Why Millennials aren’t feeling the boom in household wealth


Households are wealthier than ever. But if you’re a Millennial or have a low credit score, you probably don’t feel any richer.

Since the financial crisis, home equity has grown for older Americans as home prices have recovered and debt has accumulated more slowly, according to a study by the Federal Reserve Bank of New York released Thursday.

But younger people and borrowers considered less creditworthy haven’t reaped the same benefits. Homeownership has declined for these Americans because of tighter lending standards.

The Fed study examined home equity between 2006 and 2017.

In 2006, before the crisis, Americans over age 60 and under age 45 each held about a quarter of the country’s overall home equity.

But by 2017, older Americans held 41% and younger Americans just 14%. That’s partly because of the aging population, but also because of tougher mortgage standards and higher student loan debt, the researchers said.

Related: Almost half of US families can’t afford basics like rent and food

“Tight credit can limit the scope for renters to become owners and for current homeowners to access their equity,” said Beverly Hirtle, executive vice president and director of research at the New York Fed.

The shift in housing wealth distribution could have long-term effects on the nation’s housing cycle, the New York Fed researchers warned. It also leaves far less cushion for those younger Americans or low-credit-score borrowers in harder financial times.

In times of hardship, homeowners can use a portion of the equity they’ve accumulated in their homes to bridge financial shortfalls. Equity is the difference between the value of your home and how much you owe on your mortgage.

Related: It’s really tough to be a homebuyer in Seattle

“The distribution is important, as it reflects who will likely bear the burden when the next economic downturn occurs,” Hirtle said.

The findings were part of the New York Fed’s household debt report, which showed that American households carried $13.21 trillion in debt in the first quarter, up 0.5% from the fourth quarter of last year.

Americans are also doing a better job paying off credit card balances, and the delinquency rate of their mortgages has continued to improve, according to the report.

CNNMoney (Washington)
First published May 17, 2018: 4:10 PM ET

 




3 Tax Breaks for Homeowners


Homeowners have access to certain tax deductions that don’t apply for renters — and these tax breaks can add up to quite a sum.

Published on Jan 18, 2018.

If you own your home, you may qualify for several special tax breaks. Claiming these tax breaks can be an awfully helpful way to counterbalance the additional expenses involved in homeownership. Let’s look at three tax breaks for homeowners and how to qualify and claim them.

Before we get started, however, keep in mind that all three of these deductions are itemized. That means you can’t claim them unless you forgo the standard deduction, which has been nearly doubled by the recently passed Tax Cuts and Jobs Act. Therefore you should figure out how much money they can save you and only claim them if that amount exceeds the standard deduction you’re eligible for.

The mortgage interest deduction

Most homeowners know they can deduct the interest they pay on their mortgages from their federal income taxes, but they may not be aware that because points are basically prepaid interest, they can also be deducted. The rules for the mortgage interest deduction have changed somewhat thanks to tax reform: The deduction is now capped at mortgage amounts of $750,000, though if you have an existing mortgage that’s larger than that, you’ll still be allowed to deduct the interest (the new limit applies to mortgages acquired after 2017).

The property tax deduction

Property taxes are a local tax that can be deducted as part of the state and local taxes deduction. This can be a huge tax break if you live in an area with high property taxes. However, note that the state and local taxes deduction will now be capped at $10,000 starting in 2018. If you pay high state income taxes and/or have very high property taxes, you may not be able to squeeze the full expenses into this deduction in future years.

Medical home improvements deduction

If you make changes to your home for medical reasons, you can deduct the costs as part of the medical expense deduction. This covers both big improvements (e.g., putting in an elevator if you can no longer climb stairs) and small ones (e.g., switching your doorknobs to lever-style knobs because arthritis makes it hard for you to grip things).

Note that you can only claim a deduction for these expenses to the extent that they don’t increase the value of your home. For example, if your house was worth $200,000 and adding an elevator cost you $80,000 but increased your home’s value to $250,000, then you could only deduct $30,000 of the expense (the $80,000 cost minus the $50,000 increase in the house’s value). If the improvement doesn’t change the value of your home, then you can deduct the entire amount. You can also deduct upkeep expenses for medical improvements in future years; for example, if you have a maintenance man check out your new elevator once a year, you can deduct his fees as a medical expense.

Although the recent tax reform bill dramatically increase the standard deductions for all filing statuses, if you can take all three of these deductions, you’re far more likely to benefit from itemizing. And maxing out these deductions will also make other itemized deductions more attractive, including the charitable contribution deduction. When you throw those other itemized deductions into the pot, you may find that your total savings are significantly greater than your standard deduction.

