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What You Should Know Before Buying Your First Home

This guest contribution comes from Megan, who is the founder of home improvement & real estate blog, Your Wild Home. As a millennial, she enjoys writing about the unique challenges and opportunities available to millennials in the housing market. When she's not reading at a local coffee shop, you can find her giving advice on U.S. News, Redfin, Homes.com, and many other sites.

 

What You Should Know Before Buying Your First House

You’re out of school and plugging away at that job you wanted. You’re young and free — except for some fairly significant school debt. Having grown accustomed to dorm life, the apartment you now inhabit is a decided step up. Even if, by most standards, the living quarters are still sketchy.

With money finally coming in, you’ve got so many plans: travel, concerts, maybe a decent set of luggage. Take your Mom out to a truly decadent dinner this year for her birthday.

But you also know it’s time to start thinking about investing for your future. Could buying a home at this early stage of the game be a possibility? Consider the following pros of renting versus purchasing.

 

Rent Pros

  • Flexibility to Relocate: Who knows where your current job and just-beginning adult life may take you? Perhaps you have a significant other from school who works in a different city. Or you’re shooting for a temporary overseas assignment. Assuming you might not remain where you are for long, renting may feel like the safest option.
  • Lower Immediate Cost: Insurance, utility bills, taxes and repair costs remain minimal or nonexistent. There is no significant down payment other than first month’s rent and perhaps a security deposit. In contrast, traditional home purchasers are required to come up with a down payment of as much as 20% of the home’s present value.
  • Property Value Stability: Homeowners necessarily ride the waves of property value fluctuation. Without a mortgage or tax payments, renters are safe from such volatility.
  • Renovation and Labor Free: Renters have no responsibility for a home remodel, restoration or even common household repair. Lawn and garden care, exterior structure upkeep and snow and leaf removal are tasks best left to the landlord.

 

Purchase Pros

  • Long-Term Savings: Instead of paying monthly rent with no investment value, consistent mortgage payment establishes substantial credit and accumulates real property wealth. Federal income tax reporting deducts mortgage interest as well as some closing fees and property taxes.
  • Property Value Instability: Yes, this is a pro. Purchasing a home while property values are low gives you more bang for your buck and the eventual certainty of value increase.
  • Renovation and Labor Amenability: Remember that young and free descriptive tag? Comparatively few responsibilities? It’s an ideal time to take on home remodeling projects! Slowly — one room or project at a time. Sometimes it’s small improvements that lend the greatest payoff. While you anticipate the inevitable upswing of property values, you are simultaneously creating design profit.

 

Consider Renting Your Home

An excellent way to maximize home purchase investment while you’re still paying off those school loans is to rent the property out. An immediate second source of earning, rental income can pay off standing debt as well as reinvest in your new home.

Here are some things to add to your to-do list:

  • Investigate Mortgage Requirements: Mortgages for investment properties tend to have higher rates and more stringent credit score requirements. As you go through the initial process of gaining pre-approval — discovering just how much house you can afford and how you would like the house to be structured — a higher-than-expected mortgage can be discouraging. Don’t worry — you have other options:
  • Check out FHAs: Loans from the Federal Housing Administration are available for investment property purchases as long as the purchaser lives onsite. Credit requirements are lenient, buyers with a score of 580 or higher need only pay a 3.5% down payment. The FHA also offers capital improvement loans, known as 203(k)s, for home repair and remodeling.
  • Go Small: There’s no need to jump into landlording on a large scale. After all, you’re just out of school and relatively new to the learning curve of investment planning. Consider the purchase of a duplex instead of multi-family structure. Your goal is to keep costs low as your investment grows. And you don’t want property management to interfere with your day job.

Keep things simple while your significant obligations are still few, but don’t be afraid to go bold with property investment opportunities! Your future self will thank you.


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Effective Payoff Strategies for Med School Loans

This guest contributor post comes to MSF from Jacob who runs Dollar Diligence where he blogs about debt repayment, saving money, and side hustles.

