Chris Werme and Mike Boland - ERA Key Realty Services - Westborough



Posted by Chris Werme and Mike Boland on 5/12/2020

Home prices may vary greatly throughout the country. But, buying a home is most likely the largest purchase you will make in your life.

Deciding just how much to spend on your home isn’t just a matter of numbers--it also depends on your lifestyle and long-term goals.

In today’s post, I’m going to give you a few ways you can help determine how much is a safe amount to spend on your home so that you’ll feel confident moving into the home buying process that you’re making the best decision for you and your family.

Mortgage as a percent of your income

Like most large purchases, buying a home typically isn’t dependent on the amount you have in the bank. Rather, it depends on several factors including your income, credit score, and the type of lifestyle you want to maintain.

One of the simplest ways to determine how much house you can afford is to figure out what percent of your monthly income your mortgage and insurance will be.

For most homeowners, a mortgage payment that is 25% of their income or less is ideal. So, if you earn $6,000 per month, you don’t want your monthly mortgage payment to exceed $1,500.

This “25% rule” does have one flaw, however, and that does not--and cannot--account for each individual’s financial circumstances.

Let’s say, for example, that you earn $6,000 per month, but that you have a large monthly car payment and are trying to aggressively pay off your student loans. You might find that paying another $1,500 toward a mortgage on top of your current bills is bringing you over budget, especially when combined with your other monthly expenses and retirement contributions.

Plan for homeowner expenses

Another caveat to determining how much to spend on a home is that the home itself will require a budget for maintenance. When renting an apartment, repairs are mostly the responsibility of the landlord or property manager.

Homeownership, on the other hand, requires you to make the repairs yourself or hire a professional. And, if you neglect these repairs, you might find that they cost you even more in the long run or drive down the value of your home.

Create a comprehensive budget

Throughout a given person’s life, they’ll experience raises, promotions, layoffs, medical expenses, childcare costs, and any other number of financial changes. While it isn’t possible to foresee all of the financial fluctuations you’ll experience in life, it is always helpful to have a comprehensive budget.

What do I mean by “comprehensive budget”? The goal of a good budget is to know where each dollar of your income is currently going and to have a plan for each cent that you make. This is a proactive approach to budgeting that will give you an exact number for the amount you can afford when it comes to a mortgage payment.

Within your budget, it’s vital to account for things like an emergency fund, retirement, savings for vacations, and so on.

If you take this due diligence, not only will you have a better sense of where your money goes, but you’ll also be confident in knowing exactly how much you can spend on a home.




Tags: Buying a home   budgeting  
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Posted by Chris Werme and Mike Boland on 6/26/2018

If budgeting isn’t your thing, you’ll be glad to discover that it’s quite simple. There’s a way to categorize your spending and save money easily. If you learn the rule, it will become so automatic that you won’t even think about it. If you’re saving money for a home, this practice will be essential. Break your budget down into three categories: 


  • Living expenses
  • Financial goals
  • Personal spending


Half of your budget should go towards living expenses. This number includes all of the essentials like rent or mortgage, utilities, groceries, commute costs, and insurances. 


20 percent of your income should go towards other financial goals like savings, investments, or paying down debt. Credit card bills, student loans, and other bills would fall under this category. This category is also where you’d save for your down payment, closing costs, and other expenses. This percentage can be adjustable depending on how much debt you have or how much you need to save for retirement. 


The remaining 30 percent of your income can go towards personal spending. This category includes everything that you use your money for but isn’t a necessity. This percentage is also flexible. If your lifestyle doesn’t require you to use all 30 percent each month, you can indeed save more money.


A Clear Plan 


These categories simplify your budget. Even if you make some adjustments to the numbers, the outline truly makes budgeting easy even for the most scatterbrained among us. It allows you to see where your money goes clearly. It also works no matter what kind of living situation you have.


The great thing about this budgeting plan is that you have some future needs built into it. Many times, when we budget, we think of our immediate needs and our shorter term goals. Saving for any occasion can never happen too early. You are able to not only focus on your current goals and the future.   



Steps


First, determine your monthly income. This number is how much money you take home after taxes. From here, you’ll be able to split your money into categories by percentages. If your income fluctuates frequently, you’ll need to take an average of your monthly income to determine your numbers. 


Next, you should take a look at your spending habits. These include everything from your morning latte to your monthly rent payment. From here you can make adjustments. Perhaps you need to look for a less expensive apartment. Maybe you need to cut down your weekly pizza to a bi-monthly purchase. Whatever you see in your finances, a simple percentage rule gives you the tools you need to become a saver and be well on your way to the purchase of your first home.     





Tags: budgeting   saving money  
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Posted by Chris Werme and Mike Boland on 5/30/2017

If it always seems like your money disappears as fast as you earn it, you're not alone. All too many people live from paycheck to paycheck -- even when their income is well above average.