The $16,122 Social Security bonus you could be missing
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This Article was originally published on www.fool.com website. This article has not been modified from its original version. Click here to read the article on www.fool.com.




19 Things a New Homeowner Should Do Immediately to Save Money


By Trent Hamm
On December 13, 2017.

So you’ve just moved into your nice new home. You’ve unloaded the boxes and started to unpack your life.

Right now is the perfect time to walk through a checklist of ways to save money on your home for years to come.

Starting on these things as early as possible will allow you to start saving money sooner rather than later. Plus, some of them will be easier to accomplish before you hang pictures or get too settled in — and lose your move-in momentum.

Here are 19 things to check or do immediately that will reduce the energy and maintenance costs of your home over the long haul.

 

19 Things to Do Immediately to Reduce Your Home Energy and Maintenance Costs

1. Check the insulation in your attic – and install more if needed.

If you have an unfinished attic, pop your head up there and take a look around. You should see insulation up there between the beams, and there should be at least six inches of it everywhere (more if you live in the northern part of the United States).

If there’s inadequate insulation up there – or the insulation you have appears to be damaged – install new insulation. Here’s a great guide from the Department of Energy on attic insulation, including specifics on how much you should have depending on where you live. Many states offer financial incentives, up to a 75% refund for instance, to encourage homeowners to better insulate their homes.

2. Lower the temperature on your hot water heater down to 120 degrees Fahrenheit (55 degrees Celsius).

This is the optimum temperature for your hot water heater. Most people don’t use water hotter than 120 degrees — indeed, water hotter than that can scald you or a child — and thus the energy needed to keep the water above 120 degrees isn’t used effectively. Lower the temperature, save money on your energy bill, and you’ll never skip a beat.

3. Toss a water heater blanket over that hot water heater as well.

While most modern hot water heaters are well-insulated, some are insulated better than others, and many older heaters aren’t insulated well at all. A small investment in a blanket for your water heater will slowly and gradually save you money on your heating bill over time by keeping the heat in the water instead of letting it disperse slowly into your basement or utility closet.

The Department of Energy recommends being “careful not to cover the water heater’s top, bottom, thermostat, or burner compartment.” And of course, on-demand (or “tankless”) water heaters don’t require this treatment.

4. Install ceiling fans in most rooms.

Ceiling fans are a low-energy way to keep air moving in your home. Because of the air circulation effect, you can get away with keeping your thermostat a degree or two higher in summer and a degree or two lower in winter, netting a rather large savings.

A while back, I wrote a guide to maximizing ceiling fan use. The most important thing to know is that the air directly below the fan should be blowing down on you in the summer and should be pulled upwards away from you in the winter — you can use the reversal switch on your fan to switch between the modes at the start of each season.

install-ceiling-fans

 

5. Wrap exposed water pipes with insulation.

Exposed hot water pipes lose heat as they move water from your heater to your faucet or shower. Wrapping them in pipe insulation, especially in cold basements or garages, can make a two- to four-degree difference in the temperature of the water, and also allows hot water to reach your faucet faster.

Check the pipes into and out of your hot water heater first, as the first three feet out of the heater (and the last few feet of inlet water) are key. Use good-quality pipe insulation for the job, which is actually quite simple — here’s a tutorial.

6. Install a programmable thermostat – and learn how to use it.

A programmable thermostat allows you to schedule automatic increases and decreases in your home’s temperature, saving money on cooling in the summer and heating in the winter.

They’re easy to install and easy to use, especially if you keep a fairly routine schedule. Just program the thermostat to drop a few degrees at night while you’re sleeping or off at work during the day, and set it to return to your preferred temperature just before you wake up or return home from work. You won’t notice the difference — until you see your lower utility bill.

7. Replace your air filters.

When you first move in, you almost always need to replace the air handling filter or the filter on your furnace or AC unit. Don’t worry, it’s easy to do – it takes about 10 seconds.

Go down to your air handling unit, find where the filter is (it’s almost always a large rectangle), and mark down the measurements (printed around the edges). Then, go to the hardware store and pick up a few of them. Go home and replace the old one with a new filter, and save the rest so you always have a clean one ready to go. An outdated filter not only doesn’t filter air as well, it also has a negative impact on air flow, meaning your air handling system or HVAC unit has to work harder — and use more energy — to pump out lower quality air.

