Beating Broke

Is the Housing Market Making a Comeback?

December 9, 2012 By Shane Ede 5 Comments

The housing market has been in a slump, since it crashed in 2008. Here we are, three plus years later, and it just might be showing signs of making a bit of a comeback.

I’ve got to admit that, here in North Dakota, we never really directly felt the housing market crash. With all the oil flowing in the western half of the state, and the resulting high demand for housing, our market has remained pretty close to level. In the western part of the state, there’s such a demand for housing that the home builders can’t keep up, and prices have gone up by quite a bit. Here in the eastern half, our market has kept steady, with only some minimal gains, but the number of homes available has stayed low.

Other parts of the country weren’t as lucky to have an oil boom going on at the same time as a major market correction, however, and certainly felt the crash a whole lot more than we did. Recently, I’ve read several articles on the increase in inventory churn in some key areas.

Housing Market Key Factors

I’m no expert in the housing market, but I think that there are several key factors that might be contributing to a market comeback. Interest rates remain low around the country, with many qualified buyers getting home loans with loans that are below 4%. As a comparison, the home loan rates in Australia are near 6%. As a further comparison, when my wife and I bought our house in 2004, the rate we got on the house was almost 7%. Another key factor, in my opinion, has been the rising of new home construction. As the market crashed, the rates dropped, but the number of people who still qualified under new, stricter lending policies dropped too. The lower number of qualified buyers meant that there were less houses being bought, and built. Rates are still low, but the number of new homes constructed has gone up several months in a row. The people who survived the crash without bankruptcy are building homes. That also means that they are likely selling their old homes, if they have them, and putting more lower cost houses into the market. Those lower cost houses in the market could lead to more people buying houses and becoming first time homeowners. The final factor that I think is contributing to a resurgent housing market is the leveling off of the job market. With several months of gains in the job market, the employment situation appears to have leveled off some which should make people feel more secure in their employment situation and decide to make the jump into home-ownership.

Should you Buy a House?

Anytime we start talking about the housing market, the inevitable question comes up of whether a person should buy a house now or not. I’m not trying to avoid the question, but it really comes down to your personal situation. Your primary home still isn’t an investment. Your local market should also be taken into account. What are the rental rates in your area? What would the mortgage payment on a house be? Is the rent for a similar house more or less? Is your financial situation stable? Do you have savings for a down payment? With enough left over to pay closing costs? Do you have an emergency fund in place to pay for any unforeseen emergencies that might occur after you move in? Spending thousands of dollars isn’t something that anyone should rush into. Run the numbers on your financial situation, then run them again. Sleep on it for a while, and then decide if now is a good time for you to consider buying a house.

What’s the housing market like in your area? Did your market feel the crash?

How Much Car Insurance Coverage Do You Need?

December 8, 2012 By Shane Ede 8 Comments

Car insurance, like most insurances, can seem complicated. Deciding just how much car insurance coverage you need is the biggest hurdle. Of course, it’s easy to select the coverage that meets the requirements of your state and the lien holder (of you owe on a loan for the car, you’ve got a lien holder, and it’s likely the bank you borrowed from), but those aren’t the only factors to take into account when deciding on how much coverage you need. Using a free online service can quickly find cheap auto insurance companies and shows multiple competitive policies. In the end, you’ve got to find a coverage that will meet those requirements, and also fit within your budget.

State Requirements

You’ll want to know what the state requires you to have for insurance. Any local insurance provider should be able to tell you, but you’ll want to double check if you’re planning on using an out of state or online provider. If you still owe on your car, the lender on your loan will likely require that you have full coverage, so the state minimums will likely only come into play if you own the car you’ll be insuring.

Lien Holder Requirements

If you owe on your car, you’ve got a lien holder. The lien holder is whomever you borrowed the money from. Most (if not all) lenders will require that you carry full coverage insurance on the car. It has nothing to do with them wanting to make sure you’re safe, and all to do with making sure that should you get in an accident, that they’ll get some of their money for the loan. While most lien holders won’t require a certain level of insurance (over full coverage), it is a good idea to find out what they require just to make sure that you’re getting the coverage that you need.

Deciding on Coverage Levels

Once you know the requirements of the state and any lien holders, you’ve got to decide on the level of car insurance coverage you want. There are two ways to look at this. The first is that you’ve got to find a coverage and provider that is affordable enough to fit into your budget. The second is usually the forgotten way of looking at insurance. The coverage doesn’t just have to fit into your budget, it also needs to cover you against a total loss. If you have full coverage, but it’s only enough to cover a portion of what you owe on the car, you’ll also want to look at something that’s usually called “Gap Insurance”. Gap insurance is aptly named in that it is designed to cover any gap between the value of the car and the remaining loan should the car be totaled before you pay it off. Car insurance can be a combination of three coverages. A liability coverage (usually what States require), Comp & Collision, and personal injury. The exact levels that you need will vary based on your situation, but your insurance provider should be able to make recommendations for you.

