Home Loan Focus

Archive for June, 2007

I was reading an article on Military.com this afternoon titled seven ways to cut Child Care costs. They had some good tips but it struck me that they had only listed seven ways. I have three children and after going through some budget readjustments over the last year we have had to find a number of ways to cut child care costs.

Child Care expenses for us easily topped our house payment as an expense!

I’ll start off listing their 7 ways and then add my own additional ways.

1. Employee Discounts — Check with both your employer and your daycare provider to see if there is a discount available based on your company. For example used to work for Motorola and they had a partnership with takers across the country that enabled me as an employee to get a certain discount based on my salary. The general idea was that employees that burned lower salaries or wages would receive a bigger discount than those employees that had higher salaries.
2. Telecommute — An obvious way to lower your child care costs is to telecommute and watch her own kids. Now when you’re watching your own kid you definitely will not be as productive as as you might be if your kids were in daycare and you were working at home alone. However you can creatively rearrange her schedule such that you can watch your kids during the day, work at night then when your spouse is home and proceed from there.
3. Flex hours — by rotating your schedule just a bit media couple hours one way and your spouse a schedule another way by a couple of hours you might be able to cover the entire period that is currently being used for child care. Even if you can cut your child on the halftime you might feel to save money.
4. Community programs — see if there are community programs that you can enroll your child and it don’t cost money. Or the possibly cause less money. Then you might be what makes up daycare with the community programs.
5. School Programs — see if your state sponsors a school program. I lived in Georgia where they had a lottery program that funds prekindergarten education for four year old children. This is pre-K. and not daycare, but it’s paid for by the state. That definitely saves you money and it prepares you child for kindergarten, see if your state has a similar program. Some states cover select children in some states cover all children. In addition some states cover children with special needs.
6. Use Operation Military Child Care (OMCC) — the military provides childcare fee assistance for National Guard and reserve troops that are placed on active duty and deployed when their children are not in DOD licensed childcare programs already. This is also available to active duty members of the military
7. Relatives — if you have family members are capable of watching your children, you might see if they can do that. It will definitely save you money and to give your children time and opportunities to bond with other family members. Even if they could only watch your child a few hours for a couple days a week that might help you reduce your childcare bill.

Those are the ways that military.com mentions that she might be a little reduce job care bill. Here are some additional ways that might help you:

