Saving for a Vacation Home: How Seniors Can Plan for the Financial End of Things

Vacation Home

Saving money for a vacation home can be difficult, and when you’re a senior on a fixed income, it can take some creative thinking to make sure you have the funds you need for the perfect getaway. Not only will you need to think about saving for a second mortgage, you’ll also need to consider the extra costs that you’ll incur from taxes and furnishing your new home. Then you’ll need to think about whether you want to turn your vacation home into a rental property when you’re not using it in order to recoup some of your investment.

A good financial plan begins with educating yourself about the real cost of a vacation home. Think about what it will take to make your dream a reality. Of course you’ll need money for the down payment, but you’ll also need funds to cover all the extra costs that come with a home, such as property taxes, utilities, HOA fees, and insurance, just to name a few. The location is a huge factor not only in cost, but in convenience, as the ideal vacation home is far enough away to be a “getaway” but close enough to your home that you can manage the upkeep.

Read on for some tips on how to plan for your vacation home and get everything you want out of it.

Location is key

The perfect vacation home means different things to different people. You may want something near the beach, near a ski resort, or in an area that has lots of restaurants nearby. You might want a home that fulfills needs for your health and well-being, such as a floor plan that works well for individuals with limited mobility. Take into consideration your lifestyle, your budget, and how often you’ll be using the home when you start your search, and gather some info on what the neighborhood is like as well.

Calculate well

Budgeting for something as big as a vacation home means doing some heavy planning. You need to make sure you’re familiar with all the rules of the area first, as some cities, homeowner associations, and resorts make their own set of laws when it comes to properties and amenities. Talk to a real estate agent and an accountant to get a good idea of what you’ll need to set aside.

Don’t forget the upkeep

Vacation homes often need updates when it comes to the kitchen and bathrooms, and these improvements can be pricey if you’re not careful with your budget and planning. One of the best ways to keep your home in good shape is to keep up with repairs and small changes rather than waiting to do them all at the same time. If you’re fairly close to your vacation home and can make a few trips a year for maintenance and upkeep, it will likely save you quite a bit of money in the long run. HomeAdvisor states that the average cost to remodel a kitchen is between $16,348 and $38,800, which is a big chunk of change. However, making green improvements, such as installing energy-efficient appliances or solar panels to the roof, can help you with tax credits as well as save you money on utilities every month, and that’s a great place to start with your budget.

Consider renting it out

While there are certainly downsides to renting out your vacation home, there are many upsides, too, including the fact that you’ll be getting extra income to help pay the mortgage. You’ll need to check and make sure this is an option before buying your home, as well as think about whether you’ll be available for emergencies should something go awry when the renters are in the home, but many vacation homeowners find this to be a great way to balance out the cost of the house.

Saving money for a vacation home starts with a solid plan, so make an effort to consider all your needs before you begin the process. Talk to your family about your plans and garner support and help from your loved ones to help make everything go smoothly.

 

 

 

 

 

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College Time Tips

college 2It is that time of the year. Time for back to school, but now it is the start of a new chapter – college. Parents hope for a better life for their kids and it starts with helping after high school. Along with newfound independence come new experiences and unknown responsibilities. One of the most important talks that should be had before young adults venture out on their own is how to manage money and especially how to handle credit. An in-depth conversation will prepare them for the eventual struggles that we all experience and help them set the stage for a secure financial future.

Many of the tips you should share may seem obvious but don’t make the mistake of leaving them unsaid because you think it’s simply common sense. Common sense is defined as a basic ability to perceive, understand and judge things, much of which is acquired through the experiences of others. Share mistakes you’ve made and explain how easy it can be to get into trouble but encourage them that there are corrective measures, if they’re committed to turning a bad decision around to protect their financial future.

Teach your young people that cash should be the main source of funding, if at all possible. Living within their means will prevent the accumulation of debt that will be difficult to pay off on a fixed income and a burden when they move into the real world after graduation. If a credit account becomes a necessity, limits must be put in place to only use it to finance absolute necessities when sufficient cash is unavailable or cannot be secured in any other way.

When Credit is a Necessity
The fact that borrowing on credit can be costly is a fact that everyone needs to understand but especially young people who may be more impulsive in their spending. How monthly interest is calculated should be demonstrated using simple math equations and how interest compounds should be explained. The importance of having a lengthy credit history and a high credit score should be stressed.

Lesson #1: How you handle a credit card will affect your future in ways that may not be obvious now. Over time everyone establishes a credit history that reflects how well they handle money. This information is collected into credit reports that are used to calculate your credit scores.

Lesson #2: Handled with care a credit card can have a positive effect on your credit scores.
Lenders use your credit scores to decide whether to approve an application for a mortgage, automobile loans, personal or other types of loans. Mismanage a credit card by maxing out your credit limit and making late payments, and the often, repeated advice to young people to avoid using credit will prove true. If, however, you’re responsible and conscientious in paying the balance in full each month and on time, the benefits to your credit scores and the ability to get credit in the future will be vastly improved.

Lesson #3: The financial success of life on your own lies in taking a genuine interest in the details. Whether you’re choosing a bank, investment firm, employer, credit card or anything other situation that deals with money, what are vital to understand are the details in the fine print. With credit cards, the terms and conditions of each agreement vary and can mean the difference between reasonable and outlandish charges incurred for the privilege of borrowing. Fees and rates can add up quickly.

Factors that should be examined to make a wise decision when choosing a credit card:

  • Annual Percentage Rate (APR): Look for a low rate; a high one will cost more.
  • Annual Fees: Rates range from $25 to $300. Look for a no or low fee card.
  • Penalty Fees: Pay late and you’ll be charged a maximum $25 fee. Go over your credit limit and pay another fee. A penalty rate increase can be imposed for late payments of more than 60 days and remain in effect for six months. Make three late payments and you’re stuck with the penalty rate.

Lesson #4: Using a credit card responsibly takes discipline and commitment. Limit yourself to one card for purchases you can pay off when the bill comes due. Never use a credit card for an impulsive purchase; if you can’t afford to pay with cash, you simply can’t afford it. Frivolous spending will result in an out-of-control balance that may be hard to pay down. Carefully examine every billing statement for errors before making the each payment on time.

Anyone under the age of 21 is required to have a co-signer or proof of sufficient income to make the payments before being approved for a credit card in their name. Sit down together and compare a number of student card offers and teach them how interest is calculated and the debt trouble that can ensue if care isn’t taken.

The Last Word
If your child pays attention to even half of the advice you offer, they’ll be ahead of their peers trying to navigate without any guidance. The right information and your willingness to oversee their efforts in learning to manage their own finances will help them avoid the hardship of learning the hard lessons on their own.