Financial Fitness: July 2024

Summer has officially begun, so it’s a perfect time to take some time off and spend time with friends and family. If you have savings in place, check out our article on Compound Interest and see just how hard your money’s working for you, even when you’re not. Even though you may be camping indoors this month, don’t feel guilty about going online and checking out future purchases. Research has found that this habit, aka dreamscrolling, can encourage better financial management habits.

Home Financing

Home Buyers and Assumable Mortgages

While there are several strategies for buying a home when rates and prices are high, some buyers are hunting the rare but desirable assumable mortgage. This is when a buyer purchases a new home and takes over the seller’s existing mortgage as well.

If a buyer finds a seller who locked in a lower interest rate when purchasing a home fairly recently (late 2019 to spring 2022), it could be the first step towards an assumable mortgage and big savings. There’s one problem: there aren’t that many available.

While almost any government-backed loan, including FHA, VA and USDA mortgages, could be assumed by a purchaser, only around 13% have rates below 4%. Since about two-thirds of assumable mortgages were taken out within the past three to four years, a buyer’s chances of finding an appealing home with an assumable mortgage are pretty small.

However, there may be some help available with finding these properties. Several online specialized search companies (Roam, Assumable, and AssumeList) have begun posting details of homes with possibly-assumable mortgages.

There’s one other potential problem, besides the scarcity of assumable mortgages: when buyers assume a loan, they must make a down payment that’s equal to the difference between the purchase price and the seller’s loan balance. Depending on the loan’s age and seller’s down payment, this can be a much larger sum than a traditional down payment.

Source: axios.com

Insurance

Do You Need Personal Cyber-Insurance?

In today’s technology-dependent world, it’s depressingly true that we’re all potential victims of identity theft, malware, ransomware attacks, phishing scams and even cyber blackmail. According to the FTC’s Consumer Sentinel Network, 46% of Americans experienced some type of fraud in 2022.

Even worse, identity thieves have become more creative. They’ve branched out into crimes such as medical and tax identity theft, stealing everything from personal medical records to your tax refund. A few even steal children’s Social Security numbers to open fraudulent credit accounts.

Other cyber-crimes are rarer but still happen. Cyber-blackmail happens when your computer is hacked and all your files locked, and the hacker demands you pay a Bitcoin ransom to unlock everything. Another scenario is when a hacker finds potentially embarrassing data on your computer and threatens to go public unless you pay.

If you’re considering adding cyber-protection to your insurance coverage, you may be able to add it to your homeowners or renters policy. In the meantime, visit the Federal Trade Commission’s Cybersecurity Basics to ensure you and your family are surfing safely and know how to recognize potential scams.

Source: usaa.com

In the News

The Joy of Dreamscrolling

While daydreaming gets a bad rap, a March 2024 survey found that it’s not such a bad thing after all, especially when we window-shop online.

The average American spends over two hours a day “dreamscrolling”, which describes looking at things they’d like to buy. Most survey respondents say dreamscrolling is time well spent, as it motivates them to responsibly reach their financial goals so they can buy that new speedboat or handbag.

Age-wise, younger Americans are the most prolific. Generation Zers aged 18 to 26 spend the most time dreamscrolling at just over three hours per day, while Boomers aged 60 and up clock in at around an hour.

Here are details of popular dreamscroll items:

• The most popular are clothing, shoes and accessories. Nearly 50% are checking these out.
• Technology gadgets and home decor are the first and second runners-up with 29-30% viewing these.
• Around 25% are planning their next vacation.
• Around 20% are thinking big, checking out a home purchase or a move to a new apartment.
• Last but not least, self-care products and pet care items come in at 21% and 19%.

More than half of the respondents admitted they have items saved in shopping carts. These scrollers are dreaming big, as they estimated it would cost about $86,593.40 to buy everything they currently have saved.

Source: empower.com

Credit and Consumer Finance

How Compound Interest Rewards Savers

Did you know that 80% of Americans plan to make investing a priority this year…but over 60% don’t know how to calculate compound interest? If you’re not sure how to do the math, here’s a refresher course.

Simply put, compound interest is the interest you earn on your interest. This super-charges your savings, as you’re earning interest on your principal balance and interest on the interest you’re earning. As the years go by, compound interest will continue to grow your savings.

At the end of a compounding period, your interest is added to your principal balance. Therefore, in each compounding period, the amount of money accruing interest is larger than in the previous period, resulting in greater interest earnings.

Compound interest formula

If you enjoy math, here’s the equation for calculating compound interest:

𝐴=𝑃(1+𝑟𝑛)𝑛𝑡

𝐴=Final amount
𝑃=Initial principal balance
𝑟=Interest rate
𝑛=Number of times interest applied per time period
𝑡=Number of time periods elapsed

However, the rest of us will probably prefer using an online calculator, such as the one provided online by the SEC. Microsoft Excel users also have several formulas available.

Just as compounding can work in your favor, it can also work against you if you have debt with compounding interest. In most cases, loans such as mortgages, auto loans, and personal loans have simple interest, meaning it doesn’t compound.

Credit cards, on the other hand, charge compound interest. If you feel like your credit card balance is fighting back, it’s because your credit card interest is compounding each day. In other words, your balance literally grows every day.

It can be helpful to keep compounding interest in mind when you next review your savings and debt management strategy.

Source: empower.com

Did You Know?

How To Blur Your Home on Google Street View

Google Maps Street View is popular for several reasons. You can check out areas near a new destination, look at a home you’re considering buying or renting, or even have fun looking at amusing photos taken by Google’s camera-laden sedans.

However, there are valid reasons for removing your own home. Perhaps you don’t want potential burglars scoping out your home and neighborhood. Or the photo shows your home (or you, or a family member) in an unattractive light.

You can request that Google blur your house on Street View, although once it’s done, it’s permanent. Also, Google doesn’t supply a time frame for this, so you may wait a while to see results.

Step One: Pull up your house on Google Maps. Enter your address into the search bar, then click on the yellow Street View image (yellow stick figure) that appears at the bottom of the left-hand menu.

Step Two: Click the three dots next to the address, then choose Report a problem. Alternatively, you can click the Report a problem button in the bottom-right corner of the Street View window. This will pull up Google Maps’ “Report Inappropriate Street View” form for your specific address.

Here, you can adjust the exact amount of blur you want to add to the image. Be sure not to blur your neighbors’ homes, as they won’t be able to undo this.

Step Three: Choose My home as the element of the photo you want to blur. You can skip the “Report image quality” section.

Step Four: Enter your email address, as Google requires you to attach it to your request, then complete the reCAPTCHA.

Source: lifehacker.com