1. You could attempt to renegotiate a better childcare rate. Sometimes you can negotiate a slight discount or even a temporary discount to save some money.
2. You could volunteer at your child’s daycare potentially in exchange for discount.
3. You might even barter your own services in exchange for daycare services.
4. Make sure that you are utilizing depending care savings funds to save money on your taxes as it relates to daycare.
5. You should also make sure that you are utilizing the childcare credit allowed for an income tax law.
6. If you have an infant, try and make the extra time to pump breast milk instead of buying formula. This does require extra work as you know at the pulpit but you can freeze it and make sure that your daycare is stocked with the right type of milk. Formula is very expensive and this can definitely save you a lot of money and based on my experience and research it’s healthier for your children.
7. Potty train your children early. This is not easy but the sooner you can potty train your children, the fewer diapers you’ll have to buy. If you can make the time to train your children to use the potty it can save you money.
8. On occasion you can take turns watching your neighbor’s children and in exchange they can watch yours from time to time. This can save you the cost of a babysitter, and on those days when schools out but you have to work, you can even take turns staying out with a group of children while your neighbor works and alternatively, having your neighbor stale with all the children while you work.
9. Plan your vacation sets up the fallen school holidays. This is not always possible, but if you can make it work or lease plan to telecommute on these days you might be a little save yourself the expense of putting your children into afterschool care during those holidays.
10. Don’t pay for your daycare with a credit card, pay with cash or check you don’t need to pay interest on daycare. If you have a rewards debit card, such as a PayPal card, then you can get a 1% cashback savings when you pay for daycare with your PayPal debit card. If you pay for daycare and it costs you $400 a month for two children, that is close to $5,000 for the year. A 1% cashback discount is $500 and that’s a hefty savings!
11. Don’t bounce checks with your daycare. If you don’t have the funds don’t write the check. You don’t need to pay a bounced check fee to daycare.
12. See if there’s a scholarship available for the your child care program. Alternatively see if there is a grants available for any type of financial systems that you might be able to use towards childcare.
13. See if you can get a discount for paying in advance. I wouldn’t advise paying more than three months in advance, , however you could potentially get a bit of a discount if you pay three months in advance. It doesn’t hurt to ask especially at the financial means to do this.
14. Don’t have anymore kids. I say this half jokingly, but there is a truism here. My wife and I have three children over stopping in two. Our third child was a bit of a surprise, she was a good surprise, however financially additional children especially infants are expensive. If you have the luxury of planning, consider that child care is expensive. Put together a family plan of how you anticipate paying the expenses that will come from a new child in the family. Planning can only help you take better care of your children. Birth control however can save you a great deal of money and childcare.
15. Pay Your daycare bill on time. Pay on time so that you don’t have to pay late fees for paying late, but don’t neglect my rule above and bounce a check.
16. Use generic diapers and wipes. Unless your child has allergies, generic diapers and wipes can work just as well as daycare setting. You can oftentimes save 30% on generic diapers and wipes compared to premium brand-name diapers and wipes.
17. Choose a daycare that’s close to your home or centrally located between your job and your home. You don’t want to have to spend more time, or gas, traveling back and forth to the daycare. Pick a daycare that’s close and convenient and don’t go out of your way if you don’t have to.
18. Do everything in your power to keep your house clean and keep your children healthy. Children often times get sick at daycare and bring it home, or get sick at home and take it to daycare and get the other kids sick. Sick kids are expensive. Keep your kids healthy keep them clean and if your pediatrician agrees make sure they take their vitamins. You need every advantage you can get!
19. See if your state offers any tax credits for daycare or childcare programs.

That’s all I can think of right now, I’ve had children in day care or childcare for the last nine years. Some of these lessons above I’ve learned the hard way and some of them I’ve just recently learned, I’m sure there are many more so if you have some ideas or thoughts on how other people could save money on childcare please share them here and I will be happy to publish them and give you credit in any way that I can.

The Federal Reserve decided to hold the federal funds reserve rate of 5.25%.  Economic conditions are present in a mixed bag for the Federal Reserve is a continued to reassess what their next move will be as they attempt to head off inflation and spur growth.  Inflation based on the Federal Reserve’s preferred benchmark rate rose 2 points yet growth across United States is down to a rate of 0.7%.  Unemployment continues to hold it for half percent, and fallout from issues in the mortgage market do not seem to be making a significant impact on the economy other than the decrease in the growth rate, which to be clear is a reduction in the speed of growth.

In general it’s good news of the Fed is not increasing the interest rate as inflation continues to increase.  However if energy prices continue to rise in inflation continues to grow the Federal Reserve will likely have to act and raise interest again.  If energy prices can be brought back into line and other inflationary measures taper off in the economy could escape the federal fund rate hike.

Link to Fed Leaves Interest Rates at 5.25 Percent – washingtonpost.com

When you live or own a home in a neighborhood, you have thrown your lot in with your neighbors.  It is in your best financial interests for your neighbors to do well.  If they build up their home value or even some day sell their home for a good price, that raises the comparable value of homes in the neighborhood.  That can help you get a better interest rate, a larger home equity loan, or someday might help you get a better price on your own home sale.

The house above is a home that recently listed in my own neighborhood.  This home is pushing the envelope on price in our neighborhood.  That is a good thing for all of us neighbors. 

Here is a Link to Homes for Sale in River Bridge, Lawrenceville, Georgia $210,000 for this particular home.

Its a good price for the home, part of the reason why we were paying attention.  Most of the homes in our area price out in the $250 – $350 price range.  That’s relatively average, possibly a little on the low side for Lawrenceville Georgia Real Estate.