8. Make sure the vents in all rooms are clear of dust and obstructions.

None of the vents in your home should be covered or blocked by anything – doing that makes your heating and cooling work overtime. You should also peek into all of your vents and make sure they’re as dust-free as possible, and brush them out if you see any dust bunnies. This improves air flow into the room, reducing the amount of blowing that needs to happen.

9. Mark any cracks in the basement with dated masking tape.

Many homes have a few small cracks in their basement walls from the settling of the foundation and the weight of the house. In a stable home, the small cracks aren’t growing at all – they’re safe. If they’re growing, however, you’ll save a ton of money by getting the problem addressed now rather than later.

How do you tell if they’re growing? Take some masking tape and cover up the end of any cracks you notice inside or outside, and write today’s date on the tape. Then, in a few months, check the tape – if you see a crack growing out of the end of the tape, you might have a problem and should call a specialist before the problem gets out of hand.

10. Hang a clothes rack in your laundry room (or better yet, an outdoor clothesline).

Even an efficient clothes dryer can really eat up your energy costs, but it’s convenient for many people. If you’re willing to battle that convenience, you can save money by hanging a clothes rack from the wall in the laundry room and using it for some items; t-shirts, underwear, towels, and pillow cases dry great on clothes racks. If you can hang up 20% of the clothes in a load on a rack, you can get away with running the dryer 20% less than before, saving you cash.

Even better: If you can, install a clothesline in your back yard and hang most of your clothes to dry outside, where a good breeze can do the work of a dryer in no time — and at no cost.

3

11. Check all toilets and under-sink plumbing for leaks or constant running – and check faucets, too.

Do a survey of the plumbing in your home before you settle in. If you find a toilet is running constantly, it’s going to cost you money – here’s how to easily fix that constantly-running toilet.

You should also peek under the basin of all the sinks in your home, just to make sure there aren’t any leaks. Got a leaky faucet? You should repair or replace any of those, because the drip-drip-drip of water is also a drip-drip-drip of money; not to mention the terrible interplay between mold and home insurance.

12. Install LED or CFL light bulbs.

LED and CFL bulbs can save you a lot of money on energy use over the long haul, plus they have much longer lives than normal incandescent bulbs, making them well worth the upfront investment. Consider installing some in various places — especially in areas where the lights may be in use for long periods, like the living room or kitchen, or left on accidentally, like a back hallway or basement. CFL bulbs tend to be cheaper, but LED bulbs are usually preferable in terms of performance, and have come down in cost quite a bit over the past few years.

13. Choose energy efficient appliances, even if you have to pay more up front.

Unless you were lucky enough to buy a fully-furnished home, you’ll likely have to do some appliance shopping. Focus on reliability and energy efficiency above all, even if that seriously increases the cost you have to pay up front. A refrigerator that uses little energy and lasts 20 years is far, far cheaper over the long run than a fridge that runs for seven years and guzzles electricity. If you plan ahead, you can buy it with a credit card that offers a big sign-up bonus. You’ll pay the balance off immediately and walk away with hundreds in cash or travel rewards.

14. Set up your home electronics with a SmartStrip or two.

Looking forward to getting your television, cable box, DVD player, sound system, and video game console set up? When you do it, set things up with proper surge protection (to shield your equipment from electric surges). You might also want to consider a SmartStrip, which makes it easy to “unplug” devices that aren’t in use.

A SmartStrip allows the on-off status of one device — say, the television — to control whether or not there’s power flowing to other devices (say, the DVD player or the video game console). Having the power cut automatically from such auxiliary devices can save a lot of money over time, especially since many such devices eat quite a bit of power as they sit there in standby mode, constantly draining your money.

15. Plant shade trees near your house.

Mother nature can help you save significantly on your summer cooling costs — and heating costs in winter, too.

Plant deciduous trees — the kind that lose their leaves in the fall — on the western and eastern sides of your house. The leafy shade trees will naturally cool your home during the hot summer months by reducing the amount of direct sunlight that hits your house.

In the winter, they’ll lose their leaves, allowing that same sunlight to stream through your windows and heat up the home a bit more. And if you plant evergreens on the north and northwest sides of your home, they won’t affect the sunlight, but will shield your home from cold winter winds.

As an added benefit, mature trees can increase your property value. Just make sure to plant them a safe distance from power lines and your home itself (no one wants a downed limb poking through their roof). Plant them now, and they’ll grow and shade your house sooner.

16. Change the locks and make spare keys.

One of the first things many homeowners do is change the locks on their new home. You don’t need to be particularly handy to install new door hardware, and a set of basic doorknobs and locks for your front and back door will only set you back $20-$80 or so. It may seem unnecessary, but there’s no way to know whether there are copies of your old key floating around, and who might have them if so. Investing a bit of money and time today can protect you from burglary down the road.

