the smartphone or be diligent about finding WiFi territory. Making small sacrifices now will help you buy a home later.

13. Gym membership

If buying a gym membership is the motivation you need to work out, you may want to try getting motivated in some other way. On the cheap end, a gym membership costs $50 per month—and that’s not even including an initiation fee! That’s burning a $700 hole in your wallet the first year when you could be lifting free weights at home or going for a run around the neighborhood for free.

14. Music subscriptions

Who doesn’t love listening to music without commercials? We totally get it. But $9.99 a month is costing you $119.88 to listen to music ad-free. How will you practice frugal living and save for a down payment on a house with a yearly bill like that?!

15. TV subscriptions

Be honest, do you really need Netflix, Hulu, Sling, and Xfinity cable? A TV-lover who’s subscribed to the cheapest offering for all four is still spending roughly $88.97 a month—a massive $1,067.64 every year! Can you limit that to one or two? Or, switch between streaming services monthly? Frugal living isn’t easy, but when you’re working toward a greater goal, it can be so worth it.

Ready to see how much you might need to save for a down payment? Get those frugal living skills ready and get a free, no-obligation home loan estimate today.

Free Mortgage Quote

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MONEY MANAGEMENT

Five Steps to Financial Fitness: Your Financial Tips For 2022

You know the saying: “New year, new you.” Raise your hand if you’ve ever made a resolution and let it fade away within weeks? I bet a bunch of hands just went down.

For those of you that have stuck to your resolutions, congratulations. For those of you looking to crack down on your finances once and for all this year, also congratulations. It’s not easy to stick to your goals, especially when life throws challenges your way.

That’s why we assembled a short list of financial tips for 2022. Together, we’re going to get your finances in shape so you can maximize your budget all year long.

1. Self-Evaluate

Before you know what steps you need to take, you need to know where you’re at. This is one of the toughest parts of financial fitness, because it involves a hard, honest look at your finances.

According to recent studies, more than half of U.S. adults are living paycheck-to-paycheck, leaving little money leftover for spending once bills are paid. Despite some news stories suggesting this is because people are spending too much on lattes and avocado toast, the simple fact is that prices for just about everything in life have been increasing — cost of living and rent included — while wages remain stagnant.

So let’s ask ourselves the hard questions:

  • How much money do you earn, after taxes, per month?
  • How much of that money goes to essential bills, like electricity or childcare?
  • How much of that money goes to non-essential bills, like streaming subscriptions?
  • After all of your bills, how much is left to spend?
  • More importantly, how much is left to save?
  • How much do you have in savings right now?

The answers to these questions may not be easy to swallow. The best medicine rarely is.

While there are a host of apps that promise to manage your budget and track your spending, a simple spreadsheet may be your best (and most cost-friendly) option because it forces you to type out everything line by line and update it regularly.

The point is that before you get in shape, you need to know where you stand. Once you’ve painted with broad strokes, you can get into the finer details, like creating a plan of action.

Financial Planning Tips For Home Buyers

2. Pay Down Debt

According to debt.org, Millennials (24-39) have an average debt of $87,448. Gen X’ers (40-55) are almost $141,000 in debt on average. Considering the median age of a first-time homebuyer is 33, it’s easy to see why so many people are wary of buying a home.

Look, debt is a fact of life. And not all debt is bad debt! For many of us, we’ll be paying off student loans until the bitter end. For others, credit cards are a looming shadow. If you’re overwhelmed by your debt, add a tab to your aforementioned spreadsheet and start tracking that as well.

Balances, due dates, interest rates, minimum payments, etc. – all of it will help you regain control over your financial fitness.

3. Plan Ahead

Once you’ve got your debt under control — or once you’re comfortable with your debt — it’s time to plan ahead. That means savings.

In life, there are three main things to save for: emergencies, retirement, and buying a home.

We’re not financial advisors, so we can’t tell you how to save for retirement. What we can tell you, however, is that saving is vital to financial fitness.

Think about it: A lot of people go into debt because an emergency pops up.

A car breaks down, a pet gets hurt, a roof leaks, someone loses a job — there are a litany of emergencies that could arise at a moment’s notice, and being able to dip into cash savings is healthier than wading into a deeper pool of debt.

One of the safest assumptions for an emergency savings fund is three to four months of your monthly net income. Alternatively, enough cash to cover three to four months of your monthly expenses (cost of living, bills, etc.). That gives you the liquidity to cover yourself and your family until things get back on track.

4. Check In

Next to the self-evaluation, this is one of the most critical financial tips for 2022.

It’s one thing to make a resolution. It’s another thing to make sure you’re sticking to it. Once again, it involves answering hard questions.

  • How much debt have you put on or paid off?
  • How much money have you put into savings?
  • What extraneous bills have you gotten rid of?
  • Have you been updating your budget regularly?

Checking in doesn’t always require positive progress, either. Things happen. Life throws curveballs, and that’s okay. What matters is that you maintain a clear view of where you’re at and what steps you need to take to get to where you want to be.

5. Reward Yourself

Financial fitness is a lot like physical fitness. It’s not all about the grind — it’s about celebrating the wins, even the little ones.

Like we said earlier, too many people blame lattes or avocados for the paycheck-to-paycheck lifestyle. For many, lattes aren’t even a concern — a full tank of gas is. Don’t let other articles make you feel guilty for rewarding yourself.

Hit your savings goal for the month? Go to dinner with the family. Pay off a credit card? Go get a massage. Do something that makes you feel good, because after all’s said and done, it’s still your money.

What’s important is making sure the rewards don’t turn into a daily occurrence, and that your rewards still fit within your overall budget.

At the end of the day, small progress is progress nonetheless.

Before you get in shape, you need to know where you stand. Once you’ve painted with broad strokes, you can get into the finer details, like creating a plan of action.