How Much Deductible for Car Insurance

One of the easiest ways to lower the monthly cost of your car insurance coverage is to raise the deductible on your policy. This method is a bit of a double-edged sword, however. Raise it too high, and you might not be able to afford to have the car fixed. Or, anything short of a major collision may fall under the amount of the deductible. Again, your insurance provider should be able to help you compare the different deductible levels and help you find one that fits your budget without breaking you if you get in an accident.

The level of coverage that you need is going to be drastically different based on your own individual situation. Do you own your car, or owe on your car? Do you have sufficient savings to cover a higher deductible in an emergency? What are the requirements of your state and any lien holders? Make sure you know all that information before you go looking for car insurance, and remember to double check any suggestions by an insurance provider. We’d all like to think that they are all honest, but not all of them are. Knowing at least a little about what you’re talking about, and the information required to ask informed questions is a huge step towards not getting taken advantage of.

How much do you know about car insurance? How much have you learned since the first time you bought insurance?

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A Review of Dave Ramsey’s Revised Financial Peace University & New Speakers

December 3, 2012 By MelissaB 3 Comments

Dave Ramsey has changed thousands, if not millions, of lives with his Financial Peace University. Now, he is looking to improve on that formula with the newly revised Financial Peace University. While this latest version of Financial Peace University has all of the benefits of the old version, some of the material has been changed, and there are new speakers added to the mix.

The revised Financial Peace University kit includes a workbook; Ramsey’s book, The Complete Guide to Money; a welcome guide that includes a pencil, sharpener, and eraser; an envelope system; a laminated Financial Peace University Progress Chart; a folder for Financial Peace forms; and most importantly, 10 audio CDs containing Ramsey’s lessons.

The 10 audio CDs cover the following topics:

CD #1: Super Saving: Common Sense for Your Dollars and Cents

CD #2: Relating with Money: Nerds and Free Spirits Unite!

CD #3: Cash Flow Planning: the Nuts and Bolts of Budgeting

CD #4: Dumping Debt: Breaking the Chains of Debt

CD #5: Buyer Beware: The Power of Marketing on Your Buying Decisions

CD #6: The Role of Insurance: Protecting Your Health, Family and Finances

CD #7: Retirement and College Planning: Mastering the Alphabet Soup of Investing

CD #8: Real Estate and Mortgages: Keeping the American Dream from Becoming a Nightmare

CD #9: The Great Misunderstanding: Unleashing the Power of Generous Giving

CD #10: Dave’s Story: Learn How Dave Found the Peace He Was Missing

There are three major changes I noticed in the newly revised Financial Peace University.

1. The course has been shortened from 13 weeks to 9 weeks. Some may say that this time frame is too short, but I think it is great. Ramsey is such a motivational speaker, that after hearing him speak for one class people are fired up and ready to get their finances in order. Shortening the course to 9 weeks allows them to make quicker progress and begin working on their financial situation sooner.

2. Content that wasn’t relevant to everyone has been moved to the website. Some content, while useful to those in a particular situation, isn’t applicable to the majority of people. For instance, Ramsey skillfully explained exactly how to deal with harassing bill collectors in the original Financial Peace University, and that information is essential to those in that situation. However, since the majority of FPU participants are not in that desperate situation, that content has been moved to the website.

3. Ramsey has brought in three new speakers–Rachael Cruze (Ramsey’s daughter), Jon Acuff and Chris Hogan. Fans of Ramsey will probably have mixed feelings about these new additions.

Rachael Cruze has the hardest job. Ramsey is a dynamic motivational speaker who makes his job seem effortless. People will naturally expect the same of his child. In reality, Cruze is young and new at this business. She is definitely not as polished as her famous father, though truthfully very few people are. However, she offers the voice of a person who has been raised following Dave Ramsey’s principles and hearing her success is encouraging.

Jon Acuff shares Ramsey’s sense of humor, but his jokes don’t go over quite as well. However, his tips on negotiation are good, and readers can definitely learn from him. A few more years of working with Ramsey, and he will have the natural, relaxed attitude as Ramsey does.

Chris Hogan is the most charismatic new addition. While he is not Dave Ramsey, he is a natural public speaker. He gives important information about buying a home, but his lessons are peppered with humor that naturally engage the listener.

My husband and I both listened to the CDs, and I didn’t mind the addition of the new speakers and know that Ramsey is probably adding them to prepare to eventually hand over his dynasty. However, my husband did not like the new additions and felt that most of the speakers were simply reiterating what Ramsey always says.

Overall, Dave Ramsey’s newly revised Financial Peace University is an improvement on the first version and can inspire participants to pay off debt and improve their financial situation once and for all.