Why you should Pay Off Your Mortgage Before you Retire

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For decades one of the dreams that almost everyone had was to be able to be debt free by the time they retired and, for quite a few decades, this was the case and many people’s dreams did come true. Today that’s changed however and, according to the  Federal Reserve Board, nearly 25% of all households where the head of the household is 75 or older still had a home mortgage when they retired. When you compare these 2010 numbers with the 5.8% of retirees in the same situation in 1989, you see just how big the situation has grown.

In simple terms, retiring with any type of large debt can be a problem and retiring with a mortgage that still needs to be paid can be even worse. Many retirees just won’t have the type of income needed to be able to pay their mortgage and pay for all of the other expenses that they’ll have on their retirement savings and Social Security alone. It’s for that reason that we put together this blog today with reasons, advice and tips on why you should pay off your mortgage before you retire. We believe that some of them will be quite helpful. Enjoy.

One of the best things that you can do is opt for a shorter fixed-rate mortgage. The reason; since the mortgage payments will be higher, you’ll more than likely be forced to purchase a smaller home. With a smaller home comes lower property taxes, fewer maintenance bills and, since you’ll have less square feet to heat and cool, lower energy bills. Although your mortgage will be higher, these extra savings should be big enough to allow you to put more money into your retirement savings.

If you want to be able to increase your retirement withdrawal rate, not having the fixed expense of a big mortgage can be very helpful. In fact, one of the best ways to increase your safe withdrawal rate is to have flexibility with the withdrawals and, by cutting back on withdrawals when the market is down, the chance that your retirement income will last through your retirement increases substantially. Without a big mortgage bill every month you’ll have much more flexibility and be able to much better control your spending and investment account withdrawals.

Many people invest the money that they get from their mortgage in risky assets but the fact is that there are few guarantees that this will make them more money. Indeed, most people’s actual returns are far below what the market promises. Rather than do this, better to take a lower mortgage or pay it off faster and use the money you’re now saving towards retirement instead. Yes this is the safe play but, as you get older, you’ll definitely be thankful to not have the stress of worrying about whatever it is you’ve invested in.

Speaking of lowering your stress, just the fact that you don’t have a huge mortgage payment looming every month can help many retirees to sleep much better at night. Without the worry of the mortgage there are also fewer worries about employment because you’re spending much  less money. Even better, a retiree in control of their finances who chooses to continue working will have the freedom to work wherever they choose. (Say that five times fast!)

At the end of the day there certainly will be a few people that can retire comfortably with a mortgage but, statistically speaking, it’s certainly not the majority. Besides the fact that it’s going to be much easier financially, the feeling of being debt-free in retirement can be a good one and so, if your goal is to retire comfortably, part of that goal should definitely include paying off your mortgage before you retire.

The Importance of Comparing Gas Suppliers

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Small businesses move premises all the time for various reasons. Perhaps your business is growing and you need more space to accommodate all of your employers, or perhaps the lease has ended and you’d like to relocate your business due to accessibility or cost? For whatever reason, when you move your business, you’re automatically placed onto a high gas tariff known as deemed rate. Whether you’re with British Gas business gas suppliers or otherwise, this high rate should be avoided wherever possible – unless, of course, you’re happy to pay over the odds for your gas when you could get it much cheaper on a better tariff that is.

When you move premises, you need to compare gas suppliers and the available tariffs so that you can benefit from the best price plan for your requirements. By doing this, you can dramatically cut your gas bill and your balance sheets will thank you for it.

Staying on the deemed rate, even for a small business, can be crippling, adding up to hundreds of pounds to your annual gas bill that you shouldn’t be paying. By comparing gas prices online, you can choose the best supplier and your most favourable tariff so that you’re moved off the deemed rate as soon as possible.

Even if you’ve had the premises for a while, it’s advisable to keep track of your gas prices because situations can change. Market prices change and suppliers introduce better rates and plans all the time so it’s wise to keep your eye out for these, especially if you’re not tied into a contract.