 

Strategies Toward Paying Off Your Med School Loans

 

The average student debt is $30,100, according to The Institute for College Access & Success. An increase of 4% when compared with college graduates from 2014. In the case of new physicians, one can expect an  average of $166,750 in medical school debt.

 

There are a lot of numbers out in the world regarding student loan debt. However, debt is debt. Medical school loans and how they can be paid off are no different than average student loan debt. The difference is the amount of money involved.

 

Because of the higher loan balance after medical school, it can take much longer for doctors to pay off their student debt. Yes, earning capacity can help. However, it can take doctors years to pay off their loans because of the amount of debt accrued. Thus, only making the minimum monthly payment can be one of the most dangerous things a new doctor can do because the loan could take decades to pay off.

 

Effective Payoff Strategies

 

The good news is that there are some strategies that can help you pay off medical school loans. To be successful with this, you absolutely don’t want to defer your medical school debt during your residency. Instead, opt for an income-driven repayment plan that bases your repayment on income. As your income increases, your payment increases. And as a doctor, you know you are going to see an increase eventually.

 

Other things you can do:

  • Pay off your private loans first. These loans tend to have higher interest, so they are costing you more. Putting more money into these loans pays down the principal faster so you don’t have to pay more than you have to.

 

  • Refinance your student loans after you have established credit. Since your debt is very high, refinancing for a lower interest rate can reduce the amount of money the loan costs you and the amount of time it takes to pay it off. Most doctors will be eligible once they start earning a higher income – a major factor of the eligibility requirements for refinancing.

 

  • There may be a forgiveness program that you can participate in. For instance, working in a specific community, such as an economically depressed area, can earn student loan forgiveness via the Public Service Loan Forgiveness program. Public non-profit hospitals, the military, and the public health sector may have opportunities available. Teaching a medical-based class at a local college or university could also earn forgiveness.

 

  • A hospital or medical facility may pay a percentage of your loans in exchange for you working with them. Not all of them do, but you may want to consider this when deciding which hospital system you would like to join.

 

  • Make extra payments even if you are on an income-driven repayment plan. Anything extra you can put into the loan will help you pay it off faster. This is a strategy that works for any type of student loan and any type of debt.

 

  • After your residency is finished, continue living the residency Your income is usually relatively low during residency. If you keep living that lifestyle, you will have more money in the bank so you can pay it toward your student debt.

 

  • Many physicians get a signing bonus. It is wise to apply that bonus to your student loan debt. The average signing bonus is less than $25,000. However, it’s an amount that is enough to make an impact on your loan balance.

 

 

Budget Your Heart Out

 

Just like anyone else paying off student loan debt, you want to create a budget. Yes, doctors also need budgets sometimes. This is one of those times. When you are clear of the debt, the fruits of your education will certainly be evident. Your money can go toward the life you want to lead rather than the life medical school loans force you into.

 

All you have to do is sit down and determine where you need to cut expenses and establish a goal for your loans. Determine a date you want to have them zeroed out by and work toward that goal. Yes, it can be challenging considering that you have enough to think about as you practice medicine. However, the effort can be worth it when you remove years off your loans and save thousands of dollars in interest.

 

Sadly, student loans even keep doctors from achieving some of their goals, like buying a brand new car or the house of their dreams. Having $200,000 or more in debt can create a very high debt-to-income ratio that makes a bank extremely hesitant to approve a loan. Paying them down lowers the ratio and makes achieving life’s milestones much easier. This is good, because medical school was hard, and you deserve the personal rewards that come with being a great doctor.

 

 

For more advice and content, follow him on Twitter.


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Weekend Wealth Tip: 3 Top Reasons for Investing in Water

Think about investing in water as it is truly the elixir of life and additionally as you read this most people are not getting enough of it in more ways than one.

The national geographic fresh water site notes that:

 

1: By 2050 a third of the people on Earth may lack a clean, secure source of water.