I point all this out because today the real estate and mortgage industry is a little confused.  Neighbors often times get caught up in their personal issues and complaints about each other.  They do not always realize that it is in their best interests to cooperate with each other.  If your neighbor’s lawn mower breaks down, loan yours to them. Its good for the neighborhood.

If your neighbor works on their home from 6 am till midnight a couple nights a week.  Let it slide.  They are building up the value of their home and the neighborhood and by extension your home.  They are giving you free money so do not be so quick to complain.

If someone sells a home in your neighborhood, help them sell it by passing on some information.  The more successful they are at selling their home for their asking price, the more successful you will be in the future.

I recently established a new home equity loan. I signed up for the automatic withdrawal plan. My payment would be withdrawn from my checking account on a certain day of the month and I would save a quarter point on my interest rate. I also saved a quarter point for another reason as well.

The first payment due date rolled around and hit on a Saturday. My mortgage holder and bank, which happens to be Bank of America, did not process the payment on Saturday.

I phoned on Saturday to check on it and they could not contact the Home Equity Loan department. They were supposed to be at work, but no one answered the phone when other bank employees tried to hone them? Must have been a Saturday pool party at the bank . . .

I phoned back on Monday and they informed me that the payment could not be made on a weekend in their system. Translation: Someone somewhere in the bank had to process a batch file manually and that wouldn’t happen till Monday. Hence my payment would not show up until Monday at 7 PM.

Interest Charges on the Loan

That raises the potential for miscalculation and possibly abuse by the bank. They could conceivably charge me interest for the time from Saturday till Sunday and then Sunday to Monday.

Two days of interest on a Home Equity Loan. They do compound daily so over time that could add up. For a single incident, that means I would pay $19.73 if I had a loan of $40k at 9% interest (40,000 x .09 x 2 days / 365 days for the year).

If a Saturday payment occurs 2 times per year and I pay this loan for 20 years, that would total up to ($19.73 x 2 x 20) $789.04 plus the interest charged on this interest!

Bank of America Resolution

Bank of America informed me that they would back date the transaction from Monday to Saturday, and so I would not be charged the interest.

I won’t know if that is correct until this evening, but you can bet I will be paying attention!

You should check as well if you have an automatic withdrawal. An extra $500 – $1,000 over the life of your home equity loan is not insubstantial. You should check to insure that your bank is not over charging you and that they have provisions to back date appropriately.

 Madison, Wisconsin is proving to be an area that is ripe for controversy in the real estate world.  Homeowners are selling their houses by themselves without a realtor and doing better than homeowners at cell with a realtor in Madison, Wisconsin.

These results run contrary to the results generated by the real estate industry, which is by far not an arbitrary or objective group to provide homebuyers and sellers information about the most cost-effective way to buy or sell a house.  Buyers and sellers of houses are more more getting annoyed at paying six to 7% to a realtor.  This is been exacerbated by the price of McMansions that oftentimes go for a half-million dollars or better depending on where you live and might go up to a $1.5 million before you break into mansion territory.

The averages are under $200,000 though.  And regular everyday homeowners are saving all those fees and they’re getting a better price on their house.  They are not selling their house as fast as a realtor does in the area, but they’re getting more money for the sales price and not paying commissions.

Now if you don’t have the time, or if you’re not capable of selling your own home in a realtor can provide you a good service.  Furthermore if you don’t need to squeeze out an extra five to 10 or $15,000, and a realtor might build a sell and move your house faster than if you try to do it by yourself.  But if you need that extra money, and you can spare a few extra weeks maybe a couple of months than selling your house without a realtor in Madison, Wisconsin might work out for you.

I’m going to be putting my house on the market soon and I’m definitely looking at both the for sale by owner scenarios as well as the discount realtor scenarios.  In the meantime you definitely should read this article for some more information on the trends in Madison, Wisconsin and where they are contradicted elsewhere.

Link to Home sellers get lucky in Madison, Wis. – Jun. 8, 2007