While you’re at it, get an extra copy of your key made and leave it with someone you trust, so you don’t have to shell out $100 to a locksmith when you inevitably lock yourself out.

17. Air-seal your home.

This isn’t such a problem in new homes, some of which are built tight as drums, but in older homes, it’s important to look for any places where air may be leaking directly into or out of your home. Common trouble spots are around doorways, windows, and even electric outlets.

These aren’t just air leaks – they’re money leaks. Thankfully, fixing small air leaks is pretty easy – here’s a great Department of Energy guide to caulking and weatherstripping, which will keep such air leaks from sucking the heat – and money – out of your home.

18. Take advantage of tax benefits and other incentives.

The energy tax credit, which was set to expire in 2014, was renewed at the last minute in December. That means homeowners who made energy-based improvements to their homes last year were eligible to receive a tax credit for 10% of the cost, up to $500 lifetime. Whether this popular credit is renewed for another year, however, is anyone’s guess. A whopping 30% tax credit toward the cost of solar energy systems, residential wind turbines, and geothermal heat pumps is in effect through 2016.

Your state or city may offer even more benefits, from no-interest loans to rebates, so do some research when you invest money improving the efficiency of your home — you may save even more money than you expected.

Many states and local utility companies also provide home energy audits for free or at a discount. Someone will thoroughly inspect your home to find where you’re wasting energy. They’ll look for air leaks and uninsulated pipes, test the efficiency of your heating and cooling equipment, and even replace any older incandescent light bulbs for free.

19. Develop a home maintenance checklist, and run through it for the first time.

One final tip: Create a home maintenance checklist. This list should include regular home maintenance tasks that you’d want to do on a monthly, quarterly, or annual basis. Then, make it a habit to run through the items on this list every so often. Doing so will extend the life of almost everything in your home, saving you buckets of money over time.

Any other tips along these lines from the readers?

 

This Article was originally published in The Simple Dollar.
This article has not been modified from its original version. Click here to read the article on www.thesimpledollar.com website.




How I Saved $36,000 in 12 Years by Doing This Simple Trick – by Marie C. Franklin


Pull up a chair and get comfortable because I’m about to tell you a story that may seem hard to believe — but it is the absolute truth. Around 12 years ago, I made a decision that forever changed my relationship to money: instead of spending every $5 bill that passed through my hands, I started saving them.

At the time, I had two daughters in private colleges and, to put it mildly, my husband and I were financially stressed. But I found that socking away each and every $5 bill I received as change in a cash transaction was one way I could stay in control of what little extra money I had at the time — and the strategy has paid off. The girls are out of college and both are married now. And I’ve saved almost $36,000, all in $5 bills. Wowza!

The best part about my plan is that you can do it too. All it takes to get started is a commitment to save and one $5 bill.

The number one reason most people don’t save is that they don’t have a savings plan. Not me. From the moment I wake in the morning, I’m thinking of ways to get back a $5 bill. That’s one reason I do most of my day to day living by spending cash, because let’s be honest, you can’t get a $5 back if you pay with a debit or credit card.

And once you commit to saving your fives, you’ll never look at a $5 bill the same way again. Once you see them accumulate, you won’t be tempted to spend them. It becomes an addictive habit, a fun game to see how fast you can grow your stash.

One of Warren Buffett’s ideas about investing that I really like is that we should invest in ourselves before anything else. What better way to invest in ourselves than committing to a personal savings plan?

The way I see it, people everywhere are yearning for a simple way to put aside some extra money, to pay for a wedding or a vacation, a new car or a house; to pay off school loans or help put a child through school; or maybe the ultimate savings goal — retirement. Some people throw loose change in a jar, while others are way more ambitious and disciplined, setting aside 10% of their monthly income as savings before paying their bills.

But loose change never amounts to any significant money and most people can’t save at all, much less 10% of their salary. So I started a blog to help people get started on the saving their fives idea, and hope you will become a faithful reader and a follower. For more information on my nest egg saving method, please visit Save Money Fast With Fives.


 

This article originally appeared on Lepenzo.com

http://lenpenzo.com/blog/id32828-how-i-saved-36000-dollars-in-12-years-by-doing-this-simple-trick.html

Marie C. Franklin is a former member of the Boston Globe staff and today a journalism professor at Lasell College in Auburndale, MA. She publishes a personal finance blog at www.savemoneyfastwithfives.wordpress.com




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