Investing in water is an area of concern for global and emerging markets. Thus investing in water presents an opportunity for those looking to diversify they investments by considering the role of water in their portfolios.  Water comprises ~ 60 percent of the human body and it is an essential part of our very existence. We can only anticipate growing demand and need for companies in positions to make a positive difference in this space.  A key driving factors is in part going to be an increasingly growing population, both in age and density. When you put all this together, the importance of investing in water as a resource that is near and dear to our society cannot be understated. The matter of the fact is that we depend on it from fueling not only people but the plants we eat, machines we use, and cleanliness much of the developed markets have come to expect.

2:According to the United Nations, water use has grown at more than twice the rate of population increase in the last century.

 

3:The high needs for better water management, treatment and conservation creates investment opportunity for those with a longer investment horizon.

 

One water company we like is SABESPs (SBS).

 

Companhia de Saneamento Básico do Estado de São Paulo - SABESP (SBS)

 

SBS is currently at a market cap of $7.13B USD and a price to earnings ratio of ~9.1. The company recently reported their earnings per share at $1.14 USD. The company also pays out a dividend which is currently at $.30 per share annual, making it attractive for those looking for dividend companies as well. What is attractive about SBS is their long term prospects as their are in one of the high growth emerging markets with increasing demand for water utility and management. It is important to note that with a Beta of 1.71 the stock has been a bit more volatile and thus may be for those with a little more risk tolerance. With an extended outlook and a price to book value of 1.4 it is one to consider for the portfolio.

The company does appear to be financially healthy from a profit generating perspective with an operating margin of ~ 24%, profit margin of ~20% and a total revenue of $4.49 billion. However, it does carry about ~3.81B in debt, with a current ratio of .81. Overall this indicates a less than favorable position to pay its debts. Simply stated SBS's liabilities currently outweigh its assets.

*MSF does not currently have any positions in SBS

Share your story:
 Reasons not to start your journey to sharing your story. Because you are the currently starring in the "Most interesting Man or Woman" in the world commercials and your story is telling it self. Otherwise, why not because you without a doubt you can add value to the world? The process to get started has become quite simple and user friendly. As a reader of MSF going through the logo to the left will start you at a hosting rate of $3.95 per month. This comes with a free domain and their customer service has been great from day one.

Track All Your Finances:
Personal Capital is a free and easy to use platform that helps track your finances. Its a great tool to utilize to help track as your Net worth as you work to build it and eliminate your financial debts. Definitely recommend checking it out, as I have found it to be incredibly useful. Here is a preview of what the software will look we have put together for your review.


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Weekend Health Tip: 3 Reasons for Cycling Your Way to Better Health

The Weekend Health Tip, is the moment we take out of the week to give you health tips that we believe can gradually transform your life and health. This week's health tip is to dust off your bicycle or find a local spin class so as to start cycling your way to better health. With countless benefits, incorporating cycling into your weekend routine will undoubtedly bring about positive results. The weekend health tip will be succinct and to the point so you can get moving and make it a part of your day.

As with any other physical activity make sure to keep safety first, and make sure you have what you need and a helmet for outdoors off road biking. Poland has taken this to the next level by building out a glow in the dark bike path:

Glow in the dark bike path

Photo Credit: BoredPanda.com

3 reasons to cycle:

Stress Relief

Stress is pervasive in our society today, and it is incredibly important to find healthy ways to relief its negative benefits. If left unchecked stress will negatively affect your physical and mental well being. Stress is linked with increased anxiety, tension, upset stomach, feeling overwhelmed, and irritable. One of the worst side effects is lack of motivation and focus. This one is key, as it supports the vision and goals you set for your week, month, year and life. As time is a precious gift, don't let it be wasted.

 

Brain Health

As life expectancy goes to rise, it is important to maintain a healthy brain. Aerobic exercise has been shown to repeatedly have positive effects on mental clarity, problem solving, and keeping your memory sharp. An easy way to remember this is that what is generally good for the heart is also good for the brain. Increased blood flow and release of BDNF or brain derived neurotrophic factor leads to increased production of neurons. In other words, it is the fertilizer that makes your brain grow.

