AIA Chiangmai

The most traditional way of saving money is through a savings account at your local bank. There are two types of savings accounts: passbook and statement. You usually don’t have a choice between the two, most banks offer one or the other.

A passbook account comes with a little booklet that you use to keep track of your deposits, withdrawals and interest. You are responsible for all of the necessary math. With a statement account, you receive a monthly or quarterly statement that details the transactions. Most savings accounts are insured up to $100,000 by the Federal Deposit Insurance Corporation (FDIC) or the Nation Credit Union Share Insurance Fund (NCUSIF).

A savings account is a liquid savings, which means that you can withdraw your money at any time. Federal regulations only allow you six electronic, telephone or preauthorized transfers each month. No more than three of the transfers can be made by check, draft or debit card. But you can usually make unlimited withdrawals through the teller or ATM. Certain savings accounts have a limit of, for example, three free withdrawals per month if your balance falls under a minimum amount. Make sure that you read and understand the savings policies before you open an account.

Most savings accounts have very low balances to open an account - sometimes just a dollar is required. But they may charge a monthly maintenance fee on accounts that fall below a minimum balance, such as $100. The fee can often be as much as $10 a month, which will quickly eat up your account. If you are looking for a savings account for your children, there may be special accounts that waive or lessen the fee.

There is a big difference in the amount of interest earned on savings accounts compared to other forms of savings. Most banks pay very little interest on savings as count, often as little as 0.25%. There are higher interest payments available through high-yield savings or money market accounts that are found online. Many high-yield money market accounts allow you to write checks, though high-yield savings accounts usually won’t offer that feature. There are some high-yield savings accounts that will allow you to link to your checking for faster and easier deposits
and withdrawals.

Online accounts are easy to open, but aren’t for everyone. Many people are concerned about entering personal information online. You may feel more comfortable being able to walk into a local bank and talk to someone face-to-face if you have a problem with your account. You simply have to weigh the customer service of a local bank with the higher interest available through an online institution.

It is highly recommended to keep an emergency fund in a savings account. You should have enough money in a savings account to pay all of your expenses for a three to six month period. You can also use the money for car repairs, insurance deductions and large appliance replacement. A savings account can often help to see you through a true emergency without ruining your financial stability.

Martin Lukac, represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

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There’s little doubt that we’re borrowing more and there’s also little doubt that credit is one of the great conveniences of modern life. That said, like Goldilocks you want to borrow the amount that’s just right — and no more.

So what’s the right level of debt?

The loan qualification standards used by mortgage lenders are an important guideline. You can typically get that old standby — the fixed-rate, 30 year mortgage — if no more than 28 percent of your gross monthly income goes for mortgage principal and interest, property taxes and property insurance (PITI). In addition, as much as 36 percent of your gross monthly income can go to regular monthly costs — PITI plus car payments, credit card debt, school costs, etc. In addition, because they have more liberal qualification standards, you can often borrow more with other loan programs such as FHA, VA and adjustable-rate financing.

But no matter what type of mortgage financing you consider, the real question should be not how much can you borrow, but rather how much can you borrow comfortably. In other words, financial sanity counts.

Unfortunately the term “financial sanity” is an expression without a definition. The economics that work for the Webbers plainly may not work for the Johnsons. We each have different incomes as well as different interests, expenses and preferences. Given this background one might ask: What makes financial sense for me?

The answer looks like this: If you’re living from paycheck to paycheck, if monthly costs are a burden, if savings are small or non-existent, if you do not have health insurance then it’s time to re-think debt burdens.

The richest person I ever met, someone who started with nothing and created jobs for more than 50,000 people, once offered this advice: “The key to financial success is saving, and nothing is harder than saving that first $10,000. After that, it’s easy.”

In other words, it’s entirely possible to have a substantial salary and to fail the financial sanity test. The waiting rooms in every bankruptcy court are filled with people who once had big incomes and bigger debts. One day the numbers didn’t work and away went the trophy houses and the big cars.

So how do you begin the savings process?

The first step, literally, is to open a savings account. The very nice people who provide checking accounts and credit cards will also be happy to hold your savings.

The second step is to go after every nickel and dime you can find.

