GreenPath Financial Wellness CEO Kristen Holt, left, and LPL Financial Wealth Advisor and Financial Educator Specialist Sherise Steele, right.
The beginning of Fall, which officially starts on Thursday, September 22, marks new sepia-tinged memories in the making where hay rides, caramel apples and a looming winter greet soon-to-be-bundled-up Michiganders who have recently tucked away their shorts and swimsuits, and said goodbye to summer.
This cherished, wind-swept season of new beginnings also represents a new opportunity for year-end budgets to be reviewed, realigned and remade as the holiday season approaches along with new bills and a dwindling number of paychecks left until the end of the year.
“The holiday season is nipping at our heels. People who are paid bi-weekly have five to six paychecks before Christmas,” Sherise Steele, wealth advisor, LPL Financial, told the Michigan Chronicle previously about her savvy spending habits, particularly around the fall. “I tease my daughter that it is illegal to turn on the heat in September in Michigan.”
A LinkedIn article, Six Tips for Financial Fitness This Fall, hones in on the importance of staying financially fit:
- Splurge a bit and schedule some celebratory days to spend a certain amount of money on things you cherish.
- Take a fresh look at that budget and prioritize what should be saved and spent for a more realistic financial future. Also look for minor, unexplained charges, fees and more – remove what’s not needed.
- Maintain that credit for a better credit score that is determined by you. From knowing credit limits to canceling credit cards – find financial help when needed and don’t be afraid to ask for it.
- Pay down high interest credit.
- Spend time; look at spending time more than money. Spend time with loved ones, which can be free and fulfilling!
- Work on giving back to those less fortunate, especially around the holidays, within one’s budget. Think about giving to charities, or spending at small shops, restaurants, and other places that could use those wisely-spent funds.
Steele previously added that the fall season is an important time to re-evaluate one’s finances during this time.
“Several Michigan counties experienced flooding this year. Homeowners may not realize the extent of those damages until they need their furnaces in a few weeks. The fall is a great time to complete delayed car repairs and maintenance. Replacing car tires isn’t cheap but it keeps all of us safer,” she said.
From flood protection for homes to buying homes – smart Fall finances are always a good idea.
GreenPath Financial Wellness, a national 60-year-old nonprofit financial counseling organization, stresses the need for home buyers to have a plan, which GreenPath CEO Kristen Holt stated to the Michigan Chronicle.
Interest rates have hit a 14-year high, and economists expect a continued climb. These factors, plus record-high home prices and limited inventory, create the perfect storm for home buyers this season who feel they have the short end of the stick.
While summer is still around for a few more weeks, Holt explained that it’s typically “the hottest time of year for home buying and selling.”
“While the interest rate increase is intended to help combat overall inflation, home buyers will undoubtedly feel the strain. Buyers should take a holistic look at their finances and explore all financing options before making a commitment,” Holt said, adding that typically when interest rates rise, home prices fall, as demand decreases with higher mortgage rates. “Unfortunately, that is not yet the case with the current housing market, which has seen record-high prices and record-low inventory since the start of the pandemic. With higher interest rates, the cost of borrowing money is increasing and these days, you will pay more to finance your home purchase.”
For example, according to Bankrate, the monthly principal and interest payment on a $300,000 home with 20 percent down and a loan term of 30 years at 5 percent interest is $1552. That same home with the same down payment and mortgage term at 3 percent interest (where rates were about a year ago) would be $1275. That is $277 increase in the monthly payment. Consumers need to consider what is affordable in their monthly budget.
Holt added that understanding one’s credit history and learning ways to improve their credit score goes a long way.
“A good credit score is part of a path to get a favorable loan or line of credit,” she said, adding that websites like annualcreditreport.com can help a person obtain their score from all three reporting bureaus. “If you already have access to your credit report, pay attention to your payment history, which is the biggest single factor used to calculate your credit score.”
Also learning different types of available financing helps.
“Your financing options through different lenders may differ, depending on your credit score, employment history and debt-to-income ratio. Research online and shop current rates and offers from lenders. Credit unions tend to have lower fees and better interest rates on loans,” she said.
Understanding your own budget affordability with monthly payments and seeing if it’s possible to increase the size of the down payment on a home is critical too, along with borrowing less.
“To offset the higher cost, consider financing a less expensive home or reducing the amount of your home equity loan to make sure the monthly payment fits into the budget, Holt said, adding that GreenPath is there to help as seasons change. “At GreenPath, we don’t look at debt in a vacuum. If a person has mortgage concerns, they may also have concerns with managing day-to-day expenses, credit cards, or other debt. We look at the person’s entire financial picture and help identify the best path forward,” said Holt.
Steele said that it is never too late to get finances back together, especially in this season.
“If you feel like you’re off track, begin tracking what you’re spending. I won’t say the ‘budget’ word because it’s like the word diet. Let’s define what on track means — spending less than you earn,” Steele said. “Most of us do not want to work forever. … It takes about 30 years of savings to retire. Working for 30 years isn’t the same as saving while working for 30 years. I’ve been a financial advisor for over two decades. I’ve seen good retirements and some regrets.”
Consumers contemplating home financing should contact GreenPath at (866-648-8122 or www.greenpath.org) or the 995HOPE hotline (888-995-4673, www.995hope.org) for help navigating all phases of homeownership. GreenPath can revisit one’s budget, help clients understand their credit and the full costs of homeownership, make a plan and more.