 

 

Increased Stamina

If there is anything else to glean and benefit from regular aerobic exercise it is increased energy and stamina. Kristen Armstrong, is a 3 time gold medal time trial champion, as well as works as part of a hospitals staff and mother to her son. She was able to accomplish this by just finding time on the side to get some riding in. Cycling improves physical endurance that carries into your work week. Additionally, your body becomes more efficient at absorbing the energy you consume, resulting in health benefits and decreased risk of other chronic diseases like diabetes. I

 

If your weekend needed a dose of inspiration to get you moving, then look no further than the 3 reasons below.

 

Articles To Check Out After Your Ride

Share your story:
 Reasons not to start your journey to sharing your story. Because you are the currently starring in the "Most interesting Man or Woman" in the world commercials and your story is telling it self. Otherwise, why not because you without a doubt you can add value to the world? The process to get started has become quite simple and user friendly. As a reader of MSF going through the link will start you at a hosting rate of $3.95 per month. This comes with a free domain and their customer service has been great from day one.

Track All Your Finances:
Personal Capital is a free and easy to use platform that helps track your finances. Its a great tool to utilize to help track as your Net worth as you work to build it and eliminate your financial debts. Definitely recommend checking it out, as I have found it to be incredibly useful. Here is a preview of what the software will look we have put together for your review.


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Six Things To Consider Before You Invest In Older Homes

This guest contributor post comes to MSF from Tina Roth, a passionate personal finance blogger. She shares her 6 tips for your consideration if you are planning on investing in an older home now or in the future. 

Planning to buy an Older Home? Are you fascinated by the antique and intricate architecture of the house? The old, huge beams have already conquered your heart and you have started imaging yourself with your morning tea, sitting on the big wooden swing at the lawn… hold on! Before you dwell yourself completely into the old house and invest on making it yours, glance through these 6 questions which might change your opinion.

Hold on! Why an older house?

A vintage house would be anyone’s dream home with big wooden door, a wrap-around porch, and the stained glass windows welcoming the morning sun. It may sound like the dream place you were looking for all your life but it is equally essential to ensure that you are making the right choice.

The old houses have always been accompanied by mysterious stories sometimes it might be true as well. Mostly, people tend to sell-off such house due to poor maintenance, financial crisis or others reasons. It is a big mess when it comes to maintenance of such old houses and can cost you several dollars.

It might seem like a cheaper option initially comparing the overall cost but be prepared to spend on restoration and renovation. You can get a million of reasons of why you should not go for an older house but when it comes to the beautiful craftsmanship which has caught your eye, there’s no backing out! Just go for it!

Few points to consider, before you buy:

  1. Track the recent inspection report!

After miles of search when you find your perfect dream home that fits your budget, the only thing in your mind is to buy it before anyone else does. A decision taken in haste might end you up in trouble. A beautiful vintage house with a big lawn and that too at a stunning price, it might feel like a jackpot! Think…there may be a catch!!!

 

If you are keen on buying that house then do an area study for price comparison. It is mandatory to get all the papers checked before investing on any property.  Get the latest inspection report of the house and give a detailed study for all possible details. This will give you the status of the house and you can have a rough estimate of how much you might need on restoration & renovation. Look for all possible points mentioned in the report like how old is the electrical, heating or plumbing systems.

 

  1. Is it a stable structure?

It is extremely important to check the stability of the structure before going with the deal. It can be the worst nightmare to imagine the roof falling over while you’re asleep. Getting a detailed examination done is very much a mandate. Look for all minute details like any cracks or leakage on the walls or windowsills. Also, any damps or moulds shouldn’t be overlooked! Repairing a leakage on the walls can be a painful and pricey task.

 

  1. Roof status

The outer roof is the one of the key factors that one will notice on the first gaze. It can cut your pocket with a heavy price if the roof is made of slate, wood shingles or thatch. It is very much mandatory to investigate the roof from inside as well. Some investigation reports might not cover this aspect. If there are any cracks or serious issues with the roof from inside then you might land up spending a huge amount on repairing it.