The economics of savings resemble gravity: Little pieces brought together in one place produce big results. Here’s an example: Imagine that you usually spend $2.50 per day on little things — coffee, candy or whatever. Instead, you set the money aside in an account that pays 6 percent interest. The result? After 30 years there’s almost $77,000 in your account.

There are any number of strategies to save money, but let me suggest a practical approach. Look at your debts. Pick the one with the lowest balance, say a small credit card that requires monthly payments of $25. Save and pay it off. Then identify the next remaining debt with the smallest balance. You now have $25 a month extra that can be applied to the second obligation. Save and pay off the second debt. Maybe with the second obligation you can save $50 a month. After the second debt is repaid, you have an additional $75 a month to attack the third debt.

During this process there are other steps to take. Bring lunch to work. Have one car (hard in some areas, but not impossible). Collect change at the end of the day and deposit rolls of coins every month or so. Eat out — but not often. Stay away from credit cards. Avoid late fees and maintain good credit by paying bills in full and on time.

As this process continues you’ll notice several interesting results.

First, borrowing for real estate becomes easy as debts decline and qualification scores rise.

Second, better credit results in reduced interest rates that can save you big money. Save a half percent as a result of good credit on a $300,000 mortgage and you’ll cut costs in the first year of the loan by nearly $1,500.

Third, there’s no tax on “savings.”

If you have $1,000 in credit card debt and auto costs each month, that money is available only after taxes are paid. To get that $1,000 in cash you may have to earn $1,300 or $1,400, depending on your tax bracket and location. If you pay off your bills and don’t have to pay that $1,000 a month, Uncle Sam does not raise your taxes and you gain the equivalent of a huge raise.

When you speak with lenders about your ability to borrow, consider that with good credit you likely can borrow as much as you need if not more. But also consider that as a matter of financial sanity you have a personal obligation to save. If you can buy a home, pay general expenses and still save 5 or 10 percent of your gross monthly income, the odds are overwhelming that borrowing will not be an undue burden now or in the future.

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Peter G. Miller is a syndicated real estate and personal finance columnist who appears 70 newspapers.

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The stereotype of the twenty-something single is a small apartment with roommates and lots of those cups of noodles. The young twenty-something couple often is thought to live in a small, affordable rental with hand-me-down furniture.

However, that isn’t the case anymore. An increasing number of consumers are buying their first homes before they reach the age of 30.

It’s never too early to buy a home. There are different responsibilities, but young people are just as equipped to purchase a home as older buyers.

One of the beneifts is that the earlier you purchase a home, the younger you are when you pay off the mortgage. You are building equity in an investment, which is always a good idea. While it isn’t a guaranteed return, most buyers do well given time and wise choices.

It doesn’t matter you age, you should be sure that you are ready to buy a home. Consider the following:

What is your job situation? If you are in a stable position that you plan to remain in, then you should consider putting down roots. You might want to wait if you think you may change jobs or be transferred.

Is your credit in order? Having a good credit score is essential in making a wise purchase. If you know your credit score and it looks great, then you are probably ready. If your score needs work, you should take the time to fix it. It can save you thousands, not only on your mortgage, but you insurance premiums, credit cards and other loans.

Do you know what you are looking for? Look to the future in considering a home for purchase. You will want to live there for at least three years. Think about the expansion of your family and other issues that will come up over the years.

Consider how much you can afford to buy. While your dream home may be out of your price range right now, you can make a wise decision. In fact, with each home my family has bought and sold, we’ve come closer and closer to our dream — partly to the increase in profits.

Look at all of the responsibilities of owning a home. You will now have to make the repairs. You will have to deal with the leaky sinks and sagging gutters. You will have to pay all of the utilities and maintain the property. No more landlords to take care of things for you. Owning a home is a big responsibility.

There are also added costs to consider. Not only do you need to save a sizeable down payment, you will also need closing and moving costs. You will need to have reserves for any necessary repairs. You will have to pay homeowner’s insurance and property taxes on the home. It can all add up, so make sure you remember all the little things when looking at what your budget can afford.

Age really doesn’t matter all that much in the decision to buy a home. It’s an individual decision, based on many factors. If you are ready, then go for it. If you are hesitant, don’t jump too fast. It’s a big step.

Martin Lukac represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

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