It’s not always easy to stick to your goals, especially when life throws challenges your way. That’s why we assembled a short list of financial planning tips for 2023. Together, we’re going to get your finances in shape so you can maximize your budget this year and in the future.

1. Self-Evaluate

Before you know what financial planning tips you need to act upon, 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 CNBC, 63% 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 can help you 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 by creating a budget and a plan of action.

2. Pay Down Debt

According to debt.org, Millennials (ages 24-39) have an average debt of $87,448. Gen X’ers (ages 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 many people are hesitant to buy 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 for years to come. 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 planning tips for 2023. 

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 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 still progress.

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

The post Five Steps to Financial Fitness: Your Financial Planning Tips For 2023 appeared first on Cardinal Financial.

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.

The post 15 Tips for Frugal Living: Kick Spending Habits to the Curb appeared first on Cardinal Financial.

Did you know it’s possible to save hundreds, if not thousands of dollars over the course of your home loan by practicing a little thing called early payoff? For many Americans, their mortgage is their largest form of debt. And with debt comes the pressure of wanting to pay it back as soon as possible. However, most homeowners don’t believe they could afford to pay more on their mortgage than what they’re paying right now. We want to challenge you to think outside that box and reimagine the possibilities of debt-free homeownership. If you’re a homeowner who’s still paying off your mortgage, wishing you could pay it off sooner, you’ve come to the right place. Read on to see how you may be able to get out of mortgage debt sooner.

first things first

Let’s look at a scenario from our amortization calculator: a 30-year, fixed-rate, $200,000 mortgage with a 3.25% APR. This borrower’s first month’s mortgage payment would be $870.41 which, not factoring in taxes and insurance, breaks down to $555.55 in principal and a whopping $314.86 in interest! Quite a big chunk of their mortgage payment is just interest. Because of this, over the course of their 30-year loan term, they will have paid a total of $313,348 on that $200,000 mortgage.

Now before you get too excited to pay off your mortgage early, talk to your mortgage lender and ask if they have a prepayment penalty. Some lenders do this and we wouldn’t want you to have to pay a fee for prepaying on your mortgage. That said, before you read on, we highly recommend you consult your tax, financial, and/or legal advisor too before you use any of our methods to pay off your mortgage early!

Reimagine the possibilities of debt-free homeownership.

make one extra payment a year

Take baby steps. Try making one extra payment a year on your mortgage and you could greatly reduce the total amount you pay over time. How might you make this happen? Consider some luxuries you might be splurging on that you could live without. By making financial sacrifices, you could save up enough money throughout the year to make one extra payment.

If there’s no room in your budget or lifestyle for such sacrifices, you could make one extra payment a year by taking extra cash such as your tax refund or a bonus check and applying it directly to your mortgage balance. This puts more money toward your principal amount, which will reduce your interest over the life of your loan. Need help calculating? Ask your mortgage lender or try using an early payoff calculator.

increase your monthly payment when you get a raise

Rather than paying the same amount every month for the next 30 years, increase your mortgage payment proportionately to your pay raises. Like making one extra payment a year, increasing your monthly payment when you get a raise pays down your principal amount, reducing your interest.

Some homeowners even take on a second job to bring in more income because they’re so dedicated to becoming free of mortgage debt. This option isn’t for everyone, but homeowners who work a second job could potentially put all of the money they make from that job toward the principal on their mortgage.

round up each payment

Another way you may be able to pay off your mortgage early is by rounding up each payment. For example, if your monthly mortgage payment is $1,105, round up and pay $1,200. The additional $95 will go toward your principal and will result in fewer payments and a reduced term. If your budget has room for it, this early payoff tip is an easy way to pay just a little extra on your mortgage every month—and it might be the method that’s easiest to integrate into your lifestyle with very little sacrifice!

make biweekly payments

Yet another way you may be able to pay off your mortgage early is by making biweekly payments. The concept is fairly simple: when you pay half of your mortgage payment every two weeks, you’re actually making 26 half-payments, which comes out to 13 full monthly payments every year. Depending on your interest rate, that extra payment could shave up to eight years off a 30-year mortgage! Just make sure you check with your loan servicer first because some don’t allow biweekly payments.

refinance for a shorter term and/or lower rate

Lastly, you could check with your lender and see if you’re eligible to refinance your mortgage for a shorter term and/or lower rate. Oftentimes, a shorter term will raise your monthly payment, but depending on what you qualify for, you could reduce your mortgage term by up to 20 years!

If you refinance for a lower rate, the good news is that mortgage rates are still historically low, so you could take advantage of this time and get a lower monthly payment.

Thinking about paying off your mortgage sooner? These methods can help, but it’s important to plan carefully and seek professional tax, financial, and/or legal advice first. Ask your financial advisor about these tips before you make the decision to pay off your mortgage early.

Did this blog post help you pay off your mortgage early and get out of debt sooner? Let us know on social media or share this post with a friend!

The post How to Pay Off Your Mortgage Early appeared first on Cardinal Financial.