Why is this condition so widespread? Well, the reasons are as varied as people's spending habits, lifestyles, and financial obligations, but there is one factor that is often overlooked: self-defeating attitudes toward money. Here are a few examples you may be able to relate to:

  • "I don't have the time or patience to compare prices." The truth of the matter is that it doesn't really take that much time to do a few quick price comparisons when you're in the supermarket, department store, or on the Web. During the course of a typical week, you probably make dozens of spending decisions, many of them almost unconsciously. By simply increasing your awareness of how much you're spending and what the alternatives are (if any), you can often save hundreds of dollars a month.
  • "People who use coupons are penny pinchers." Although the term "penny pincher" is frequently used to describe someone who's stingy or overly careful with their spending habits, some people consider it a badge of pride to be frugal and careful with their money. It's all a matter of perspective. There are numerous blogs, small businesses, and newspapers that have no reluctance about including the words "penny pincher" in their name While few people want to be thought of as cheap or stingy, frugality has different connotations. It's associated with being economical and thrifty.
  • "I don't want people to think I'm cheap." This can be a tough self-defeating thought to overcome because it's often so deep rooted. However, if you're a compulsively high tipper or often feel obligated to pick up the check at restaurants (rather than splitting it with your fellow diners), this could be a contributing cause of your budgetary problems. Generosity is a wonderful thing, as long as it's not based on a desire to be liked, accepted, or approved of by other people. As a side note, concerns about being perceived as "cheap" is one reason some people don't take a closer look at their retail receipts, restaurant bills, and other invoices. Remember this: There's nothing cheap about being unwilling to pay extra for cashier or restaurant staff mistakes -- which are more common that you might think -- and unauthorized or redundant fees on bills.
Another factor which contributes to tight household budgets is not having a budget at all. If you don't take the time to identify your expenses and deduct them from your monthly income, then it's next-to-impossible to gain control of your finances. While there's no panacea for spending beyond your means -- and some people clearly need professional advice and help in dealing with financial management and debt problems -- sometimes a few simple attitude shifts can make the difference between scarcity and surplus in your life.




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Posted by Chris Werme and Mike Boland on 2/21/2017

Keeping up with household expenses can be a daunting task. Service providers are making it easier than ever to set up auto-pay features for their products. Furthermore, playing with credit cards makes it seem like you hardly ever have to look at your account balances. Unfortunately, that can make it easy to go over your allotted budget each month. That’s where the home budget app comes in.

In recent years, a growing number of budgeting apps have hit the app stores. You could scroll for hours through all of the various apps, comparing their needs. Fortunately, we’ve done the hard work for you.

Some apps are geared towards families, where others are designed for a single user. Some sync with bank accounts and others depend on your own input to keep track of your expenses. In this article, we’re going to break down some of the best budgeting apps for keeping up with your household and living expenses.

HomeBudget

If you’re hoping to split expenses and plan your budget with your spouse, family, or roommates, HomeBudget is a good place to start. With HomeBudget you can assign one person to be the payee, making it easy to determine who pays certain bills.

You and your family members can also assign expenses and attach images of your receipts to see who paid which bill.

At the end of the month, you can view reports that will tell you if you stayed under budget. You can then compare the month’s budget to the previous six months and decide if you need to increase your budget or try to cut some expenses.

YNAB: You Need A Budget

If you’re new to budgeting or are having trouble paying off debt, YNAB is the budgeting tool you need. Aside from keeping track of your spending, YNAB is also a learning resource. Signing up gives you access to budgeting tips and information that you may not be familiar with.

YNAB links up with your bank accounts to tell you just how much you need to save each month in order to keep up with everyday expenses like mortgage payments and utilities, and get out of debt.

Mint

Mint is designed to be your one-stop shop for all things financial. It combines your bills, bank accounts, student loans, credit cards, and more all in one place.

Mint enables you to track your spending, plan a budget, and gain access to resources like free monthly credit scores.

Unsplurge

Having an organized budget is a reward of its own. But, if you need even more of an incentive, Unsplurge is here to help. With Unsplurge, you can focus on saving up for a goal. You’ll get updates when you save enough to “splurge” on your goal.

It’s a great tool for people who like to see their progress and feel the sense of accomplishment when they meet their objective.


Now pick the app that sounds right for your needs and get started with saving money and managing your household budget today.




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Posted by Chris Werme and Mike Boland on 11/29/2016

Buying a house can be one of the most exciting moments of anyone’s life. You have just moved in and now you have a whole new set of tasks. Making your house a home can be a huge job. Here are some tips on how to get your house feeling like a home in no time without breaking the bank. Space out your purchases Many first-time home buyers are coming into home-ownership without all the things they need to fill their new home. Many new homeowners feel the pressure to buy everything at once. It is important to focus on the most necessary items first. Space out your home furnishing purchases and focus on the most necessary pieces first, such as a bed, living room sofa and dining room table. Windows can also present a problem for new homeowners. Don’t feel pressured to choose window treatments for every window all at once. Make a priority list starting with the areas where privacy is a must and go from there. You will also need to prioritize appliances. You may want to rush out and buy that huge flat screen TV but consider what other appliances need to take priority, such as a refrigerator, stove, or washer/dryer. New Responsibilities A new home comes with new responsibilities. This may be the first time you have to take care of a yard. Don't go crazy, invest in a few key garden tools, such as hedge trimmers, a sprinkler, and a lawn mower. No need to invest big money in expensive landscaping services at first. Just focus on keeping your yard uncluttered and neat. Another new responsibility is home maintenance. There is no landlord to call when an issue arises. You will want to make sure you are equipped to handle minor issues on your own. Many home improvement stores have tool sets you can purchase, but make sure it includes a hammer, screw drivers, pliers, wrenches, a tape measure and a staple gun.




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