Whether you choose to go directly to the supplier’s website, or you use a third party comparison site, online facilities make sure that comparing gas prices is simple for business owners to do. Online calculators exist that will help to provide you competitive quotes so that you can benefit from the best deal for your business needs.

Financial Questions that need to be answered when you’re getting married

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Marriage is a huge decision no matter how you slice it. If you found somebody who you love, someone who is sympathetic, nurturing and caring, and you’re ready to take a big step, there are a number of financial questions that you really need to ask of each other before you are standing in the church in front of hundreds of people. While this might put a little bit of a kibosh on your lovey-dovey feelings for each other it is vital that you both realize their financial situation that you are getting into. With that in mind, we’ve put together a blog with some of the most important questions that need to be answered before you tie the knot. Enjoy. (And congratulations.)

Simply put, the sooner that you and your spouse-to-be discuss not only your actual finances but your financial preferences, the better you will be able to avoid major financial problems and marital stress in the future. Statistically, one of the biggest reasons cited for divorce is financial problems and so if you wish to avoid divorce court it would be a good idea to discuss finances before you wed.

One of the worst situations to enter into is when one partner has severely damaged credit, huge debts and a very low credit score. If you’re a young couple (and even if you’re not) looking forward to buying a house and having children this could put a serious damper on your plans and inhibit your ability to jointly purchase a home together or even a car. In some cases it may be better to wait until your future spouse has dug him or herself out from under their debt before tying the knot.

One of the best things that a newly married couple can do is commit to building strong individual credit profiles while they are also building a solid joint credit history together. Keeping debt under control, cutting as many costs as possible and merging your expenses are all excellent ideas as well as not overspending and paying bills on time. All of these things will lead to a much stronger financial profile and a much stronger marriage as well.

Unfortunately, one problem that occurs even before a couple gets married is that they take on a huge amount of debt from their wedding. Simply put, taking on a five or six figure debt to finance a wedding and honeymoon could destroy your financial plans before they even begin. Unless you or your spouse have wealthy parents who are going to pay for the wedding you would do best to be a sensible about your wedding, reception and honeymoon as possible. (We like the idea of having a very small reception and an awesome honeymoon.)

Frankly, if both of you are truly care about each other and that care about your future together there is no reason why you shouldn’t put all financial facts on the table and talk them out completely. It is here, at the beginning of your life together, that you need to be totally honest and open about many things, your finances definitely included.  By being straight with each other and getting everything out into the open you should be able to determine how to correct any credit or financial problems that either of you has, clean up any of your credit issues and establish a good foundation from where to begin your new lives together.

Once you’re married you’re going to have to do things as a couple and the big word that you’ll need to get used to using is compromise. This might be the hardest word for some married couples to get used to using but the fact is that, unlike before you were married when your decisions generally only affected you, your decisions now will affect 2 people and possibly more in the future. If you can learn to compromise you will avoid many future financial problems.

While we hate to be down on anyone’s wedding plans the simple fact is that if you are planning on marrying someone who has terrible spending habits, finances that are already in ruin and a credit score that looks like Forrest Gump’s IQ, you may well wish to reconsider your wedding plans, at least for now. In most cases marrying someone with awful credit will usually damage your credit rather than helping their credit.

They say that love is blind but, unless you want your love to also be broke, you definitely need to put all of your financial chips on the table and show all of your credit cards (pun!) before you take that short walk down the aisle. In the long run, talking about your finances now will more than likely greatly reduce future financial problems and help you to stay in love and married for a long time.

5 Ways to Boost Your Credit Rating

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A poor credit rating can limit your chances of securing money when you need it most, especially whilst many of us are still experiencing the backlash of the economic crisis. There are actions you can take to ensure your credit rating is the best it possibly can be, this will enhance your chances of having your credit application accepted.

