Green Panda Treehouse

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Photo Credit:  Jeff Belmonte

Some students in the next month will be getting some money from the school. After their tuition and books have been paid, there may be left over scholarship and grant money. Some students will get money back from student loans.

The tuition refund is a great way to start an emergency fund. It’s not the most fun way to spend the money, but it’ll benefit you the most. Since college students tend not to have large incomes, this is a way to quickly set up a financial cushion.

Put the money in a high yield savings account. There are several options to place your money. I use ING Direct for my emergency fund. Check out the different rates (as of 8/2008):

• ING Direct offers 3.00% APY.
• HSBC Direct offers 3.50% APY.
• FNBO Direct offers 3.50% APY.
• AmTrust Direct offers 4.0% APY.
• Washington Mutual offers 3.75% APY.
• E-Trade offers 3.0% APY.

Use it ONLY for emergencies. I’m not taking about using it for regular groceries or for concerts. I suggest not touching for the whole year. If you run into a real emergency, then pull just enough out to cover it.

If you have a refund from student loans, I would pay the principal back. There is too much temptation to use money and plan on paying it back. Keep the interest you earned.

If you have a refund from grants and scholarships, then allow the money to grow. Keep it at the high yield savings account.

I’m not saying you can’t have some fun with money. If you maintain your scholarship and grant requirements, you can most likely continue to get refunds each semester. After you have your emergency fund set up, split the money 50% saving/50% fun.

Use your small windfall and build for the future. Be smart with your money. Does anyone have good ideas on what do with tuition money if someone already has savings and no debt?

Photo Credit: by james.thompson

You’re thinking of getting a home someday. After seeing the current housing situation, you decide to be prepared for a home. How much house should you get? How much of a down payment are you going to need?What other expenses do you have to plan for?

There are many different opinions on how much house you can afford. The general consensus seems to be 2-3x your annual salary. Even if banks may suggest you can afford more, be careful. Look at your circumstances.

Do you have a high amount of debt? Considering pausing on buying a home and get that reduced as there are many other expenses included with purchasing a home (see below). It’s good to anticipate your financial needs ahead of time. Wat will bills be like after you purchase a home? Ask family and friends to get an idea.

Here’s how you can use Zillow to figure out a down payment.

Locate the city you want to live in. If you’re living in New York City or San Francisco, expect to need a HUGE down payment. Hopefully you income is also higher and can help you build your down payment. Use Zillow to locate affordable neighborhoods in the city and state you’re interested in.

Find the areas in the city with home you like. Within cities there are areas that have developed their own ‘personalities’. See for yourself if it’s the right area for you. Go there during different times and days.  If you’re a couple looking to start a family, you may not enjoy an area with a loud and active nightlife.

I also like to look at the Zestimate.  It can give you an idea if the asking price is reasonable. Select a couple of homes you would love to live in and determine the average price. Use this for your down payment fund estimate.

Aim for a down payment between 10-20%  the ‘dream home’. The advantage of this is that it will reduce your mortgage payment.

Stash your down payment fund in a high yield savings account. Speed along your savings by opening an account with banks with high interest savings like ING Direct, HSBC, Emigrant Direct, WaMu, and many others.

Remember there are other costs in buying a home (provided by Zillow). Try to include some buffer money for them. Also check the requirements for your state, as it can vary and you may have additional responsibilities.

• Appraisal
• Credit Report
• Closing Fee
• Title Search
• Homeowners’ Insurance
• Escrow Deposit for Property Taxes & Mortgage Insurance
• Transfer Taxes
• Recording Fees
• Processing Fee
• Underwriting Fee
• Loan Discount Points
• Pre-Paid Interest
• Property Tax
• Pest Inspection
  

Buying a home can be a great experience, but it can also be a nightmare. If you’re not in a position to buy a home, don’t worry. Rent can be a wise choice for many people. Don’t be impatient; wait for the right time.

Do you have more questions about getting a home and the basics of real estate? Here are some great articles I found n the web:

• So you want to buy a house…. @ Gather Little By Little
• The Continuing Saga of the First Time Home Buyer (That’s Me) @ Being Frugal
• 11 Tips for First-Time Homebuyers @ Get Rich Slowly
• The Real Scoop on Real Estate @ I Will Teach You To Be Rich

Photo Credit: Jake the Linux Geek

I’m not talking about predicting the future. I’m talking about looking at possible expenses and including it into your budget. I uses to budget and not include things like car repairs. (I don’t really know why, life happens. I guess I lived in hopeful world, where nothing ever needs to be fixed.) When something came up, I scrambled to have money for the repair.

Right now I’m saving up for my timing belt work. I’m going to need it soon, so I’m setting aside some money for it.  I have $200 saved, so $450 to go. The alternative is to wait for it to go bad and possibly ruin my car, which I’m sure would cost me more than $650. Building a doable budget isn’t hard, it just takes time to refine it.

I’m using a ING savings account for the money. By keeping it there, it makes it harder to get it, aka spend it.

I’m still working on the system.This weekend my headlights stopped working. I called my local repair shop and will bring it in today to get diagnosed and repaired. This was unexpected, so I may have to dip into my emergency fund for this, depending on the costs.

Don’t forget to do some easy car maintance work yourself and you can save some money for bigger repairs and maintence work. I had to put some radiator fluid in my car yesterday.

What unexpected repairs have come and ruined your budget? How do you save up for expected expenses?