Is it better to buy or rent a home in retirement?
October 26, 2017

The kids are gone, the house is paid for, and you are ready for retirement. The question is whether keeping the house is the best idea.

According to USA Today, as many as 46 percent of seniors aged 65 or older are deciding to rent a home rather than buy a new house or keep their previous one.

There are pros and cons to each option.

For someone who already owns their own home with no monthly mortgage payment to worry about, it might seem an obvious choice to keep the house.  According to the Motley Fool, this house can be used as a source of income in retirement through a line of credit or a reverse mortgage if there is a sudden need for extra money. On the other hand, annual upkeep eats up as much as 1 percent to 4 percent of the value of the house each year.  These expenses can add up quickly on an older home. Then there are property taxes and homeowner’s insurance. Meanwhile, it is entirely possible that a housing market crash could erode the value of the home right when it is needed the most.

On the flip side, selling a home near or during retirement when the market is priced right could add a lot of cash flow and savings to draw from in the event of an emergency. The idea here is that cash can be invested and might be worth more over time than the house’s appreciation.

Kiplinger’s took a look at several scenarios involving home ownership, selling, and renting to decide which option made the most financial sense. They determined that in the short run renting was the better choice while buying a new home was more profitable after ten years or more.  They also noted that it could be possible to pay yearly rent with interest gained from investing profits from the sale of a home.

Remember too that retirement is also about freedom.  Separate from the financial aspects, renting a home could allow retirees to move around to different parts of the country more easily rather than worrying about having to sell or maintain a house from a distance.

Ask the Expert: 30 yr or 15 yr mortgage
October 25, 2017

We are trying to decide between a 30-year mortgage and a 15 year mortgage. The interest rate is a bit lower on the 15-year but the payments are nearly twice as high. What is the value to us of going with the 15-year?

The first obvious answer is that you pay off the mortgage more quickly. But, if you can afford payments on the 15-year mortgage, there is one big advantage: Equity.

According to mtgprofessor.com, the difference is dramatic.

Suppose you want to finance a $100,000 home for 30 years. At an interest rate of 4.25 percent, you’ll have an affordable payment of $492. If you take a 15-year mortgage at 3.375 percent, the payment is 44 percent higher at $709 per month.

The big difference in the deal comes over time. In five years, the amount  you owe on a 15-year mortgage is reduced by $27,900. During the same period, a 30-year mortgage sees a reduction of just $9,192.

According to mtgprofessor.com, the home equity growth on the 15-year is three times as large. As a practical matter, this means your debt load is lower and your flexibility is higher.

The equity in your home can be useful if you want to buy a bigger home — you’ll have more buying power.

More equity is also a boon in retirement. You can use your equity with a reverse mortgage to help fund retirement.

Finally, you could borrow against your equity by taking a home equity loan (second mortgage). This type of borrowing against equity can be used for home improvements or to fund education. Best advice, however, is to avoid this type of loan except if absolutely necessary since it defeats the purpose of building equity in the first place.

Alternative to granite
October 24, 2017

Soapstone countertops combine beauty with utility.

If a stone material can be called flexible, then soapstone is that material.

Soapstone, actually a mineral known as steatite, is a somewhat rare stone that is made up of talc, a soft mineral, and magnesium among others. Time, heat and pressure forge the minerals together into a veined, relatively soft stone that compares favorably to marble or granite for countertops, floors and sinks.

In fact, soapstone has much to recommend it for countertops.

First, it is always unique. Every slab of soapstone is different. Your slab won’t be like that owned by anyone else.

Second, it is versatile. Unlike zinc, for example, it is heat resistant. Unlike granite, marble and limestone, it is non-porous and does not have to be sealed to prevent staining. This non-porous quality also means it doesn’t harbor bacteria and is easy to clean. Acids from lemons or tomato juice won’t affect it and neither will alkalin found in some householder cleaners.

Third, it is easy to maintain. Owners will want to wipe a thin layer of mineral oil over the surface at regular intervals. This helps expose its deeper tones and veining, according to vermontsoapstone.com.

It is a soft stone, however, and will scratch or chip over time. The good news is that it is easy to repair. Light scratches can be smoothed with simple oiling. Deeper scratches can be sanded. And a chip can be easily repaired using a two-step glue. Soapstone is affordable but not cheap. It costs between $70 to $120 per square foot, according to hunker.com. That is less than marble but comparable to high-end granite.

Many other uses for soapstone reflect its ability to retain heat. Historically, it was used as a fireplace material, since once heated it slowly radiates the heat long after the fire has died. That is why it has been used  as a boot dryer and bedwarmer. Vermont Soapstone still sells small slabs for use as bedwarmers. At $42 each, they make a warm gift for chilly nights.

Teaching kids about the cashless economy
October 21, 2017

The cashless society reigns and it is getting more powerful every year.

One area of life that usually does involve cash are allowances paid to kids every week.

But even kids need to learn that cash comes in many forms. As they become adults, today’s kids will manage virtual money more than coin and paper, according to walnutrow.com

It’s a good thing to teach kids how money moves from place to place and what forms it takes.

If you give your kids an allowance in cash, it’s worth taking a trip to an ATM and explaining how an amount from your paycheck goes into a checking account. From the ATM, you access the money and turn some of it into paper.