 

  1. Is the Septic tank working fine?

This is one important aspect to keep in mind before you sign the deal. It is often seen that the old houses with septic tanks costs a huge while restoration & repair if there is any issue with the working condition. No matter if you flush it 3 times, you cannot trust its working condition something might crop up any moment. Get as much as information from the owner or even hire any inspector to do a detailed study.

 

  1. Check the wooden spaces for termites!

See some mud like tubes on the wooden structures? It is nothing but termites! The old houses often comprise of beautiful intricate wooden carvings apart from the furniture & flooring which can serve as a house for termites and other insects; if poorly maintained. Termites are deadly enemies for wooden structures. It is recommended to get a clear inspection done. In case of infestation, get a pest-control professional to woe off the unwanted pests.

 

  1. Is there asbestos in the house?

Sometimes the inspection report might not cover the details of asbestos just because it’s hidden behind any wall covering or laminated flooring. Asbestos can be hazardous if it becomes airborne. So, it is essential to get a certified specialist to look for it.

Before you go with the deal, have a budget in your mind to get an idea of how much extra you need to spend on the restoration works! Hope you have some clarity over the points to consider before buying an older house.

Tina Roth is a passionate personal finance blogger, and editor at Finance Blog. She loves to write about personal finance tips, money management, investments, business management, and frugality. 


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BioFuels: Is There Room For Organic Growth In Your Portfolio?

With the increasing global population over the coming decades, it makes sense that discussions around more efficient fuels are taking place. I recently came across an article showing that India has embarked on the journey with the first launch of the passenger carrying train that will be powered by biofuels. As India represents a commonly cited high growth market, I felt biofuels would a topic of interest to delve into a little more.

So what are biofuels?

Biofuels represent an energy product that is harnessed from crops and other plants. There are also a lot of perks that come using other renewable source fuel transportation that can translate into saving money. There are estimates that by the year 2050 biofuels could make up to 30 % of fuel. My thoughts on this are that alternative fuels whether bio based or electrical are going to become more common place over time. As a world, it is human desire to increase the output and efficiency of our actions. The outcome of this is evident in the tremendous progress from horse and buggy, to modern day attempts for commercial space travel as efficiency in how we travel expanded.

If the use of biofuels in mass transportation shows promise and is effective in bringing about more fuel efficiency to countries like India and China, it will gain traction in other areas of the world as well. There are various pros and cons to this form of fuel

Pros:

One obvious benefit of using biofuels is that they are renewable. This allows for sustainability that is beneficial on multiple fronts. First it expands the output of yields by farmers, second it allows for broader access in lower resource regions, and thirdly as a whole it produces less pollution.

Negatives:

The cost of production currently still needs to be improved. The use of fertilizers may result in ground water pollution and other environmental factors. The release of emissions is mainly from the manufacturing process.

While some consider their use "carbon neutral," the machinery required to farm the plants for biofuels does create carbon emissions, this machinery is also typically not powered by biofuels. Research suggests despite this fact, that biofuels help to reduce carbon emissions by 50-60% -UMN

 

The alternative energy sector has drawn a lot of attention from investors over the years for good reason, and it may be time to consider the role of alternative energy as a potential viable space to consider in your overall portfolio.

*MSF is not a financial adviser and statements are opinion. We recommend consulting your financial advisor for matters relating to your particular investment and financial plan. MSF has no financial relation with companies mentioned in this article.

The Future of Renewable Energy

Share your story:
 Reasons not to start your journey to sharing your story. Because you are the currently starring in the "Most interesting Man or Woman" in the world commercials and your story is telling it self. Otherwise, why not because you without a doubt you can add value to the world? The process to get started has become quite simple and user friendly. As a reader of MSF going through the link will start you at a hosting rate of $3.95 per month. This comes with a free domain and their customer service has been great from day one.

Track All Your Finances:
Personal Capital is a free and easy to use platform that helps track your finances. Its a great tool to utilize to help track as your Net worth as you work to build it and eliminate your financial debts. Definitely recommend checking it out, as I have found it to be incredibly useful. Here is a preview of what the software will look we have put together for your review.

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