Keep up-to-date with money you owe

No one is expected to have a clean slate, and lenders are well aware that everyday citizens owe money. As long as you are making repayments regularly when they are due, this will not go unnoticed! It will also look good if you are occasionally paying back more than the minimum amount, showing capability, if you miss payments or are regularly paying late this will put you at risk. Lenders also understand there might be some instances where you are unable to repay an owed amount and you can place a correction note next to this justifying your reasons. Remember, if you already owe a lot of money, lenders will be unwilling to put you at risk of more debt. See RIFT for more information on any money you might be owed by tax to boost your credit.

Regularly check your file

Mistakes can occur and put you at risk if there are incorrect details noted on your record. This could include an incorrect payment or wrong personal details, which can jeopardise your chance of a good credit score. It is important to move any incorrect or old addresses, as this will affect your chances of being approved. It’s also worth keeping your credit separate to your financial partner in case any negative ratings on their part affect you. By regularly checking your file you can overcome these issues and correct any errors.

 

Sign up to the Electoral Roll

This is a quick and easy step that will put you at an advantage. Lenders use the electoral roll as a means to prevent fraud and as proof of address. If you aren’t signed up you are less likely to have you credit application approved.

Keep borrowing to a minimum

It is important to remember that every time you obtain a new form of credit, this will leave a footprint on your record. If you have any credit arrangements that are no longer in use then close them down to ensure you no longer owe to these. Keep a consistent eye on existing accounts and close old accounts to put you at an advantage.

Be realistic

It is essential to be realistic when applying for credit, only apply for credit you are likely to be approved for. Remember to review your credit history to ensure your best chances of approval and by following these 5 steps your chances will be leveraged!

How to Use Credit Cards to Your Advantage

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When you have a high credit score, you’re more likely to receive lower interest rates on loans, more affordable premium rates on insurance, and better credit card benefits than if you had a poor credit score. And although we all want to strive for the best credit score possible, unfortunately sometimes consumers don’t realize the importance of using credit cards to help improve their scores. In fact, routinely using a credit card, sending in the credit card bills on time, and maintaining a low credit utilization rate all can help you bump up your credit score.

Use Cards Consistently

When the credit bureaus calculate your score, they take into account the length of your credit history. The longer and healthier your credit score, the better your score, so it’s a good idea to get in the habit of using your credit card on a regular basis for purchases that you can pay back on time. Don’t apply for a credit card and then forget about it, because in doing so, you aren’t building any credit as the account gets older.

The same goes for opening various credit cards at once, only using them for a short period of time, and then closing them, because these behaviors could actually have a negative effect on your credit score. Instead, focus on responsibly using one or two cards at once over a long period of time to build good credit history and boost your credit score.

Make Timely Payments

Paying your credit card bills on time is one of the easiest ways to build credit. When the credit bureaus calculate your score, 35% of your final score takes into account your payment history. Positive payment history is obviously good for your credit score, but poor payment practices could be detrimental to your total score.

Using a credit card and then sending in the payment on time will give you a good reputation with the credit bureaus. This is because making timely payments shows the credit bureaus that you can manage your finances, so in turn, you’ll have a healthy credit score that reflects your financial responsibility.

Keep a Low Credit Utilization Rate

Credit experts urge consumers to use no more than 30% of their available credit, which helps them to maintain a low credit utilization rate. To calculate your credit utilization rate, divide your total credit card balances by your credit card limits.

A low credit utilization score can boost up your credit score because it indicates that you can responsibly use credit and pay it back in a timely manner. However, when you use more than 30% of of your credit, it may be a sign that you’re getting close to maxing out your card or you’re making purchases that you ultimately cannot afford. The credit bureaus see these actions as risky behaviors, so your credit score could take a hit if you keep a high credit utilization rate.

While there are numerous ways of improving your credit score, discovering how to use a credit card to your advantage can significantly help to improve your credit score.

Chloe Mulliner writes and edits for CreditSources.org, an authority website that focuses on loans, credit scores, and options for people with poor or no credit.