When you write a check, explain that you are giving your bank a notice to transfer money from your account to another account. Even young kids need to know that a stack of checks is not necessarily money.

Gone are the days when mom or dad comes home with a paper check. Nowadays many paychecks are electronically deposited. Explain to kids that the paycheck is really a transfer of dollars from the employer’s account to your account.

One note: If you give your teenagers some sort of debit or credit card instead of cash, set up balance notifications and spending notifications so you can monitor their use of digital money.

Stained coffee mugs
October 18, 2017

If your ceramic mugs have stubborn tea and coffee stains, try a baking soda paste.

Mix a little water into several teaspoons of baking soda; just enough to make the mixture pasty.

Now rub the paste over the offending coffee stains with a soft cloth or sponge. Clean off with a wet sponge and dry.

The mixture also has other uses: Scuff marks on the floor, chrome on golf clubs or stainless steel in the kitchen, according to hunker.com

How to buy a home when there aren’t many on the market
October 14, 2017

In economic parlance, many describe today’s housing market this way: demand is high and supply is low.  In practical terms this means there are more buyers than homes for sale. While this isn’t true in all areas of the country, it is true in many areas.

According to USA Today, there was a 4.3 month supply of homes nationally in August of 2017. That means it would take a little more than four months to run out of homes for sale if no other homes came on the market. This number was down from earlier in the summer when there was a 4.6-month supply.

The normal number of homes for sale is a 6-month supply. Why is supply of homes for sale so low? Baby Boomers don’t want to sell, according to USA Today. A recent realtor.com survey showed that 85 percent of Baby Boomers aren’t selling but 60 percent of millennials are.

In this market, sellers may easily get the price they want, but buyers must have all their shingles in a row these days.

Here’s how you have the best chance of snagging the house you want:

*Get your financing ready First get pre-qualified for a loan. This is an informal process where you visit with various lenders, giving them an overview of your financial situation. The lenders can then give you an idea of how much you can borrow and an idea of interest rates.  But, beware, this is not a promise to loan you the money. It merely gives you working numbers.

*Shop around The good thing about pre-qualification is that you can start shopping around before you are ready to buy. You can get an idea of what you can afford and what you want in a house.  Even if this isn’t your first time in the market, don’t skip the growing period, according to USNews. If you have been out of the market for more than a year, then you don’t know what is out there.

*Get pre-approved When you know you want to take the plunge, get pre-approved for a loan. At this point, you should have an idea of which lender you might want to use. The lender checks your credit, verifies employment, and confirms your ability to qualify for a mortgage. With a pre-approval in hand, you are ready to make a credible offer when you find the home you want.

For a beautiful start in spring: You can store your tropical bulbs
October 11, 2017

The growing season might be over, but you don’t have to say goodbye to your tropical plants. With a little effort, you can have twice as many next spring, and you won’t have to spend a lot of money to do it. You can store the bulbs.

For those who have a special liking for elephant ears, cannas, gladioli, dahlias, begonias, caladium, and other exotics, here’s how to save bulbs from the winter cold.

After foliage has dried back from the first light frost, trim the top growth, then gently dig up each bulb and brush off excess soil.  Discard any that are dried out or rotted.

Spray each bulb with a protective fungicide such as Concern Copper Soap and allow to dry. Keep bulbs in a warm, dry area for a week to ease them into dormancy.

Store the bulbs in a cardboard box. Cover the bottom with newspaper and place the bulbs so they don’t touch each other. Cover with peat moss, then make another layer.

Most bulbs prefer a 45 to 55 degree temperature range. Begonias, gladioli, and cannas prefer 50 to 60 degrees.

Kids and windows
October 10, 2017

Fires and falls are among the leading causes of injury and death for young children. Some falls are from windows, but a window is also a means of escape in the event of a fire. Some cautions:

* When making an escape plan for your home, remember that children may have to rely on a window to escape a fire.

* If you open windows for fresh air, open those that are beyond the reach of young children.

* Don’t depend on a screen to hold a child inside. A child pushing on a screen could make it fall through.

* Make sure windows can be opened easily in an emergency.

* If you have window air conditioners, make sure a window nearby is available for escape.

Renting tools instead of buying them
October 9, 2017

If you think doing a job yourself will save money, wait until you start buying tools.  A lawn mower is one thing but paying hundreds of dollars for a chainsaw to cut down one small tree is a waste.

There are options for renting tools that might only be needed occasionally.  According to Lifehacker, big box stores like Home Depot and Lowe’s have tool rental departments for equipment like scissor lifts, augers, and pressure washers as well as tools for plumbing, floor cleaning, and more. Rental companies, even if they are party rental companies, often have some tools to rent.

Locally, tools and equipment are available from DP Rentals and Ramsey Hardware.

Vacation debt
October 8, 2017

According to the 2017 LearnVest Money Habits and Confessions Survey, 74 percent of people say they’ve gone into debt to pay for a vacation; to the tune of $1,108, on average.

On average, Americans spend 10 percent of their annual income on vacations. A quarter of respondents even said they spend 15 percent or more.

While 32 percent of Americans marked vacation savings as a financial priority, only 7 percent said retirement savings was top of mind.